FERC Withdraws Controversial "Duty Of Candor" Proposal

Chairman Swett maintains agenda of simplifying regulations, while contending that FERC's existing communications rule is more than adequate to regulate communications.

At the November 20, 2025 Open Meeting, the Federal Energy Regulatory Commission ("FERC") issued an order withdrawing and terminating a controversial 2022 notice of proposed rulemaking ("NOPR") to add an omnibus duty of candor to its regulations governing all communications with FERC and other related organizations.¹ FERC Chairman Laura Swett noted that this action reflects her priorities of streamlining the regulatory process, and cutting through regulatory red tape. Commissioner Rosner, who Ms. Swett replaced as Chairman, echoed this sentiment, adding that there are already many applicable regulations imposing a duty of candor.

Existing Communication Rule and Duty of Candor NOPR

Section 35.41(b) of FERC's regulations requires all market-based rate ("MBR") authorized sellers of electricity to "provide accurate and factual information and not submit false or misleading information, or omit material information" in communications with FERC, regional transmission organizations ("RTOs")/independent system operators ("ISOs"), market monitors, and jurisdictional transmission providers.² This market behavior rule has been a mainstay of FERC's enforcement efforts in the wholesale electric markets, used in a wide variety of contexts, for example: omissions and/or inaccurate communications with FERC; inaccurate regulatory filings with FERC; discovery violations during investigations; improperly declared outage tickets submitted to RTOs; misleading explanations about generator offer strategies to market monitors. FERC investigations into alleged manipulation of the wholesale electric markets frequently include related allegations of Section 35.41(b) violations.³

The 2022 Duty of Candor proposal would have created a new regulation prohibiting inaccurate communications from any entity—including individuals at companies, law firms, or consulting firms—concerning any communications related to matters under FERC's jurisdiction, noting that the proposal would cover any communication that "relates to a matter subject to the jurisdiction of the Commission."

While some entities (RTOs, ISOs, and market monitors) were supportive of the proposed rule change, the industry as a whole—utilities, trade organizations, and other stakeholders—largely panned the proposal as greatly expanding FERC's ability to police a broad range of market communications without having shown a need to do so. The breadth of the proposal's regulation of speech also raised significant First Amendment concerns that FERC would have had to address on appeal.⁴ FERC's explanation for withdrawing the 2022 proposal was brief but made clear that the agency was influenced by the industry comments (which, as noted, were largely critical). FERC also emphasized "that there are numerous existing regulations that prohibit untruthful, inaccurate, or incomplete communications to the Commission and other organizations upon which it relies"—and that market participants were expected to follow those regulations, including the existing market behavior rule governing communications.

Compliance Takeaway

Chairman Swett's decision to terminate the Duty of Candor NOPR, which was supported by Commissioners from both parties, signals FERC's interest in taking a streamlined approach to its regulatory remit. That the Commission has chosen not to proceed with an omnibus duty of candor regulation should not be viewed as a capitulation to the market or relaxing of regulatory priorities. Rather, FERC's recent enforcement activity shows that FERC will use the myriad of statutory, regulatory, and procedural mechanisms available to it to investigate and penalize bad actors.⁵

Further, the just-issued 2025 Report on Enforcement demonstrates FERC's frequent use of the existing Communication market behavior rule. Five out of eleven FERC Enforcement actions include a violation of the Communication rule;⁶ six out of twenty-four Enforcement investigations opened in 2025 involved violations of the Communication rule;⁷ and there were at least eight market monitor referrals related to alleged violations of the Communication rule.⁸

Footnotes

1. Duty of Candor, 180 FERC ¶ 61,052 (2022); Duty of Candor, 193 FERC ¶ 61,129 (2025).

2. 18 C.F.R § 35.41(b),

3. Coaltrain Energy, L.P., Peter Jones, Shawn Sheehan, Robert Jones, Jeff Miller, Jack Wells, and Adam Hughes, Order Assessing Civil Penalties, 155 FERC ¶ 61,204 (2016); 2020 Report on Enforcement, Docket No. AD07-13-014 at P 39 (2020) (discussing an investigation opened into violations of the Anti-Manipulation Rule and Section 35.41(b)); 2024 Report on Enforcement, Docket No. AD07-13-018 at PP 38-39 (2024) (discussing two investigations opened by Enforcement staff into violations of the Ant-Manipulation Rule and Section 35.41(b)).

4. See, e.g., Joint Comments of Energy Trade Associations, Docket No. RM22-20-000 (2022).

5. Los Angeles Department of Water and Power, Docket No. IN25-11-000, Order Approving Stipulation and Consent Agreement, 193 FERC ¶ 61,010 (2025); see 2025 Report on Enforcement, Docket No. AD07-13-019 (2025).

6. 2025 Report on Enforcement, Docket No. AD07-13-019,PP 8-9 (2025).

7. Id. at 36.

8. Id. at 47.

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