While W&L was on Spring Break, the DC Circuit issued an interesting decision with a substantial effect on the FERC’s enforcement jurisdiction. In the meantime, the decision has been extensively covered by a variety of firms, and energy news sources (google “DC Circuit Hunter” or see below) so I will spare a long discussion of facts and analysis and jump straight to the point.
Acting under jurisdiction, that it believed to possess under EPAct 2005, and section 4A of the Natural Gas Act, the FERC fined Amaranth commodities trader Brian Hunter for allegedly manipulating natural gas futures contracts during a three month period in 2006. FERC claimed that in each of those months Hunter increased his trading volume during the settlement periods for natural gas that determined the actual price of physical natural gas for the following month, and as result the actual price for natural gas fell. Federal regulators soon realized that Hunter had also “shorted” natural gas commodities contracts at higher prices that came due during those periods of deflated prices. The CFTC also filed a civil enforcement action against Hunter.
Hunter appealed the FERC’s decision and fine against him, and the CFTC intervened in support of his claim. The court found that in section 2(a)(1)(A) of the Commodity Exchange Act, Congress gave the “CFTC exclusive jurisdiction over transactions conducted on futures markets.” As a result, despite Hunter’s indirect interference in the markets for physical natural gas–which FERC has jurisdiction over under section 4A of the NGA–the FERC has no enforcement authority under that section to fine Hunter for his trades in natural gas futures contracts. The DC Circuit could find no implication in EPAct 2005, that removed the CFTC’s exclusive jurisdiction over natural gas futures contract.
The Opinion – Brian Hunter v. CFTC
Van Ness Feldman – DC Circuit Holds CFTC has Exclusive Jurisdiction Over Natural Gas Futures Contracts, Finds FERC Lacked Authority to Impose $30 Million Civil Penalty
Schiff Hardin – DC Circuit: FERC Lacked Jurisdiction to Fine Amaranth Trade Hunter $30 Million; CFTC Has Exclusive Jurisdiction over Natural Gas Futures Contracts
Interesting Question and discussion over at the National Journal Energy Experts Blog. Arun Majum, Director of DOE’s Advanced Research Projects, asks “Where can Government Energy R&D Have the Most Impact?” I agree that American ingenuity can prevail to develop energy technology that can be invented and manufactured domestically and exported globally. He asks, “Where are the white spaces,” i.e. those “undeveloped areas where technology could revolutionize the way we use and produce energy to secure our economic prosperity and national security for future generations.”
The comments provide some good insights on what these white spaces are, and how ARPA-E and government and private sector collaboration might just get us there. Well worth the read, and all thoughts and comments would be appreciated.
Where Can Government Energy R&D Have Most Impact?.
Over the weekend the Attorney General of Vermont filed an appeal of the January 19 District Court of Vermont ruling. The ruling blocked an attempt by the Vermont Legislature to prevent the Vermont Yankee nuclear power plant from continuing operations after its original NRC operating license expires on March 21, 2012. Last year the NRC renewed the Vermont Yankee operating license for an additional twenty years, through 2032.
When Entergy Corp. purchased the plant in 2002, it agreed to seek a certificate of public good (cpg) from the Vermont Public Service Board for continued operation beyond its initial operating license. The Vermont Legislature, however, passed legislation that required its approval before a cpg could be issued. The district court ruling found that the state legislature’s attempts to decide the fate of the power plant on the basis of “radiological safety” were preempted by the Atomic Energy Act, and solely under the jurisdiction of the Nuclear Regulatory Commission. The court struck down several state laws that prevented the renewal of Vermont Yankee’s operating license, but nonetheless, ordered Entergy to obtain a new cpg to continue operating under the NRC extension.
VT Attorney General Homepage
January 19 District Court Decision