posted on Monday, March 26, 2007 2:09 PM by Andrea Kells

FERC Exercises New Natural Gas Civil Penalty Authority

FERC has approved a settlement agreement between its Office of Enforcement and Bangor Gas Company, LLC (Bangor Gas) requiring Bangor Gas to pay a civil penalty of $1 million for self-reported violations of FERC's shipper-must-have-title policy.  That policy requires shippers who transport natural gas using their own capacity to hold title to that natural gas.  The settlement represents the first time FERC has exercised the natural gas civil penalty authority granted to it by the Energy Policy Act of 2005.  That authority permits FERC to impose a penalty of up to $1 million per day per violation of FERC's rules, regulations, and orders issued under the Natural Gas Act.  In addition to the monetary penalty, the settlement requires Bangor Gas to file semi-annual reports with FERC's Office of Enforcement to ensure future compliance with FERC's natural gas transportation requirements, including the shipper-must-have-title policy.   

In accordance with its Policy Statement on Enforcement of October 2005, FERC considered several factors in fixing Bangor Gas' penalty:  (1) the shipper-must-have-title policy is a long-standing and well-known element of FERC's natural gas transportation policies; (2) senior management's failure to ensure that Bangor Gas personnel complied with this policy; (3) Bangor Gas's prompt submission of the self-report; (4) Bangor Gas cooperated with the agency during its investigation; (5) Bangor Gas took prompt action to ensure future compliance; and (6) the violations occurred only on short pipeline segments serving a small geographic area, with no identifiable financial harm to other parties.  Consideration of such factors will likely make the difference in future investigations between FERC's imposition of the full scope of its penalty authority or a lesser penalty.