CFTC Division of Market Oversight Holds Roundtable to Assess the Made Available to Trade Process

By Anthony Mansfield, Paul Pantano, Neal Kumar, Lamiya Rahman and Mary Treanor

On Wednesday, July 15, 2015, the Commodity Futures Trading Commission’s (“CFTC”) Division of Market Oversight (“DMO”) hosted a public roundtable to discuss the process to determine whether a swap must be executed on an exchange.  The roundtable assessed industry experience with the current process under the Commodity Exchange Act (“CEA”) and compared approaches to mandatory exchange trading in other jurisdictions.  read more

Posted in CFTC, Commodity Trading, Enforcement and Investigations, Oil & Gas, Power, Regulation

Supreme Court Rejects EPA Mercury Emissions Rule

By Athena Eastwood and Douglas Fischer

On June 29, 2015, the Supreme Court cast serious doubt upon the future of the Mercury and Air Toxics Standards (“MATS”) by finding that the Environmental Protection Agency (“EPA”) failed to adequately consider the costs of the rule as part of its initial decision to issue the rule under the Clean Air Act (“CAA”).1 MATS is a regulatory regime aimed at reducing emissions of mercury and other pollutants from power plants.  MATS would have imposed caps on coal and oil-fired power plants’ emissions of mercury, toxic metals, and other pollutants.  read more

Posted in Cases, Emissions, Oil & Gas, Power, Regulation, Supreme Court

REMIT: The Road to Enforcement

By Doron Ezickson and Adam Topping

Following a number of recent developments, described below, the rules and regulations enacted under the European Union (EU) Regulation on Wholesale Energy Markets Integrity and Transparency (REMIT) are now close to being fully-implemented.  Market participants must ensure they are now prepared for an increasing number of investigations and enforcement actions.  read more

Posted in Commodity Trading, Enforcement and Investigations, Mining/Metals, Oil & Gas, Power, Regulation, REMIT

Tariff Compliance Is Not Enough: FERC Imposes Nearly Thirty-Five Million Dollars in Penalties and Disgorgement against Powhatan Energy Fund and Its Trading Associates

By Doron Ezickson, Thomas Millar, and Mary Treanor

On May 29, 2015, the Federal Energy Regulatory Commission (“FERC”) issued an Order against Powhatan Energy Fund, LLC and its trading partners, Dr. Houlihan Chen, HEEP Fund, LLC and CU Fund, Inc. (together, “Powhatan”).  FERC imposed civil monetary penalties of more than $29 million and disgorgement of nearly $5 million against the entities and a $1 million civil penalty against Dr. Chen for fraudulent trading in PJM Interconnection (“PJM”).  read more

Posted in Commodity Trading, Enforcement and Investigations, FERC, Oil & Gas, PJM, Power, Regulation

CFTC Issues Proposed Order to Exempt Certain SPP Transactions from Regulation Under Most Provisions of the CEA and CFTC Rules

By Paul Pantano, Sohair Aguirre and Lamiya Rahman

On May 19, 2015, the Commodity Futures Trading Commission (“CFTC” or “Commission”) issued an order in response to an application from Southwest Power Pool, Inc. (“SPP”) proposing to exempt three categories of SPP transactions (“Covered Transactions”) from all but the anti-fraud and anti-manipulation provisions of the Commodity Exchange Act (“CEA”) and CFTC Regulations, subject to certain conditions (“Proposed Exemption”).  The Proposed Exemption was published in the Federal Register today and comments are due by June 22, 2015.  read more

Posted in CFTC, Enforcement and Investigations, Oil & Gas, Power, Regulation

“Such a fact pattern does not a $5 million penalty make.”

By Doron Ezickson, Thomas Millar and Katherine Vorhis

Or so says one dissenting FERC Commissioner in the recent Maxim Power enforcement proceeding. On May 1, 2015, FERC issued an order assessing civil penalties (the “Order”) of $5 million against Maxim Power Corporation and its named subsidiaries (“Maxim”), as well as $50,000 against Maxim Energy Marketing Analyst, Kyle Mitton (together, the “Respondents”), for violating the Commission’s Anti-Manipulation and Market Behavior rules.  The Commission did not order disgorgement of profits because the overpayments at issue in the matter were returned through ISO-NE tariff processes.  Nor did the Commission impose compliance obligations or other penalties.  read more

Posted in FERC, Oil & Gas, Power, Regulation

What Did April Bring?: FERC Extends Out-of-Market Reliability Measures but Wants Market-Based Solutions

By Gregory Lawrence, Thomas Millar and Mary Treanor

The Federal Energy Regulatory Commission (“FERC”) recently published two orders that approved capacity and reliability measures for the Independent System Operator New England Inc. (“ISO-NE”) and the New York Independent System Operator (“NYISO”).  In contrast to its approval of NYISO’s measures as promoting transparent pricing and appropriate market signals for reserves, FERC approved ISO-NE’s out-of-market winter measures but urged that they be modified further to more closely resemble the market and market-based results.  read more

Posted in Enforcement and Investigations, FERC, Oil & Gas, Power, Regulation

Supreme Court’s Holding in Oneok v. Learjet Could Lead to New Risks for Market Participants

By Joseph Bial, Gregory Lawrence, Gregory Mocek, Paul Pantano, Charles F. (Rick) Rule, Daniel Howley, Thomas Millar, and Natalie Mitchell

On April 21, 2015, the Supreme Court decided Oneok v. Learjet, holding that “Respondents’ state-law antitrust claims are not within the field of matters pre-empted by the Natural Gas Act” even though the claimed violations “affected . . . federally regulated wholesale natural gas prices.” This is an important decision for market participants for several reasons:

First, the decision could expose entities accused of market manipulation under the Natural Gas Act (“NGA”) to the risk of possible follow on litigation by private plaintiffs who are trying to stretch the bounds of Oneok’s applicability, based on antitrust claims.  However, the majority appears to foresee additional argument regarding conflict preemption on remand the outcome of which could foreclose this possibility.  Class action litigation alleging violations of either the NGA or the Federal Power Act (“FPA”) have not been successful in the past because (1) the statutes do not provide for private rights of action; and (2) the NGA (and the FPA) was understood to preempt state law claims.  Antitrust compliance programs may be tested in the wake of this ruling where plaintiff law firms attempt to examine the energy space more closely and mine state antitrust laws for potential suits.

Second, despite the Court’s effort to narrow the scope of its decision, some litigants may seek to extend the precedent to circumstances involving follow-on civil antitrust litigation tied to other FERC jurisdictional products, including electricity products and markets governed by the FPA.

Third, Oneok is likely to be featured in future demand response litigation, whether it is before the Court on a grant of certiorari or in other forums.  read more

Posted in Antitrust/Competition, Cases, Commodity Trading, Enforcement and Investigations, Oil & Gas, Power, Regulation, Supreme Court

A Signal of Things to Come? New CME Rule 512 Reflects Modified Stance for Violations of Futures and Options Reporting Requirements

By Athena Eastwood, Gregory Mocek, Jonathan Flynn, Neal Kumar and Mary Treanor.

On March 24, 2015, the CME Group, Inc. (“CME”) announced a proposed amendment to Rule 512 indicating that it will impose a minimum fine of $1,000 for repeat violations of its exchanges’ reporting rules for futures and options. The amendment, which became effective on April 7, 2015 and applies to all CME Group exchanges, reflects an increasingly strict approach taken by the Commodity Futures Trading Commission (“CFTC”) and CFTC-regulated exchanges for technical violations of futures and options reporting.  read more

Posted in CFTC, CME, Commodity Trading, Enforcement and Investigations, Mining/Metals, Oil & Gas, Power, Regulation

Truthful . . . but Not Forthcoming? FERC Staff Takes Aggressive View of Material Omissions as Basis for Intent in Maxim Power

By Gregory Lawrence, Thomas Millar and Mary Treanor

Recent positions taken by FERC’s Enforcement Staff in the Maxim Power show cause proceeding add to the uncertainty regarding what information market participants must volunteer when communicating with the Commission, ISOs/RTOs, market monitors and others. We have recently written about Maxim Power. As a refresher, Staff alleged in its Order to Show Cause that Maxim Power Corporation and its named subsidiaries (“Maxim”), as well as its executive, Kyle Mitton (together, the “Respondents”) engaged in a supposed “offer oil, burn gas” scheme “for the purpose of obtaining inflated make-whole payments at high fuel oil prices when Maxim[’s Pittsfield] plant was dispatched for reliability, even though the plant was actually burning much less expensive natural gas.” Importantly, Respondents purportedly engaged in “misleading” communications with ISO-NE and the market monitor in an effort to retain the make-whole payments in violation of the Market Behavior and Anti-Manipulation rules (discussed below). For these alleged violations, Staff seeks civil penalties of $5 million against Maxim and $50,000 against Mitton, but not disgorgement of profits because the overpayments were returned through ISO-NE tariff processes.  read more

Posted in Enforcement and Investigations, FERC, Oil & Gas, Power, Regulation