A recent decision by the U.S. Court of Appeals for the District of Columbia, which found the Federal Energy Regulatory Commission lacked jurisdiction in natural gas futures markets, was a disappointment, but FERC Commissioner Tony Clark said Wednesday he was hopeful Congress can come up with a legislative fix addressing jurisdiction in cases of “cross-market manipulation” (see Daily GPI, March 18).

“I was disappointed with the decision. I would have hoped there might have been a way for the court to attempt to harmonize the statutes that were in play in a way that could have [protected] the public’s interest,” he said during a Platts-sponsored Energy Podium in Washington, DC.

Clark raised the possibility of a legislative fix to the jurisdictional overlap of FERC and the Commodity Futures Trading Commission (CFTC), which oversees the natural gas futures market. “It could be done in a number of ways. It either would be done with dealing with the…exclusiveness of the the CFTC jurisdiction, as the court determined narrowly to mean, or it could deal with more explicitly” FERC having authority in cases of cross-market manipulation, said Clark, a Republican and the newest member of FERC.

Earlier this month the appeals court ruled that FERC lacked the authority to fine Brian Hunter, a former gas trader for failed hedge fund Amaranth Advisors LLC, because the “CFTC has exclusive jurisdiction over all transactions involving commodity futures contracts. Because manipulation of natural gas contracts falls within CFTC’s exclusive jurisdiction and because nothing in the Energy Policy Act [of 2005] clearly and manifestly repeals the CFTC’s exclusive jurisdiction.”

Since the beginning FERC has argued that Hunter’s manipulation of the gas futures market in early 2006 impacted physical gas contracts over which the FERC has sole jurisdiction. FERC and CFTC have butted heads for years over their jurisdictional boundaries.

As a result of the court’s decision on Hunter, there will be “areas of the market that [won’t] have as much light shined on them as they should have,” potentially resulting in cross-market manipulation, Clark said. Moreover, the relationship between FERC and the CFTC has been strained, he noted.

Clark was unable to say what impact the ruling could have on future enforcement cases involving manipulation. “I think it might be a bit of a stretch to say that it impacts all of these cases that we have,” he said, pointing out that Hunter was not trading in the physical markets over which FERC has jurisdiction. “With regard with what may happen in the future, I think that we don’t know because we don’t know what exact cases may be out there.”

Clark added that he did not know if the Commission would appeal the case to the U.S. Supreme Court.

The commissioner also weighed in on the state of the country’s energy infrastructure amidst increased shale oil and gas development.

As a former member and chairman of the North Dakota Public Service Commission, Clark said, “We had a front row seat for the Bakken boom,” especially oil production and the associated natural gas. As a result, he said he spends a “good deal of my time” at the Commission on infrastructure development. Pipeline filings have been on the uptick. “It’s almost inconceivable that you’re not not going to build new pipes.”

In one of the filings, Enbridge Inc. and Energy Transfer propose to develop a transport solution for Bakken crude oil using some of the latter’s Trunkline Gas Co. LLC pipeline (see Daily GPI, Feb. 20). The partners are planning to develop a pipeline to carry crude oil from Western Canada and the Bakken Shale, by way of the Patoka, IL, hub to the eastern Gulf Coast in a project that would convert portions of the Trunkline natural gas system to oil service.

Trunkline is a subsidiary of Energy Transfer Partners LP and Energy Transfer Equity LP. The project is subject to FERC approval. Clark said he expects other pipelines to take a similar approach — convert their gas pipeline facilities to crude oil.

Clark also suggested a possible legislative fix to move the permitting process for energy projects along at a faster clip. “It would be helpful to, I think, move that process along. I don’t think it’s too much to expect a federal agency to meet a deadline” to respond to FERC questions on a project. He rejected the suggestion that failure to meet a deadline would result in an “automatic” project approval.

“I don’t know. That may be a stretch too far…There could be a legislative fix,” he said.

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