On April 29, 2013, three U.S. Senators sent a letter to FERC and the Commodity Futures Trading Commission (“CFTC”) urging greater cooperation between the two agencies. Senators Dianne Feinstein (D-CA), Lisa Murkowski (R-AK), and Ron Wyden (D-OR) penned the open-letter requesting that FERC and the CFTC “execute more robust Memorandums of Understandings” (“MOUs”) to prevent market manipulation. The letter follows the recent Brian Hunter ruling in which the Court of Appeals for the D.C. Circuit rejected FERC’s authority to fine a natural gas futures trader – a case in which FERC and the CFTC both claimed jurisdiction (see March 18, 2013 edition of the WER).
The Senators stated that the Dodd-Frank Wall Street Reform and Consumer Protection Act divides the jurisdiction of the natural gas markets with FERC regulating the physical cash market, and the CFTC regulating the futures market. However, the Senators noted that effective regulation in these markets requires “active oversight of both markets in an integrated fashion,” and that the recent Brian Hunter dispute has undermined the regulation of these markets.
The Senators’ letter focused on the lack of cooperation between FERC and the CFTC, highlighting the recent jurisdictional dispute and lack of agency cooperation. Specifically, the letter addressed concerns that the two agencies only shared information when a specific request was made – a process that the Senators noted could take months – and that the agencies’ different methods of information collection impeded cooperation during investigations by making “it more difficult for either Commission to identify market distorting conduct.”
Therefore, the Senators requested that FERC and the CFTC comply with Section 720 of Dodd-Frank by agreeing to new MOUs that promote cooperation between the agencies, increased information sharing, and integration of all natural gas and electricity trading information between the agencies.
Commissioner Phillip Moeller, speaking at an industry event, noted that “the two agencies could certainly benefit from having a better working relationship.” A copy of the Senators’ letter is available here.