Recent developments:

  • CFTC Chairman Massad plans to recommend that the CFTC abandon its proposal to allow private rights of action in RTO/ISO markets.
  • FERC and City Power file joint status report in district court proceeding.
  • District court judge denies TOTAL’s request for reconsideration.
  • BP files petition for review with Fifth Circuit, and FERC grants BP’s motion for modification of payment directive at FERC.

CFTC Chairman Massad plans to recommend that the CFTC abandon its proposal to allow private rights of action in RTO/ISO markets.

On September 12, Chairman Timothy Massad sent a letter stating that he will recommend that the CFTC exempt transactions in the organized wholesale electricity markets from private rights of action under Section 22 of the Commodity Exchange Act (CEA). Chairman Massad’s letter responds to a September 1 letter from the four U.S. Senators expressing concern that private rights of action would impact the ability of FERC to continue to regulate the RTO/ISO markets, as well as create uncertainty for entities participating in these markets. According to Chairman Massad, private rights of action in the RTO/ISO markets “could result in greater costs and uncertainties without necessarily enhancing supervision of markets or consumer protection.” Chairman Massad states that the CFTC will continue to retain the authority to pursue fraud and manipulation within the RTO/ISO markets. He also notes that aggrieved market participants and consumers can still file complaints with the CFTC, as well as the CFTC’s Whistleblower program. Chairman Massad sent a similar letter on September 13 to Senator Boozman regarding the CFTC’s proposed amendment impacting Southwest Power Pool.

As we previously reported, on May 10, the CFTC issued a proposed amendment to the 2013 RTO/ISO Final Order that exempted specified RTO/ISO transactions from certain provisions of the CEA and CFTC regulations. The CFTC’s proposed amendment sought change that 2013 order by explicitly stating that the exemption does not apply to actions pursuant to CEA Section 22, which allows for a private right of action. If adopted, the amendment would permit private parties to bring claims under the CEA for fraud and manipulation involving financial energy products traded in the organized wholesale power markets, which is not permitted under the Federal Power Act. For more information on the CFTC’s proposed amendment, please see our Energy Update: CFTC Proposes Major Changes Affecting RTO/ISO Markets.

FERC and City Power file joint status report in district court proceeding.

On September 20, FERC and City Power filed a joint status report in the U.S. District Court for the District of Columbia, as required by the court’s prior order setting an initial scheduling conference (to be held on September 26). FERC asserts that it plans to file a motion for summary judgment shortly, and FERC proposes that discovery be stayed until the court rules on summary judgment. FERC also requests that the court not put the case on hold to await developments in two related cases pending in district court (Powhatan/Chen and Coaltrain).

On the other hand, City Power argues that numerous outstanding factual issues make dispositive motions premature at this time. In addition, City Power asserts that it should have the right to conduct discovery from FERC, given that City Power has not yet had any discovery needed to present a complete version of the facts. City Power requests that the case should be temporarily stayed in order to allow the remaining related cases (if not dismissed) to catch up, which could allow for a single round of coordinated discovery and cut down on duplication of efforts.

District court judge denies TOTAL’s request for reconsideration.

On September 14, U.S. District Judge Nancy F. Atlas issued an order denying TOTAL’s request for reconsideration of a prior order dismissing TOTAL’s declaratory judgment action against FERC in the U.S. District Court for the Southern District of Texas. According to Judge Atlas, TOTAL did not meet its burden under Rule 59(e) of the Federal Rules of Civil Procedure to demonstrate that the court committed a “manifest error of law” in the prior opinion. Judge Atlas rejected TOTAL’s position that Section 24 of the Natural Gas Act (NGA) creates exclusive district court jurisdiction over proceedings imposing civil penalties under the NGA.

Judge Atlas also ruled that it is inappropriate for the court to insert itself prematurely into the dispute between FERC and TOTAL. According to the order, “If, as Plaintiffs contend, FERC’s case is so weak that no one but FERC itself would believe it, the ‘substantial evidence’ review in a court of appeals should be protection from overreach by the agency.” Therefore, Judge Atlas denied TOTAL’s motion to alter the judgment or for leave to file a second amended complaint.

BP files petition for review with Fifth Circuit, and FERC grants BP’s motion for modification of payment directive at FERC.

On September 9, BP filed a petition for review with the U.S. Court of Appeals for the Fifth Circuit of FERC orders in its natural gas market manipulation case against BP. The petition seeks review of FERC’s July 11 order on initial decision, which denied BP’s request for rehearing of FERC’s 2014 order setting the matter for hearing. BP previously filed a separate request for rehearing of FERC’s underlying findings of liability in FERC’s order on initial decision, which is still pending before FERC.

In addition, on September 12, FERC granted BP’s motion for modification of the payment directive. As we previously reported, BP filed a motion stating it was unable to comply with FERC’s payment directive as to disgorgement because it could not send the disgorgement monies to the Texas LIHEAP in the manner required by FERC’s order assessing penalties. FERC’s order stays the disgorgement payment directive, but interest will continue to accrue on unpaid monies during the pendency of the stay.