16 Tex. Admin. Code § 22.246 - Administrative Penalties
(a) Scope. This
section addresses enforcement actions related to administrative penalties or
disgorgement of excess revenues only and does not apply to any other
enforcement actions that may be undertaken by the commission or the commission
staff.
(b) Definitions. The
following words and terms, when used in this section, have the following
meanings unless the context indicates otherwise:
(1) Affected wholesale electric market
participant -- An entity, including a retail electric provider (REP),
municipally owned utility (MOU), or electric cooperative, that sells energy to
retail customers and served load during the period of the violation.
(2) Excess revenue -- As defined in §
25.503 of this title (relating to
Oversight of Wholesale Market Participants).
(3) Executive director -- The executive
director of the commission or the executive director's designee.
(4) Person -- Includes a natural person,
partnership of two or more persons having a joint or common interest, mutual or
cooperative association, and corporation.
(5) Violation -- Any activity or conduct
prohibited by the Public Utility Regulatory Act (PURA), the Texas Water Code
(TWC), commission rule, or commission order.
(6) Continuing violation -- Except for a
violation of PURA chapter 17, 55, or 64, and commission rules or commission
orders adopted or issued under those chapters, any instance in which the person
alleged to have committed a violation attests that a violation has been
remedied and was accidental or inadvertent and subsequent investigation reveals
that the violation has not been remedied or was not accidental or
inadvertent.
(c) Amount
of administrative penalty for violations of PURA or a rule or order adopted
under PURA.
(1) Each day a violation continues
or occurs is a separate violation for which an administrative penalty can be
levied, regardless of the status of any administrative procedures that are
initiated under this subsection.
(2) The administrative penalty for each
separate violation of PURA §35.0021, PURA §38.075, or a commission
rule or commission order adopted under PURA §35.0021 or PURA §38.075
will be in an amount not to exceed $1,000,000 per violation per day. For all
other violations, the administrative penalty for each separate violation will
be in an amount not to exceed $25,000 per violation per day. An administrative
penalty in an amount that exceeds $5,000 may be assessed only if the violation
is included in the highest class of violations in the classification
system.
(3) The amount of the
administrative penalty must be based on:
(A)
the seriousness of the violation, including the nature, circumstances, extent,
and gravity of any prohibited acts, and the hazard or potential hazard created
to the health, safety, or economic welfare of the public;
(B) the economic harm to property or the
environment caused by the violation;
(C) the history of previous
violations;
(D) the amount
necessary to deter future violations;
(E) efforts to correct the violation;
and
(F) any other matter that
justice may require, including, but not limited to, the respondent's timely
compliance with requests for information, completeness of responses, and the
manner in which the respondent has cooperated with the commission during the
investigation of the alleged violation.
(d) Amount of administrative penalty for
violations of the TWC or a rule or order adopted under chapter 13 of the TWC.
(1) Each day a violation continues may be
considered a separate violation for which an administrative penalty can be
levied, regardless of the status of any administrative procedures that are
initiated under this subsection.
(2) The administrative penalty for each
separate violation may be in an amount not to exceed $5,000 per day.
(3) The amount of the penalty must be based
on:
(A) the nature, circumstances, extent,
duration, and gravity of the prohibited acts or omissions;
(B) the degree of culpability, including
whether the violation was attributable to mechanical or electrical failures and
whether the violation could have been reasonably anticipated and
avoided;
(C) the demonstrated good
faith, including actions taken by the person, affiliated interest, or entity to
correct the cause of the violation;
(D) any economic benefit gained through the
violations;
(E) the amount
necessary to deter future violations; and
(F) any other matters that justice
requires.
(e)
Initiation of investigation. Upon receiving an allegation of a violation or of
a continuing violation, the executive director will determine whether an
investigation should be initiated.
(f) Report of violation or continuing
violation. If, based on the investigation undertaken in accordance with
subsection (e) of this section, the executive director determines that a
violation or a continuing violation has occurred, the executive director may
issue a report to the commission.
(1) Contents
of the report. The report must state the facts on which the determination is
based and a recommendation on the imposition of an administrative penalty,
including a recommendation on the amount of the administrative penalty and, if
applicable under §
25.503 of this title, a
recommendation that excess revenue be disgorged.
(2) Notice of report.
(A) Within 14 days after the report is
issued, the executive director will give written notice of the report to the
person who is alleged to have committed the violation or continuing violation
which is the subject of the report. The notice may be given by regular or
certified mail.
(B) For violations
of the TWC or a rule or order adopted under chapter 13 of the TWC, within ten
days after the report is issued, the executive director will, by certified
mail, return receipt requested, give written notice of the report to the person
who is alleged to have committed the violation or continuing violation which is
the subject of the report.
(C) The
notice must include:
(i) a brief summary of
the alleged violation or continuing violation;
(ii) a statement of the amount of the
recommended administrative penalty;
(iii) a statement recommending disgorgement
of excess revenue, if applicable, under §
25.503 of this title;
(iv) a statement that the person who is
alleged to have committed the violation or continuing violation has a right to
a hearing on the occurrence of the violation or continuing violation, the
amount of the administrative penalty, or both the occurrence of the violation
or continuing violation and the amount of the administrative penalty;
(v) a copy of the report issued to the
commission under this subsection; and
(vi) a copy of this section, §
22.246 of this title (relating to
Administrative Penalties).
(D) If the commission sends written notice to
a person by mail addressed to the person's mailing address as maintained in the
commission's records, the person is deemed to have received notice:
(i) on the fifth day after the date that the
commission sent the written notice, for notice sent by regular mail;
or
(ii) on the date the written
notice is received or delivery is refused, for notice sent by certified
mail.
(g) Options for response to notice of
violation or continuing violation.
(1)
Opportunity to remedy.
(A) This paragraph does
not apply to a violation of PURA chapters 17, 55, or 64; PURA §35.0021 or
§38.075; or chapter 13 of the TWC; or of a commission rule or commission
order adopted or issued under those chapters or sections.
(B) Within 40 days of the date of receipt of
a notice of violation set out in subsection (f)(2) of this section, the person
against whom the administrative penalty or disgorgement may be assessed may
file with the commission proof that the alleged violation has been remedied and
that the alleged violation was accidental or inadvertent. A person who claims
to have remedied an alleged violation has the burden of proving to the
commission both that an alleged violation was remedied before the 31st day
after the date the person received the report of violation and that the alleged
violation was accidental or inadvertent. Proof that an alleged violation has
been remedied and that the alleged violation was accidental or inadvertent must
be evidenced in writing, under oath, and supported by necessary
documentation.
(C) If the executive
director determines that the alleged violation has been remedied, was remedied
within 30 days, and that the alleged violation was accidental or inadvertent,
no administrative penalty will be assessed against the person who is alleged to
have committed the violation.
(D)
If the executive director determines that the alleged violation was not
remedied or was not accidental or inadvertent, the executive director will make
a determination as to what further proceedings are necessary.
(E) If the executive director determines that
the alleged violation is a continuing violation, the executive director will
institute further proceedings, including referral of the matter for hearing
under subsection (i) of this section.
(2) Payment of administrative penalty,
disgorged excess revenue, or both. Within 20 days after the date the person
receives the notice set out in subsection (f)(2) of this section, the person
may accept the determination and recommended administrative penalty and, if
applicable, the recommended excess revenue to be disgorged through a written
statement sent to the executive director. If this option is selected, the
person must take all corrective action required by the commission. The
commission by written order will approve the determination and impose the
recommended administrative penalty and, if applicable, recommended disgorged
excess revenue or order a hearing on the determination and the recommended
penalty.
(3) Request for hearing.
Not later than the 20th day after the date the person receives the notice set
out in subsection (f)(2) of this section, the person may submit to the
executive director a written request for a hearing on any or all of the
following:
(A) the occurrence of the violation
or continuing violation;
(B) the
amount of the administrative penalty; and
(C) the amount of disgorged excess revenue,
if applicable.
(4)
Failure to respond. If the person fails to timely respond to the notice set out
in subsection (f)(2) of this section, the commission by order will approve the
determination and impose the recommended penalty or order a hearing on the
determination and the recommended penalty.
(5) Opportunity to remedy a weather
preparedness violation.
(A) This paragraph
applies to a violation of PURA §35.0021, §38.075, or a commission
rule or order adopted or issued under those sections.
(B) PURA §15.024(c), as written, does
not apply to a violation of PURA §35.0021, §38.075, or a commission
rule or order adopted or issued under those sections. This paragraph implements
PURA §15.024(c), as modified by PURA §15.023(a), §35.0021(g),
and §38.075(d), for violations of PURA §35.0021, §38.075, or a
commission rule or order adopted or issued under those sections.
(C) The commission may impose an
administrative penalty against an entity regulated under PURA §35.0021 or
§38.075 that violates those sections, or a commission rule or order
adopted under those sections, except:
(i) the
commission will assess a penalty for a violation of PURA §35.0021,
§38.075, or a commission rule adopted under those sections if the entity
against which the penalty may be assessed does not remedy the violation within
a reasonable amount of time; and
(ii) the commission will not assess a penalty
for a violation of PURA §35.0021, §38.075, or a commission rule or
order adopted or issued under those sections if the violation was accidental or
inadvertent, and the entity against which the penalty may be assessed remedies
the violation within a reasonable period of time.
(D) For purposes of this paragraph, the
following provisions apply unless a provision conflicts with a commission rule
or order adopted under PURA §35.0021 or §38.075, in which case, the
commission rule or order applies.
(i) Not all
violations to which this paragraph applies can be remedied. Clauses (C)(i) and
(C)(ii) of this paragraph do not apply to a violation that cannot be
remedied.
(ii) For purposes of
clauses (C)(i) and (C)(ii) of this paragraph, an entity that claims to have
remedied an alleged violation and, if applicable, that the alleged violation
was accidental or inadvertent has the burden of proving its claim to the
commission. Proof that an alleged violation has been remedied and, if
applicable, that the alleged violation was accidental or inadvertent must be
evidenced in writing, under oath, and supported by necessary
documentation.
(iii) An entity that
remedies a violation that is discovered during an inspection by the independent
organization certified under PURA §39.151 for the ERCOT power region prior
to the deadline provided to that entity by the independent organization in
accordance with PURA §35.0021 or §38.075 is deemed to have remedied
that violation in a reasonable period of time.
(iv) If the independent organization
certified under PURA §39.151 has not provided an entity with a deadline,
the executive director will determine whether the deadline can be remedied and,
if so, the deadline for remedying a violation within a reasonable period of
time. The executive director will provide the entity with written notice of the
violation and the deadline for remedying the violation within a reasonable
period of time. This notice does not constitute notice under paragraph (f)(2)
of this section unless it fulfills the other requirements of that subsection.
However, the provisions of subparagraph (f)(2)(D) of this section apply to
notice under this clause.
(v) The
executive director will determine if and when a report should be issued to the
commission under subsection (f) of this section and will make a determination
as to what further proceedings are necessary.
(vi) If the executive director determines
that the alleged violation was not remedied within a reasonable period of time
or is a continuing violation, the executive director will issue a report to the
commission under subsection (f) of this section and will institute further
proceedings, including referral of the matter for hearing under subsection (i)
of this section.
(vii) If the
commission determines that the deadline for remedying a violation provided by
the independent organization certified under PURA §39.151 or determined by
the executive director is unreasonable, the commission will determine what the
deadline should have been. The commission will use this updated deadline to
determine the applicability of subclauses (C)(i) and (C)(ii) of this paragraph
and, if appropriate, as a factor in determining the magnitude of administrative
penalty to impose against the entity for the violation.
(h) Settlement
conference. A settlement conference may be requested by any party to discuss
the occurrence of the violation or continuing violation, the amount of the
administrative penalty, disgorged excess revenue if applicable, and the
possibility of reaching a settlement prior to hearing. A settlement conference
is not subject to the Texas Rules of Evidence or the Texas Rules of Civil
Procedure; however, the discussions are subject to Texas Rules of Civil
Evidence 408, concerning compromise and offers to compromise.
(1) If a settlement is reached:
(A) the parties must file a report with the
executive director setting forth the factual basis for the
settlement;
(B) the executive
director will issue the report of settlement to the commission; and
(C) the commission by written order will
approve the settlement.
(2) If a settlement is reached after the
matter has been referred to the State Office of Administrative Hearings, the
matter will be returned to the commission. If the settlement is approved, the
commission will issue an order memorializing commission approval and setting
forth commission orders associated with the settlement agreement.
(i) Hearing. If a person requests
a hearing under subsection (g)(3) of this section, or the commission orders a
hearing under subsection (g)(4) of this section, the commission will refer the
case to SOAH under §
22.207 of this title (relating to
Referral to State Office of Administrative Hearings) and give notice of the
referral to the person. For violations of the TWC or a rule or order adopted
under chapter 13 of the TWC, if the person charged with the violation fails to
timely respond to the notice, the commission by order will assess the
recommended penalty or order a hearing to be held on the findings and
recommendations in the report. If the commission orders a hearing, the case
will then proceed as set forth in paragraphs (1) - (5) of this subsection.
(1) The commission will provide the SOAH
administrative law judge a list of issues or areas that must be
addressed.
(2) The hearing must be
conducted in accordance with the provisions of this chapter and notice of the
hearing must be provided in accordance with the Administrative Procedure
Act.
(3) The SOAH administrative
law judge will promptly issue to the commission a proposal for decision,
including findings of fact and conclusions of law, about:
(A) the occurrence of the alleged violation
or continuing violation;
(B)
whether the alleged violation was cured and was accidental or inadvertent for a
violation of any chapter other than PURA chapters 17, 55, or 64; of a
commission rule or commission order adopted or issued under those chapters; or
of chapter 13 of the TWC; and
(C)
the amount of the proposed administrative penalty and, if applicable, disgorged
excess revenue.
(4) Based
on the SOAH administrative law judge's proposal for decision, the commission
may:
(A) determine that a violation or
continuing violation has occurred and impose an administrative penalty and, if
applicable, disgorged excess revenue;
(B) if applicable, determine that a violation
occurred but that, as permitted by subsection (g)(1) of this section, the
person remedied the violation within 30 days and proved that the violation was
accidental or inadvertent, and that no administrative penalty will be imposed;
or
(C) determine that no violation
or continuing violation has occurred.
(5) Notice of the commission's order issued
under paragraph (4) of this subsection must be provided under the Government
Code, chapter 2001 and §
22.263 of this title (relating to
Final Orders) and must include a statement that the person has a right to
judicial review of the order.
(j) Parties to a proceeding. The parties to a
proceeding under chapter 15 of PURA relating to administrative penalties or
disgorgement of excess revenue will be limited to the person who is alleged to
have committed the violation or continuing violation and the commission,
including the independent market monitor. This does not apply to a subsequent
proceeding under subsection (k) of this section.
(k) Distribution of Disgorged Excess
Revenues. Disgorged excess revenues must be remitted to an independent
organization, as defined in PURA §39.151. The independent organization
must distribute the excess revenue to affected wholesale electric market
participants in proportion to their load during the intervals when the
violation occurred to be used to reduce costs or fees incurred by retail
electric customers. The load of any market participants that are no longer
active at the time of the distribution will be removed prior to calculating the
load proportions of the affected wholesale electric market participants that
are still active. However, if the commission determines other wholesale
electric market participants are affected or a different distribution method is
appropriate, the commission may direct commission staff to open a subsequent
proceeding to address those issues.
(1) No
later than 90 days after the disgorged excess revenues are remitted to the
independent organization, the monies must be distributed to affected wholesale
electric market participants active at the time of distribution, or the
independent organization must, by that date, notify the commission of the date
by which the funds will be distributed. The independent organization must
include with the distributed monies a communication that explains the docket
number in which the commission ordered the disgorged excess revenues, an
instruction that the monies must be used to reduce costs or fees incurred by
retail electric customers, and any other information the commission
orders.
(2) The commission may
require any affected wholesale electric market participants receiving disgorged
funds to demonstrate how the funds were used to reduce the costs or fees
incurred by retail electric customers.
(3) Any affected wholesale electric market
participant receiving disgorged funds that is affiliated with the person from
whom the excess revenue is disgorged must distribute all of the disgorged
excess revenues directly to its retail customers and must provide certification
under oath to the commission that the entirety of the revenues was distributed
to its retail electric customers.
Notes
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