FERC lacks jurisdiction over commodity futures contracts, court rules
Originally published March 19, 2013
The Commodity Futures Trading Commission has exclusive jurisdiction over all transactions involving commodity futures contracts, a federal appeals court ruled in finding that the Federal Energy Regulatory Commission lacked jurisdiction to charge a trader with manipulation of natural gas futures contracts. Nothing in the Energy Policy Act of 2005 "clearly and manifestly repeals the CFTC's exclusive jurisdiction," the U.S. Court of Appeals for the District of Columbia Circuit said in granting Brian Hunter’s petition for review of FERC’s $30 million fine against him.
Although the March 15 decision in Hunter v. FERC relates to the Natural Gas Act, the court's analysis would appear to apply equally with respect to FERC's jurisdiction to enforce its anti-manipulation rule under the Federal Power Act, APPA Assistant General Counsel Delia Patterson said.
The CFTC intervened in the case to argue that it has exclusive jurisdiction over commodity futures contracts. The CFTC filed its own civil enforcement action against Hunter, alleging that he violated the Commodity Exchange Act by manipulating the price of natural gas futures contracts.
The court rejected FERC’s argument that, while the CFTC and FERC each has exclusive jurisdiction over day-to-day trading in the financial and physical energy markets respectively, both have an enforcement role where manipulation of one market directly or indirectly affects the other market. "Such an interpretation would eviscerate the CFTC’s exclusive jurisdiction over commodity futures contracts and defeat Congress’s very clear goal of centralizing oversight of futures contracts," the three-judge panel said.
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