Energy Compliance and Enforcement

Energy Compliance and Enforcement


Energy industry stakeholders face unprecedented compliance challenges in today’s constantly evolving regulatory environment. With the continuing focus on market manipulation by both the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC), companies involved in energy markets need to know the boundaries of the two jurisdictions and what can be done to protect against new regulatory burdens or to avoid investigation. In addition, many utilities and energy companies will shortly face Dodd-Frank issues from the CFTC, which will likely scrutinize Dodd-Frank recordkeeping and exemption claims (i.e. forward exclusion, end user, registration) as part of its focus on compliance and enforcement.

Schiff Hardin’s Energy Compliance and Enforcement practice is dedicated to helping energy companies meet these challenges, providing regulatory compliance, investigation, negotiation and litigation capabilities along with comprehensive guidance about FERC and North American Electric Reliability Corporation (NERC) requirements that affect their businesses.

Programs that Minimize Risk

Where possible, our approach begins with compliance. We recognize that companies have differing business interests and objectives and thus face different FERC compliance issues. We work closely with senior management as well as employees on the front lines to prepare and implement internal FERC and NERC compliance programs to suit their company’s business model and objectives and minimize the risk of enforcement proceedings. We also review and recommend improvements to existing compliance programs.

Our attorneys have prepared compliance programs for companies engaged in all aspects of the natural gas industry — including marketing and trading, gathering, intrastate transportation, and local distribution of gas — as well as for electric utilities engaged in wholesale electric market transactions. We have developed customized training materials and conducted on-site training programs focused upon a variety of FERC and NERC compliance issues including, but not limited to:

  • FERC’s market manipulation rules
  • Standards of conduct requirements
  • FERC’s natural gas capacity rules
  • FERC market-based rate rules and regulations, and
  • FERC merger authority.


With experience in compliance matters related to other agencies (including the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Department of Justice), we bring an intentional, multidisciplinary approach to helping clients sync their entire compliance regime together with their FERC compliance obligations.

We are also able to assist clients in navigating the complexities of FERC Enforcement investigations by complementing our comprehensive compliance practice with top-flight litigation experience. Having represented a variety of energy companies over the years, we assist our clients in a comprehensive way, infusing our roles as advocates with the knowledge of our clients’ business objectives and of regulatory priorities. Where appropriate, we draw on our general commercial litigation experience and our white collar litigation experience to tailor our assistance to the particulars of any FERC Enforcement action.

Leading the Way Through a Shifting Compliance Landscape

Our attorneys have been at the forefront of the development and evolution of the relatively new NERC regulatory regime. With an attorney and an auditor who served in FERC’s Office of Enforcement on our team, we are able to offer highly informed advice on all aspects of this regulation.

Many entities in the electric power industry must comply with NERC reliability standards. Non-compliance can result in significant monetary penalties along with very costly corrective actions or “mitigation” plans. As NERC reforms its compliance monitoring and enforcement program to shift its focus to more significant reliability risks, average penalties have increased over time and are expected to climb in the future.

  • Experience

    FERC Compliance and Enforcement

    Schiff Hardin’s FERC compliance and enforcement experience includes the following:

    • We successfully negotiated reduced civil penalties for natural-gas marketing companies and local distribution companies related to violations of FERC’s rules governing the use of interstate pipeline capacity, including the capacity release requirements, the shipper-must-have-title rule, and the prohibition on buy-sell transactions.
    • We successfully negotiated with FERC investigations staff for reduced civil penalties for a Regional Transmission Organization for violations of NERC Standards and operating procedures.  
    • We obtained a favorable settlement for a client in the first case brought by FERC's Office of Enforcement (OE) alleging failure to comply with an order issued in a complaint proceeding.
    • We have successfully negotiated the conclusion of numerous FERC Enforcement investigations “with no further action” involving rules governing the use of interstate pipeline capacity, including the capacity release requirements, the shipper-must-have-title rule, and the prohibition on buy-sell transactions.
    • We have successfully negotiated the conclusion of FERC Enforcement investigations “with no further action” involving the interpretation of RTO market rules and participation in RTO markets.
    • We obtained a dismissal of an investigation of a possible violation of FERC’s Standards of Conduct.
    • We obtained waivers of FERC's Codes of Conduct.
    • We represent clients in ongoing investigations by OE regarding FERC’s rules governing the use of interstate pipeline capacity, including the capacity release requirements, the shipper-must-have-title rule, and the prohibition on buy-sell transactions. We have developed procedures to be used by our clients for internal audits related to compliance with these rules and participated in such audits. We have evaluated the results of internal audits, assisted our clients in replying to data requests from OE, participated in meetings with OE Staff, and developed reports to OE regarding our clients' conduct.
    • We work with senior management to develop custom-tailored internal compliance programs and training sessions for company employees regarding FERC compliance requirements. We have also evaluated internal compliance programs and provided advice on how such programs should be modified to comport with FERC’s guidance on compliance plans.
    • We have assisted clients with respect to audits conducted by FERC’s Chief Accountant and have repeatedly worked to successfully remove negative findings that otherwise would have resulted in referrals to FERC OE.

    NERC Compliance Experience

    Schiff Hardin attorneys have assisted clients develop internal reliability compliance programs, prepare for compliance audits and other compliance monitoring activities by NERC regional entities, and negotiate settlements or other resolutions of possible violations.

    • Negotiated settlement for three affiliates, each alleged to have violated 24 of the 41 requirements under NERC’s cyber-security reliability standards. The settlement that was nearly 40% lower than the penalty amount originally pursued by the NERC regional entity. We also assisted in ongoing efforts to mitigate related instances of noncompliance.
    • Assisted in a G&T cooperative’s efforts to de-register its distribution-only members and to rationalize the allocation of compliance responsibilities between the G&T Cooperative and its members.
    • On several occasions, worked with the NERC regional entity’s compliance enforcement staff to have all findings of potential violations by clients either dismissed, processed without penalty under the NERC “Find, Fix, and Track” program, or settled at a reduced penalty level.
    • Participated in transactions for the development, financing or acquisition of electric generating plants to ensure that responsibility for compliance with reliability standards was properly allocated among the parties and that no material reliability issues would impede the closing of such transactions.

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