# 130 FERC ¶ 61,220: Policy Statement On Penalty Guidelines

> Federal · Agency guidance · In force

URL: https://www.frixlaw.com/law-library/statutes/FERC_PL10_4_000_20100318

## Section

- **Citation:** 130 FERC ¶ 61,220
- **Heading:** Policy Statement On Penalty Guidelines
- **Jurisdiction:** Federal
- **Kind:** Agency guidance
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** FERC Policy Statements / Policy Statement On Penalty Guidelines

## Text

130 FERC ¶ 61,220
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Jon Wellinghoff, Chairman;
Marc Spitzer, Philip D. Moeller,
and John R. Norris.

Enforcement of Statutes, Orders, Rules,
and Regulations
Docket No. PL10-4-000

POLICY STATEMENT ON PENALTY GUIDELINES

(Issued March 18, 2010)

1.
The Commission issues this Policy Statement on Penalty Guidelines for the
purpose of adding greater fairness, consistency, and transparency to our civil penalty
determinations. The Commission’s Penalty Guidelines (Penalty Guidelines) are modeled
on portions of the United States Sentencing Guidelines (Sentencing Guidelines), with
appropriate modifications to account for Commission-specific considerations. The
Penalty Guidelines are contained at the end of this Policy Statement.
I.
Introduction
2.
The Commission’s present adoption of a guidelines approach as a significant factor
to be considered in determining civil penalties is the latest in a line of policy statements
and initiatives we have implemented since passage of the Energy Policy Act of 2005
(EPAct 2005) to add greater fairness, consistency, and transparency to our enforcement
program.1 The Penalty Guidelines accomplish this by using a set of objective
characteristics to determine penalties that are transparent. The Penalty Guidelines will
promote greater consistency by basing penalties on a set of uniform factors that are

1 A guidelines approach allows for the discretion to depart from the indicated
penalty where necessary.
1 The Penalty Guidelines accomplish this by using a set of objective
characteristics to determine penalties that are transparent. The Penalty Guidelines will
promote greater consistency by basing penalties on a set of uniform factors that are

1 A guidelines approach allows for the discretion to depart from the indicated
penalty where necessary.

Docket No. PL10-4-000
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assigned transparent values and weighted similarly for similar types of violations and
similar types of violators. Organizations will be provided more notice and certainty as to
how we will determine appropriate civil penalties.2 Application of the Penalty
Guidelines, however, is discretionary, not mandatory. As such, deviations in penalties
may be necessary to account for the specific facts and circumstances of a violation.
3.
The Commission’s approach to determine penalties has evolved during the almost
four-and-a-half years since EPAct 2005 first went into effect in August 2005. We have
given the question careful consideration at many junctures, weighing the benefits and
costs and considering how other federal agencies determine civil penalties. We have paid
close attention to the Sentencing Guidelines because they rely on many of the same
factors that are at the core of our enforcement program.3 We now believe that it is in the
public interest to advance our past use of the Sentencing Guidelines’ principles by
implementing a guidelines approach patterned after the Sentencing Guidelines, which
apply factors in a focused manner to promote fairness and consistency, while still
allowing for the discretion to depart from the indicated penalty where necessary.
4.
The purpose of this Policy Statement is to explain how we have come to the
decision to adopt the Penalty Guidelines, to explain the benefits of a guidelines approach,
and to set forth how our Penalty Guidelines will work in practice.
II.
Background

A.
Energy Policy Act of 2005
5
istency, while still
allowing for the discretion to depart from the indicated penalty where necessary.
4.
The purpose of this Policy Statement is to explain how we have come to the
decision to adopt the Penalty Guidelines, to explain the benefits of a guidelines approach,
and to set forth how our Penalty Guidelines will work in practice.
II.
Background

A.
Energy Policy Act of 2005
5.
The Commission has various enforcement tools in policing the areas of the electric,
natural gas, hydroelectric, and oil pipeline industries within our jurisdiction. Specifically,
we can require compliance plans and disgorgement of unjust profits, we have the ability
to condition, suspend, or revoke market-based rate authority, certificate authority, or
blanket certificate authority, we have the ability to refer matters to the Department of
Justice for criminal prosecution, and we have civil penalty authority. With respect to
civil penalties, the Commission received a significant enhancement to its

2 “Organization” is defined in the Penalty Guidelines as “any entity other than a
natural person.” Penalty Guidelines § 1A1.1 (Commentary note 1).
3 See, e.g., Compliance with Statutes, Regulations, and Orders, 125 FERC
¶ 61,058, PP 23-25 (2008) (Policy Statement on Compliance).

Docket No. PL10-4-000
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enforcement program with the passage of EPAct 2005.4 Prior to EPAct 2005, the
Commission’s authority to assess civil penalties was limited to: (1) $11,000 per day
under Part I of the Federal Power Act (FPA); (2) $11,000 per day under sections 211
through 214 of Part II of the FPA; and (3) $5,500 per day under the Natural Gas Policy
Act of 1978 (NGPA).5 The Commission lacked civil penalty authority entirely under the
Natural Gas Act (NGA). Congress significantly expanded this authority in EPAct 2005
through three primary enhancements
) $11,000 per day
under Part I of the Federal Power Act (FPA); (2) $11,000 per day under sections 211
through 214 of Part II of the FPA; and (3) $5,500 per day under the Natural Gas Policy
Act of 1978 (NGPA).5 The Commission lacked civil penalty authority entirely under the
Natural Gas Act (NGA). Congress significantly expanded this authority in EPAct 2005
through three primary enhancements. First, Congress expanded the Commission’s FPA
civil penalty authority to cover all provisions of FPA Part II and any rule or order issued
thereunder.6 Second, Congress extended our civil penalty authority to cover the NGA
and any rule, regulation, restriction, condition, or order made or imposed by the
Commission under the NGA.7 Third, Congress increased the maximum civil penalty the
Commission can assess to $1,000,000 per day, per violation for any violation of the
NGA, NGPA, and Part II of the FPA.8 With this expansion came the responsibility to
carefully implement our new authority and to seek to improve our application of it in
light of experience. This Policy Statement represents such an improvement.
6.
While granting the Commission this greater civil penalty authority, EPAct 2005
also mandated that we consider certain factors in determining the amount of a particular
penalty. Specifically, EPAct 2005 amended the NGA to provide that “[i]n determining
the amount of a proposed penalty, the Commission shall take into consideration the
nature and seriousness of the violation and the efforts to remedy the violation.”9 Thus, in

4 See Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594 (2005) (EPAct
2005).
5 16 U.S.C. § 823b(c) (2000) (FPA Part I); 16 U.S.C. § 825o-1(b) (2000) (FPA
Part II); 15 U.S.C. § 3414(b)(6) (2000) (NGPA); 18 C.F.R. § 385.1602 (2009).
6 EPAct 2005 § 1284(e)(1) (amending FPA § 316A(a)).
7 EPAct 2005 § 314(b)(1) (inserting new NGA § 22)
he efforts to remedy the violation.”9 Thus, in

4 See Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594 (2005) (EPAct
2005).
5 16 U.S.C. § 823b(c) (2000) (FPA Part I); 16 U.S.C. § 825o-1(b) (2000) (FPA
Part II); 15 U.S.C. § 3414(b)(6) (2000) (NGPA); 18 C.F.R. § 385.1602 (2009).
6 EPAct 2005 § 1284(e)(1) (amending FPA § 316A(a)).
7 EPAct 2005 § 314(b)(1) (inserting new NGA § 22).
8 EPAct 2005 § 314(b)(1) (inserting new NGA § 22(a)); EPAct 2005 § 314(b)(2)
(amending NGPA § 504(b)(6)(A)); EPAct 2005 § 1284(e)(2) (amending FPA §
316A(b)). EPAct did not change the Commission’s existing $11,000 per day authority
under Part I of the FPA. See section 385.1602(b) of the Commission’s regulations, 18
C.F.R. § 385.1602(b) (2009).
9 15 U.S.C. § 717t-1 (added by EPAct 2005§ 314(b)). A similar directive already
had existed in the FPA.

Docket No. PL10-4-000
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determining an appropriate penalty, Congress instructs that we must specifically consider
the seriousness of the violation and the efforts a company takes to remedy it. As we will
discuss more fully below, these two factors have been at the forefront of our penalty
determinations since EPAct 2005 and will continue to be significant factors under the
Penalty Guidelines that we announce here.

B.
The Commission’s First Policy Statement on Enforcement
7.
Following the passage of enhanced civil penalty authority in EPAct 2005, the
Commission issued the first Policy Statement on Enforcement on October 20, 2005 (2005
Policy Statement), for the purpose of providing guidance and regulatory certainty
regarding our statutes, orders, rules, and regulations.10 We made clear that our purpose
was to provide “firm but fair enforcement” of our laws and to provide notice to
jurisdictional organizations of the consequences of violating our laws.11 The
Commission described factors that we would consider in determining appropriate
penalties under our enhanced penalty authority.12
8
tainty
regarding our statutes, orders, rules, and regulations.10 We made clear that our purpose
was to provide “firm but fair enforcement” of our laws and to provide notice to
jurisdictional organizations of the consequences of violating our laws.11 The
Commission described factors that we would consider in determining appropriate
penalties under our enhanced penalty authority.12
8.
In deciding what criteria would guide our penalty determinations, we considered
our statutory mandates from EPAct 2005 as well as the enforcement policies of other
federal agencies, including the Securities and Exchange Commission (SEC), the
Commodity Futures Trading Commission (CFTC), and the Department of Justice (DOJ).
We explained that the “first touchstone for our determination” would be the seriousness
of the violation, given that this was a statutorily mandated consideration.13 We listed
some factors we would consider in judging the seriousness of the violation, including the
harm caused by the violation and whether the violation resulted from manipulation,
deceit, or artifice.14 We also looked to the second statutory criterion, specifically, the
efforts made by the company to remedy the violation in a timely manner.15 This criterion

10 Enforcement of Statutes, Orders, Rules, and Regulations, 113 FERC ¶ 61,068
(2005) (2005 Policy Statement).
11 Id. P 1.
12 Id. PP 17-27.
13 Id. P 11.
14 Id. P 20.
15 Id. P 21.
ice.14 We also looked to the second statutory criterion, specifically, the
efforts made by the company to remedy the violation in a timely manner.15 This criterion

10 Enforcement of Statutes, Orders, Rules, and Regulations, 113 FERC ¶ 61,068
(2005) (2005 Policy Statement).
11 Id. P 1.
12 Id. PP 17-27.
13 Id. P 11.
14 Id. P 20.
15 Id. P 21.

Docket No. PL10-4-000
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also includes several factors, including efforts relating to internal compliance, self-
reporting, and cooperation.16 We encouraged organizations to create comprehensive
compliance programs, develop a culture of compliance, and to self-report and cooperate
with the Commission if violations were to occur.17
9.
At the time, the Commission also considered the most effective way to apply the
various factors to determine a penalty. It did this, in part, by considering the enforcement
programs at other federal agencies. In 2001, the SEC issued a decision in which it listed
thirteen factors it considers in determining whether, and how much, credit it gives for
self-policing, self-reporting, remediation, and cooperation.18 While listing these factors,
the SEC declined to adopt a guidelines approach, emphasizing that it was not limiting its
broad discretion to evaluate each case individually.19 The CFTC also has listed relevant
factors it considers to determine penalties, but like the SEC, has declined to adopt a
guidelines approach. Other agencies, however, have adopted guidelines approaches. For
example, the Environmental Protection Agency uses various matrices to calculate civil
penalty amounts.20 Similarly, the Nuclear Regulatory Commission uses a guidelines
model to determine penalties.21 The Federal Communications Commission employs
guidelines to assess forfeiture penalties.22 In addition, the Occupational Safety and
Health Administration uses a guidelines approach to determine penalties.23 We also

16 Id. PP 21-27
ncy uses various matrices to calculate civil
penalty amounts.20 Similarly, the Nuclear Regulatory Commission uses a guidelines
model to determine penalties.21 The Federal Communications Commission employs
guidelines to assess forfeiture penalties.22 In addition, the Occupational Safety and
Health Administration uses a guidelines approach to determine penalties.23 We also

16 Id. PP 21-27.
17 See, e.g., id. P 2.
18 Accounting and Auditing Enforcement, SEC Release No. 1470 (October 23,
2001).
19 Id.
20 See generally Calculation of the Economic Benefit of Noncompliance in EPA’s
Civil Penalty Enforcement Cases, 64 Fed. Reg. 32,948 (Envtl. Prot. Agency June 18,
1999); Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of
Violations, 65 Fed .Reg. 19,618 (Envtl. Prot. Agency April 11, 2000).
21 See NRC Enforcement Policy at 18-21, available at http://www.nrc.gov/about-
nrc/regulatory/enforcement/enforc-pol.pdf.
22 See 47 C.F.R. § 1.80 (2009).
23 See OSHA’s Field Operations Manual, Chapter 6 (Nov. 9, 2009).

Docket No. PL10-4-000
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considered the practice of the DOJ, which, pursuant to the Sentencing Reform Act of
1984, uses the Sentencing Guidelines to determine penalties.24 After weighing our
options, we chose, like the SEC and CFTC, to determine penalties based on a case-by-
case approach, hoping to retain more discretion and flexibility to address each case on its
individual set of facts.25
10.
Although we declined at the time to adopt a guidelines approach like that used by
the DOJ, we were heavily influenced by the Sentencing Guidelines and the practices of
the DOJ in deciding which factors would guide our penalty analyses
ermine penalties based on a case-by-
case approach, hoping to retain more discretion and flexibility to address each case on its
individual set of facts.25
10.
Although we declined at the time to adopt a guidelines approach like that used by
the DOJ, we were heavily influenced by the Sentencing Guidelines and the practices of
the DOJ in deciding which factors would guide our penalty analyses. For example, as
with our approach, the Sentencing Guidelines consider the seriousness of an offense, in
part, by calculating the gain to the organization or the loss caused by the conduct,26 and
the number of victims.27 Also, the Sentencing Guidelines consider the organization’s
culpability, including whether the organization has a prior history, whether the
organization has self-reported the offense, whether high-level personnel were involved in
the offense, and whether the organization cooperated with governmental authorities.28
Moreover, the Sentencing Guidelines provide credit for organizations with effective
compliance programs.29 The Commission incorporated all of these factors into its 2005
Policy Statement and it has continued to weigh these factors in its penalty determinations,
albeit in a less structured manner than is found in the Sentencing Guidelines.
C.
Early Experience with Civil Penalties and Feedback from Regulated
Community
11.
The Commission’s early experience with our enhanced civil penalty authority
reflected the “firm but fair enforcement” policy that we articulated in our 2005 Policy
Statement. We imposed civil penalties in the context of negotiated settlements where

24 2005 Policy Statement at P 8.
25 Id. P 13.
26 United States Sentencing Commission, Guidelines Manual (U.S.S.G.), §
8C2.4(a).
27 Id. § 2B1.1(b)(1-2).
28 Id. § 8C2.5.
29 Id. §§ 8C2.5(f); 8B2.1.
fair enforcement” policy that we articulated in our 2005 Policy
Statement. We imposed civil penalties in the context of negotiated settlements where

24 2005 Policy Statement at P 8.
25 Id. P 13.
26 United States Sentencing Commission, Guidelines Manual (U.S.S.G.), §
8C2.4(a).
27 Id. § 2B1.1(b)(1-2).
28 Id. § 8C2.5.
29 Id. §§ 8C2.5(f); 8B2.1.

Docket No. PL10-4-000
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d in

appropriate, but we also closed many investigations with no sanctions and required
compliance measures instead of penalties in others. Between 2005 and 2007, the
Commission’s Office of Enforcement staff (Enforcement staff) closed forty-seven out of
sixty-four investigations without any sanctions being imposed, even though Enforcement
staff found a violation in twenty-two of those closed investigations.30 Only the
remaining one-quarter of the total investigations completed during this period resulte
civil penalties.31 In addition, Enforcement staff closed with no action more than half of
the seventy-four self-reports submitted to Enforcement staff during this period.32
Enforcement staff frequently exercised prosecutorial discretion to resolve minor
infractions with agreed-upon compliance measures rather than with penalties.
12.
Between 2005 and the end of 2007, all of the post-EPAct 2005 investigations
resulting in civil penalties were resolved by settlement between Enforcement staff and the
subject companies. The Commission issued 12 orders approving these settlements.33
The civil penalties ranged from $300,000 to $10 million, and reflected a wide variety in
the type and seriousness of the violations at issue. In some of these cases, disgorgement
or other monetary remedies were imposed as well, and all but three of the settlements
also required compliance plans designed to prevent reoccurrence of the violations
issued 12 orders approving these settlements.33
The civil penalties ranged from $300,000 to $10 million, and reflected a wide variety in
the type and seriousness of the violations at issue. In some of these cases, disgorgement
or other monetary remedies were imposed as well, and all but three of the settlements
also required compliance plans designed to prevent reoccurrence of the violations. We
also issued two Orders to Show Cause, based on Enforcement staff’s allegations of

30 Report on Enforcement, Docket No. AD07-13-000, at 21 (Nov. 14, 2007). No
sanctions were imposed in the twenty-two investigations because the violations were
relatively minor in nature and resulted in little or no actual harm. In addition, in some of
those investigations, the violations predated the effective date of the Commission’s
expanded penalty authority under EPAct 2005.
31 Id.
32 Id. at 15.
33 See In re BP Energy Co., 121 FERC ¶ 61,088 (2007); In re MGTC, Inc., 121
FERC ¶ 61,087 (2007); In re Gexa Energy L.L.C., 120 FERC ¶ 61,175 (2007); In re
Cleco Power, LLC, 119 FERC ¶ 61,271 (2007); In re Columbia Gulf Transmission Co.,
119 FERC ¶ 61,174 (2007); In re Calpine Energy Services, L.P., 119 FERC ¶ 61,125
(2007); In re Bangor Gas Co., 118 FERC ¶ 61,186 (2007); In re NRG Energy, Inc.,
118 FERC ¶ 61,025 (2007); In re NorthWestern Corp., 118 FERC ¶ 61,029 (2007); In re
Entergy Services, Inc., 118 FERC ¶ 61,027 (2007); In re SCANA Corp.; 118 FERC
¶ 61,028 (2007); In re PacifiCorp, 118 FERC ¶ 61,026 (2007).
9 FERC ¶ 61,174 (2007); In re Calpine Energy Services, L.P., 119 FERC ¶ 61,125
(2007); In re Bangor Gas Co., 118 FERC ¶ 61,186 (2007); In re NRG Energy, Inc.,
118 FERC ¶ 61,025 (2007); In re NorthWestern Corp., 118 FERC ¶ 61,029 (2007); In re
Entergy Services, Inc., 118 FERC ¶ 61,027 (2007); In re SCANA Corp.; 118 FERC
¶ 61,028 (2007); In re PacifiCorp, 118 FERC ¶ 61,026 (2007).

Docket No. PL10-4-000
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possible violations of a former Market Behavior Rule34 and the current Anti-
Manipulation Rule.35 Reflecting the seriousness of the allegations in those cases, those
orders portended the possibility of near maximum statutory penalties.
13.
Given the importance and nascence of this new enforcement regime, Enforcement
staff prepared a report summarizing the enforcement actions it took in the first two years
after issuance of EPAct 2005,36 and the Commission held a widely-attended Conference
on Enforcement Policy (Enforcement Conference) on November 16, 2007, to entertain
questions and suggestions regarding our enforcement program.37
14.
The Enforcement Conference generated many thoughtful comments, questions, and
suggestions, including requests for additional information on how we apply the factors
set out in our 2005 Policy Statement and suggestions that the Commission adopt a
guidelines approach to determine penalties. These requests and suggestions led the
Commission to issue a Revised Policy Statement on Enforcement (Revised Policy
Statement).

D.
Revised Policy Statement on Enforcement and Policy Statement on

Compliance
15.
In 2008, we issued two additional policy statements to provide further guidance on
our enforcement program. First, on May 15, 2008, the Commission issued the Revised
Policy Statement to supersede the 2005 Policy Statement and provide industry with a

34 18 C.F.R
evised Policy Statement on Enforcement and Policy Statement on

Compliance
15.
In 2008, we issued two additional policy statements to provide further guidance on
our enforcement program. First, on May 15, 2008, the Commission issued the Revised
Policy Statement to supersede the 2005 Policy Statement and provide industry with a

34 18 C.F.R. § 284.403(a)(2005) (at the time of the alleged violations, this
regulation included the now rescinded Market Behavior Rule 2); Energy Transfer
Partners, L.P., 120 FERC ¶ 61,086 (2007).
35 18 C.F.R. § 1c.1-1c.2 (2007); Amaranth Advisors LLC, 120 FERC ¶ 61,085
(2007).
36 Report on Enforcement, Docket No. AD07-13-000 (Nov. 14, 2007). This report
was well-received by the regulated community, and Enforcement staff has continued to
issue this report on an annual basis.
37 Conference on Enforcement Policy, Docket No. AD07-13-000 (Nov. 16, 2007).

Docket No. PL10-4-000
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fuller picture of Enforcement staff’s investigative process and the factors we consider to
determine whether a penalty is warranted and, if so, the amount of such penalty.38
Second, on October 16, 2008, we issued the Policy Statement on Compliance to discuss
factors related to effective compliance that the Commission will consider in determining
whether to reduce or, where appropriate, even eliminate civil penalties for violations.39
16.
In the Revised Policy Statement, the Commission re-emphasized that the two most
important factors are seriousness of the offense and the strength of an organization’s
commitment to compliance.40 As to the compliance factor, the Commission provided
additional guidance not included in the 2005 Policy Statement as to what specifically
constitutes an effective compliance program.41 The Policy Statement on Compliance
further supplemented our discussion as to the specific factors underpinning effective
compliance programs
and the strength of an organization’s
commitment to compliance.40 As to the compliance factor, the Commission provided
additional guidance not included in the 2005 Policy Statement as to what specifically
constitutes an effective compliance program.41 The Policy Statement on Compliance
further supplemented our discussion as to the specific factors underpinning effective
compliance programs. There, we enumerated four hallmarks of effective compliance
programs: active engagement and leadership by senior management; effective preventive
measures; prompt detection and cessation of violations and voluntary reporting of
violations; and remediation of the misconduct.42 Thus, with both the Revised Policy
Statement and Policy Statement on Compliance, the Commission placed a renewed and
heavy emphasis on promoting industry-wide compliance and the creation of effective
compliance programs.
17.
As was the case with the 2005 Policy Statement, the Commission once again was
heavily influenced by the factors enumerated in the Sentencing Guidelines. For example,
the hallmarks of an effective compliance program that we listed in the Policy Statement
on Compliance are all included in the Sentencing Guidelines.43 Nevertheless, the
Commission continued to decline various commenters’ suggestions that we adopt a
penalty guidelines approach like that used by the DOJ. We explained in the Revised

38 Enforcement of Statutes, Regulations and Orders, 123 FERC ¶ 61,156 (2008)
(Revised Policy Statement).
39 Policy Statement on Compliance, 125 FERC ¶ 61,058 (2008).
40 Revised Policy Statement at P 54.
41 Id. P 59.
42 Policy Statement on Compliance at PP 13-21.
43 See U.S.S.G. § 8B2.1.
s that we adopt a
penalty guidelines approach like that used by the DOJ. We explained in the Revised

38 Enforcement of Statutes, Regulations and Orders, 123 FERC ¶ 61,156 (2008)
(Revised Policy Statement).
39 Policy Statement on Compliance, 125 FERC ¶ 61,058 (2008).
40 Revised Policy Statement at P 54.
41 Id. P 59.
42 Policy Statement on Compliance at PP 13-21.
43 See U.S.S.G. § 8B2.1.

Docket No. PL10-4-000
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Policy Statement that “[o]ur two years of experience in administering the enhanced
penalty authority granted under EPAct 2005 has not yet convinced us to revise our
decision [from the 2005 Policy Statement] at this time.”44 We left open the possibility of
moving to a guidelines approach in the future, indicating that a guidelines approach might
be more feasible when “the Commission develops more experience in reviewing matters
involving its enforcement authority.”45

E.
United States Sentencing Guidelines
18.
The section of the Sentencing Guidelines that applies to organizations involves a
two-step process to determine the ultimate fine range that an organization will be
required to pay after being sentenced for a crime. First, the Sentencing Guidelines
require the calculation of a base fine.46 The base fine is the greater of the gain to the
organization, the loss caused by the conduct, or a pre-determined amount that is
generated by the offense level and is enumerated in the guidelines.47 Second, the
Sentencing Guidelines produce a multiplier range for the base fine, which requires an
analysis of the organization’s culpability, considering factors similar to those the
Commission considers, such as whether the organization has a prior history of violations,
whether high-level management was involved in the offense, whether the organization
has self-reported and accepted responsibility for its conduct, whether the organization had
an effective compliance program at the time it committed its offense, and whether the
organization cooperated with government author
mmission considers, such as whether the organization has a prior history of violations,
whether high-level management was involved in the offense, whether the organization
has self-reported and accepted responsibility for its conduct, whether the organization had
an effective compliance program at the time it committed its offense, and whether the
organization cooperated with government authorities.48 The multiplier and the base fine
are then combined to calculate a fine range for the conduct.49
19.
Imposing a sentence or fine generated by the Sentencing Guidelines is not
mandatory. The Sentencing Guidelines themselves provide for a departure process where

44 Revised Policy Statement at P 52.
45 Id. P 53. See also Policy Statement on Compliance at P 22 (explaining that the
“appropriate result must be determined on a case-by-case basis”).
46 See U.S.S.G. § 8C2.4.
47 Id.
48 See id. § 8C2.5.
49 See id. § 8C2.6.

Docket No. PL10-4-000
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a judge may impose a sentence higher or lower than the relevant guidelines range.50 In
addition, the Supreme Court in United States v. Booker held that under the Sixth
Amendment the Sentencing Guidelines are advisory, not mandatory, in nature and that
federal judges are required only to consider the guidelines.51 As a practical matter,
though, a majority of federal criminal sentences fall within the designated Sentencing
Guidelines range.52
20.
For over two decades, federal courts have used the Sentencing Guidelines to
determine sentences and fines in federal criminal cases. Although the Sentencing
Guidelines have not existed without controversy in the criminal law community, they are
designed to promote many of the same policy goals that we promote at the Commission
es fall within the designated Sentencing
Guidelines range.52
20.
For over two decades, federal courts have used the Sentencing Guidelines to
determine sentences and fines in federal criminal cases. Although the Sentencing
Guidelines have not existed without controversy in the criminal law community, they are
designed to promote many of the same policy goals that we promote at the Commission.
Specifically, the Sentencing Guidelines are designed to provide certainty and fairness by
avoiding unjustified disparity among offenders with similar characteristics, while
permitting enough flexibility to account for applicable aggravating and mitigating
factors.53 Moreover, by providing a predictable sentence, the Sentencing Guidelines
operate as a deterrent to misconduct. Since nationwide implementation of the Sentencing
Guidelines in January 1989, federal judges have sentenced more than one million
defendants under the Sentencing Guidelines.54

50 See, e.g., id. §§ 1B1.4; 5K2.0 (“A departure may be warranted in the exceptional
case in which there is present a circumstance that the Commission has not identified in
the guidelines but that nevertheless is relevant to determining the appropriate sentence.”).
51 543 U.S. 220, 264 (2005).
52 Since Booker, the United States Sentencing Commission has conducted national
comparisons of sentences imposed by judges relative to the Sentencing Guidelines range.
Since 2006, approximately sixty percent of sentences have fallen within the guidelines
range annually. See United States Sentencing Commission, Final Quarterly Data Report,
Fiscal Year 2006, at 1 (61.7 percent); Fiscal Year 2007, at 1 (60.8 percent); Fiscal Year
2008, at 1 (59.4 percent); Preliminary Report, Fiscal Year 2009, at 1 (57.1 percent
through September 30, 2009).
53 See An Overview of the United States Sentencing Commission at 1, June 2009,
available at http://www.ussc.gov/general/USSC_Overview_200906.pdf.
54 Id. at 2.
, Final Quarterly Data Report,
Fiscal Year 2006, at 1 (61.7 percent); Fiscal Year 2007, at 1 (60.8 percent); Fiscal Year
2008, at 1 (59.4 percent); Preliminary Report, Fiscal Year 2009, at 1 (57.1 percent
through September 30, 2009).
53 See An Overview of the United States Sentencing Commission at 1, June 2009,
available at http://www.ussc.gov/general/USSC_Overview_200906.pdf.
54 Id. at 2.

Docket No. PL10-4-000
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ease
t

21.
In 1991, the United States Sentencing Commission (Sentencing Commission)
created a new chapter of the Sentencing Guidelines related to sentencing of
organizations. The purpose of this chapter, much like the Commission’s purpose in
assessing penalties against organizations, is to provide “just punishment, adequate
deterrence, and incentives for organizations to maintain internal mechanisms for
preventing, detecting, and reporting criminal conduct.”55 After implementing this
chapter related to organizations in 1991, the number of indicted organizations increased
rapidly, then declined, and has now continued to increase in recent years.56 The incr
in indictments has led corporations to operate more cautiously and to devote significan
attention and resources to self-policing programs.57
22.
Since the Sentencing Guidelines went into effect nationwide in 1989, the Supreme
Court has upheld their constitutionality, even while rejecting the mandatory nature of
them in Booker. In 1989, defendants began challenging the constitutionality of the
Sentencing Guidelines, arguing that they represented improper legislative delegation and
a violation of the separation of powers doctrine. The Court rejected these arguments in
Mistretta v
ct nationwide in 1989, the Supreme
Court has upheld their constitutionality, even while rejecting the mandatory nature of
them in Booker. In 1989, defendants began challenging the constitutionality of the
Sentencing Guidelines, arguing that they represented improper legislative delegation and
a violation of the separation of powers doctrine. The Court rejected these arguments in
Mistretta v. United States.58 In Booker, the Court held that the Sixth Amendment right to
a jury trial applies to the Sentencing Guidelines.59 As a result, the Court held that district
courts are not bound by the Sentencing Guidelines, but they must at least consult them
when sentencing.60 Even while making the Sentencing Guidelines advisory, the Court in
Booker recognized that the guidelines still would serve the purpose of “provid[ing]
certainty and fairness in meeting the purposes of sentencing, [while] avoiding
unwarranted sentencing disparities . . . [and] maintaining sufficient flexibility to permit
individualized sentences when warranted.”61

55 U.S.S.G. § 8A1.1 (Introductory Commentary).
56 Melissa Ku & Lee Pepper, Corporate Criminal Liability, 45 Am. Crim. L. Rev.
275, 289 (2008).
57 Id.
58 488 U.S. 361 (1989).
59 543 U.S. 220, 226-27 (2005).
60 Id.
61 Id. (citation and internal quotations omitted).

Docket No. PL10-4-000
- 13 -
23.
Thus, the Sentencing Guidelines have been tested for more than twenty years and
used to promote fairness, consistency, and efficiency in sentencing for federal criminal
cases. More than one million defendants, including many organizations, have been
sentenced and fined under the Sentencing Guidelines.
III.
Discussion
24.
As demonstrated above, since the passage of EPAct 2005 we have continuously
sought and implemented methods to bring more fairness, consistency, and transparency
to our enforcement program
d efficiency in sentencing for federal criminal
cases. More than one million defendants, including many organizations, have been
sentenced and fined under the Sentencing Guidelines.
III.
Discussion
24.
As demonstrated above, since the passage of EPAct 2005 we have continuously
sought and implemented methods to bring more fairness, consistency, and transparency
to our enforcement program. Most recently, we: (1) formalized a process by which
Enforcement staff will provide exculpatory evidence to subjects of its investigations and
respondents in administrative enforcement proceedings;62 and (2) authorized the Director
of the Office of Enforcement to direct the Secretary of the Commission to issue
Enforcement staff’s preliminary notice of violations after the subject of an investigation
has had an opportunity to respond to Enforcement staff’s preliminary findings letter.63
25.
Until now, however, we have chosen not to use the Sentencing Guidelines, or any
other guidelines approach, to apply various penalty factors. Instead, we have chosen to
apply the factors more generally. For the reasons discussed below, we now believe that
the advantages of a penalty guidelines approach outweigh the disadvantages and that we
have gained sufficient experience to employ a guidelines approach as a significant factor
to be considered in determining civil penalties.
A.
The Penalty Guidelines Approach
26.
On balance, the Commission believes that it is in the public’s interest to use a
guidelines approach to determine civil penalties patterned after the Sentencing Guidelines
related to organizations. The multiple advantages of a guidelines approach outweigh the
disadvantages, and we believe that we now have enough experience with various types of
enforcement actions to implement such an approach
n balance, the Commission believes that it is in the public’s interest to use a
guidelines approach to determine civil penalties patterned after the Sentencing Guidelines
related to organizations. The multiple advantages of a guidelines approach outweigh the
disadvantages, and we believe that we now have enough experience with various types of
enforcement actions to implement such an approach. We believe further that the
Sentencing Guidelines provide the best model to adapt to Commission purposes because
they focus on factors—such as the seriousness and remediation of a violation—that
reflect the requirements of EPAct 2005 and that we believe are the centerpiece of our
penalty regime. Moreover, the Sentencing Guidelines allow for the consideration of a

62 Enforcement of Statutes, Regulations, and Orders, 129 FERC ¶ 61,248 (2009),
reh’g pending.
63 Enforcement of Statutes, Regulations, and Orders, 129 FERC ¶ 61,247 (2009).

Docket No. PL10-4-000
- 14 -
wide range of additional factors that are also important, while still providing sufficient
flexibility to allow for departures where necessary.
27.
The advantages of the penalty guidelines approach we adopt today reflect our
continual efforts to promote greater fairness, consistency, and transparency in our
enforcement program. The adoption of the Penalty Guidelines promotes greater fairness
and ensures greater proportionality in violations by more rigorously imposing
appropriately different penalties for conduct of differing severity. At the same time, the
Commission retains the discretion to depart from the Penalty Guidelines as necessary.
28.
Determining penalties based on a guidelines approach also promotes consistency
by basing the penalty calculations on a set of uniform factors that are weighted similarly
for similar types of violations and similar types of violators. To date, we have attempted
to treat cases consistently
time, the
Commission retains the discretion to depart from the Penalty Guidelines as necessary.
28.
Determining penalties based on a guidelines approach also promotes consistency
by basing the penalty calculations on a set of uniform factors that are weighted similarly
for similar types of violations and similar types of violators. To date, we have attempted
to treat cases consistently. As an analytical exercise, however, it is simply more difficult
to compare outcomes in particular cases and determine if they are “consistent” as
opposed to consistently applying the same factors to all cases to reach results. This
problem of “back end” consistency review becomes even greater as the “database” of
cases grows and the cases become ever more varied from one another. The uniformity of
the guidelines approach reduces the potential disparities in penalties that might otherwise
arise for similar violations committed by similarly situated offenders, particularly
because a uniform approach ensures that similar cases are considered based on more than
just institutional judgment.
29.
The guidelines approach promotes greater transparency by providing notice to
organizations as to how we will determine civil penalties for violations of the statutes,
rules, regulations, restrictions, conditions, or orders overseen by the Commission. This
will add to organizations’ confidence in the fairness and consistency of our enforcement
program. Determining penalties based on the Penalty Guidelines avoids potential
confusion in the industry regarding the bases behind particular penalties. Further,
organizations will gain a greater understanding of which types of violations the
Commission views as most important. This, in turn, will help organizations best allocate
resources to the most important compliance objectives, leading to more robust and
effective compliance.
30.
Another benefit of using a guidelines approach is the relative ease of administration
in determining civil penalties
rganizations will gain a greater understanding of which types of violations the
Commission views as most important. This, in turn, will help organizations best allocate
resources to the most important compliance objectives, leading to more robust and
effective compliance.
30.
Another benefit of using a guidelines approach is the relative ease of administration
in determining civil penalties. Determining appropriate civil penalties has been a
complex process, made more difficult and time consuming by the present and inevitable
lack of uniformity of the analyses in cases. Modeled on the Sentencing Guidelines, the
Penalty Guidelines allow for a more straightforward process, while still allowing us the
discretion to depart from the guidelines where appropriate.

Docket No. PL10-4-000
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31.
We have confidence in the fairness of the Penalty Guidelines because they are
modeled on the Sentencing Guidelines. We base our new approach on the Sentencing
Guidelines because they are largely driven by the same factors in our policy statements
on enforcement and that we believe should be the focus of our penalty regime. The
Sentencing Guidelines consider similar factors to those present in our policy statements
on enforcement, but do so in a more focused manner. For instance, while the current
enforcement statements consider generally the harm caused by the violation, the
Sentencing Guidelines explicitly incorporate a dollar value estimate of the harm into the
base penalty determination.64 Similarly, the current enforcement policy statement
considers whether the organization had a robust internal compliance program generally.
In contrast, the Sentencing Guidelines provide a specified and substantial reduction in the
culpability score if the violation occurred while the organization had such a program in
place.65
32.
We recognize that a guidelines approach is not without some disadvantages
rrent enforcement policy statement
considers whether the organization had a robust internal compliance program generally.
In contrast, the Sentencing Guidelines provide a specified and substantial reduction in the
culpability score if the violation occurred while the organization had such a program in
place.65
32.
We recognize that a guidelines approach is not without some disadvantages. A
guidelines approach provides less flexibility and discretion than a more generalized
approach. Similarly, a guidelines approach always creates the possibility of outcomes not
adequately accounting for all of the specifics of a case. This is inevitable with any
guidelines-based system, including the Sentencing Guidelines. Indeed, a system tailored
to fit every conceivable circumstance of a case would likely prove unworkable. The
Penalty Guidelines, however, reduce the impact of this concern by allowing us to depart
from the guidelines where we deem appropriate. This departure mechanism allows us to
account for unique or exceptional factors that might arise in a case. In addition, we have
made certain modifications and changes to the Sentencing Guidelines in our Penalty
Guidelines to account for recurring Commission-specific considerations that have arisen
in our experience since EPAct 2005. Also, the Commission will continue to determine
penalties based on the individual facts and circumstances for certain violations, such as
for natural persons as opposed to organizations,66 and for cases involving multiple types
of violations.67 Finally, we also retain some discretion because the Penalty Guidelines
produce a penalty range, rather than an absolute figure. Specific facts of each case will
determine where in the range the ultimate penalty might fall. Overall, we retain sufficient

64 Compare Revised Policy Statement at P 55, with U.S.S.G § 8C2.4.
65 Compare Revised Policy Statement at PP 57-60, with U.S.S.G § 8B2.1.
66 Penalty Guidelines § 1A1.1 (Commentary note 1).
67 Id. § 1C2.1(b).
produce a penalty range, rather than an absolute figure. Specific facts of each case will
determine where in the range the ultimate penalty might fall. Overall, we retain sufficient

64 Compare Revised Policy Statement at P 55, with U.S.S.G § 8C2.4.
65 Compare Revised Policy Statement at PP 57-60, with U.S.S.G § 8B2.1.
66 Penalty Guidelines § 1A1.1 (Commentary note 1).
67 Id. § 1C2.1(b).

Docket No. PL10-4-000
- 16 -

discretion and flexibility in those cases where the Penalty Guidelines produce a penalty
that does not “fit” the violation for one reason or another. We do not intend to depart
from the Penalty Guidelines regularly, but neither will we always adhere to a rigid
application of them.
33.
With the Penalty Guidelines, organizations may be able to estimate their civil
penalty exposure with various violations. As such, some would argue that the guidelines
approach creates the potential that organizations will engage in cost-benefit analyses and
decide that the benefits of committing a violation outweigh the cost of a potential civil
penalty. On the other hand, it would be difficult for an organization to adequately predict
all of the effects of its misconduct before committing the violations. This uncertainty in
how an organization’s violation would actually “play out” would likely hinder the
organization’s ability to accurately estimate, in advance of the misconduct, its civil
penalty. Also, such gaming by organizations would likely trigger penalty enhancements
intended to deter willful misconduct.68
34.
Another consideration weighing against adopting a guidelines approach is the
continuing need to keep the model current with statutory, regulatory, and policy changes.
The Commission’s priorities change over time, and we have a history of re-examining
and refining our approach to determining civil penalties. This is a cost that is embedded
in all approaches to determining penalties
34.
Another consideration weighing against adopting a guidelines approach is the
continuing need to keep the model current with statutory, regulatory, and policy changes.
The Commission’s priorities change over time, and we have a history of re-examining
and refining our approach to determining civil penalties. This is a cost that is embedded
in all approaches to determining penalties. Indeed, when Congress created the
Sentencing Guidelines regime, it directed the Sentencing Commission to continually
monitor the Sentencing Guidelines, to submit to Congress appropriate modifications to
the Sentencing Guidelines, and to establish education and research programs related to
the guidelines. In so directing the Sentencing Commission, Congress recognized that
“sentencing is a dynamic field that requires continuing review by an expert body to revise
sentencing policies, in light of application experience, as new criminal statutes are
enacted, and as more is learned about what motivates and controls criminal behavior.”69
Enforcement staff, working with the Commission, will have to attend to this task, but it is
not an unreasonably difficult one. We anticipate that the Penalty Guidelines will be
adjusted and amended as necessary and appropriate in light of reason and experience, as
well as to reflect changes in the law and enforcement practice and policy. In addition,
Enforcement staff will hold a technical conference one year from the implementation of
the Penalty Guidelines to discuss how the Penalty Guidelines have worked and to permit
comments and questions from the industry.

68 See, e.g., id. § 1C2.3(b)(1)-(5).
69 U.S.S.G., Chapter 1, Part A, Introductory Commentary.
to reflect changes in the law and enforcement practice and policy. In addition,
Enforcement staff will hold a technical conference one year from the implementation of
the Penalty Guidelines to discuss how the Penalty Guidelines have worked and to permit
comments and questions from the industry.

68 See, e.g., id. § 1C2.3(b)(1)-(5).
69 U.S.S.G., Chapter 1, Part A, Introductory Commentary.

Docket No. PL10-4-000
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35.
After balancing the foregoing factors, we believe that the benefits outweigh the
disadvantages and that a guidelines approach to determining penalties is best for the
Commission, organizations, and the public at large. Most of the potential downsides are
minimal, more perceived than likely, and more administrative than substantive. We have
several years of experience in determining penalties and, at this juncture, determine it
appropriate to use the Penalty Guidelines.
36.
Courts have acknowledged the benefits of an agency issuing a policy statement
designed to inform the public as to the approach the agency plans to take in future
cases.70 Courts have also recognized the limitations of policy statements. Consistent
with this precedent, we recognize that, as a policy statement, the Penalty Guidelines are
neither a rule nor a precedent but instead are an announcement to the public of the course
the Commission intends to follow in future penalty determinations. In addition, when the
Commission applies the Penalty Guidelines, we must be prepared to support the
application of the Guidelines.
IV. Description of the Commission’s Penalty Guidelines

A.
Calculation of Civil Penalties Under Penalty Guidelines
37.
The attached Penalty Guidelines provide the details of our new approach and need
to be carefully applied in each case. The purpose of this section, however, is to describe
in summary fashion how our new Penalty Guidelines work in practice. Like the
Sentencing Guidelines, our model generates a penalty range based on the combination of:
lation of Civil Penalties Under Penalty Guidelines
37.
The attached Penalty Guidelines provide the details of our new approach and need
to be carefully applied in each case. The purpose of this section, however, is to describe
in summary fashion how our new Penalty Guidelines work in practice. Like the
Sentencing Guidelines, our model generates a penalty range based on the combination of:
(1) a violation level, consisting of a base level that is adjusted for various seriousness
factors; and (2) a culpability score, which considers an organization’s past and current
conduct and efforts to remedy the violation. Generating a final penalty range can be
broken down into five discrete steps.
i.
Step One: Base Violation Level
38.
Step one involves identifying the “base violation level” from an applicable Chapter
Two guideline.71 Specifically, Chapter Two consists of three separate guidelines for
various types of violations, each containing a unique “base violation level:”

70 Pacific Gas and Electric v. FPC, 506 F.2d 33, 38 (D.C. Cir. 1974) (PGE);
Panhandle Eastern Pipe Line Co. v. FERC, 198 F.3d 266, 269-70 (D.C. Cir. 1999).
71 Penalty Guidelines § 1C2.1(a).

Docket No. PL10-4-000
- 18 -
” of eighteen.
(1) violations of the Reliability Standards for the Bulk Electric System of North America
carry a “base violation level” of sixteen;72 (2) violations involving fraud, manipulation,
or anti-competitive conduct and violations of rules, tariffs, and orders carry a “base
violation level” of six;73 and (3) violations involving misrepresentations and false
statements to the Commission carry a “base violation level
74

ii.
Step Two: Adjustments
39
lk Electric System of North America
carry a “base violation level” of sixteen;72 (2) violations involving fraud, manipulation,
or anti-competitive conduct and violations of rules, tariffs, and orders carry a “base
violation level” of six;73 and (3) violations involving misrepresentations and false
statements to the Commission carry a “base violation level
74

ii.
Step Two: Adjustments
39.
Step two involves applying, in the order listed, any appropriate adjustments
contained in the applicable Chapter Two guideline.75 Specifically, each Chapter Two
guideline contains specific adjustments that account for circumstances that are specific to
the type of violation at issue. For example, the guideline for violations of the Reliability
Standards has adjustments based on the risk of loss caused by the particular violation.76
Many violations of the Reliability Standards pose a risk of serious harm, but did not, on
their facts, result in actual harm. These adjustments account for this reality and consider
two primary factors: the amount of potential injury and the likelihood of that injury
actually occurring. As an example, if we find that the violation created either a high risk
of substantial harm or a low risk of major harm, seven points will be added to the “base
violation level.”77
40.
The guideline for violations involving fraud, manipulation, or anti-competitive
conduct and violations of rules, tariffs, and orders contains adjustments for the monetary
gain or loss caused by the violation and the scope of the violation.78 The adjustment for
gain or loss has the potential to significantly increase an organization’s civil penalty. For
example, if an organization causes a loss of more than $1 million, sixteen points would
be added to the “base violation level” and, as a result, the ultimate penalty would increase

72 Id. § 2A1.1(a).
73 Id. § 2B1.1(a).
74 Id. § 2C1.1(a).
75 Id. § 1C2.1(a).
76 See id. § 2A1.1(b)(1).
77 Id
ificantly increase an organization’s civil penalty. For
example, if an organization causes a loss of more than $1 million, sixteen points would
be added to the “base violation level” and, as a result, the ultimate penalty would increase

72 Id. § 2A1.1(a).
73 Id. § 2B1.1(a).
74 Id. § 2C1.1(a).
75 Id. § 1C2.1(a).
76 See id. § 2A1.1(b)(1).
77 Id. § 2A1.1(b)(1)(D).
78 Id. § 2B1.1(b)(1)-(2).

Docket No. PL10-4-000
- 19 -
accordingly. The adjustments for scope consider the volume of energy involved in the
violation as well as the violation’s duration.79 Further, this guideline contains an
adjustment that creates a floor violation level of sixteen for violations that present a
serious threat to market transparency.80 The guideline for misrepresentations and false
statements contains upward adjustments for violations resulting in substantial
interference with the administration of justice and violations involving spoliation of
records or that are otherwise extensive in scope, planning, or preparation.81
41.
Applying the foregoing adjustments to the “base violation level” from step one
generates a final “violation level.” Each “violation level” then corresponds to a specific
dollar amount listed in a table in Chapter One, section 1C2.2(b), which plays a role in
determining the “base penalty,” discussed below.

iii.
Step Three: Base Penalty
42.
Step three involves calculating a “base penalty,” which is the greater of: (1) the
dollar amount from the table in section 1C2.2(b) that corresponds to the applicable
violation level, described above; (2) the pecuniary gain to the organization from the
violation; or (3) the pecuniary loss from the violation caused by the organization.82 As

79 Id. § 2B1.1(b)(2).
80 Id. § 2B1.1(b)(3). “Flipping” transactions, for example, present a serious threat
to market transparency
2.2(b) that corresponds to the applicable
violation level, described above; (2) the pecuniary gain to the organization from the
violation; or (3) the pecuniary loss from the violation caused by the organization.82 As

79 Id. § 2B1.1(b)(2).
80 Id. § 2B1.1(b)(3). “Flipping” transactions, for example, present a serious threat
to market transparency. These transactions disguise what is in effect a long-term
discounted release of firm capacity as a series of short-term releases, circumventing the
Commission’s capacity release rules that require competitive bidding for long-term
discounted releases and, thereby, denying access to the capacity to interested market
participants. See, e.g., In re BP Energy Co., 121 FERC ¶ 61,088 (2007). Violations of
an organization’s Open Access Same-time Information System (OASIS) posting
requirements provide another example. An organization’s failure to post information on
OASIS, for example, results in a lack of transparency because transmission customers are
not able to view information regarding the transmission system, including information
about available products and desired services. See, e.g., Entergy Servs., Inc., 118 FERC
¶ 61,027 (2007).
81 Id. § 2C1.1(b)(1)-(2). “Substantial interference with the administration of
justice” includes the unnecessary expenditure of substantial Commission resources.
82 Id. § 1C2.2(a)(1)-(3).
are
not able to view information regarding the transmission system, including information
about available products and desired services. See, e.g., Entergy Servs., Inc., 118 FERC
¶ 61,027 (2007).
81 Id. § 2C1.1(b)(1)-(2). “Substantial interference with the administration of
justice” includes the unnecessary expenditure of substantial Commission resources.
82 Id. § 1C2.2(a)(1)-(3).

Docket No. PL10-4-000
- 20 -
described in step five, this “base penalty” will be combined with “minimum and
maximum multipliers,” stemming from an organization’s “culpability score,” to generate
penalty ranges.
iv.
Step Four: Culpability Score
43.
Step four involves calculating an organization’s “culpability score.” Each
organization’s “culpability score” starts with a base score of five and is then adjusted
upward or downward depending on six separate considerations.83
44.
First, we will adjust the “culpability score” upwards in pre-determined amounts
where high-level personnel of the organization or unit of the organization within which
the violation occurred participated in, condoned, or were willfully ignorant of the
violation.84 We also consider whether tolerance of the violation by substantial authority
personnel was pervasive throughout the organization or unit of the organization within
which the violation occurred.85 Following the Sentencing Guidelines, this factor is tied
to the size of the organization and the unit of the organization within which the violatio
occurred. For example, we will increase the “culpability score” by five points where this
factor applies to an organization with 5,000 or more employees, four points if 1,000 or
more employees, three points if 200 or more employees, two points if fifty or more
employees, and one point if ten or more employees.
n

86
45.
Second, we will increase the “culpability score” where the organization has a prior
history of committing violations
factor applies to an organization with 5,000 or more employees, four points if 1,000 or
more employees, three points if 200 or more employees, two points if fifty or more
employees, and one point if ten or more employees.
n

86
45.
Second, we will increase the “culpability score” where the organization has a prior
history of committing violations. We will increase the “culpability score” by one point
where the organization committed any part of the instant violation less than ten years
after a prior Commission adjudication of any violation or less than ten years after an
adjudication of similar misconduct by other enforcement agencies.87 We will increase

83 Id. § 1C2.3(a).
84 Id. § 1C2.3(b).
85 Id.
86 Id. § 1C2.3(b)(1)-(5).
87 Id. § 1C2.3(c)(1). The other enforcement agencies would include those Federal
and state enforcement agencies that adjudicate similar types of matters as the
Commission.

Docket No. PL10-4-000
- 21 -

the score by two points where the organization committed any part of the instant violation
less than five years after a prior Commission adjudication of any violation or less than
five years after an adjudication of similar misconduct by other enforcement agencies.88
46.
Third, following the Sentencing Guidelines, we will increase the “culpability
score” by two points if the violation violated a judicial or Commission order or injunction
directed at the organization by the Commission or other Federal and state enforcement
agencies that adjudicate similar types of matters as the Commission.89
47
ion of similar misconduct by other enforcement agencies.88
46.
Third, following the Sentencing Guidelines, we will increase the “culpability
score” by two points if the violation violated a judicial or Commission order or injunction
directed at the organization by the Commission or other Federal and state enforcement
agencies that adjudicate similar types of matters as the Commission.89
47.
Fourth, also following the Sentencing Guidelines, we will increase the “culpability
score” by three points where the organization obstructed justice, or encouraged
obstruction of justice, during the investigation or resolution of the violation.90 Three
points will also be added if the organization knew of such obstruction, but failed to take
reasonable steps to prevent it.91
48.
The fifth adjustment to the “culpability score” deals with an organization’s
compliance and ethics program and reemphasizes from our previous policy statements
the importance we place on compliance. Specifically, we will reduce an organization’s
“culpability score” by three points if the violation occurred despite the existence of an
effective compliance and ethics program at the time of the violation.92 Moreover,
Chapter One, Part B of our Penalty Guidelines details what is required for an
organization to have an effective compliance and ethics program.93 Part B is modeled
after section 8B2.1 of the Sentencing Guidelines, but is consistent with the four hallmarks
of effective compliance programs that we enumerated in our Policy Statement on
Compliance: active engagement and leadership by senior management; effective

88 Id. § 1C2.3(c)(2). “Prior adjudication” is defined in the Penalty Guidelines as
“any resolution, whether by trial or settlement, regardless whether the settlement included
an admission of the violation.” Penalty Guidelines § 1A1.1 (Commentary note 3(e)).
89 Id. § 1C2.3(d).
90 Id. § 1C2.3(e).
91 Id.
92 Id. § 1C2.3(f)(1).
93 See id. § 1B2.1.
leadership by senior management; effective

88 Id. § 1C2.3(c)(2). “Prior adjudication” is defined in the Penalty Guidelines as
“any resolution, whether by trial or settlement, regardless whether the settlement included
an admission of the violation.” Penalty Guidelines § 1A1.1 (Commentary note 3(e)).
89 Id. § 1C2.3(d).
90 Id. § 1C2.3(e).
91 Id.
92 Id. § 1C2.3(f)(1).
93 See id. § 1B2.1.

Docket No. PL10-4-000
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preventive measures; prompt detection and cessation of violations and voluntary
reporting of violations; and remediation of the misconduct.94
49.
Finally, we will decrease the “culpability score” for self-reporting, cooperation,
and acceptance of responsibility.95 We have always considered self-reporting and
cooperation, but we now also will give specific, transparent, and measurable credit if the
organization clearly demonstrates recognition and affirmative acceptance of
responsibility for its violation. Moreover, we will also reduce the “culpability score”
where the organization resolves the matter without the need for a trial-type hearing.
Organizations can substantially reduce their scores if they satisfy each of these elements.
Specifically, if an organization self-reports, exhibits full cooperation during the
investigation, admits the violation, and resolves the matter without the need for a trial-
type hearing, we will reduce the “culpability score” by five points.96
50.
Thus, the base “culpability score” of five is adjusted based on the six culpability
factors to produce a final “culpability score.” The final “culpability score” corresponds
to a set of “minimum and maximum multipliers” that are listed in a table in section 1C2.4
of our Penalty Guidelines
thout the need for a trial-
type hearing, we will reduce the “culpability score” by five points.96
50.
Thus, the base “culpability score” of five is adjusted based on the six culpability
factors to produce a final “culpability score.” The final “culpability score” corresponds
to a set of “minimum and maximum multipliers” that are listed in a table in section 1C2.4
of our Penalty Guidelines. For example, any “culpability score” of ten or higher
corresponds to “minimum and maximum multipliers” of 2.00 and 4.00.97 A “culpability
score” of zero or less corresponds to “minimum and maximum multipliers” of 0.05 and
0.20.98 “Culpability scores” one through nine also have corresponding “minimum and
maximum multipliers.”
v.
Step Five: Multiplication of Base Penalty by Minimum and
Maximum Multipliers
51.
The fifth and final step involves multiplying the “base penalty” amount (from step
three) by the “minimum and maximum multipliers” (from step four) to produce the

94 Policy Statement on Compliance at PP 13-21.
95 Penalty Guidelines § 1C2.3(g).
96 Id. § 1C2.3(g)(1).
97 Id. § 1C2.4.
98 Id.

Docket No. PL10-4-000
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applicable penalty range.99 For example, a case involving a base penalty of $1 million
and “minimum and maximum multipliers” of 0.80 and 1.60 would generate a penalty
range of $800,000 to $1,600,000.

B.
Specific Examples Calculating Civil Penalties Under the Penalty

Guidelines
52.
In addition to our general description above setting forth the steps involved in
calculating civil penalties under the Penalty Guidelines, we add further guidance below
by applying the guidelines using specific hypothetical examples.100
i.
Example One: Market Manipulation in Violation of 18 C.F.R. §
1c
53.
Our first example involves Organization A, a 450-employee organization that has
violated the Commission’s anti-manipulation regulation, 18 C.F.R. § 1c
involved in
calculating civil penalties under the Penalty Guidelines, we add further guidance below
by applying the guidelines using specific hypothetical examples.100
i.
Example One: Market Manipulation in Violation of 18 C.F.R. §
1c
53.
Our first example involves Organization A, a 450-employee organization that has
violated the Commission’s anti-manipulation regulation, 18 C.F.R. § 1c. Enforcement
staff learned, through a call to the Enforcement Hotline and through subsequent data
responses, that Organization A manipulated a specific market for a period of three weeks
and caused a loss of $75 million to other market participants. Organization A committed
multiple violations on each day during the three-week period. Organization A’s senior
management knew about and condoned the manipulative conduct, Organization A does
not have a prior history before the Commission, it did not violate an order specifically
directed at Organization A, and did not engage in obstruction of justice. At the time of its
violation, Organization A lacked an effective compliance program. Organization A fully
cooperated with Enforcement staff throughout Enforcement staff’s investigation.
Although it settled the case, Organization A refused to demonstrate an affirmative
acceptance of responsibility for its violations. To calculate a civil penalty for
Organization A, we would take the following steps:
 Step One: Base Violation Level
o Base violation for market manipulation = 6 (§ 2B1.1(a))

99 Id. § 1C2.5.
100 These examples are entirely hypothetical and the facts are not taken from any
of Enforcement staff’s prior or pending investigations.
ts violations. To calculate a civil penalty for
Organization A, we would take the following steps:
 Step One: Base Violation Level
o Base violation for market manipulation = 6 (§ 2B1.1(a))

99 Id. § 1C2.5.
100 These examples are entirely hypothetical and the facts are not taken from any
of Enforcement staff’s prior or pending investigations.

Docket No. PL10-4-000
- 24 -
 Step Two: Adjustments
o Applicable Adjustments:
 Manipulation caused a loss of $75 million = add 24
(§ 2B1.1(b)(1)(M)) Manipulation lasted more than ten, but
less than fifty days = add 2 (§ 2B1.1(b)(2))
o Final violation level (adding the base and the adjustments) = 32,
which corresponds to $17,500,000 from the “Violation Level
Penalty Table” (§ 1C2.2(b))
 Step Three: Base Penalty
o Base penalty is the greater of: (a) the dollar amount from the
“Violation Level Penalty Table,” which in this case would be
$17,500,000 (see step two, above); (b) the pecuniary gain; or (c) the
pecuniary loss, which in this case was $75 million (§ 1C2.2)
o Because the pecuniary loss in this case ($75 million) was greater
than $17,500,000, the base penalty equals $75 million (§ 1C2.2)
 Step Four: Culpability Score
o Base culpability score = 5 (§ 1C2.3(a))
o There was senior management involvement and Organization A has
more than 200, but less than 1,000 employees = add 3 (§
1C2.3(b)(3))
o No prior history (§ 1C2.3(c))
o No violation of an order directed specifically at Organization A (§
1C2.3(d))
o No obstruction of justice (§ 1C2.3(e))
o No effective compliance program (§ 1C2.3(f))
o No self-report
o Organization A fully cooperated and avoided a trial-type hearing =
subtract 2 (§ 1C2.3(g))
tion A has
more than 200, but less than 1,000 employees = add 3 (§
1C2.3(b)(3))
o No prior history (§ 1C2.3(c))
o No violation of an order directed specifically at Organization A (§
1C2.3(d))
o No obstruction of justice (§ 1C2.3(e))
o No effective compliance program (§ 1C2.3(f))
o No self-report
o Organization A fully cooperated and avoided a trial-type hearing =
subtract 2 (§ 1C2.3(g))

Docket No. PL10-4-000
- 25 -
o Organization A did not accept responsibility (§ 1C2.3(g))
o Total culpability score = 5+3-2 = 6
o A culpability score of 6 corresponds to minimum and maximum
multipliers of 1.20 and 2.40 (§ 1C2.4)
 Step Five: multiply base penalty amount by minimum and maximum
multipliers to determine penalty range (§ 1C2.5)
o Minimum penalty: $75,000,000 x 1.20 = $90,000,000
o Maximum penalty: $75,000,000 x 2.40 = $180,000,000
ii.
Example Two: Tariff Violation
54.
In our second example, Organization B, a 200-employee corporation that provides
electric transmission services, violated its Open Access Transmission Tariff (OATT) by
denying access to unrelated organizations without a valid reason and favoring its affiliate
instead. As a result, Organization B’s affiliate was able to make favorable sales in a
market in which it would have been unable to participate without Organization B’s
transmission. These favorable sales by Organization B’s affiliate totaled $1,700,000 in
that market. Organization’s B’s violation lasted for almost a full year. Organization B
self-reported these violations. Organization B’s senior management was not involved in
the violations, but Organization B committed the same type of violations less than two
years earlier. Organization B did not violate an order specifically directed at
Organization B, and it did not commit obstruction of justice. Organization B lacked an
effective compliance program at the time it committed its violations
ese violations. Organization B’s senior management was not involved in
the violations, but Organization B committed the same type of violations less than two
years earlier. Organization B did not violate an order specifically directed at
Organization B, and it did not commit obstruction of justice. Organization B lacked an
effective compliance program at the time it committed its violations. It fully cooperated
with Enforcement staff, settled the matter, and demonstrated an affirmative acceptance of
responsibility for its misconduct. To calculate a civil penalty for Organization B, we
would take the following steps:
 Step One: Base Violation Level
o Base violation for a tariff violation = 6 (§ 2B1.1(a))
 Step Two: Adjustments
o Applicable Adjustments:
 Organization B gained $1,700,000 = add 16 (§
2B1.1(b)(1)(I))

Docket No. PL10-4-000
- 26 -
 OATT violations lasted more than 250 days = add 6 (§
2B1.1(b)(2))
o Final violation level (adding the base and the adjustments) = 28,
which corresponds to $6,300,000 from the “Violation Level Penalty
Table” (§ 1C2.2(b))
 Step Three: Base Penalty
o Base penalty is the greater of: (a) the dollar amount from the
“Violation Level Penalty Table,” which in this case would be
$6,300,000 (see step two, above); (b) the pecuniary gain, which in
this case was $1,700,000; or (c) the pecuniary loss (§ 1C2.2)
o Thus, the base penalty equals $6,300,000 (§ 1C2.2)
 Step Four: Culpability Score
o Base culpability score = 5 (§ 1C2.3(a))
o No senior management involvement
o Prior history less than 5 years after prior Commission adjudication =
add 2 (§ 1C2.3(c))
o No violation of an order directed specifically at Organization B (§
1C2.3(d))
o No obstruction of justice (§ 1C2.3(e))
o Organization B lacked an effective compliance program (§ 1C2.3(f))
o Organization B self-reported, fully cooperated, accepted
responsibility, and avoided a trial-type hearing = subtract 5 (§
1C2.3(g))
o Total culpability score = 5+2-5 = 2
o A culpability sco
1C2.3(c))
o No violation of an order directed specifically at Organization B (§
1C2.3(d))
o No obstruction of justice (§ 1C2.3(e))
o Organization B lacked an effective compliance program (§ 1C2.3(f))
o Organization B self-reported, fully cooperated, accepted
responsibility, and avoided a trial-type hearing = subtract 5 (§
1C2.3(g))
o Total culpability score = 5+2-5 = 2
o A culpability score of 2 corresponds to minimum and maximum
multipliers of 0.40 and 0.80 (§ 1C2.4)
 Step Five: multiply base penalty amount by minimum and maximum
multipliers to determine penalty range (§ 1C2.5)

Docket No. PL10-4-000
- 27 -
o Minimum penalty: $6,300,000 x 0.40 = $2,520,000
o Maximum penalty: $6,300,000 x 0.80 = $5,040,000
iii.
Example Three: Capacity Release Violation
55.
Example three involves Organization C, a local distribution company that self-
reported shipper-must-have-title violations involving the transportation of natural gas on
three interstate pipelines during a two-year period. Organization C’s violations affected
the transparency of the applicable markets, but it did not earn any profits from its
transactions and did not cause any identifiable harm to other market participants.
Organization C’s senior management was not involved in the violations, and
Organization C did not have any history of violations before the Commission.
Organization C did not violate an order specifically directed at Organization C, and it did
not commit obstruction of justice. Organization C lacked an effective compliance
program at the time it committed its violations. It fully cooperated with Enforcement
staff, settled the matter, and demonstrated an affirmative acceptance of responsibility for
its misconduct
ons before the Commission.
Organization C did not violate an order specifically directed at Organization C, and it did
not commit obstruction of justice. Organization C lacked an effective compliance
program at the time it committed its violations. It fully cooperated with Enforcement
staff, settled the matter, and demonstrated an affirmative acceptance of responsibility for
its misconduct. To calculate a civil penalty for Organization C, we would take the
following steps:
 Step One: Base Violation Level
o Base violation level for capacity release violation = 6 (§ 2B1.1(a))
 Step Two: Adjustments
o Applicable Adjustments:
 Violations lasted more than 250 days = add 6 (§ 2B1.1(b)(2))
o Final violation level (adding the base and the adjustments) = 12, but
because the violations presented a serious threat to market
transparency, the violation level becomes 16. (§ 2B1.1(b)(3)). A 16
violation level corresponds to $175,000 from the “Violation Level
Penalty Table” (§ 1C2.2(b))
 Step Three: Base Penalty
o Base penalty is the greater of: (a) the dollar amount from the
“Violation Level Penalty Table,” which in this case would be
$175,000 (see step two, above); (b) the pecuniary gain, which in this
case was $0; or (c) the pecuniary loss, which in this case was $0 (§
1C2.2)

Docket No. PL10-4-000
- 28 -
o Thus, the base penalty equals $175,000 (§ 1C2.2)
 Step Four: Culpability Score
o Base culpability score = 5 (§ 1C2.3(a))
o No senior management involvement
o No prior history (§ 1C2.3(c))
o No violation of an order directed specifically at Organization C (§
1C2.3(d))
o No obstruction of justice (§ 1C2.3(e))
o Organization C lacked an effective compliance program (§ 1C2.3(f))
o Organization C self-reported, fully cooperated, accepted
responsibility, and avoided a trial-type hearing = subtract 5 (§
1C2.3(g))
o Total culpability score = 5-5 = 0
o A culpability score of 0 corresponds to minimum and maximum
multipliers of 0.05 and 0.20 (§ 1C2.4)
 Step Five: multiply
tion of justice (§ 1C2.3(e))
o Organization C lacked an effective compliance program (§ 1C2.3(f))
o Organization C self-reported, fully cooperated, accepted
responsibility, and avoided a trial-type hearing = subtract 5 (§
1C2.3(g))
o Total culpability score = 5-5 = 0
o A culpability score of 0 corresponds to minimum and maximum
multipliers of 0.05 and 0.20 (§ 1C2.4)
 Step Five: multiply base penalty amount by minimum and maximum
multipliers to determine penalty range (§ 1C2.5)
o Minimum penalty: $175,000 x 0.05 = $8,750
o Maximum penalty: $175,000 x 0.20 = $35,000
iv.
Example Four: Violation of Reliability Standards
56.
Example four involves Organization D, a transmission owner which violated
Reliability Standard FAC-003-1, Requirement 2, for failing to implement its annual plan
for vegetation management work to ensure the reliability of the system. Organization D’s
vegetation management plan required it to perform, or contract with a third party vendor
to perform, annual aerial patrols of all of its transmission lines. The plan also required it
to verify that its vendors promptly and satisfactorily completed the patrols. One of
Organization D’s vendors failed to perform an aerial patrol, as required, and Organization
D never verified whether the work had been completed. As a result, no patrol had been
performed over a 500 kV line, which ultimately came into contact with an overgrown
s transmission lines. The plan also required it
to verify that its vendors promptly and satisfactorily completed the patrols. One of
Organization D’s vendors failed to perform an aerial patrol, as required, and Organization
D never verified whether the work had been completed. As a result, no patrol had been
performed over a 500 kV line, which ultimately came into contact with an overgrown

Docket No. PL10-4-000
- 29 -
tree. The contact caused a loss of load to 20,000 customers for seven hours during the
middle of a work day. No one was injured as a result of the loss of load. The value of
the loss of load was $15 million. Organization D’s senior management was not involved
in the violations, and Organization D did not have any history of Reliability Standard
violations before the Commission. Organization D did not violate an order specifically
directed at Organization D, and it did not commit obstruction of justice. Organization D
lacked an effective compliance program at the time it committed its violations. It did not
self-report its violation, was not fully cooperative with Enforcement staff, and did not
demonstrate an affirmative acceptance of responsibility for its violation. Organization D,
however, did settle the matter, thus avoiding the need for a trial-type hearing. To
calculate a civil penalty for Organization D, we would take the following steps:
 Step One: Base Violation Level
o Base violation level = 16 (§ 2A1.1(a))
 Step Two: Adjustments
o Applicable Adjustments:
 Organization D’s violations created a moderate risk of
extreme harm = add 14 (§ 2A1.1(b)(1)(G))
o Final violation level (adding the base and the adjustments) = 30,
which corresponds to $10,500,000 from the “Violation Level
Penalty Table” (§ 1C2.2(b))
 Step Three: Base Penalty
o Base penalty is the greater of: (a) the dollar amount from the
“Violation Level Penalty Table,” which in this case would be
$10,500,000 (see step two, above); (b) the pecuniary gain; or (c) the
pecuniary loss,
al violation level (adding the base and the adjustments) = 30,
which corresponds to $10,500,000 from the “Violation Level
Penalty Table” (§ 1C2.2(b))
 Step Three: Base Penalty
o Base penalty is the greater of: (a) the dollar amount from the
“Violation Level Penalty Table,” which in this case would be
$10,500,000 (see step two, above); (b) the pecuniary gain; or (c) the
pecuniary loss, which in this case was $15,000,000 (§ 1C2.2)
o Thus, the base penalty equals $15,000,000 (§ 1C2.2)
 Step Four: Culpability Score
o Base culpability score = 5 (§ 1C2.3(a))
o No senior management involvement
o No prior history (§ 1C2.3(c))

Docket No. PL10-4-000
- 30 -
o No violation of an order directed specifically at Organization D
(§ 1C2.3(d))
o No obstruction of justice (§ 1C2.3(e))
o Organization D lacked an effective compliance program (§ 1C2.3(f))
o Organization D did not self-report, fully cooperate, or accept
responsibility (§ 1C2.3(g))
o Organization D avoided a trial-type hearing = subtract 1
o Total culpability score = 5-1 = 4
o A culpability score of 4 corresponds to minimum and maximum
multipliers of 0.80 and 1.60 (§ 1C2.4)
 Step Five: multiply base penalty amount by minimum and maximum
multipliers to determine penalty range (§ 1C2.5)
o Minimum penalty: $15,000,000 x 0.80 = $12,000,000
o Maximum penalty: $15,000,000 x 1.60 = $24,000,000
C.
General Principles of Applicability
57
ulpability score = 5-1 = 4
o A culpability score of 4 corresponds to minimum and maximum
multipliers of 0.80 and 1.60 (§ 1C2.4)
 Step Five: multiply base penalty amount by minimum and maximum
multipliers to determine penalty range (§ 1C2.5)
o Minimum penalty: $15,000,000 x 0.80 = $12,000,000
o Maximum penalty: $15,000,000 x 1.60 = $24,000,000
C.
General Principles of Applicability
57.
The Penalty Guidelines do not affect the Commission’s practice of requiring
disgorgement of unjust profits.101 In cases of identifiable pecuniary gain that results from
a violation, the Commission will continue to enter disgorgement orders for the full
amount of the gain, plus interest.102 The disgorgement amount is also relevant to
determining the base penalty, which, as described above, is the greater of (1) the dollar
amount from the table in section 1C2.2(b) that corresponds to the applicable violation

101 See Revised Policy Statement at P 42 (“It is important to note that the
Commission has discretion to order disgorgement not in lieu of, but in addition to, civil
penalties . . . .”).
102 Penalty Guidelines § 1B1.1(a).

Docket No. PL10-4-000
- 31 -

level; (2) the pecuniary gain to the organization from the violation; or (3) the pecuniary
loss from the violation caused by the organization.103
58.
The Penalty Guidelines will generally be applicable to Commission cases, but, as
we have stated, we reserve the discretion to depart from them where we deem
appropriate. We believe that retaining this level of flexibility is necessary to account for
unique circumstances not considered by the Penalty Guidelines.
59.
In addition, we will continue to determine civil penalties based on the individual
facts and circumstances for natural person violators.104 As a Commission, we have less
experience in determining penalties to be applied when the case involves an individual as
opposed to an organization
exibility is necessary to account for
unique circumstances not considered by the Penalty Guidelines.
59.
In addition, we will continue to determine civil penalties based on the individual
facts and circumstances for natural person violators.104 As a Commission, we have less
experience in determining penalties to be applied when the case involves an individual as
opposed to an organization. Moreover, since we have patterned the Penalty Guidelines
after the organizational Sentencing Guidelines, the structure is not designed to apply to
natural persons. As a result, the Commission will determine the appropriate penalty for
natural persons based on the facts and the circumstances of the violation but will look to
the Penalty Guidelines for guidance in setting the penalties. Thus, the Penalty Guidelines
apply to organizations which violate the statutes, rules, and tariffs overseen by the
Commission.105 As noted above, under the Penalty Guidelines, an “organization” is “any
entity other than a natural person.”106
60.
The Commission also has discretion to determine penalties in cases involving
multiple types of violations.107 For example, the Commission will set penalties for a case
involving both anti-competitive conduct and violations of the Reliability Standards.
61.
Moreover, the Penalty Guidelines contain certain caveats where the penalty range
will not be followed. First, where the minimum guideline penalty is greater than the
maximum penalty authorized by our $1 million per day, per violation statutory authority,
then the guideline penalty will be reduced to the maximum penalty authorized by

103 Id. § 1C2.2(a)(1)-(3) (emphasis added).
104 Id. § 1A1.1 (Commentary note 1).
105 Id. § 1A1.1.
106 Id. § 1A1.1 (Commentary note 1).
107 Id. § 1C2.1(b).
d. First, where the minimum guideline penalty is greater than the
maximum penalty authorized by our $1 million per day, per violation statutory authority,
then the guideline penalty will be reduced to the maximum penalty authorized by

103 Id. § 1C2.2(a)(1)-(3) (emphasis added).
104 Id. § 1A1.1 (Commentary note 1).
105 Id. § 1A1.1.
106 Id. § 1A1.1 (Commentary note 1).
107 Id. § 1C2.1(b).

Docket No. PL10-4-000
- 32 -

statute.108 Second, we will reduce the penalty to the extent that it would impair the
organization’s ability to disgorge profits,109 and can reduce penalties where the
organization is not able to pay the minimum penalty.110
62.
The Penalty Guidelines apply to all future violations of any statute, rule, regulation,
restriction, condition, or order of the Commission. The Penalty Guidelines will apply to
any pending investigation where Enforcement staff and the organization have not yet
entered into settlement negotiations.
63.
The Commission’s prior policy statements on enforcement as well as its Policy
Statement on Compliance still provide useful guidance and will continue to inform our
enforcement program. The Penalty Guidelines supplement those previous documents,
but any perceived conflicts will be resolved in favor of the Penalty Guidelines.
64.
The North American Electric Reliability Corporation (NERC), acting as the
Electric Reliability Organization, and Regional Entities (RE) impose penalties for
violations of Commission-approved, mandatory Reliability Standards using penalty
guidelines that employ a Base Penalty Amount Table
previous documents,
but any perceived conflicts will be resolved in favor of the Penalty Guidelines.
64.
The North American Electric Reliability Corporation (NERC), acting as the
Electric Reliability Organization, and Regional Entities (RE) impose penalties for
violations of Commission-approved, mandatory Reliability Standards using penalty
guidelines that employ a Base Penalty Amount Table. FPA section 215(e)(2) provides
that a penalty imposed by NERC or an RE may take effect no earlier than 31 days after
NERC files with the Commission a notice of penalty and the record of the proceeding.111
In the Notice of Penalty Policy Order, we established the general criteria the Commission
will use to determine whether it will review a particular notice of penalty.112 The
Commission stated that the more serious the violation described in the notice of penalty,
the more likely it would be subject to Commission review.113 To date, the Commission
has decided to further review only one of the 153 Notices NERC has filed. We are not
modifying the approach set forth in the Notice of Penalty Policy Order. In our previous

108 Id. § 1C3.1(b).
109 Id. § 1C3.2(a).
110 Id. § 1C3.2(b).
111 16 U.S.C. §284o(e)(2) (Supp V (2005)). See also 18 C.F.R. §39.7(e).
112 See Statement of Administrative Policy on Processing Notices of Penalty and
Order Revising Statement in Order No. 672, 123 FERC ¶ 61,046 (2008) at PP 10-11.
113 Id. P 11.
ying the approach set forth in the Notice of Penalty Policy Order. In our previous

108 Id. § 1C3.1(b).
109 Id. § 1C3.2(a).
110 Id. § 1C3.2(b).
111 16 U.S.C. §284o(e)(2) (Supp V (2005)). See also 18 C.F.R. §39.7(e).
112 See Statement of Administrative Policy on Processing Notices of Penalty and
Order Revising Statement in Order No. 672, 123 FERC ¶ 61,046 (2008) at PP 10-11.
113 Id. P 11.

Docket No. PL10-4-000
- 33 -
determinations on notices of penalty, our prior Policy Statements on Enforcement and the
Policy Statement on Compliance were resources that informed our judgment whether to
review the notices of penalty. We intend to use the Penalty Guidelines in a similar
manner. That is, while we do not anticipate applying the Penalty Guidelines when we
look at most notices of penalty that we receive, for an out-of-ordinary notice of penalty
describing a serious violation we may consider the results of applying the Penalty
Guidelines—but these results would not be determinative of our decision to proceed with
a further review.
65.
The Commission’s principal objective in enforcement is to ensure compliance with
our rules, regulations and orders. That goal is best achieved if the orders we issue and the
regulations we adopt clearly inform the public as to what the Commission expects of
them and how the Commission will implement its rules and programs. To that end, we
expect that all orders imposing penalties shall describe the facts that support the penalty
amount.
V.
Conclusion
66.
The Commission’s use of the Penalty Guidelines further improves our enforcement
program and our approach to making civil penalty determinations. Although the Penalty
Guidelines represent a change in the way we determine civil penalties, they incorporate
many of our prior considerations and further our enforcement program goals by serving
as a deterrent, encouraging compliance, and adding greater fairness, consistency, and
transparency.
By the Commission.

(S E A L)

Nathaniel J
pproach to making civil penalty determinations. Although the Penalty
Guidelines represent a change in the way we determine civil penalties, they incorporate
many of our prior considerations and further our enforcement program goals by serving
as a deterrent, encouraging compliance, and adding greater fairness, consistency, and
transparency.
By the Commission.

(S E A L)

Nathaniel J. Davis, Sr.,
Deputy Secretary.

Docket No. PL10-4-000
- 34 -
FERC Penalty Guidelines

CHAPTER 1

PART A - GENERAL APPLICATION PRINCIPLES

§1A1.1.
Applicability of these Guidelines

This chapter applies to the penalties to be imposed on all organizations for violations of the statutes, rules,
regulations, restrictions, conditions or orders overseen by the Federal Energy Regulatory Commission.
The Commission reserves the right to depart from these Guidelines where it deems appropriate.

Commentary
Application Notes:

1.
"Organization" means any entity other than a natural person. The Commission will determine
the appropriate penalty for natural persons based on the facts and circumstances of the violation
but will look to these Guidelines for guidance in setting those penalties.

2.
The definitions in the United States Sentencing Guidelines are persuasive authority in
interpreting these Guidelines unless otherwise specified.

3.
The following are definitions of terms used frequently in this chapter:

(a)
"High-level personnel of the organization" means individuals who have substantial
control over the organization or who have a substantial role in the making of policy
within the organization. The term includes: a director; an executive officer; an individual
in charge of a major business or functional unit of the organization, such as sales,
administration, or finance; and an individual with a substantial ownership interest.
"High-level personnel of a unit of the organization" is defined in the Commentary to
§1C2.3 (Culpability Score).
he making of policy
within the organization. The term includes: a director; an executive officer; an individual
in charge of a major business or functional unit of the organization, such as sales,
administration, or finance; and an individual with a substantial ownership interest.
"High-level personnel of a unit of the organization" is defined in the Commentary to
§1C2.3 (Culpability Score).
(b)
"Substantial authority personnel" means individuals who within the scope of their
authority exercise a substantial measure of discretion in acting on behalf of an
organization. The term includes high-level personnel of the organization, individuals who
exercise substantial supervisory authority (e.g., a plant manager, a sales manager), and
any other individuals who, although not a part of an organization’s management,
nevertheless exercise substantial discretion when acting within the scope of their
authority (e.g., an individual with authority in an organization to negotiate or set price
levels or an individual authorized to negotiate or approve significant contracts). Whether
an individual falls within this category must be determined on a case-by-case basis.

(c)
"Agent" means any individual, including a director, an officer, an employee, or an
independent contractor, authorized to act on behalf of the organization.

(d)
An individual "condoned" a violation if the individual knew of the violation and did not
take reasonable steps to prevent or terminate the violation.

(e)
"Prior adjudication" means any resolution, whether by trial or settlement , regardless

Docket No. PL10-4-000
- 35 -
whether the settlement included an admission of the violation.

(f)
"Similar violations" means prior conduct that is similar in nature to the conduct
underlying the instant violation, without regard to whether or not such conduct violated
the same provision.
tion.

(e)
"Prior adjudication" means any resolution, whether by trial or settlement , regardless

Docket No. PL10-4-000
- 35 -
whether the settlement included an admission of the violation.

(f)
"Similar violations" means prior conduct that is similar in nature to the conduct
underlying the instant violation, without regard to whether or not such conduct violated
the same provision.

(g)
"Pecuniary gain" is derived from 18 U.S.C. § 3571(d) and means the additional
before tax profit to the entity resulting from the relevant conduct of the violation. Gain
can result from either additional revenue or cost savings. For example, a violation
involving an unreported outage by an organization receiving capacity payments can
produce additional revenue. In such a case, the pecuniary gain is the additional revenue
received because the outage was not reported. A violation involving a failure to comply
with the reliability standards requiring vegetation management can produce pecuniary
gain resulting from cost savings. In such a case, the pecuniary gain is the amount saved
over time as a result of the failure to implement an appropriate vegetation management
program.

(h)
"Pecuniary loss" is equivalent to the term "loss" as used in Chapter Two (Violation
Conduct). In a case involving a violation of the Reliability Standards, the loss will be
enhanced to the extent necessary to reflect any loss that the organization should have
caused to prevent greater risk to the bulk power system. An example of such an
enhancement to pecuniary loss would be the value of firm load that a balancing authority
should have shed to resolve an emergency condition, but did not do so.

(i)
An individual was "willfully ignorant of the violation" if the individual did not investigate
the possible occurrence of violative conduct despite knowledge of circumstances that
would lead a reasonable person to investigate whether violative conduct had occurred.
e the value of firm load that a balancing authority
should have shed to resolve an emergency condition, but did not do so.

(i)
An individual was "willfully ignorant of the violation" if the individual did not investigate
the possible occurrence of violative conduct despite knowledge of circumstances that
would lead a reasonable person to investigate whether violative conduct had occurred.

(j)
“Violation” means a violation of any statute, rule, regulation, restriction, condition or
order overseen by the Commission. “Compliance with the law” means compliance with
a statute, rule, regulation, restriction, condition or order overseen by the Commission.

PART B - DISGORGING GAIN FROM VIOLATIONS AND EFFECTIVE COMPLIANCE AND
ETHICS PROGRAM

1.
DISGORGING GAIN FROM VIOLATIONS

§1B1.1.
Disgorgement

(a)
In the case of pecuniary gain as a result of the violation, the Commission enters a
disgorgement order for the full amount of the gain plus interest.

2.
EFFECTIVE COMPLIANCE AND ETHICS PROGRAM

§1B2.1.
Effective Compliance and Ethics Program

(a)
To have an effective compliance and ethics program, for purposes of
subsection (f) of §1C2.3 (Culpability Score), an organization shall—

Docket No. PL10-4-000
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(1)
exercise due diligence to prevent and detect violations; and

(2)
otherwise promote an organizational culture that encourages ethical
conduct and a commitment to compliance with the law.

Such compliance and ethics program shall be reasonably designed, implemented,
and enforced so that the program is generally effective in
preventing and detecting violations. The failure to prevent or detect the instant
violation does not necessarily mean that the program is not generally effective in
preventing and detecting violations.
conduct and a commitment to compliance with the law.

Such compliance and ethics program shall be reasonably designed, implemented,
and enforced so that the program is generally effective in
preventing and detecting violations. The failure to prevent or detect the instant
violation does not necessarily mean that the program is not generally effective in
preventing and detecting violations.

(b)
Due diligence and the promotion of an organizational culture that encourages
ethical conduct and a commitment to compliance with the law within the
meaning of subsection (a) minimally require the following:

(1)
The organization shall establish standards and procedures to prevent and
detect violations.

(2)
(A)
The organization’s governing authority shall be knowledgeable

about the content and operation of the compliance and ethics
program and shall exercise reasonable oversight with respect to
the implementation and effectiveness of the compliance and
ethics program.

(B)
High-level personnel of the organization shall ensure that the
organization has an effective compliance and ethics program, as
described in this guideline. Specific individual(s) within high-level
personnel shall be assigned overall responsibility for the
compliance and ethics program.

(C)
Specific individual(s) within the organization shall be delegated
day-to-day operational responsibility for the compliance and
ethics program. Individual(s) with operational responsibility
shall report periodically to high-level personnel and, as
appropriate, to the governing authority, or an appropriate
subgroup of the governing authority, on the effectiveness of the
compliance and ethics program. To carry out such operational
responsibility, such individual(s) shall be given adequate
resources, appropriate authority, and direct access to the
governing authority or an appropriate subgroup of the governing
authority.
sonnel and, as
appropriate, to the governing authority, or an appropriate
subgroup of the governing authority, on the effectiveness of the
compliance and ethics program. To carry out such operational
responsibility, such individual(s) shall be given adequate
resources, appropriate authority, and direct access to the
governing authority or an appropriate subgroup of the governing
authority.

(3)
The organization shall use reasonable efforts not to include within the
substantial authority personnel of the organization any individual whom the
organization knew, or should have known through the exercise of due
diligence, has engaged in violations or other conduct inconsistent
with an effective compliance and ethics program.

(4)
(A)
The organization shall take reasonable steps to communicate

Docket No. PL10-4-000
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periodically and in a practical manner its standards and
procedures, and other aspects of the compliance and ethics
program, to the individuals referred to in subdivision (B) by
conducting effective training programs and otherwise
disseminating information appropriate to such individuals’
respective roles and responsibilities.

(B)
The individuals referred to in subdivision (A) are the members
of the governing authority, high-level personnel, substantial
authority personnel, the organization’s employees, and, as
appropriate, the organization’s agents.

(5)
The organization shall take reasonable steps—

(A)
to ensure that the organization’s compliance and ethics program
is followed, including monitoring and auditing to detect violations;

(B)
to evaluate periodically the effectiveness of the organization’s
compliance and ethics program; and

(C)
to have and publicize a system, which may include mechanisms
that allow for anonymity or confidentiality, whereby the
organization’s employees and agents may report or seek
guidance regarding potential or actual violations without
fear of retaliation.
ng to detect violations;

(B)
to evaluate periodically the effectiveness of the organization’s
compliance and ethics program; and

(C)
to have and publicize a system, which may include mechanisms
that allow for anonymity or confidentiality, whereby the
organization’s employees and agents may report or seek
guidance regarding potential or actual violations without
fear of retaliation.

(6)
The organization’s compliance and ethics program shall be promoted and

enforced consistently throughout the organization through (A)

appropriate incentives to perform in accordance with the compliance and

ethics program; and (B) appropriate disciplinary measures for engaging
in violations and for failing to take reasonable steps to prevent or
detect violations.

(7)
After a violation has been detected, the organization shall take
reasonable steps to respond appropriately to the violation and to
prevent further similar violations, including making any necessary
modifications to the organization’s compliance and ethics program.

(c)
In implementing subsection (b), the organization shall periodically assess the risk
of violations and shall take appropriate steps to design, implement, or
modify each requirement set forth in subsection (b) to reduce the risk of violations
identified through this process.

Commentary
Application Notes:

1.
Definitions.—For purposes of this guideline:
ce and ethics program.

(c)
In implementing subsection (b), the organization shall periodically assess the risk
of violations and shall take appropriate steps to design, implement, or
modify each requirement set forth in subsection (b) to reduce the risk of violations
identified through this process.

Commentary
Application Notes:

1.
Definitions.—For purposes of this guideline:

Docket No. PL10-4-000
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"Compliance and ethics program" means a program designed to prevent and detect violations.

"Governing authority" means the (A) the Board of Directors; or (B) if the organization does
not have a Board of Directors, the highest-level governing body of the organization. "High-level
personnel of the organization" and "substantial authority personnel" have the meaning given those terms
in the Commentary to §1A1.1 (Application Instructions-Organizations).

"Standards and procedures" means standards of behavior and internal controls that are
reasonably capable of reducing the likelihood of violations.

2.
Factors to Consider in Meeting Requirements of this Guideline.—

(A)
In General.—Each of the requirements set forth in this guideline shall be met by
an organization; however, in determining what specific actions are necessary to meet
those requirements, factors that should be considered include: (i) applicable industry
practice; (ii) the size of the organization; and (iii) similar violations.

(B)
Applicable Industry Practice.—An organization’s
failure to incorporate and follow applicable industry practice weighs against a finding of
an effective compliance and ethics program.

(C)
The Size of the Organization.—
t
those requirements, factors that should be considered include: (i) applicable industry
practice; (ii) the size of the organization; and (iii) similar violations.

(B)
Applicable Industry Practice.—An organization’s
failure to incorporate and follow applicable industry practice weighs against a finding of
an effective compliance and ethics program.

(C)
The Size of the Organization.—

(i)
In General.—The formality and scope of actions that an organization

shall take to meet the requirements of this guideline, including the

necessary features of the organization’s standards and procedures,

depend on the size of the organization.

(ii)
Large Organizations.—A large organization generally shall devote more formal
operations and greater resources in meeting the requirements of this guideline
than shall a small organization.

(iii)
Small Organizations.—In meeting the requirements of this guideline, small
organizations shall demonstrate the same degree of commitment to ethical
conduct and compliance with the law as large organizations. However, a small
organization may meet the requirements of this guideline with less formality and
fewer resources than would be expected of large organizations. In appropriate
circumstances, reliance on existing resources and simple systems can
demonstrate a degree of commitment that, for a large organization, would only
be demonstrated through more formally planned and implemented systems
s. However, a small
organization may meet the requirements of this guideline with less formality and
fewer resources than would be expected of large organizations. In appropriate
circumstances, reliance on existing resources and simple systems can
demonstrate a degree of commitment that, for a large organization, would only
be demonstrated through more formally planned and implemented systems.

Examples of the informality and use of fewer resources with which a
small organization may meet the requirements of this guideline include
the following: (I) the governing authority’s discharge of its responsibility for
oversight of the compliance and ethics program by directly managing the
organization’s compliance and ethics efforts; (II) training employees through
informal staff meetings, and monitoring through regular "walk-arounds" or
continuous observation while managing the organization; (III) using available
personnel, rather than employing separate staff, to carry out the compliance and

Docket No. PL10-4-000
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ethics program; and (IV) modeling its own compliance and ethics program on
existing, effective compliance and ethics programs and best practices of other
similar organizations.

(D)
Recurrence of Similar Violations.—Recurrence of similar violations creates doubt
regarding whether the organization took reasonable steps to meet the requirements of
this guideline. For purposes of this subdivision, "similar violations" has the meaning
given that term in the Commentary to §1A1.1 (Application Instructions - Organizations).

3.
Application of Subsection (b)(2).—High-level personnel and substantial authority personnel of
the organization shall be knowledgeable about the content and operation of the compliance and
ethics program, shall perform their assigned duties consistent with the exercise of due diligence,
and shall promote an organizational culture that encourages ethical conduct and a commitment
to compliance with the law
n of Subsection (b)(2).—High-level personnel and substantial authority personnel of
the organization shall be knowledgeable about the content and operation of the compliance and
ethics program, shall perform their assigned duties consistent with the exercise of due diligence,
and shall promote an organizational culture that encourages ethical conduct and a commitment
to compliance with the law.

If the specific individual(s) assigned overall responsibility for the compliance and ethics
program does not have day-to-day operational responsibility for the program, then the

individual(s) with day-to-day operational responsibility for the program typically should, no less
than annually, give the organization’s governing authority or an appropriate subgroup thereof
information on the implementation and effectiveness of the compliance and ethics program.

4.
Application of Subsection (b)(3).—

(A)
Consistency with Other Law.—Nothing in subsection (b)(3) is intended to require
conduct inconsistent with any Federal, State, or local law, including any law governing
employment or hiring practices.

(B)
Implementation.—In implementing subsection (b)(3), the organization shall hire and
promote individuals so as to ensure that all individuals within the high-level personnel
and substantial authority personnel of the organization will perform their assigned duties
in a manner consistent with the exercise of due diligence and the promotion of an
organizational culture that encourages ethical conduct and a commitment to compliance
with the law under subsection (a)
hall hire and
promote individuals so as to ensure that all individuals within the high-level personnel
and substantial authority personnel of the organization will perform their assigned duties
in a manner consistent with the exercise of due diligence and the promotion of an
organizational culture that encourages ethical conduct and a commitment to compliance
with the law under subsection (a). With respect to the hiring or promotion of such
individuals, an organization shall consider the relatedness of the individual’s violations
(including other conduct inconsistent with an effective compliance and ethics program)
to the specific responsibilities the individual is anticipated to be assigned and other
factors such as: (i) the recency of the individual’s violations; and (ii) whether the
individual has engaged in other such violations.

5.
Application of Subsection (b)(6).—Adequate discipline of individuals responsible for a violation
is a necessary component of enforcement; however, the form of discipline that will be appropriate
will be case specific.

6.
Application of Subsection (c).—To meet the requirements of subsection (c), an organization shall:

(A)
Assess periodically the risk that violations will occur, including assessing the
following:

(i)
The nature and seriousness of such violations.

Docket No. PL10-4-000
- 40 -

(ii)
The likelihood that certain violations may occur because of the nature of the
organization’s business. If, because of the nature of an organization’s business,
there is a substantial risk that certain types of violations may occur, the
organization shall take reasonable steps to prevent and detect that type of
violation. For example, an organization that, due to the nature of its business,
has employees whose compensation is dependent on the final settlement price of
a certain product shall establish standards and procedures designed to prevent
market manipulation of that final settlement price.
violations may occur, the
organization shall take reasonable steps to prevent and detect that type of
violation. For example, an organization that, due to the nature of its business,
has employees whose compensation is dependent on the final settlement price of
a certain product shall establish standards and procedures designed to prevent
market manipulation of that final settlement price.

(iii)
The prior history of the organization. The prior history of an organization may
indicate types of violations that it shall take actions to prevent and detect.

(B)
Prioritize periodically, as appropriate, the actions taken pursuant to any requirement set
forth in subsection (b), in order to focus on preventing and detecting the violations
identified under subdivision (A) of this note as most serious, and most likely, to occur.

(C)
Modify, as appropriate, the actions taken pursuant to any requirement set forth in
subsection (b) to reduce the risk of violations identified under subdivision (A) of this note
as most serious, and most likely, to occur.

PART C – CIVIL PENALTIES

1.
GENERAL

§1C1.1

This Part governs the determination and implementation of civil penalties.

2.
DETERMINING THE PENALTY

§1C2.1.
Violation Level

(a)
Use the applicable Chapter Two guideline to determine the base violation level
and apply, in the order listed, any appropriate adjustments contained in that guideline.

(b)
Where there are multiple violations falling under different Chapter Two guidelines, e.g., a
case involving both anticompetitive conduct and reliability violations, the Commission
will determine the appropriate penalty on a case-by-case basis.

§1C2.2.
Base Penalty
ine the base violation level
and apply, in the order listed, any appropriate adjustments contained in that guideline.

(b)
Where there are multiple violations falling under different Chapter Two guidelines, e.g., a
case involving both anticompetitive conduct and reliability violations, the Commission
will determine the appropriate penalty on a case-by-case basis.

§1C2.2.
Base Penalty

(a)
The base penalty is the greatest of:

(1)
the amount from the table in subsection (b) below corresponding to the
violation level determined under §1C2.1 (Violation Level); or

(2)
the pecuniary gain to the organization from the violation; or

Docket No. PL10-4-000
- 41 -
(3)
the pecuniary loss from the violation caused by the organization.

(b)
Violation Level Penalty Table

Violation Level
Amount

6 or less

$5,000
7

$7,500
8

$10,000
9

$15,000
10

$20,000
11

$30,000
12

$40,000
13

$60,000
14

$85,000
15

$125,000
16

$175,000
17

$250,000
18

$350,000
19

$500,000
20

$650,000
21

$910,000
22

$1,200,000
23

$1,600,000
24

$2,100,000
25

$2,800,000
26

$3,700,000
27

$4,800,000
28

$6,300,000
29

$8,100,000
30

$10,500,000
31

$13,500,000
32

$17,500,000
33

$22,000,000
34

$28,500,000
35

$36,000,000
36

$45,500,000
37

$57,500,000
38 or more

$72,500,000
.
§1C2.3.
Culpability Score

(a)
Start with 5 points and apply subsections (b) through (g) below.

(b)
Involvement in or Tolerance of Violations

If more than one applies, use the greatest:

(1)
If --

Docket No. PL10-4-000
- 42 -

(A)
the organization had 5,000 or more employees and
35

$36,000,000
36

$45,500,000
37

$57,500,000
38 or more

$72,500,000
.
§1C2.3.
Culpability Score

(a)
Start with 5 points and apply subsections (b) through (g) below.

(b)
Involvement in or Tolerance of Violations

If more than one applies, use the greatest:

(1)
If --

Docket No. PL10-4-000
- 42 -

(A)
the organization had 5,000 or more employees and

(i)
an individual within high-level personnel of the
organization participated in, condoned, or was willfully
ignorant of the violation; or

(ii)
tolerance of the violation by substantial authority
personnel was pervasive throughout the organization; or

(B)
the unit of the organization within which the violation was
committed had 5,000 or more employees and

(i)
an individual within high-level personnel of the unit
participated in, condoned, or was willfully ignorant of
the violation; or

(ii)
tolerance of the violation by substantial authority
personnel was pervasive throughout such unit,

add 5 points; or

(2)
If --

(A)
the organization had 1,000 or more employees and

(i)
an individual within high-level personnel of the
organization participated in, condoned, or was willfully
ignorant of the violation; or

(ii)
tolerance of the violation by substantial authority
personnel was pervasive throughout the organization; or

(B)
the unit of the organization within which the violation was
committed had 1,000 or more employees and

(i)
an individual within high-level personnel of the unit
participated in, condoned, or was willfully ignorant of
the violation; or

(ii)
tolerance of the violation by substantial authority
personnel was pervasive throughout such unit,

add 4 points; or

(3)
If --

(A)
the organization had 200 or more employees and

Docket No. PL10-4-000
- 43 -
000 or more employees and

(i)
an individual within high-level personnel of the unit
participated in, condoned, or was willfully ignorant of
the violation; or

(ii)
tolerance of the violation by substantial authority
personnel was pervasive throughout such unit,

add 4 points; or

(3)
If --

(A)
the organization had 200 or more employees and

Docket No. PL10-4-000
- 43 -
(i)
an individual within high-level personnel of the
organization participated in, condoned, or was willfully
ignorant of the violation; or

(ii)
tolerance of the violation by substantial authority
personnel was pervasive throughout the organization; or

(B)
the unit of the organization within which the violation was
committed had 200 or more employees and

(i)
an individual within high-level personnel of the unit
participated in, condoned, or was willfully ignorant of
the violation; or

(ii)
tolerance of the violation by substantial authority
personnel was pervasive throughout such unit,

add 3 points; or

(4)
If the organization had 50 or more employees and an individual within
substantial authority personnel participated in, condoned, or was willfully
ignorant of the violation, add 2 points; or

(5)
If the organization had 10 or more employees and an individual within
substantial authority personnel participated in, condoned, or was
willfully ignorant of the violation, add 1 point.

(c)
Prior History

If more than one applies, use the greater:

(1)
If the organization committed
any part of the instant violation less than 10 years after a prior Commission adjudication
of any violation or less than 10 years after an adjudication of similar misconduct by any
other enforcement agency, add 1 point; or

(2)
If the organization committed
any part of the instant violation less than 5 years after a prior Commission adjudication of
any violation or less than 5 years after an adjudication of similar misconduct by any other
enforcement agency, add 2 points.
tion
of any violation or less than 10 years after an adjudication of similar misconduct by any
other enforcement agency, add 1 point; or

(2)
If the organization committed
any part of the instant violation less than 5 years after a prior Commission adjudication of
any violation or less than 5 years after an adjudication of similar misconduct by any other
enforcement agency, add 2 points.

(d)
Violation of an Order

If the commission of the instant violation violated a judicial or Commission order or
injunction directed at the specific organization by the Commission or other Federal and
state enforcement agencies that adjudicate similar types of matters as the Commission,
add 2 points.

(e)
Obstruction of Justice

Docket No. PL10-4-000
- 44 -

If the organization willfully obstructed or impeded, attempted to obstruct or
impede, or aided, abetted, or encouraged obstruction of justice during the
investigation or resolution of the instant violation, or, with knowledge thereof,
failed to take reasonable steps to prevent such obstruction or
impedance or attempted obstruction or impedance, add 3 points.

(f)
Effective Compliance and Ethics Program

(1)
If the violation occurred even though the organization had in place at the
time of the violation an effective compliance and ethics program, as
provided in §1B2.1 (Effective Compliance and Ethics Program), subtract
3 points.

(2)
Subsection (f)(1) does not apply if, after becoming aware of a violation,
the organization unreasonably delayed reporting the violation to
appropriate governmental authorities.
occurred even though the organization had in place at the
time of the violation an effective compliance and ethics program, as
provided in §1B2.1 (Effective Compliance and Ethics Program), subtract
3 points.

(2)
Subsection (f)(1) does not apply if, after becoming aware of a violation,
the organization unreasonably delayed reporting the violation to
appropriate governmental authorities.

(3)
(A)
Except as provided in subdivision (B), subsection (f)(1) does not
apply if an individual within high-level personnel of the
organization, a person within high-level personnel of the unit of
the organization within which the violation was committed where
the unit had 200 or more employees, or an individual described
in §1B2.1(b)(2)(B) or (C), participated in, condoned, or was
willfully ignorant of the violation.

(B)
There is a rebuttable presumption, for purposes of subsection
(f)(1), that the organization

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FERC_PL10_4_000_20100318. Check the current official text before relying on it. Not legal advice.