Background - Practices (Details)
Energy Compliance, Investigations & Enforcement

Crowell & Moring's attorneys are at the forefront of the energy industry's renewed commitment to compliance. This commitment recognizes the Federal Energy Regulatory Commission's (FERC's) recently enhanced enforcement authority and FERC's expressed intent to be vigilant in investigating and enforcing allegations of improper conduct in competitive electricity and natural gas markets.

Crowell & Moring has unsurpassed experience in representing clients in internal and regulatory investigations. This extends to designing and implementing compliance programs and codes of conduct that conform to industry best practices and that would be favorably viewed under FERC's Penalty Guidelines and Policy Statements on Enforcement, the Principles of Federal Prosecution of Business Organizations, and the federal sentencing guidelines. In recent years, firm attorneys have represented clients in more than a dozen non-public investigations conducted by FERC's Office of Enforcement, in addition to numerous public investigations. These non-public investigations have generally been closed with no further action or with settlements. Some of these matters have involved dual investigations by and settlements with other federal agencies including the U.S. Department of Justice (DOJ), the U.S. Commodity Futures Trading Commission (CFTC), and the U.S. Securities and Exchange Commission (SEC), federal and state prosecutors, and state regulatory authorities.

The firm similarly assists clients in conducting internal investigations of compliance matters that arise with respect to energy trading, bidding and scheduling, plant operations, the natural gas "buy-sell" arrangements, "shipper must have title" and "anti-flipping" rules, price reporting practices, and the myriad obligations imposed on competitive market participants in tariffs, market rules, and FERC regulations and orders. In conducting sensitive internal investigations, the firm assists clients in fully understanding the pertinent facts, in interpreting applicable laws and rules, and in making considered decisions whether and how to self-report potential violations to FERC, market monitors, and other applicable authorities.

FERC now expects energy companies to develop and instill a culture of compliance. Our attorneys are very experienced in conducting independent assessments of clients' existing compliance programs, designing and documenting revitalized compliance programs, and assisting in the formulation of trading and plant operations policies and price reporting procedures. The firm further assists clients with the compliance requirements imposed by the North American Electric Reliability Corporation (NERC), as well as enforcement activities associated with potential NERC Reliability Standard violations.

The firm's Energy practice has attorneys and industry professionals focusing on electricity and natural gas in the regulatory, reliability, and transactional fields. Many devote substantial portions of their time to compliance matters. The Energy practice also includes a former senior FERC official who helped formulate FERC policy regarding market-based rates and provides critical insights into navigating FERC enforcement policies.

The importance of a solid internal regulatory compliance program has grown significantly in recent years. The Energy Policy Act of 2005 gave FERC substantial new enforcement authority to address both manipulation of electricity and natural gas markets, and violations of tariffs, market rules, and FERC orders. FERC's Penalty Guidelines encourage adoption and implementation of robust compliance programs as mitigating factors in reducing any penalties for violations. By being at the forefront of energy compliance matters, Crowell & Moring is uniquely able to advise and to recommend compliance programs that incorporate "best practices" within the industry.

Energy trading, in particular, can involve complex portfolio management of electricity and gas positions. The firm's energy trading attorneys and advisors pride themselves on their in-depth understanding of hedging and risk management trading practices. They have considerable experience with complex trading transactions and with assessing voluminous trading data, which is often essential in assessing compliance with market rules and FERC's anti-manipulation regulations. The firm's attorneys also are keenly aware of accounting and disclosure issues raised in energy trading, as well as the necessity of compliance with Sarbanes-Oxley, the antitrust laws, and other non-FERC compliance requirements. The firm's experience and the breadth of its practice has enabled it to assist clients in handling the increasingly complex and visible compliance requirements presented by participation in today's energy markets.

In advising on compliance matters, the firm's Energy attorneys are thoroughly familiar with RTO- and Independent System Operator (ISO)-specific market rules and market designs. Such an understanding is essential because variations in these rules and designs determine what practices are permitted or prohibited in each of those markets and how internal control procedures must be tailored to each market. Specifically, Crowell & Moring has significant experience with market rules and market design for each organized market in the U.S. today, including the California ISO, Midwest ISO, New York ISO, PJM Interconnection, Southwest Power Pool, ISO New England, and Electric Reliability Council of Texas.

North American Electric Reliability Corporation (NERC)

Today's electric market necessarily subjects many entities, including municipal utilities, to NERC's Reliability Standards.  Crowell & Moring provides advice to a wide array of energy industry clients on all aspects of NERC's reliability standards as well as its monitoring and enforcement processes. We know the rules and what must be done in order to comply and are often able to avoid penalties by staying ahead of the curve. Our energy attorneys assist clients in preparing for periodic NERC compliance audits as well as in developing company-specific compliance programs. We have the capability to build a program from start to finish or to evaluate and enhance a program already in place to ensure it is structured and documented to meet NERC's and FERC's evolving standards.

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