A federal judge in Washington, DC, last week ordered McGraw-Hill Companies Inc., which owns Inside FERC publisher Platts, to turn over information to the Commodity Futures Trading Commission (CFTC) related to its complaint against Energy Transfer Partners LP and three of its subsidiaries for attempted manipulation of physical natural gas prices at the Houston Ship Channel delivery hub in September and November 2005.
U.S. District Judge Ricardo M. Urbina ruled that the CFTC had successfully demonstrated its need for three of four subpoena requests. Urbina’s decision did not publicly name the energy company that was the subject of the CFTC’s subpoena request. However, it did note that the subpoena was related to a CFTC complaint filed on July 26 of this year in the U.S. District Court for the Northern District of Texas, which alleged that four corporate defendants attempted to manipulate the price of natural gas at the Houston Ship Channel during September and November 2005. That was the date the CFTC took its enforcement action against Dallas-based Energy Transfer (see NGI, July 30).
The CFTC complaint alleged that Energy Transfer Partners and Energy Transfer Co. (also known as La Grange Acquisition LP), Houston Pipe Line Co. and ETC Marketing Ltd. attempted to manipulate the October 2005 and December 2005 Houston Ship Channel monthly index prices of natural gas published by Platts in its Inside FERC’s Gas Market Report.
The court ordered McGraw-Hill to turn over trade and pricing data that was submitted by Energy Transfer to Inside FERC to determine whether the company’s trades affected the published price index; instructions and related documents for reporting trade data provided by McGraw-Hill to Energy Transfer during the investigated period; and the formulas used by McGraw-Hill to calculate its natural gas price index.
McGraw-Hill had argued that the subpoenaed information was covered by reporter’s privilege under the First Amendment. But Urbina ruled that while privilege typically prevailed in civil cases, “this case lies somewhere between a criminal action and civil matter.”
The judge denied the CFTC’s request for unsolicited complaints received by McGraw-Hill about Energy Transfer’s alleged price manipulation. “The Commission’s unqualified demand for all complaints is an unlicensed fishing expedition into McGraw-Hill’s records — precisely the sort of abuse from which the privilege shields reporters,” he said.
The court granted in part and denied in part McGraw-Hill’s cross-motion for a protective order restricting the CFTC’s disclosure of the subpoenaed documents. Specifically, it said the CFTC, without prior notice to McGraw-Hill, could not “disclose, grant access to, and transmit the [subpoenaed] documents to any federal or state department, agency or other entity identified in Section 8(e) of the [Commodity Energy Act] that is acting within the scope of its jurisdiction.” However, it noted that the protective order could be voided during civil prosecution of the case.
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