UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 Philip D. Moeller, and Jon Wellinghoff. 

Process for Assessing Civil Penalties Docket No. AD07-4-000

STATEMENT OF ADMINISTRATIVE POLICY REGARDING 

THE PROCESS FOR ASSESSING CIVIL PENALTIES 

(Issued December 21, 2006) 

1. The Commission issues this Statement of Administrative Policy to provide 

guidance on the process by which civil penalties may be assessed when we are enforcing 

the statutes, orders, rules, and regulations we administer. Previously in Docket 

No. PL06-1-000 we issued the Policy Statement on Enforcement1

 and discussed the 

factors we will take into account in responding to violations, including applying the 

enhanced civil penalty authority provided by the Energy Policy Act of 2005 (EPAct 

2005).2

 Our purpose then was to emphasize that we will provide firm but fair 

enforcement of our rules and regulations, to place entities subject to our jurisdiction on 

notice of the consequences of violating the statutes, orders, rules, and regulations 

administered by the Commission, and to encourage such entities to develop a culture of 

compliance within their organizations, and to self-report and cooperate with the 

Commission in the event violations occur.3

 

2. The Commission’s purpose in this Statement is to explain the procedures that will 

apply when we assess a civil penalty under the primary statutes we administer—the 

Federal Power Act (FPA) Part I,4

 the FPA Part II,5 the Natural Gas Act (NGA),6 and the 

 

1 Enforcement of Statutes, Orders, Rules, and Regulations, 113 FERC ¶ 61,068 

(2005) (Policy Statement on Enforcement). 

2

 P. L. No. 109-58, 119 Stat. 594 (2005). 

3

 Policy Statement on Enforcement, 113 FERC ¶ 61,068 at P 1-2, 17-29. 

4

 16 U.S.C. §§ 791a-823c (2000). 
Docket No. AD07-4-000 - 2 - 

Natural Gas Policy Act of 1978 (NGPA).7

 In doing so, however, we first note that civil 

penalties often are negotiated as part of a stipulation and agreement resolving compliance 

issues. In such cases the civil penalty is imposed through a Commission order approving 

the negotiated agreement, obviating the need for an assessment process. We emphasize 

that nothing in this Statement is intended to change the current practice of negotiating the 

resolution of violations, including the imposition of civil penalties, whenever possible. 

Nevertheless, the Commission recognizes that cases may arise where a negotiated 

resolution is not possible, and that the result of an investigation or other process may be 

an assessment of a civil penalty by the Commission. In such cases, it will assist the 

public and the regulated community to understand the process that will be followed under 

each of the applicable statutes. We note that while this Statement outlines the basic 

procedures to be followed, we retain the right to modify these procedures to fit the 

circumstances presented by specific cases, while still providing process that meets the 

applicable statutory criteria. 

I. Background

3. EPAct 2005 amended Part II of the FPA, the NGA, and the NGPA and gave the 

Commission the authority to assess civil penalties of up to $1 million per day per 

violation for violations of rules, regulations, and orders issued under these acts.8

 There 

 5

 16 U.S.C. §§ 824-824m (2000). 

6

 15 U.S.C. §§ 717 et seq. (2000). 

7

 15 U.S.C. §§ 3301 et seq. (2000). 

8

 Energy Policy Act of 2005, Pub. L. No. 109-58, §§ 1284(e), 314 (b)(1)(B), and 

314(b)(2), 119 Stat. 594 at 950 and 691 (2005), respectively. Under FPA Part II, the 

Commission can assess a penalty “of not more than $1,000,000 for each day that such 

violation continues.” FPA section 316A(b). Under the NGA, the Commission can assess 

a penalty “of not more than $1,000,000 per day per violation for as long as the violation 

continues.” NGA section 22(a). Under the NGPA, the Commission can assess a penalty 

“of not more than $1,000,000” and “each day of violation shall constitute a separate 

violation.” NGPA section 504(b)(6)(A) and (C). There was no change to the 

Commission’s existing FPA Part I civil penalty authority, under which the Commission 

can assess civil penalties of up to $11,000 “for each day that such violation or failure or 

refusal continues.” FPA section 31(c), as adjusted for inflation by 18 C.F.R. § 385.1602 

(2006). 
Docket No. AD07-4-000 - 3 - 

will be differences in the procedures for assessment of civil penalties because of 

differences among the primary statutes we administer. The FPA and NGPA have 

provisions detailing how penalties are to be assessed. Section 31(d)9

 of the FPA outlines 

the process by which the Commission can assess penalties for Part I violations, and FPA 

section 316A(b)10 applies the section 31(d) procedures, as applicable, to Part II 

violations. Because of the differences in hydroelectric and electric regulation, however, 

there are some differences between the FPA Part I and Part II processes. Section 

504(b)(6) of the NGPA11 sets out still different procedures for assessing civil penalties 

under the NGPA. The NGA, however, contains no provisions specifying the process for 

assessing penalties under that statute. 

4. This Statement discusses the processes the Commission will use when assessing 

civil penalties under all our governing statutes, including the NGA. 12 Our goal is to 

provide procedures that meet applicable statutory requirements and to give entities 

subject to possible civil penalties due process, in as uniform a fashion as possible given 

the different governing statutes, before a penalty assessment is made. 

II. Process for FPA Part II Penalty Assessment 

5. FPA section 316A(b) grants the Commission the authority to assess civil penalties 

against any person who violates any provision under Part II of the FPA or any order or 

rule issued thereunder.13 Section 316(A)(b) also refers to the process set forth in section 

31(d) as applicable to violations related to FPA Part II. Accordingly, the following 

 9

 16 U.S.C. § 823b(d) (2000). 

10 16 U.S.C. § 825o-1 (2000). 

11 15 U.S.C. § 3414(b)(6) (2000). 

12 The Commission’s regulations address penalties under FPA Part I only. 

18 C.F.R. §§ 385.1501-1511 (2006). There are no parallel regulations for FPA Part II or 

the NGPA, nor has the Commission previously provided general guidance about the 

process for imposing penalties under FPA Part II or the NGPA. 

13 16 U.S.C. § 825o-1(b) (2000), amended by Energy Policy Act 2005, Pub. L. 

No. 109-58 § 1284(e), 119 Stat. 594, 980 (2005). Before EPAct 2005 the Commission’s 

Part II civil penalty authority was limited to violations of sections 211-214 of the FPA or 

of rules or orders issued thereunder. The Commission has not had occasion to assess a 

penalty outside a settlement context for a violation of sections 211-214 of the FPA. 
Docket No. AD07-4-000 - 4 - 

outlines the process for assessing a civil penalty under FPA Part II in accordance with 

section 31(d).14 These procedures apply to the assessment of a civil penalty by the 

Commission in the first instance, not to the review by the Commission of a penalty 

assessed by another entity.15

 14 The FPA Part II process is limited to the procedures in FPA section 31(d) that 

are applicable to Part II violations, as indicated by FPA section 316A(b). The process 

therefore excludes the effect of issuing compliance orders under FPA section 31(a), as 

such compliance orders are directed to compliance with terms and conditions of licenses 

and permits issued under FPA Part I and of exemptions from any requirement of FPA 

Part I. As described in the procedures for FPA Part I violations, infra, where a licensee 

or exemptee does not comply with a final compliance order issued under FPA section 

31(a), the Commission can assess a penalty after an administrative hearing and the 

licensee or exemptee will not have the option of choosing review in district court. 

See FPA section 31(d)(1), 16 U.S.C. § 823c(d)(1)(2000). While there may be 

circumstances in which, in response to violations of FPA Part II requirements, the 

Commission may issue orders directing compliance with such requirements, such 

compliance orders will not affect the choice of administrative or district court review. 

15 In certain circumstances, other entities may impose a penalty that is subject to 

review by the Commission. For instance, EPAct 2005 section 1211(a) enacted new 

section 215 of the FPA, 16 U.S.C. § 824n, imposing electric reliability standards. Under 

section 215(e), the selected Electric Reliability Organization (ERO), or a qualifying 

Regional Entity acting under authority delegated by the ERO, can impose penalties for 

violations of a Commission-approved electric reliability standard, and such penalties are 

subject to review by the Commission. Similarly, an independent system operator (ISO) 

or a regional transmission organization (RTO) may be authorized by tariff to impose 

penalties for certain Commission-approved, objectively-identifiable violations of 

organized market rules. See, e.g., Market Monitoring Units in Regional Transmission 

Organizations and Independent System Operators, 111 FERC ¶ 61,267, at P 5 (2005); 

California Independent System Operator Corp., 106 FERC ¶ 61,179, at P 14-16, order on 

reh’g, 107 FERC ¶ 61,118 (2004). In both situations, the Commission reviews the action 

taken in the first instance by the ERO or Regional Entity, ISO, or RTO. The Commission 

may act on the record submitted to it and any submission or response by the affected 

entity, or the Commission may order further hearing procedures (see, e.g., 18 C.F.R. 

§ 39.7(e)(5)). An order of the Commission affirming or modifying the ERO, ISO, or 

RTO action is subject to rehearing and court review. 

(continued...) 
Docket No. AD07-4-000 - 5 - 

1. Notice. Before issuing an order assessing a civil penalty against any person under 

FPA Part II, the Commission will issue such person notice of the proposed penalty 

and a statement of the material facts constituting the violation. The notice will 

give the person the option to choose between either (a) an administrative hearing 

before an Administrative Law Judge (ALJ) at the Commission prior to the 

assessment of the penalty under section 31(d)(2) or (b) an immediate penalty 

assessment under section 31(d)(3).16 Though not required by the statute, the 

Commission will allow the person to file with the Commission within 30 days of 

the notice any legal or factual arguments that could justify not issuing the 

assessment or a reduction or modification of the proposed penalty.17

a. Administrative Hearing Pursuant to Section 31(d)(2). If the person 

elects an administrative hearing before an ALJ at the Commission, the 

procedure will be as follows: 

i. Hearing Order. The Commission will issue a hearing order that 

will inform the person of the opportunity for an administrative 

hearing before an ALJ. The ALJ will conduct a hearing under Part 

385 of the Commission’s regulations. Staff from the Office of 

Enforcement will serve as trial staff at the hearing.18

 

If, however, the Commission initiates an action to assess a penalty for a violation 

of FPA Part II, including Commission-ordered penalties for violations of reliability 

standards (see 18 C.F.R. § 39.7(f)), the process described here is applicable. 

16 Section 31(d) expressly requires that an administrative hearing be “on the 

record” pursuant to 5 U.S.C. § 554 “before an administrative law judge” appointed under 

5 U.S.C. § 3105, and that a penalty assessment order “include the administrative law 

judge’s findings.” 

17 The Commission has done so in assessing FPA Part I penalties. See, e.g., 

American Hydro Power Company LP, 71 FERC ¶ 61,078, at 61,284 (1995).

18 Even though Rule 1508 of the Commission’s Rules of Practice and Procedure 

does not by its terms apply to civil penalties assessed under FPA Part II, the Commission 

will issue a hearing order if an administrative hearing is chosen, and will set the matter 

for hearing under the Rules of Practice and Procedure, in order to provide the due process 

required under FPA section 31. 
Docket No. AD07-4-000 - 6 - 

ii. Initial Decision. The ALJ will issue an Initial Decision and 

determine whether a violation or violations occurred. If a violation 

is found, the Initial Decision will recommend any appropriate 

penalty, taking into account factors described in the Policy 

Statement on Enforcement. 

iii. Exceptions and Assessment. The Commission will consider the 

Initial Decision of the ALJ and any exceptions filed. If the 

Commission determines that there is a violation, the Commission 

will issue an order and may assess any appropriate penalty, taking 

into account all relevant factors. 

iv. Rehearing. In accordance with FPA section 313(a) and Rule 713, 

the person may request a rehearing no later than 30 days after the 

issuance of the order assessing the penalty. 

b. Immediate Penalty Assessment Pursuant to Section 31(d)(3). If the 

person elects an immediate penalty assessment by the Commission, the 

procedure will be as follows: 

i. Immediate Penalty Assessment. If the Commission finds a 

violation, the Commission will issue an order setting forth the 

material facts that constitute the violations and assess any 

appropriate penalty. 

ii. District Court Review. If the assessed penalty is not paid within 60 

days, the Commission will institute an action in a United States 

district court, where, pursuant to FPA section 31(d)(3)(B), the court 

is authorized to review de novo the law and facts involved. 

iii. Judgment. The United States district court will have jurisdiction to 

enter a judgment enforcing, modifying, enforcing as modified, or 

setting aside, in whole or in part, the Commission’s penalty 

assessment. The Commission can appeal an order that modifies or 

sets aside the Commission’s penalty assessment. 

2. Appeal. The person can appeal to a United States Court of Appeals within the 

appropriate time for review of a Commission order or appeal of a district court 

order. 
Docket No. AD07-4-000 - 7 - 

3. Judicial Enforcement. Once there is a final Commission order under the section 

31(d)(2) process or the Commission has obtained a judgment under section 

31(d)(3), the Commission can institute a collection action in an appropriate United 

States district court. In such action, the validity and appropriateness of such final 

assessment order or judgment is not subject to review.19

III. Process for NGA Penalty Assessment

6. EPAct 2005’s grant of civil penalty authority under the NGA did not specify the 

process by which a penalty is to be assessed. The only statutory guidance given is that 

the “penalty shall be assessed by the Commission after notice and opportunity for public 

hearing.”20 In the Policy Statement on Enforcement, the Commission noted this and 

stated its intent to provide an administrative process for penalty assessment. 21 In many 

instances issues in dispute can be resolved fairly and expeditiously by means of the 

“paper hearing” procedures the Commission has made use of in various circumstances.22 

Such procedures are appropriate where facts can be determined on the basis of written 

submissions.23

 19 16 U.S.C. § 823b(d)(5) (2000). 

20 15 U.S.C. § 717t-1, added by Energy Policy Act of 2005, Pub. L. No. 109-58 

§314(b)(1)(B), 119 Stat. 594, 691 (2005). Although the NGA is silent on procedures for 

assessing civil penalties, the NGA does provide for enforcement of Commission rules 

and regulations in district court under NGA section 20(a), 15 U.S.C. § 717s(a) (2000), 

and collection actions in district court under NGA section 24, 15 U.S.C. § 717w (2000). 

21 Policy Statement on Enforcement, 113 FERC ¶ 61,068, at P 16. 

22 See, e.g., ISO New England, Inc., 117 FERC ¶ 61,070, at P 30 (2006) 

(reasonableness of certain expenses); Midwest Independent Transmission System 

Operator, Inc., 101 FERC ¶ 61,221 (2002), reh’g denied, 103 FERC ¶ 61,035 (2003) 

(FTR billing determinants and exit fees); Great Lakes Gas Transmission L.P., Opinion 

No. 367, 57 FERC ¶ 61,140 (1991) (NGA Section 4 rate case); Transcontinental Gas 

Pipe Line Company, 47 FERC ¶ 61,244, order on reh’g, 48 FERC ¶ 61,199 (1989) 

(gas inventory charge). 

23 Indeed, there is substantial case law upholding the Commission’s use of paper 

hearings. See Carlisle & Neola v. FERC, 741 F.2d 429, 431 (D.C. Cir. 1984) (“The 

Commission has broad discretion in deciding whether to grant a hearing, and this court 

previously has upheld the power of the Commission to dispose of cases on a ‘paper 

(continued...) 
Docket No. AD07-4-000 - 8 - 

7. Against this backdrop, the following draws on existing processes for the FPA and 

NGPA for the administrative process the Commission generally will follow in assessing 

civil penalties under the NGA. Depending on the circumstances presented, the 

Commission may employ paper hearing procedures or refer the matter to an ALJ if 

additional procedures are necessary.24 The NGA civil penalty process does not include 

the possibility for the person to receive a de novo review in district court, because there is 

no statutory provision permitting de novo review,25 but meets the requirement of “notice 

and opportunity for a public hearing.”26

 

hearing’”), citing Cities of Batavia v. FERC, 672 F.2d 64, 91 (D.C. Cir. 1982), and Public 

Service Company of New Mexico v. FERC, 653 F.2d 681, 692-93 (D.C. Cir. 1981). See 

also Public Service Company of Indiana, Opinion No. 349, 51 FERC ¶ 61,367, order on 

reh’g, Opinion 349-A, 52 FERC ¶ 61,260, clarified, 53 FERC ¶ 61,131 (1990), 

dismissed, Northern Indiana Public Service Company v. FERC, 954 F.2d 736 (D.C. Cir. 

1992) (trial-type hearing necessary only if the material facts in dispute cannot be resolved 

on the basis of the written record); Tennessee Gas Pipeline Company, 49 FERC ¶ 61,348 

(1989) (same). 

24 We note also that ALJ hearings can be tailored to the circumstances presented. 

For instance, where expedition is appropriate, the Commission could direct the ALJ to 

compile a record but omit the initial decision and instead certify the record to the 

Commission for decision, accompanied by a report or a recommended decision in lieu of 

an initial decision. See, e.g., Transmission Congestion on the Delmarva Peninsula, 

103 FERC ¶ 61,163 (2003) (report in lieu of initial decision); Stowers Oil & Gas Co., 

26 FERC ¶ 61,207 (1984) (recommended decision in lieu of initial decision). 

25 See Consolo v. Federal Maritime Commission, 383 U.S. 607, 619 n.17 (1966) 

(in the absence of specific statutory authorization, a de novo review is generally not to be 

presumed); see also Chandler v. Roudebush, 425 U.S. 840, 862 (1976). 

26 NGA section 22(b), 15 U.S.C. § 717t-1. The FPA either requires an “on the 

record” hearing before an ALJ or authorizes a de novo review in district court, FPA 

section 31(d)(2)(A), and the NGPA authorizes de novo review in district court, NGPA 

section 504(b)(6)(F). While these steps are not applicable to the NGA, the process 

outlined here meets the requirement of Commission action after notice and opportunity 

for a public hearing and provides persons subject to potential penalties the opportunity to 

present evidence and argument to the Commission. 
Docket No. AD07-4-000 - 9 - 

1. Notice. Before issuing an order assessing a civil penalty against any person under 

the NGA, the Commission will issue such person notice of the proposed penalty 

and a statement of the material facts constituting the violation. The notice will 

give the person the opportunity to respond, including information to show why the 

penalty should either not be assessed or be modified or reduced. If the person 

chooses to pay the amount of the proposed penalty, the process will terminate. 

2. Hearing Order. If the person contests the alleged violation and proposed 

assessment, the Commission will issue a further order. If the record is sufficient, 

the Commission may assess a civil penalty. If a hearing is needed, the 

Commission will issue a hearing order and indicate whether the Commission will 

conduct a paper hearing or a hearing before an ALJ. In the latter case, the ALJ 

will conduct a hearing under Part 385 of the Commission’s regulations. In either 

case, staff from the Office of Enforcement will serve as trial staff at the hearing. 

3. Initial Decision. If the matter has been set for hearing before an ALJ, and unless 

otherwise directed in a hearing order, the ALJ will issue an Initial Decision and 

determine whether a violation or violations occurred. If a violation is found, the 

Initial Decision will recommend any appropriate penalty, taking into account 

factors described in the Policy Statement on Enforcement. 

4. Penalty Assessment. If the Commission has conducted a paper hearing, it will 

issue an order on the paper hearing record. If the case was set for hearing before 

an ALJ, the Commission will consider the Initial Decision of the ALJ and any 

exceptions filed. In either case, if the Commission determines that there is a 

violation, the Commission will issue an order and may assess any appropriate 

penalty. 

5. Rehearing. In accordance with NGA section 19(a) and Rule 713, the person may 

request a rehearing no later than 30 days after the issuance of the order assessing 

the penalty. 

6. Appeal. The person can appeal a final Commission order to a United States Court 

of Appeals within the appropriate time for review of a Commission order. 

7. Judicial Enforcement. If the person fails to pay the civil penalty, the 

Commission will institute a collection action in an appropriate United States 

district court. 

8. The principal difference between the process for civil penalties under the NGA 

and the statutory process under the FPA is that there would be no option to have a 
Docket No. AD07-4-000 - 10 - 

de novo review of the Commission’s decision regarding an NGA penalty in a district 

court. As noted, unlike the FPA and NGPA, Congress did not establish a de novo court 

review under the NGA, and the Commission cannot provide what can only be provided 

by Congressional action. 

IV. Process for FPA Part I Penalty Assessment

9. FPA section 31(a) grants the Commission the authority to monitor and investigate 

compliance with licenses, permits, and exemptions for hydropower projects issued under 

Part I. If the Commission finds a violation, it can assess civil penalties under section 

31(c). Pursuant to section 31(a), the Commission can also issue compliance orders to the 

person who is in violation of the license, permit, or exemption. If the person violates a 

compliance order, the Commission can assess civil penalties under section 31(c) or issue 

a revocation order under section 31(b). Section 31(d) of the FPA establishes a process 

for assessing civil penalties issued pursuant to FPA section 31(c). This process is 

restated in greater detail in Rules 1501 through 1511 of the Commission’s Rules of 

Practice and Procedure.27 

10. Section 31(c) requires the Commission to notify the person of the violation and the 

proposed penalty, and to give the opportunity for a public hearing. The notice gives the 

person the option (unless the violation is of a final compliance order under section 31(a)) 

to choose between either (a) an administrative hearing before an ALJ at the Commission 

prior to the assessment of the penalty pursuant to section 31(d)(2) or, (b) an immediate 

penalty assessment by the Commission which may be reviewed de novo by a United 

States district court when the Commission files for a court order affirming the penalty 

assessment pursuant to section 31(d)(3). This election must be made within 30 days of 

receiving the notice of proposed penalty. If the violation is of a final compliance order 

under section 31(a), however, there is no choice and the penalty is assessed after an 

administrative hearing before an ALJ. The following outlines the process for assessing a 

civil penalty under FPA Part I: 

1. Notice. Before issuing an order assessing a civil penalty against any person under 

FPA Part I, the Commission will issue such person notice of the proposed penalty 

and a statement of the material facts constituting the violation.28 Unless the 

violation is of a final compliance order under section 31(a), the notice will give the 

person the option to choose between either (a) an administrative hearing before an 

 27 18 C.F.R. §§ 385.1501-1511 (2006). 

28 18 C.F.R. § 385.1506(b) (2006). 
Docket No. AD07-4-000 - 11 - 

Administrative Law Judge (ALJ) at the Commission prior to the assessment of the 

penalty under section 31(d)(2) or (b) an immediate penalty assessment under 

section 31(d)(3).29 Though not required by the statute, the Commission allows the 

person to file with the Commission within 30 days of the notice any legal or factual 

arguments that could justify not issuing the assessment or a reduction or 

modification of the proposed penalty.30 In the case of a violation of a final 

compliance order, the Commission will conduct an administrative hearing pursuant 

to section 31(d)(2)(A). 

a. Administrative Hearing Pursuant to Section 31(d)(2). If there has been 

a compliance order or if the person elects an administrative hearing before 

an ALJ at the Commission, the procedure will be as follows: 

i. Hearing Order. The Commission will issue a hearing order that 

will inform the person of the opportunity for an administrative 

hearing before an ALJ. The ALJ will conduct a hearing under Part 

385 of the Commission’s regulations. Staff from the Office of 

Enforcement will serve as trial staff at the hearing. 

ii. Initial Decision. The ALJ will issue an Initial Decision and 

determine whether a violation or violations occurred. If a violation 

is found, the Initial Decision will recommend any appropriate 

penalty, taking into account factors described in the Policy 

Statement on Enforcement. 

iii. Exceptions and Assessment. The Commission will consider the 

Initial Decision of the ALJ and any exceptions filed. If the 

Commission determines that there is a violation, the Commission 

will issue an order and may assess any appropriate penalty. 

iv. Rehearing. In accordance with FPA section 313(a) and Rule 713, 

the person may request a rehearing no later than 30 days after the 

issuance of the order assessing the penalty. 

 29 Id. 

30 See, e.g., American Hydro Power Company, supra n.17; Bluestone Energy 

Design, Inc., 56 FERC ¶ 6,426, at 62,526 (1991); 18 C.F.R. § 1507(a) (2006). 
Docket No. AD07-4-000 - 12 - 

b. Immediate Penalty Assessment Pursuant to Section 31(d)(3). If there 

has not been a compliance order, and the person elects an immediate 

penalty assessment by the Commission, the procedure will be as follows: 

i. Immediate Penalty Assessment. If the Commission finds a 

violation, the Commission will issue an order setting forth the 

material facts that constitute the violations and assess any 

appropriate penalty. 

ii. District Court Review. If the assessed penalty is not paid within 60 

days, the Commission will institute an action in a United States 

district court, where, pursuant to FPA section 31(d)(3)(B), the court 

is authorized to review de novo the law and facts involved. 

iii. Judgment. The United States district court will have jurisdiction to 

enter a judgment enforcing, modifying, enforcing as modified, or 

setting aside, in whole or in part, the Commission’s penalty 

assessment. The Commission can appeal an order that modifies or 

sets aside the Commission’s penalty assessment. 

2. Appeal. The person can appeal to a United States Court of Appeals within the 

appropriate time for review of a Commission order or appeal of a district court 

order. 

3. Judicial Enforcement. Once there is a final Commission decision under the 

section 31(d)(2) process or the Commission has obtained a judgment under section 

31(d)(3), the Commission can institute a collection action in an appropriate United 

States district court. 

V. Process for NGPA Penalty Assessment

11. The Commission also has civil penalty authority under section 504(b)(6) of the 

NGPA.31 Though EPAct 2005 did not create the penalty authority, section 314(b)(2) did 

amend the NGPA to allow for civil penalties up to $1 million per day per violation. 

NGPA section 504(b)(6)(A) grants the Commission the power to assess a civil penalty on 

any person who knowingly violates any provision of the NGPA or any rule or order 

 31 15 U.S.C. § 3414(b)(6) (2000). 
Docket No. AD07-4-000 - 13 - 

issued under the NGPA. NGPA sections 504(b)(6)(E) and (F) establish a process by 

which the Commission can assess civil penalties. The process is similar to, but not the 

same as, the FPA penalty process. 

12. Under the NGPA, the Commission is required to give notice of the alleged 

violation and proposed penalty. The person can choose to pay the proposed penalty and 

terminate the process, or can contest the penalty. The NGPA does not provide for an onthe-record hearing before an ALJ. Rather, after considering the response to the proposed 

penalty (and in the absence of a settlement of the matter), the Commission assesses the 

penalty by order after considering the facts presented. If the person does not make the 

required payment within 60 days of the assessment order, the Commission will institute 

an action in United States district court at which time the court provides a de novo review 

of the law and facts involved. Once the Commission has a favorable judgment, the 

person can either pay the penalty or appeal the district court decision. 

1. Notice. Before issuing an order assessing a civil penalty against any person under 

the NGPA, the Commission will issue such person notice of the proposed penalty 

and a statement of the material facts constituting the violation. Though not 

required by the statute, the Commission allows the person to file with the 

Commission within 30 days of the notice any legal or factual arguments that could 

justify not issuing the assessment or a reduction or modification of the proposed 

penalty.32 If the person chooses to pay the amount of the proposed penalty, the 

process will terminate. 

2. Penalty Assessment. If the Commission finds a violation, the Commission will 

issue an order setting forth the material facts that constitute the violation and 

assess any appropriate penalty. 

3. District Court Review. If the assessed penalty is not paid within 60 days, the 

Commission will institute an action in a United States district court, where, 

pursuant to NGPA section 504(b)(6)(F), the court is authorized to review de novo

the law and facts involved. 

 32 See, e.g., El Paso Natural Gas Co., 59 FERC ¶ 61,188, at 61,657 (1992); 

Questar Pipeline Co., 57 FERC ¶ 61,058, at 61,224 (1991); Transcontinental Gas Pipe 

Line Corp., 48 FERC ¶ 61,189, at 61,701 (1989). 
Docket No. AD07-4-000 - 14 - 

4. Judgment. The district court will enter a judgment enforcing, modifying, 

enforcing as modified, or setting aside, in whole or in part, the Commission’s 

penalty assessment. The Commission can appeal an order that modifies or sets 

aside the Commission’s penalty assessment. 

5. Appeal. The person can appeal to a United States Court of Appeals within the 

appropriate time for appeal of a district court order. 

6. Judicial Enforcement. Once the Commission has obtained a district court 

judgment, the Commission can institute a collection action in an appropriate 

United States district court. 

VI. Conclusion

13. This Statement provides general guidance on the processes applicable to the 

assessment of civil penalties under the primary statutes the Commission administers. 

Consistent with the Commission’s commitment to firm but fair enforcement of our 

statutes, rules, regulations, and orders,33 the Commission is also committed to providing 

due process to persons against whom enforcement action is taken, while retaining the 

flexibility necessary to tailor civil penalty assessment procedures to the circumstances 

presented in specific cases. 

By the Commission. 

( S E A L ) 

Magalie R. Salas, 

Secretary. 

 33 Policy Statement on Enforcement, 113 FERC ¶ 61,068 at P 1, 28. 
APPENDIX 

FLOW CHARTS ILLUSTRATING CIVIL PENALTY ASSESSMENT 

PROCESSES UNDER THE FPA, NGA, AND NGPA 
ALJ HEARING

5 U.S.C. § 554 hearing; 

OE serves as trial staff. 

INITIAL DECISION

EXCEPTIONS TO 

COMMISSION 

FINAL COMMISSION 

DECISION

PENALTY ASSESSMENT

PAYMENT OF 

PENALTY

NOTICE OF PROPOSED PENALTY

The person will receive notice of the proposed 

penalty, a statement of material facts, and be 

given an opportunity to respond; and may elect 

administrative hearing (§ 31(d)(2)) or immediate 

penalty assessment (§ 31(d)(3)). 

IMMEDIATE PENALTY 

ASSESSMENT

Pay penalty or district 

court review.

U.S. DISTRICT COURT 

REVIEW

JUDGMENT

Once the Commission 

has a favorable 

judgment, the 

Commission can seek 

collection; the 

Commission can appeal 

a judgment modifying 

or setting aside a 

penalty.

U.S. DISTRICT COURT 

COLLECTION ON 

JUDGMENT

U.S. COURT OF APPEALS

Collection can proceed absent 

stay from the court of appeals.

REHEARING

If no rehearing is sought, then 

pay penalty or seek collection. 

PROCESS FOR FPA PART II PENALTY ASSESSMENT 
ALJ HEARING

5 U.S.C. § 554 hearing 

INITIAL DECISION

EXCEPTIONS TO 

COMMISSION 

FINAL COMMISSION DECISION

PENALTY ASSESSMENT

PAYMENT OF 

PENALTY

NOTICE OF PROPOSED PENALTY

The person will receive notice of the proposed penalty, a statement of material facts, and be 

given an opportunity to respond. 

U.S. DISTRICT COURT 

COLLECTION ON 

JUDGMENT

U.S. COURT OF APPEALS

Collection can proceed absent stay 

from court of appeals. 

REHEARING

If no rehearing is sought, then pay penalty 

or seek collection. 

PROCESS FOR NGA PENALTY ASSESSMENT 

RESPONSE TO PROPOSED PENALTY

The person can file any legal or factual arguments that could justify a reduction 

in the proposed penalty within 30 days of the notice. 

HEARING ORDER

Commission issues order for agency paper hearing or 

a hearing before ALJ under Part 385, OE serves as 

trial staff. 

PAPER HEARING

Procedures as 

provided by 

Commission hearing 

order. 
ALJ HEARING

5 U.S.C. § 554 hearing; OE 

serves as trial staff 

INITIAL DECISION

EXCEPTIONS TO COMMISSION 

FINAL COMMISSION DECISION

PENALTY ASSESSMENT

PAYMENT OF PENALTY

NOTICE OF PROPOSED PENALTY

(WITH ELECTION) 

The person will receive notice of the proposed 

penalty, a statement of material facts, and be 

given an opportunity to respond, and may elect 

administrative hearing (§ 31(d)(2)) or 

immediate penalty assessment (§ 31(d)(3)). 

IMMEDIATE PENALTY 

ASSESSMENT

Pay penalty or 

district court review. 

U.S. DISTRICT 

COURT REVIEW

JUDGMENT

Once the Commission has a 

favorable judgment, the 

Commission can seek 

collection on the judgment; 

the Commission can appeal 

a judgment modifying or 

setting aside a penalty. 

U.S. DISTRICT COURT 

COLLECTION ON JUDGMENT

U.S. COURT OF APPEALS

Collection can proceed absent 

stay from the Court of 

Appeals. 

REHEARING

If no rehearing is sought, then pay 

penalty or seek collection. 

COMPLIANCE ORDER

FINAL COMPLIANCE ORDER

NOTICE OF PROPOSED PENALTY

(WITHOUT ELECTION) 

The person will receive notice of the proposed 

penalty, a statement of material facts, and be 

given an opportunity to respond. There is no 

election when the person violated a final 

compliance order issued pursuant to § 31(a). 

NO COMPLIANCE 

PROCESS FOR FPA PART I PENALTY ASSESSMENT 

(A) VIOLATION W/O 

COMPLIANCE ORDER

OR (B) COMPLIANCE,

BUT NOTICE OF 

PENALTY FOR PAST 

CONDUCT
NOTICE OF PROPOSED PENALTY

The person will receive notice of the proposed 

penalty, a statement of material facts, and be given 

an opportunity to respond.

IMMEDIATE PENALTY ASSESSMENT

The person can either pay the penalty 

or have district court review.

U.S. DISTRICT COURT REVIEW

JUDGMENT

Once the Commission has a 

favorable judgment, the 

Commission can seek collection 

on the judgment; the 

Commission can appeal a 

judgment modifying or setting 

aside a penalty. 

U.S. COURT OF 

APPEALS

Collection can proceed 

absent stay from the 

Court of Appeals. 

PAYMENT OF 

PENALTY

RESPONSE TO PROPOSED PENALTY

The person can file any legal or factual arguments that could justify a 

reduction in the proposed penalty within 30 days of the notice.

U.S. DISTRICT COURT 

COLLECTION ON JUDGMENT

PROCESS FOR NGPA PENALTY ASSESSMENT