A number of Congressional lawmakers have expressed concern about the extent of the Federal Energy Regulatory Commission’s jurisdiction in cases involving the manipulation of the futures and physical gas markets, said Commission spokeswoman Mary O’Driscoll.
“Anybody who has asked us questions [about this], FERC has responded,” O’Driscoll said, but would not elaborate on who the questions came from or what the response was. FERC Commissioner Tony Clark, a Republican and the newest member of the Commission, has said he would like to see Congress come up with a legislative fix to address cases involving “cross-market manipulation” of the physical and futures markets (see Daily GPI, March 18).
The congressional concerns stem from a ruling by the U.S. Court of Appeals for the District of Columbia in early March that found that FERC lacked authority in the futures market and therefore could not penalize Brian Hunter, a former gas trader for failed hedge fund Amaranth Advisors LLC. The court overturned a FERC order imposing a penalty of $30 million on Hunter.
FERC alleged in court that Hunter’s manipulation of the futures market, over which the CFTC has jurisdiction, impacted prices in the physical markets, over which FERC has jurisdiction.
Sens. Ron Wyden, chairman of the Senate Energy and Natural Resources Committee; Lisa Murkowski, the ranking member on the Senate Energy Committee; and Sen. Dianne Feinstein (D-CA) sent a letter to the CFTC and FERC urging a quick resolution of jurisdictional disputes that have hampered more rigorous oversight of U.S. energy markets.
“I don’t think there should be any holes” in the regulation of the physical gas market over which FERC has traditionally had jurisdiction, and the futures gas market, over which the CFTC has jurisdiction, said outgoing FERC Chairman Jon Wellinghoff. He said a number of congressional committees “are looking at this” to determine who has jurisdiction when cross-manipulation of the two markets is involved.
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