On July 28, 2022, in Docket No. RM22-20, FERC issued a notice of proposed rulemaking on “Duty of Candor.” In this rulemaking, FERC proposes to add a requirement that all entities communicating with the Commission or other specified organizations related to a matter subject to the jurisdiction of the Commission submit accurate and factual information and not submit false or misleading information or omit material information. An entity is shielded from violation of the regulation if it has exercised due diligence to prevent such occurrences. The Commission proposes to adopt a new section within 18 CFR part 1 to require that entities ensure the accuracy of communications related to a matter subject to the Commission’s jurisdiction when communicating with the following entities: the Commission, Commission-approved market monitors, Commission-approved RTOs, Commission-approved ISOs, jurisdictional transmission or transportation providers, or the Electric Reliability Organization and its associated Regional Entities. Ensuring the accuracy of such communications will increase confidence in Commission-jurisdictional industries and markets and will improve the Commission’s ability to meet its statutory responsibilities. The integrity and effectiveness of the Commission’s regulatory oversight and decision-making authority rely on and require accuracy in communications to each of these entities. FERC believes that a balance must be struck between the need for accurate information and the burden of ensuring the accuracy of that information. Based on the Commission’s experience with its existing regulations (especially 18 CFR 35.41(b)), FERC believes that a duty of candor should apply to: (1) all entities, including both organizations and individuals; (2) communications to the Commission and to certain other specified organizations that administer, participate in, or operate markets and facilities subject to the Commission’s jurisdiction; and (3) communications related to a matter subject to the jurisdiction of the Commission. However, no entity should be penalized or otherwise sanctioned for inaccurate communications where due diligence has been exercised to ensure the communications’ accuracy. Comments in the NOPR are due towards the end of September. Commissioner Danley dissented from the NOPR, stating, among other things, that “…[t]he powers we propose to grant ourselves in this rulemaking are so broad and the standards so vague that, if finalized, it would be a simple proposition for the Commission to “find” that any factually untrue statement, regardless of context, violates the duty of candor, exposing the speaker to sanctions. And rather than establish guard rails or explicit limits to our powers, we instead say “just trust us.” This proposal is chillingly broad in its scope and, by its plain terms, would encompass constitutionally protected speech.”
