On May 7, 2010, Senator Jeff Bingaman (D-NM) filed an amendment, SA 3892, to the Restoring American Financial Stability Act of 2010 (“S 3217”), which is currently being debated by the U.S. Senate.  Senator Bingaman’s amendment, if adopted, attempts to preserve the Federal Energy Regulatory Commission’s (“FERC”) authority over currently FERC-regulated contracts and electricity and natural gas rates, while acknowledging that the Commodity Futures Trading Commission (“CFTC”) holds exclusive jurisdiction over energy futures and derivatives. 

FERC has previously claimed that they should have exclusive jurisdiction over trades related to the electric market.  The CFTC, on the other hand, has stated that some FERC-regulated products, such as financial transmission rights (“FTRs”), may fall under CFTC authority based on the definition of futures contracts.  Meanwhile, FERC has also asserted that they should retain their authority to act on energy trading abuses that affect the physical electric power and natural gas prices, and thus, come under FERC’s authority to maintain just and reasonable rates for utility customers. 

In order to end the dispute between FERC and the CFTC, Senator Bingaman joined with U.S. Senate Majority Leader Harry Reid (D-NV) and six other senators to delineate the roles of each agency.  According to Senator Bingaman’s amendment, the CFTC will have exclusive jurisdiction over swaps and contracts for the sale of a commodity for future delivery.   However, the CFTC would have the power to exempt from their jurisdiction a deal or contract carried out under a FERC tariff or rate schedule as a matter of public interest.   At the same time, the proposed amendment expressly states that the CFTC’s new jurisdiction will not supersede or limit FERC’s regulatory authority under the Federal Power Act or the Natural Gas Act, and the CFTC’s new jurisdiction cannot restrict FERC from ensuring just and reasonable rates and protecting the public interest.

The full text of Senator Bingaman’s amendment can be found here.