FERC Thursday denied motions filed by Amaranth Advisors LLC and other respondents seeking a stay of enforcement proceedings at the agency pending legal review of Federal Energy Regulatory Commission jurisdiction in the matter.
Failed hedge fund Amaranth Advisors LLC said earlier this week it would appeal FERC’s recent decision upholding its assertion of jurisdiction in the natural gas futures market (see Daily GPI, Dec. 5). Amaranth said it would file its appeal with the U.S. Court of Appeals for District of Columbia Circuit at the end of the week.
“In an order denying Amaranth’s request for rehearing issued on November 30, 2007, we explained that the language and legislative history of the Natural Gas Act, and relevant legal precedent, support our conclusion that the Commission has jurisdiction to punish manipulative trading so that energy markets remain fair and competitive,” FERC said in its Thursday order. “On December 3 and 4, 2007, Amaranth filed the instant Emergency Stay Motions.”
FERC said the stay motions repeat arguments made in Amaranth’s previous request for rehearing that FERC lacks jurisdiction in the matter. “Amaranth argues that absent the stay or extension ‘Amaranth would be subjected to intense and expensive litigation seeking hundreds of millions of dollars in penalties by a regulator that lacked authority to bring the action in the first place.’ Amaranth claims that its anticipated appellate actions would raise ‘an admittedly difficult and important issue of first impression regarding the Commission’s jurisdictional authority to regulate Amaranth’s futures transactions.'”
In deciding whether to grant a stay, FERC said it considers whether the moving party will suffer irreparable harm without the stay; whether the stay will substantially harm other parties; and whether a stay is in the public interest. The key element is “irreparable harm,” which Amaranth failed to demonstrate, FERC said.
“Amaranth’s claimed harm amounts to monetary loss arising from the expense of litigation and the prospect of civil penalties. In determining whether an injury is irreparable, it is ‘well settled that economic loss does not, in and of itself, constitute irreparable harm,'” the Commission said, quoting Wisconsin Gas v. FERC [F.2d 669,674 (D.C. Cir 1985)]. “In particular, defense effort and litigation costs do not meet the standard of irreparable harm.”
Further, FERC said it disagreed “that an applicant is entitled to a stay because it claims that the agency has acted outside the scope of its jurisdiction.” Additionally, the Commission found that “the public interest is best served by allowing this mater to proceed at the Commission.”
Greenwich, CT-based Amaranth and other parties sought rehearing in August of FERC’s determination that it has jurisdiction to sanction activities in the gas futures market, arguing that this market instead was the sole purview of the Commodity Futures Trading Commission (CFTC) (see Daily GPI, Aug. 29). FERC said the Energy Policy Act of 2005 gave the agency broad authority to sanction manipulative conduct by any entity “in connection with” the purchase, sale or transport of natural gas within its jurisdiction [IN07-26-001]. FERC rejected Amaranth’s argument that the CFTC has exclusive jurisdiction over the manipulation of gas futures contracts.
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