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For legal teams navigating regulatory investigations in the energy sector, success is largely a matter of preparation. That was the key takeaway from the Legal Innovation Forum’s 2026 webinar, Regulatory Investigations in the Energy Sector – Navigating Scrutiny, from Investigation to Resolution, presented in partnership with Exterro. The panelists returned repeatedly to the same fundamentals for investigations teams: a well-established investigation process, early document preservation, safeguards for protecting privilege, pre-vetted communications, and tightly controlled use of technology.
The CLE-accredited session brought together compliance, regulatory, legal, and technology experts to examine how organizations should prepare for, manage, and ultimately resolve investigations. The panel featured Kevin Gross, Founder and Fractional Chief Compliance Officer at Compliance & Risk Consulting Group LLC; Dimitri Seletzky, Senior Counsel at Chevron; Karen Pruitt, Director of eDiscovery Customer Solutions at Exterro; and Mark Williams, Partner, Energy Regulatory and Markets, at Clifford Chance.
The discussion focused on four major themes: the current investigations landscape, practical steps legal teams should take prior to and during investigations, the impact of growing data volumes and AI, and best practices for cooperation with regulators.
The changing regulatory landscape
Energy companies operating in the U.S. answer to dozens of state utility regulators as well as federal agencies. For the purposes of the discussion, Mark Williams focused on the Federal Energy Regulatory Commission (FERC), highlighting three current trends shaping FERC investigations:
- Significant scrutiny of the defined products being sold and traded and how they are reported to markets
- Continued focus on potential false statements, misleading conduct, and pretextual (insider) trading
- Growing reliance on referrals from the internal and independent market monitors of regional transmission organizations (RTOs) and independent system operators (ISOs)
Kevin Gross cautioned against assuming regulators have become less active under the current administration.
“The government is still bringing cases and still very focused on things that affect consumers,” he said, pointing to recent enforcement actions in other sectors. With electricity and fuel prices remaining politically sensitive, he expects continued regulatory interest in energy markets.
Gross also emphasized the growing trend toward international regulatory cooperation.
“We’re going to continue to see a lot of cross-border cooperation” among U.S., European, and other regulators, particularly in matters involving corruption, sanctions, and international business activities.
Investigations often begin quietly
One of the most significant developments discussed during the webinar was the way FERC now approaches potential investigations.
Williams explained that many matters begin as informal, non-public inquiries rather than clearly identified investigations.
Following operational changes brought about during the COVID-19 pandemic, FERC has increasingly adopted a preliminary inquiry model. As a result, companies may initially receive information requests without fully understanding the scope of the potential investigation.
As Williams warned later in the session: “Never assume any communication from FERC staff or from an ISO monitor is trivial in nature.”
The implications were clear: organizations should treat every regulator inquiry seriously from the outset, and may need to trigger certain internal processes before it’s clear an investigation is underway.
The critical first 48 hours
The panelists agreed that the earliest stages of an investigation are often the most important.
Dimitri Seletzky, a former energy regulatory attorney, noted that legal teams should immediately focus on three priorities:
- Preserving relevant information and records
Protecting legal privilege - Ensuring the investigation is properly scoped to avoid over-preservation and, crucially, under-preservation
Kevin Gross stressed the importance of having a formal investigation protocol before a problem emerges. Said the fractional chief compliance officer, “If you don’t have protocols in place, you’re already behind.”
Williams and Seletzky both noted that when internal counsel leads an investigation, the lawyers directing the process must be clearly identified for everyone involved—including the regulator, who should be given two key contacts to ensure clear communication and responsibility for meeting deadlines.
Williams was also at pains to point out that although a regulator’s tolling agreement may seem like overreach, refusing to execute it often results in more negative proceedings and a more punitive outcome.
Dimitri Seletzky emphasized the importance, for internal counsel, of establishing a strong cross functional team, with:
- Colleagues who understand the business side of the matter being investigated
- External tech providers or the internal IT forensics team
- Security experts
- Staff from the finance or audit team
Managing communications and reputation
Regulatory investigations have implications far beyond the legal department. Stakeholders across an organization, as well as customers, suppliers, investors, and the public, may become aware of developments quickly, and at different points in the process.
Williams identified three distinct audiences:
- Internal parties: Informed in response to a formal notice or data request from the regulator
- Associated parties: Contacted for additional information
- The public: Informed via public disclosure by the regulator, litigation, or formal enforcement proceedings
Because of the speed at which these developments can unfold and the time needed to vet statements, companies should prepare their communications well before they are required.
Mark Williams’ top three communication best practices:
- Develop approved statements before they are needed
- Coordinate messaging with legal, investor-relations, and communications teams, and consider how that messaging will be understood by the regulator
- Establish a timeline with trigger dates for each statement and set of talking points
Data challenges, technology and AI
A recurring theme throughout the webinar was the explosion of data volumes involved in modern investigations.
Karen Pruitt said organizations are facing unprecedented technological and operational challenges.
“I see massive amounts of data coming from these customers and I see more and more technological challenges for them in dealing with that,” she said.
Increasingly, organizations are choosing to keep investigations and data review functions internal.
“Bringing a lot of technology in-house versus waiting and shipping to outside counsel is one of the biggest trends I’ve seen in the last five years,” she said.
The reasons are largely practical:
- Improved data security
- Reduced costs
- Greater control over sensitive information
“The more you hand data from one source to another, the more errors occur and the more risk you get with hacking,” Pruitt observed.
Legal hold technology was identified as an essential capability. Pruitt warned that organizations relying on spreadsheets or manual tracking methods expose themselves to significant compliance risks and regulatory penalties.
AI: Opportunity and risk
Artificial intelligence generated some of the most animated discussion of the webinar.
Pruitt praised AI’s ability to improve efficiency, while emphasizing the need for transparency and auditability.
“Efficiency is absolutely amazing,” she said. “Auditability of results is huge.”
Seletzky agreed that AI can speed the work of investigations teams, but also increases the time needed for review, reminding the audience: “You, the attorney, are responsible for all the outputs.”
Gross highlighted emerging concerns around privilege.
“Recent court decisions,” he noted, suggest AI prompts and responses are not automatically protected by privilege. Organizations must therefore ensure AI-assisted investigative work occurs within controlled and secure environments.
The panel consistently returned to one central principle: the need for a human in the loop.
Cooperation and resolution
The webinar concluded with advice on achieving the best possible outcomes once investigations are underway.
Williams noted that FERC places considerable weight on cooperation when determining resolutions. Fast, complete, and accurate responses to data requests can significantly affect outcomes.
Importantly, he also reminded attendees that most investigations do not end in litigation.
“It is important to bear in mind that the overwhelming majority … 80 to 90 percent of FERC investigations, once opened, are dismissed or significantly reduced to being tariff violation cases only, which yields a far less crippling exposure to punitive remedies and only a relative handful wind up being formally adjudicated,” he said.
Gross echoed that point, noting that regulators generally prefer settlements supported by thorough internal investigations.
Seletzky offered this closing observation:
“In my experience as a regulatory attorney, the ones I always thought were the most successful were the ones that we were able to disagree agreeably with the regulator, because the regulator is the regulator. They’re going to be there forever, so you need to figure out a way to get along even when you think they are wrong.”
Collectively, the speakers distilled their advice into a simple framework: prioritize privilege, preservation, process, and communication. Companies that prepare in advance, leverage technology responsibly, manage data effectively, and engage constructively with regulators are far better positioned to navigate scrutiny from first inquiry through final resolution.
The session is CLE accredited. To view the full webinar, click here.
Frequently Asked Questions: Regulatory Investigations in the Energy Sector
Most formal FERC investigations start with a referral or data submission from the independent market monitor of a regional transmission organization (RTO) or an independent system operator (ISO). That’s according to Mark Williams, Partner, Energy Regulatory and Markets at Clifford Chance. Since the COVID-19 pandemic, FERC has also shifted to informal, non-public preliminary inquiries. Companies may get information requests in which the full scope of a potential investigation isn’t initially clear.
Mark Williams of Clifford Chance identifies three current FERC trends. The first is closer scrutiny of wholesale and power trading products and how they are reported to markets. The second is a continued focus on false statements, misleading conduct and trades with no clear legitimate business purpose. The third is growing reliance on referrals from ISO and RTO independent market monitors.
Yes. FERC increasingly begins matters as informal, non-public inquiries, so an early request for information may be the first sign of a larger investigation. Mark Williams of Clifford Chance advises companies never to treat any communication from FERC staff or an ISO market monitor as trivial.
Dimitri Seletzky, Senior Counsel at Chevron, says the immediate priorities are to preserve relevant records, protect legal privilege, and scope the investigation correctly so the company neither over-preserves nor under-preserves. Kevin Gross of Compliance & Risk Consulting Group adds three more steps: have investigation protocols in place before they’re needed, put document-preservation measures in place immediately, and decide early whether to bring in outside counsel.
Dimitri Seletzky of Chevron noted the importance of establishing a cross-functional team with colleagues from an entity’s business, IT forensics, security, and finance and audit functions. On AI, Kevin Gross notes that recent court decisions suggest AI prompts and outputs may not automatically be privileged. AI-assisted investigative work should therefore happen in controlled, secure environments, and staff should be instructed on their proper use.
Yes, with safeguards. Karen Pruitt, Director of eDiscovery Customer Solutions at Exterro, says AI brings major efficiency gains, but its results must be transparent and auditable. Dimitri Seletzky of Chevron noted the increase in both the speed at which investigations teams can operate and the review times required, and cautioned that attorneys remain responsible for every AI output. The panel’s consistent recommendation was to keep a human in the loop.
Karen Pruitt of Exterro calls the move to in-house technology one of the biggest trends of the past five years. Companies are doing it for better data security, lower costs and more control over sensitive information. Each handoff of data between parties adds risk of errors and hacking. Pruitt also warns that tracking legal holds in spreadsheets or by hand exposes organizations to compliance risk and regulatory penalties.
Mark Williams of Clifford Chance identifies three points at which different audiences become aware of an investigation: initial notification, regulator or entity outreach to third parties, and public disclosure or enforcement proceedings. He recommends three things: 1. Prepare approved statements and talking points in advance. 2. Coordinate messaging across legal, investor relations and communications. 3. Establish a timeline with trigger dates for each set of communications.
Relatively few. According to Mark Williams of Clifford Chance, 80 to 90 percent of opened FERC investigations are dismissed or reduced to tariff-violation-only cases, which carry far less exposure to punitive remedies. Only a small number are formally adjudicated.
FERC gives significant weight to cooperation when it decides how to resolve a matter, and fast, complete and accurate responses to information requests can meaningfully improve outcomes. That’s according to Mark Williams of Clifford Chance. Kevin Gross adds that regulators generally prefer settlements backed by thorough internal investigations. Dimitri Seletzky of Chevron advises learning to “agreeably disagree.”
The panel at the Legal Innovation Forum’s 2026 webinar, presented with Exterro, boiled its advice down to four priorities: privilege, preservation, process and communication. Companies that prepare in advance, use technology responsibly, manage data well and engage constructively with regulators are best placed to handle scrutiny from first inquiry to final resolution.