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ENERGY LAWJOURNAL
Volume 32, No. 1 2011
THE
“
POWER
”
OF SOCIAL MEDIA: LEGAL ISSUES &BEST PRACTICES FOR UTILITIES ENGAGINGSOCIAL MEDIA
by Carolyn Elefant
SYNOPSIS:
Once Web 2.0 luddites, more and more utilities are nowadopting social media. Whether it
‘
s a company profile and job postings onLinkedIn, a Facebook page with tips about energy efficiency, or a Twitter streamdisseminating information about recent outages, utilities are undeniably seriousabout adding digital real estate to their service territory.Yet even as the utility march towards Web 2.0 gathers momentum, theheavily regulated nature of the utility industry presents challenges in thenaturally free-flowing world of social media. In addition to the traditional issuesthat all businesses face when engaging social media
—
from workplace concernsrelated to employee abuses of social media and appropriate discipline tocopyright and IP protection
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utilities must also ensure that their participationin social media does not run afoul of affiliate codes of conduct, SEC regulation,and a host of other compliance issues. This article provides an exhaustivesummary of the legal and regulatory issues potentially implicated by utilityengagement in social media, and proposes best practices and guidelines fordevelopment of a social media policy that reduce the risks of social media forutilities.I. Overview of Utility Engagement of Social Media ...................................... 4A. What Is Social Media and Why Does It Matter? ................................. 4B. Utility Use of Social Media: Slow but Emerging ................................ 5C. The Future of Utilities and Social Media ............................................. 9II. Legal and Regulatory Issues ..................................................................... 11A. The Utility
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s Different Hats ............................................................... 11B. Utility as Employer ............................................................................ 111. Social Media and Hiring Practices ............................................... 12a. Discrimination in Recruitment and Employment Ads ............. 12
Carolyn Elefant is principal attorney with the Law Offices of Carolyn Elefant in Washington D.C., whereshe focuses on energy regulatory, renewables issues and appeals. An early adopter of social media in her lawpractice, Carolyn is co-author, with Nicole Black, of
Social Media for Lawyers: The Next Frontier
(ABA July2010). Carolyn represents and consults with law firms and regulated entities on social media strategy andcompliance issues.
2 ENERGY LAW JOURNAL [Vol. 32:1
b. Legal Issues Related to Reliance on Social Media Profilesin Hiring Decisions................................................................... 13c. Prohibition of Searches for Genetic Information ..................... 14i. Judgment and Lifestyle Choices ......................................... 152. Limits on Employer Responses to Employee Social MediaUse ............................................................................................... 17a. Privacy Issues ........................................................................... 17b. Discharge for Off-Duty Social Media Use ............................... 183. Liability for Employee Conduct ................................................... 19C. Utility as a Business Entity ................................................................ 201. Intellectual Property Issues .......................................................... 20a. Copyright .................................................................................. 20i. Protecting Copyright .......................................................... 20ii. Avoiding Infringement ...................................................... 21b. Trademark ................................................................................ 22c. Trade Secrets ............................................................................ 232. Attorney-Client Privilege ............................................................. 243. Defamation ................................................................................... 244. Liability for User Generated Content or IP Violations ................ 24a. Defamation and Communications Decency Act ...................... 25b. IP Infringement and Digital Millennium Copyright Act .......... 255. Deceptive Practices ...................................................................... 26a. General ..................................................................................... 26i. Disclosure in Connection with Online Endorsements ........ 26b. Environmental Marketing Claims ............................................ 266. Privacy ......................................................................................... 287. Americans with Disabilities Act Issues ........................................ 288. Terms of Service (TOS) Issues .................................................... 299. Social Media Contests .................................................................. 3010. Social Media and Netiquette ........................................................ 31D. Utility as Regulated Entity ................................................................. 321. SEC Issues .................................................................................... 32a. Securities Fraud ........................................................................ 32b. Selective Disclosure ................................................................. 32c. Gun-Jumping ............................................................................ 332. Utility Regulatory Issues .............................................................. 34a. Rate Making ............................................................................. 34b. Affiliate Codes of Conduct ...................................................... 36i. Undue Preference and Joint Marketing .............................. 36ii. Separation of Function ...................................................... 38c. Privacy of Customer Data ........................................................ 40d. Recordkeeping ......................................................................... 41i. Regulatory Transactions ..................................................... 41ii. Recordkeeping and E-Discovery ....................................... 42e. Safety Requirements................................................................. 43f. Regulatory Proceedings ............................................................ 43i. Ex Parte Communications .................................................. 43(a) One-to-One or Small Group Contacts BetweenUtility Employees and Regulators .................................. 43
2011] THE POWER OF SOCIAL MEDIA 3
(b) Utility Industry Blogs .................................................. 44ii. Stakeholder Proceedings ................................................... 44(a) Federal Communications Commission ........................ 45(b) National Institute of Science and Technology ............. 46E. Additional Unique Issues for Public Power Utilities ......................... 461. First Amendment .......................................................................... 462. Open Meeting Laws ..................................................................... 473. Records Retention and Disclosure ............................................... 484. Privacy ......................................................................................... 49III. Best Practices and Social Media Policy .................................................... 49A. Banning Social Media Is Not a Social Media Policy! ....................... 49B. Best Practices ..................................................................................... 501. Identify the Social Media Tools to Be Used ................................ 502. What Are the Utility
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s Goals in Engaging Social Media? ........... 503. What Team Will Implement the Social Media Strategy? ............ 504. Distinguish Between Official Employee Use and Other Usesof Social Media ............................................................................ 515. Privacy Policy and Website Disclaimers ..................................... 516. Review of Terms of Service ......................................................... 527. Monitoring and Recordkeeping .................................................... 538. Review and Update ...................................................................... 539. Cyber-Insurance ........................................................................... 54C. Social Media Policy ........................................................................... 54IV. Conclusion ................................................................................................ 55V. Appendix: Employee Code of Conduct Policy for Social Media ............. 56T
HE
P
OWER OF
S
OCIAL
M
EDIA
Increasingly, utilities are harnessing the power of social media for a varietyof business purposes, including educating consumers, implementing regulatoryinitiatives like demand response and smart grid, coordinating stakeholderproceedings, and communicating power outages and safety issues to the public.Yet even as utilities hop aboard the social media bandwagon, they remainsubject to the same regulatory and legal requirements that apply to theirtraditional activities. Though social media changes the media forcommunicating with consumers or carrying out a required function, it does notchange the message. Thus, commonly prohibited activity like utilityendorsement of an affiliate is not transformed into permissible conduct merelybecause that endorsement comes in the form of a 140-character tweet.This article describes the regulatory and legal issues potentially triggered bya utility
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s use of social media. Part I briefly defines what social media is, anddescribes the ways that utilities currently use social media. Part II describes thedistinct legal issues triggered by utility use of social media from the perspectiveof the utility as (1) an employer, (2) a corporate entity, (3) a regulated entity, and(4) for public power, a government body. Part III highlights best practices forutility use of social media, with emphasis on development of a formal socialmedia policy.
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