FERC’s proposed “openness rule” will stifle communication | Wbactive

The new “openness rule” proposed by the Federal Energy Regulatory Commission shows the administrative state’s willingness to punish anything it deems to be “misinformation”. Earlier this year, the Biden administration was embarrassed to scrap its Disinformation Governance Board, but government efforts to monitor public discourse are ongoing, and other agencies are filling the void.

Enter the Federal Energy Regulatory Commission, an agency that oversees the nation’s wholesale energy markets for oil, natural gas, and hydroelectric power.

In August, the Commission announced a far-reaching “openness rule” that would subject communications from a number of new parties to regulatory scrutiny. The Commission stated that inaccurate information undermines its mission to ensure fair market prices for energy. Therefore, the Commission found it necessary to prohibit communications that were false, misleading or marred by material omissions.

Sounds reasonable, but behind these benign generalities lie serious problems with the Commission’s rule and its justifications.

What does the rule include? As written, any communication to the Commission or the companies it regulates where the communication “relates” to an issue within the competence of the Commission.

Who does the rule affect? Any regulated organization and its employees, agents and contractors.

It doesn’t take a law degree to appreciate the extraordinary breadth and imprecision of this rule. And while the above answers are cause for concern, it’s the unanswered questions that raise alarms.

For example, what is the standard for determining whether a statement is misleading or implicit information is material? The Commission is shy; it prefers a “flexible” enforcement approach to the use of concrete standards. But the wording of the rule is broad enough to cover minor misstatements or omissions, even if made without intent to deceive or knowledge of their inaccuracy.

Which subjects fall within the competence of the Commission and thus within the scope of the rule? Here, too, the Commission is evasive.

Energy policy and, to a certain extent, climate and environmental issues are the responsibility of the Commission. Any matter related to these issues in a weakened manner could trigger an investigation by the Commission. Creativity is the only apparent limit to the Commission’s ability to claim that myriad issues relate to its core areas of responsibility.

Finally, what are the penalties? In a word: mysterious.

The Commission did not see a need to set the penalties for lack of openness, leaving regulated parties to guess how serious the enforcement risks might be. Only by exercising due diligence can a regulated party save itself, but as expected, the Commission’s notion of due diligence is as undefined as any major aspect of this rule.

The vagueness of the rule appears intentional. This isn’t just because the Commission doesn’t want to do the detail-oriented work of tailoring its rule to specific claims. Agencies thrive on the ambiguity, the legal gray area, in which to interpret their powers and thus extend them to new issues and tasks that Congress never intended when they were created.

But vagueness could be the undoing of this rule. The lack of meaningful standards increases the risk of any covered communication. As a result, market participants and the public will limit communication on matters even remotely related to the Commission’s authority. Not only will this reduce information sharing in energy markets, but it will also raise serious First Amendment concerns.

Posts questioning climate change or criticizing the environmental impact of a pipeline could violate the rule.

As the pandemic has taught us, federal agencies tend to politicize expertise and stifle dissent when they impede the implementation of government-favored policies.

There are 434 federal agencies. Which of these agencies could not claim that accurate information is essential to their regulatory mandate? If the Commission’s rule succeeds, expect other agencies to emulate it, subjecting an alarming number of communications to administrative state scrutiny.

If public authorities assert the right to suppress disinformation and also define the concept, public discussion and debate will wither away in the areas where it is most needed.


Jack Fitzhenry is Senior Legal Policy Analyst at the Heritage Foundation’s Meese Center for Legal and Judicial Studies.

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