FERC Increases Maximum Civil Penalty Amounts to Adjust for Inflation
On June 29, 2016, the Federal Energy Regulatory Commission (FERC) issued Order No. 826, increasing the maximum civil penalty amount for violations of statutes, rules, and regulations within FERC’s jurisdiction, in order to adjust for inflation. The following table sets forth those changes:
| Source | Existing Maximum Civil Monetary Penalty | New Adjusted Civil Monetary Penalty |
| 16 U.S.C. § 825o-1(b), Sec. 316A of the Federal Power Act | $1,000,000 per violation, per day | $1,193,970 per violation, per day |
| 16 U.S.C. § 823b(c), Sec. 31(c) of the Federal Power Act | $11,000 per violation, per day | $21,563 per violation, per day |
| 16 U.S.C. § 825n(a), Sec. 315(a) of the Federal Power Act | $1,100 per violation | $2,750 per violation |
| 15 U.S.C. § 717t-1, Sec. 22 of the Natural Gas Act | $1,000,000 per violation, per day | $1,193,970 per violation, per day |
| 15 U.S.C. § 3414(b)(6)(A)(i), Sec. 504(b)(6)(A)(i) of the Natural Gas Policy Act of 1978 | $1,000,000 per violation, per day | $1,193,970 per violation, per day |
| 49 App. U.S.C. § 6(10) (1988), Sec. 6(10) of the Interstate Commerce Act | $500 per offense and $25 per day after the first day | $1,250 per offense and $62.50 per day after the first day |
| 49 App. U.S.C. § 16(8) (1988), Sec. 16(8) of the Interstate Commerce Act | $5,000 per violation, per day | $12,500 per violation, per day |
| 49 App. U.S.C. § 19a(k) (1988), Sec. 19a(k) of the Interstate Commerce Act | $500 per offense, per day | $1,250 per offense, per day |
| 49 App. U.S.C. § 20(7)(a) (1988), Sec. 20(7)(a) of the Interstate Commerce Act | $500 per offense, per day | $1,250 per offense, per day |
The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the "2015 Act") requires FERC to issue an interim final rule by July 1, 2016 that adjusts for inflation each monetary penalty provided by law within the agency’s jurisdiction and to update such penalty amounts on an annual basis thereafter. The 2015 Act sets forth the methodology for calculating all applicable inflation, and caps penalty amount increases at 150 percent of the maximum penalty amount effective November 2, 2015. Also under the 2015 Act, FERC must use the civil monetary penalty applicable at the time of penalty assessment, regardless of the date on which the violation occurred.
Consistent with the 2015 Act, Order No. 826 makes all such changes to maximum penalty amounts as set forth in the Federal Power Act, the Natural Gas Act, the Natural Gas Policy Act of 1978, and the Interstate Commerce Act ("ICA"). Note that since the inflation percentage applicable to ICA penalty amounts – $500 and $5,000 per day, amounts set by Congress in 1910 and left unchanged since that time – was 2,254.832 percent, FERC capped the revised penalty amounts at $1,250 and $12,500 per day, respectively, reflecting the maximum percentage increase permitted under the 2015 Act and its predecessor, the Federal Civil Penalties Inflation Adjustment Act of 1990.
Importantly, since FERC is required by law to undertake the inflation adjustments set forth in Order No. 826 and lacks discretion as to the method and amount of such adjustment, there will be no notice and comments period. All such changes will be effective upon publication of the final rule in the Federal Register, likely within 7-10 days.
For answers to questions regarding Order No. 826 or any other energy issue, please contact Randall S. Rich at rrich@pierceatwood.com or 202-470-6424 or Jared S. des Rosiers at jdesrosiers@pierceatwood.com or 207-791-1390.