In our final enforcement update for 2016, we cover:

  • TOTAL files reply brief in declaratory judgment action against FERC in Fifth Circuit;
  • Trial concludes in the CFTC’s case against DRW and Wilson; and
  • Judge holds scheduling conference and orders briefing in ETRACOM proceeding.

TOTAL files reply brief in Fifth Circuit proceeding against FERC. On December 12, TOTAL filed its reply brief in the Fifth Circuit in its declaratory judgment action against FERC. TOTAL argues that FERC must go to federal court to prove its allegations of market manipulation under the Natural Gas Act (NGA). According to TOTAL, FERC mischaracterizes the nature of TOTAL’s challenge: the issue is not whether a district court may “review” an agency order, but rather which tribunal—district courts or FERC—Congress vested with the power to adjudicate violations of the NGA in the first place. TOTAL argues that Section 24 of the NGA grants federal district courts “exclusive jurisdiction of violations” of the NGA, and Section 22—the civil penalty provision added in 2005—did not repeal that grant. TOTAL argues that FERC is authorized to investigate NGA violations, give notice and an opportunity to be heard, and propose civil penalties. FERC must then bring an enforcement action in federal district court to adjudicate the violations and the appropriateness of the proposed penalty.

Trial concludes in the CFTC’s manipulation case against DRW and Wilson. The bench trial in the CFTC’s case against defendants DRW Investments, LLC and Donald R. Wilson in the U.S. District Court for the Southern District of New York ended with closing arguments on December 7. During the closing arguments, Judge Sullivan questioned whether the CFTC had successfully proven that DRW’s actions created an artificial price. According to Judge Sullivan, “There are multiple elements to market manipulation and it’s not clear to me that you’ve proven a central one, which is artificiality.” The parties must submit post-trial briefs of up to 25 pages by December 21.

Judge holds scheduling conference and orders briefing in FERC’s case against ETRACOM. On December 5, Judge Bastian convened a scheduling conference in FERC’s cases against ETRACOM and Michael Rosenberg in the U.S. District Court for the Eastern District of California. Judge Bastian stayed FERC’s motion to affirm its civil penalties. In addition, Judge Bastian set a briefing schedule regarding procedural issues and scope of review. Initial briefs, limited to 20 pages, are due by January 27, and responsive briefs are due 10 days later.