With a flurry of major new environmental regulations, the Environmental Protection Agency (EPA) is altering the power generation landscape. But will the new federal rules survive court challenges—...
Dodd-Frank and Electric Utilities
Understanding the new mosaic of commodities trading regulations.
Protection Act , 75 Fed. Reg. 51,429 (Aug. 20, 2010).
5. See Testimony of Chairman G. Gensler, before the U.S. Senate Committee on Agriculture, Nutrition & Forestry, (March 3, 2011) available at http://www.cftc.gov/PressRoom/SpeechesTestimony/opagensler-72.
8. As discussed in detail below regarding the End-User Exception to the Clearing Requirement for Swaps , 77 Fed. Reg. 42560 (July 19, 2012) , the term “end-user” refers to a counterparties to a swap that “(i) is not a financial entity; (ii) is using swaps to hedge or mitigate commercial risk; and (iii) notifies the Commission, … , how it generally meets its financial obligations associated with entering into non-cleared swaps.” 7 U.S.C. § 2(h)(7)(A).
9. See the March 1, 2012 joint letter of Edison Electric Institute, American Gas Association, and the Electric Power Supply Association, supporting the Petition for Exemptive Relief for Certain Bona Fide Hedging Transactions Under Section 4a(a)(7) of the Commodity Exchange Act.
12. See 1993 Energy Exemption. As previously discussed, even if a transaction is exempt from certain requirements, the CFTC’s general anti-fraud and anti-manipulation authority, and scienter-based prohibitions under CEA continue to apply. Notably, Section 720 of Dodd-Frank requires that the CFTC and FERC negotiate a memorandum of understanding to establish procedures for applying their respective authorities; resolving conflicts concerning overlapping jurisdiction; and avoiding conflicting or duplicative regulation. The CFTC and FERC have yet to enter into such a memorandum of understanding. Therefore, the exact jurisdiction of the two agencies concerning energy related transactions is still an open question. In Hunter v. FERC , 711 F.3d 155 (D.C. Cir. 2013), however, the court held that the CFTC has exclusive jurisdiction over futures contracts and, therefore, FERC lacked jurisdiction to charge a market participant with manipulation of natural gas futures contracts.
13. See “Financial reform bill wins final approval in Senate, now awaits president’s signature,” Inside FERC, (July 19, 2010) (discussing how the energy industry had concerns that end-users would be caught up in a requirement to clear trades and be subject to stricter requirements).
17. 7 U.S.C. § 1a(47). A swap includes, inter alia , any transaction that is a “put, call, cap, floor, collar, or similar option of any kind that is for the purchase or sale, or based on the value, of 1 or more interest or other rates, currencies, commodities, securities, instruments