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Texas Court Throws Total’s Market Manipulation Charges Back Into FERC Bailiwick

Total Gas & Power North America Inc.'s (TGPNA) efforts to move its defense against FERC enforcement staff allegations of three years of natural gas trading manipulation from the regulatory agency to a federal district court were hamstrung Friday when the court tossed out that request.

The Total SA unit had contended that the federal courts are the only place where alleged violations of the federal Natural Gas Act (NGA) can be sorted out (see Daily GPIMay 10). Attorneys for Total's North American operations argued that the Federal Energy Regulatory Commission does not get the first chance to decide alleged gas market manipulation cases. Total defended its claim in a brief filed in May in the U.S. District Court for the Southern District of Texas in Houston.

But in a declaratory judgment issued Friday, Senior United States District Judge Nancy F. Atlas concluded that the court "cannot and should not entertain [TGPNA's] action for a declaratory judgement.

"At least three different justiciability or jurisdictional doctrines support dismissal of this action. Each of these doctrines revolves around the central theme that, absent extraordinary circumstances, Article III courts should not interfere with ongoing administrative proceedings. This principle is particularly relevant where the challenge is to agency processes still in their early stages."

Atlas denied as moot TGPNA's request for summary judgment and granted FERC's motion to dismiss the complaint, moving the debate back to the federal agency's docket.

The market manipulation case brought against TGPNA by FERC's enforcement staff "suffers from multiple infirmities" and doesn't include documentary evidence of intent to manipulate any market, the company has said (see Daily GPIJuly 13). FERC should throw out the proceeding, TGPNA said in a 200-page response to an Office of Enforcement (OE) show cause order, which included allegations of natural gas market manipulation against the company and two of its trading managers [IN12-17] (see Daily GPIMay 3). The order recommended civil penalties of nearly $226 million.

The trades allegedly took place at four Southwest locations between June 2009 and June 2012. FERC staff first issued a notice of the ongoing investigation in September 2015 (see Daily GPISept. 22, 2015).

Separately, in December 2015, TGPNA forged a settlement with the Commodity Futures Trading Commission (CFTC) in which the company agreed to pay $3.6 million in civil penalties for attempting to manipulate gas prices.

Whistleblowers were involved in both the CFTC and FERC cases, with former TGPNA traders filing complaints. While FERC's enforcement staff is citing trading activity covering the three-year period beginning in June 2009, the CFTC settlement only pertained to the period starting Aug. 15, 2011.

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