Senators to FERC, CFTC: Play Nicely on Energy Market Oversight

by Ballard Spahr LLP

Three U.S. Senators are calling for the Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission (FERC) to work more cooperatively on ensuring comprehensive oversight of energy markets. The Senators made their request in a letter to both agencies in the aftermath of a recent ruling by the U.S. Court of Appeals for the D.C. Circuit. The court held that the CFTC has exclusive jurisdiction over all transactions involving natural gas futures contracts, and that FERC may not regulate such contracts.

The Senators’ letter to CFTC and FERC urged the two agencies to execute more robust Memorandums of Understanding (MOUs) addressing market oversight, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The letter was signed by Senators Dianne Feinstein (D-CA), Chair of the Energy and Water Subcommittee of the Senate Committee on Appropriations; Ron Wyden (D-OR), Chair of the Senate Committee on Energy and Natural Resources; and Lisa Murkowski, (R-AK), the ranking Republican member of the Senate Committee on Energy and Natural Resources.

The Senators expressed strong concerns that disputes between CFTC and FERC undermine the free flow of information and allow market manipulators to exploit gaps in regulatory oversight—ultimately driving up energy prices for American consumers. They noted that, while federal statutes divide the jurisdiction of FERC and CFTC between cash markets and futures markets, detecting various forms of manipulation in these integrated markets requires active, integrated oversight of both markets. Dodd-Frank directed FERC and CFTC to negotiate MOUs by 2011 to integrate market oversight efforts and improve information sharing.

The Senators noted that both Commissions share information only when a specific request is made—a process that often takes months. In addition, each agency compiles investigation documents in a distinct manner, impeding the integration of data even in cases where a potential bad actor has been identified. The letter explains that this approach allows neither agency to comprehensively monitor energy markets where trading in futures contracts can affect prices in cash markets, and vice versa.

According to the Senators, the separation of data impedes both agencies’ ability to identify manipulative trading schemes, ignores the reality that traders will exploit this gap in oversight, and makes it more difficult for either Commission to identify market-distorting misconduct. New MOUs are necessary to ensure that the agencies work together to identify manipulation, share and integrate data for natural gas and electricity trading, and cooperate to protect American consumers.

The Energy Policy Act of 2005 significantly expanded FERC’s regulatory and enforcement authority in the energy sector, and Dodd-Frank gave CFTC unprecedented new authority to regulate futures markets, including the energy futures market. It appears that, in the past few years, each agency has been struggling to find the limits of its authority and has become reluctant to give up some of that authority to the other.

If you have any questions, please contact Dena E. Wiggins at 202.661.2225 or, or Jack N. Semrani at 202.661.7640 or

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP

Ballard Spahr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.