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FERC Seeks 15.2% Increase, CFTC 12.6% in Trump's FY2018 Budget; Dodd-Frank Revamped

Two federal regulatory agencies key to the natural gas and oil industry, FERC and the Commodity Futures Trading Commission (CFTC), are seeking double-digit percentage increases to their appropriations in the Trump administration's $4.1 trillion budget proposal.

The Federal Energy Regulatory Commission is seeking a $367.6 million appropriation for fiscal year (FY) 2018, a $48.4 million (15.2%) increase compared with FY2017 and FY2016, but it would offset the full cost of its operations through annual charges and filing fees assessed on the industries it regulates, according to a Congressional Performance Budget Request issued Tuesday.

FERC's FY2018 appropriations request would support an overall 5% increase in base operating costs. It would provide "continued funding for program contracts associated with statutorily required hydropower environmental workload, natural gas pipeline construction oversight, liquefied natural gas construction inspections, and expert witness contractor assistance in the Commission's enforcement program," according to the budget request.

The FERC budget request would also provide "resources to support the Commission's infrastructure review process for non-federal hydropower and natural gas pipeline facilities."

FERC allocates more than two-thirds of its budget to directly cover compensation costs of its employees. The request would support a 1.9% pay raise in FY2018, fund 1,465 full-time equivalents (FTE), and includes $11.1 million to continue modernization efforts at FERC's Washington, DC, headquarters building.

Under terms of the Federal Power Act and the Omnibus Budget Reconciliation Act of 1986, FERC recovers the cost of its operations through revenue from charges and fees, resulting in a net appropriation of zero.

CFTC Request 12.5% Higher

CFTC is requesting $281.5 million, a $31.5 million (12.6%) increase compared with FY2017, and 739 FTE, an increase of 36 FTE.

"Of these additional resources, approximately 36% are devoted to economic and legal analysis and examinations," CFTC Acting Chairman J. Christopher Giancarlo said in a letter sent to leaders of the House and Senate Appropriations committees Tuesday. "The investment in economic capabilities is aimed at boosting the CFTC's analytical expertise and monitoring of systemic risk in the derivatives markets, in particular with regard to central counterparty clearinghouses."

The budget was released two months after the White House said Giancarlo would be nominated to serve as chairman of CFTC and after he launched Project KISS, which he said stands for "Keep It Simple, Stupid."

Project KISS "will be an agency-wide review of CFTC rules, regulations and practices, to make them simpler, less burdensome and less costly," Giancarlo said at the time. He also said the era of Dodd-Frank Wall Street Reform and Consumer Protection Act implementation at CFTC was drawing to a close, and the agency expects to "resume normalized operations and practices. That means a return to greater care and precision in rule drafting."

Just days after his inauguration, Trump signed a pair of directives meant to begin rolling back provisions of Dodd-Frank, which was adopted by the Obama administration in the wake of the 2008 financial crisis, and that effort is reflected in the budget proposal released Tuesday.

"The budget fosters economic growth and vibrant financial markets by rolling back the regulatory excesses mandated by the Dodd-Frank Act," the White House said in its budget presentation.

The budget "proposes legislation to restructure the Consumer Financial Protection Bureau (CFPB). CFPB's interpretation of the Dodd-Frank Act has resulted in an unaccountable bureaucracy controlled by an independent director with unchecked regulatory authority and punitive power.

“Restructuring is required to ensure appropriate congressional oversight and to refocus CFPB's efforts on enforcing the law rather than impeding free commerce."

The sweeping Dodd-Frank legislation was signed into law by former President Obama in July 2010. Of particular interest to the energy industry, the legislation, which came nearly two years after the collapse of banks and Wall Street investment houses, marked the first time that the over-the-counter (OTC) derivatives market would be regulated by the federal government. It required OTC transactions to be traded on regulated exchanges much like stock, and to be cleared in clearinghouses in order to limit excessive speculation in markets.

Just days after his inauguration, Trump signed a pair of directives meant to begin rolling back provisions of Dodd-Frank, which was adopted by the Obama administration in the wake of the 2008 financial crisis, and that effort is reflected in the budget proposal released Tuesday.

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