FERC Settles Decade-Old Enforcement Allegations

FERC sought $225 million in proposed civil penalties and disgorgement from TGPNA and two individual traders.  For context, since 2007, FERC’s enforcement program has collected a total of $897 million in civil penalties,² and in 2024, FERC imposed $78 million in combined civil penalties and disgorgement.³

TGPNA and its traders have proclaimed their innocence for more than a decade.  They challenged FERC Enforcement both at the agency and in the federal courts.  They played the long game.  The terms of the TGPNA-FERC settlement are very favorable to TGPNA and the individual traders, and demonstrate that, while the process itself can sometimes seem like a punishment, fighting back against unfounded allegations and persisting in litigation can result in vindication.⁴

First, despite seeking $216 million in civil penalties, FERC agreed to a settlement with no civil penalties.  Second, after seeking over $10 million is disgorgement, FERC agreed to settle for $5 million in “restitution.”

Third, in a first of its kind FERC settlement, TGPNA (and the individual traders) retain the right to continue to deny the government’s allegations.  Usually FERC requires that respondents “neither admit or deny” the allegations — and, if they do deny, that is itself a potential violation of a Commission order.  FERC Enforcement maintains that its allegations were not “unfounded.”

Fourth, this settlement includes a provision limiting FERC from attempting to seek future penalty enhancements based on the allegations resolved by the settlement, also a first of its kind provision in a FERC settlement.  Finally, the agreement was signed solely by TGPNA, but its terms release all of the named individuals and additional foreign entities who were subjects of FERC’s allegations.

From the outset, TGPNA and the individual traders have denied the allegations, and also challenged FERC’s right to litigate liability for its allegations in an in-house forum before a FERC Administrative Law Judge (“ALJ”).⁵  The Commission rejected TGPNA’s arguments and forced TGPNA to defend itself in an in-house proceeding before a FERC ALJ.⁶

TGPNA brought its case to Federal District Court arguing, among other things, that they had a right to challenge the structural constitutional infirmities of FERC’s process while the process was ongoing (rather than waiting for FERC to finish its in-house proceeding before appealing to a federal court of appeals) and that the proper forum for FERC’s allegations were the federal district courts.⁷  The District Court issued a stay of FERC’s in-house proceeding pending the outcome of several cases that were under consideration by the United States Supreme Court and would likely bear on the validity of TGPNA’s arguments.  These cases included Axon Enterprise, Inc. v. FTC and SEC v. Cochran, where the Supreme Court decided that respondents in enforcement cases have the right to challenge structural constitutional infirmities with agency process while the enforcement cases are pending,⁸ and SEC v. Jarkesy, where the Supreme Court held that the Seventh Amendment to the U.S. Constitution entitles a respondent in an administrative enforcement investigation to a jury trial in a federal court under Article III of the Constitution when a federal agency seeks civil penalties for fraud.⁹

Following the Jarkesy opinion and TGPNA pressing its federal court lawsuit, on September 19, 2024, FERC voluntarily issued an Order Terminating the [ALJ] Hearing and Holding Proceeding in Abeyance (the “Order”).¹⁰  Recognizing Jarkesy, the Order stated that the Commission would not impose the civil penalties or disgorgement sought in its Order to Show Cause through a trial-type evidentiary hearing conducted by an in-house Commission ALJ.¹¹  In that same Order, the Commission referred to a future order that it has yet to issue that would “further address its approach to enforcement cases in light of Jarkesy.”¹²

FERC’s acknowledgement that respondents in enforcement cases have a right to have their cases heard in federal court, and not before an in-house FERC ALJ, is overdue.  The Order addresses many of the procedural and substantive infirmities in the FERC Enforcement Process.¹³  It can be hoped that when FERC issues the order governing its approach to future enforcement cases it will not only cement a respondent’s right to a jury trial, but will also seek to correct many of the other structural constitutional infirmities and due process concerns that TGPNA raised.

¹ Total Gas & Power N. Am., Inc., 155 FERC ¶ 61,105 at P 1 (Apr. 28, 2016).  TGPNA has since changed its name to TotalEnergies Gas & Power North America, Inc.  The Order to Show Cause also made allegations against certain foreign TotalEnergies entities and two individual traders.  TGPNA, the foreign entities, and the individual traders were all represented by current Vinson & Elkins lawyers since before the Order to Show Cause.

² “All Civil Penalty Actions – 2025,” Federal Energy Regulatory Commission, accessed Jan. 8, 2025, https://ferc.gov/civil-penalties/all-civil-penalty-actions-2025.

³ Press Release, Federal Energy Regulatory Commission, FERC Issues Fiscal 2024 Enforcement Report (Nov. 21, 2024), https://www.ferc.gov/news-events/news/ferc-issues-fiscal-2024-enforcement-report. 

⁴ Total Gas & Power North America, Inc., 190 FERC ¶ 61,011 (2025), as modified by Errata Notice (issued Jan. 8, 2025).

⁵ See Total Gas & Power N. Am., Inc., Answer in Opposition to Order to Show Cause and Notice of Proposed Penalty, Docket No. IN12-17-000 (filed July 12, 2016).

⁶ Total Gas & Power N. Am., Inc., 176 FERC ¶ 61,026 (July 15, 2021).

⁷ TotalEnergies Gas & Power N.A., Inc. et al. v. Federal Energy Regulatory Commission, et al., 4:22-cv-4318 (S.D. Tex., Dec. 13, 2022).

⁸ Axon Enter., Inc. v. FTC, 598 U.S. 175 (2023).

⁹ SEC v. Jarkesy, 603 U.S. 109 (2024).  The Supreme Court determined that when agencies seek civil penalties, the “remedy is all but dispositive,” id. at 111, which likely means that FERC will never be able to seek civil penalties through a forced in-house proceeding again.

¹⁰ Total Gas & Power N. Am., Inc., 188 FERC ¶ 61,197 (2024).

¹¹ Id. at P 5.

¹² Id. at P 6.

¹³ William Scherman, John Shepherd, & Jason Fleischer, The New FERC Enforcement: Due Process Issues in the Post-EPAct 2005 Enforcement Cases, 31 Energy Law Journal 55 (2010); William Scherman, Brandon C. Johnson, & Jason Fleischer, The FERC Enforcement Process: Time for Structural Due Process and Substantive Reforms, 35 Energy Law Journal 101 (2014).