[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6330 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 6330
To provide for regulation of certain transactions involving energy
commodities, to strengthen the enforcement authorities of the Federal
Energy Regulatory Commission under the Natural Gas Act and the Federal
Power Act, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 20, 2008
Mr. Stupak (for himself, Mr. Larson of Connecticut, Mr. McHugh, Mr.
Allen, Mr. Udall of Colorado, Mr. Carney, Mr. Kildee, Ms. Sutton, Mr.
Hinchey, Mr. Courtney, Mr. Donnelly, Mr. Altmire, Mr. Fattah, Ms.
Schwartz, Mr. DeFazio, Mr. Visclosky, Mr. Welch of Vermont, Mrs. Davis
of California, Mr. Bishop of New York, Ms. Schakowsky, Ms. Slaughter,
Mr. Inslee, Mrs. Capps, Mr. Baird, Mr. Thompson of California, Ms.
Hirono, Mr. Wilson of Ohio, Mr. McGovern, Mr. Chandler, Mrs. McCarthy
of New York, Mr. Michaud, Mr. Hill, Mr. Patrick J. Murphy of
Pennsylvania, Ms. Richardson, Mr. Hodes, Mr. Blumenauer, Mr. Grijalva,
Mr. Pascrell, Mr. Ross, Ms. Solis, Mr. Doyle, Ms. Baldwin, Mr. Conyers,
Mr. Delahunt, Mr. Pastor, and Mr. Capuano) introduced the following
bill; which was referred to the Committee on Agriculture, and in
addition to the Committee on Energy and Commerce, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To provide for regulation of certain transactions involving energy
commodities, to strengthen the enforcement authorities of the Federal
Energy Regulatory Commission under the Natural Gas Act and the Federal
Power Act, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Prevent Unfair Manipulation of
Prices Act of 2008''.
SEC. 2. REGULATION OF CERTAIN TRANSACTIONS IN DERIVATIVES INVOLVING
ENERGY COMMODITIES.
(a) Energy Commodity Defined.--Section 1a of the Commodity Exchange
Act (7 U.S.C. 1a) is amended--
(1) in paragraph (14), by inserting ``, an energy
commodity,'' after ``excluded commodity'';
(2) by redesignating paragraphs (13) through (21) and
paragraphs (22) through (34) as paragraphs (14) through (22)
and paragraphs (24) through (36), respectively;
(3) by inserting after paragraph (12) the following:
``(13) Energy commodity.--The term `energy commodity'
means--
``(A) coal;
``(B) crude oil, gasoline, diesel fuel, jet fuel,
heating oil, and propane;
``(C) electricity;
``(D) natural gas; and
``(E) any other substance (other than an excluded
commodity, a metal, or an agricultural commodity) that
is used as a source of energy, as the Commission, in
its discretion, deems appropriate.''; and
(4) by inserting after paragraph (22) (as so redesignated
by paragraph (2) of this subsection) the following:
``(23) Included energy transaction; bilateral energy
transaction.--The term `included energy transaction' means a
contract, agreement, or transaction in an energy commodity for
future delivery that provides for a delivery point of the
energy commodity in the United States, or that is transacted on
a computer terminal located in the United States. The term
`bilateral included energy transaction' means an included
energy transaction that is executed or traded other than on or
through a trading facility.''.
(b) Extension of Regulatory Authority to Swaps Involving Included
Energy Transactions.--Section 2(g) of such Act (7 U.S.C. 2(g)) is
amended--
(1) by inserting ``or an energy commodity'' after
``agricultural commodity''; and
(2) by inserting ``not an included energy transaction and
is'' before ``--''.
(c) Exemption for Transactions in Energy Commodities That Are Not
Included Energy Transactions.--Section 2 of such Act (7 U.S.C. 2) is
amended by adding at the end the following:
``(j) Exemption for Transactions in Energy Commodities Which Are
Not Included Energy Transactions.--This Act shall not apply to a
contract, agreement, or transaction in an energy commodity which is not
an included energy transaction.''.
(d) Extension of Regulatory Authority to Included Energy
Transactions on Foreign Boards of Trade.--Section 4 of such Act (7
U.S.C. 6) is amended--
(1) in subsection (a), by inserting ``, and which is not an
included energy transaction'' after ``territories or
possessions'' the 2nd place it appears; and
(2) in subsection (b), by adding at the end the following:
``The preceding sentence shall not apply with respect to
included energy transactions.''.
(e) Limitation of CFTC Authority To Provide Certain Exemptions With
Respect to Included Energy Transactions.--
(1) In general.--Section 4(c) of such Act (7 U.S.C. 6(c))
is amended by adding at the end the following:
``(6) The Commission may not exempt any included energy
transaction from the requirements of subsection (a), unless the
Commission provides 60 days advance notice to the Congress and
solicits public comment about the provision of the
exemption.''.
(2) Nullification of no-action letter exemptions to certain
requirements applicable to included energy transactions.--
Beginning 180 days after the date of the enactment of this Act,
any exemption provided by the Commodity Futures Trading
Commission that has allowed included energy transactions (as
defined in section 1a(13) of the Commodity Exchange Act) to be
conducted without regard to the requirements of section 4(a) of
such Act shall be null and void.
(f) Requirement To Establish Uniform Position Limits for Included
Energy Transactions.--Section 4a(a) of such Act (7 U.S.C. 6a(a)) is
amended--
(1) by inserting after the 2nd sentence the following:
``With respect to included energy transactions, the Commission
shall fix limits on the aggregate number of positions which may
be held by any person for the prompt month, and the aggregate
number of positions which may be held by any person for each
month, and the aggregate number of positions which may be held
by any person for all months, in all markets subject to the
jurisdiction of the Commission.''; and
(2) in the 4th sentence by inserting ``, consistent with
the 3rd sentence,'' after ``Commission''.
(g) Swaps Involving Included Energy Transactions Excluded From
Exemption for Bona Fide Hedging Transactions.--Section 4a(c) of such
Act (7 U.S.C. 6a(c)) is amended by adding at the end the following:
``The preceding provisions of this subsection shall not apply to swaps
that involve an included energy transaction.''.
(h) Special Rules Applicable to Bilateral Included Energy
Transactions.--
(1) Exemption from requirement that transactions be made on
or through a designated contract market, etc.--Section 4(a) of
such Act (7 U.S.C. 6(a)), as amended by subsection (d)(1) of
this section, is amended by inserting ``(other than a bilateral
included energy transaction)'' after ``any transaction''.
(2) Reporting and recordkeeping requirements.--
(A) In general.--Section 4g of such Act (7 U.S.C.
6g) is amended by adding at the end the following:
``(g) Requirements Applicable to Bilateral Included Energy
Transactions.--
``(1) In general.--An eligible contract participant that
enters into or executes a bilateral included energy transaction
shall--
``(A) provide to the Commission on a timely basis
the information required under paragraph (2);
``(B) consistent with section 4i, maintain books
and records relating to the transaction for at least 5
years after the date of the transaction, in such form
as the Commission shall require; and
``(C) keep the books and records open to inspection
by any representative of the Commission or the United
States Department of Justice.
``(2) Required information.--
``(A) In general.--The Commission shall require
eligible contract participants to provide the
Commission with such information regarding bilateral
included energy transactions entered into or executed
by the participants as the Commission considers
necessary to assist in detecting and preventing price
manipulation.
``(B) Information to be provided.--The information
to be provided shall include information regarding
large trading positions (as defined by the Commission)
obtained through 1 or more bilateral included energy
transactions that involve--
``(i) substantial quantities of the
underlying energy commodity in the cash market;
or
``(ii) substantial positions, investments,
or trades in agreements or contracts related to
energy commodities.''.
(B) Regulations.--Not later than 180 days after the
date of the enactment of this Act, the Commodity
Futures Trading Commission shall issue a notice of
proposed rulemaking, and not later than 1 year after
such date of enactment, the Commission shall promulgate
final regulations, specifying the information to be
maintained and provided under section 4g(g)(2) of the
Commodity Exchange Act.
(i) Public Disclosure of Number and Value of Positions Held in
Commodity Index Funds.--Section 8 of such Act (7 U.S.C. 12) is amended
by adding at the end the following:
``(j) The Commission shall publish on its website monthly the
aggregate number and value of the long positions, and the aggregate
number and value of the short positions, that are held by any person in
any portfolio constructed to match or track the components of an index
of all commodities, and the portion of the positions that are net long
positions in included energy transactions.''.
(j) No Effect on FERC Authority.--Section 2 of such Act (7 U.S.C.
2), as amended by subsection (c) of this section, is amended by adding
at the end the following:.
``(k) No Effect on FERC Authority.--This Act shall not be
interpreted to affect the jurisdiction of the Federal Energy Regulatory
Commission with respect to the authority of the Federal Energy
Regulatory Commission under the Federal Power Act (16 U.S.C. 791a et
seq.), the Natural Gas Act (15 U.S.C. 717 et seq.), or other law to
obtain information or otherwise carry out the responsibilities of the
Federal Energy Regulatory Commission.''.
SEC. 3. CEASE-AND-DESIST AUTHORITY.
(a) Natural Gas Act.--Section 20 of the Natural Gas Act (15 U.S.C.
717s) is amended by adding the following at the end:
``(e) Cease-and-Desist Proceedings; Temporary Orders; Authority of
the Commission.--If the Commission finds, after notice and opportunity
for hearing, that any entity may be violating, may have violated, or
may be about to violate any provision of this Act, or any rule,
regulation, restriction, condition, or order made or imposed by the
Commission under the authority of this Act, the Commission may publish
its findings and issue an order requiring such entity, and any other
entity that is, was, or would be a cause of the violation, due to an
act or omission the entity knew or should have known would contribute
to such violation, to cease and desist from committing or causing such
violation and any future violation of the same provision, rule, or
regulation. Such order may, in addition to requiring an entity to cease
and desist from committing or causing a violation, require such entity
to comply, to provide an accounting and disgorgement, or to take steps
to effect compliance, with such provision, rule, or regulation, upon
such terms and conditions and within such time as the Commission may
specify in such order. Any such order may, as the Commission deems
appropriate, require future compliance or steps to effect future
compliance, either permanently or for such period of time as the
Commission may specify.
``(f) Hearing.--The notice instituting proceedings pursuant to
subsection (e) shall fix a hearing date not earlier than 30 days nor
later than 60 days after service of the notice unless an earlier or a
later date is set by the Commission with the consent of any respondent
so served.
``(g) Temporary Order.--Whenever the Commission determines that the
alleged violation or threatened violation specified in the notice
instituting proceedings pursuant to subsection (e), or the continuation
thereof, is likely to result in significant dissipation or conversion
of assets, significant harm to energy consumers, or substantial harm to
the public interest, prior to the completion of the proceedings
referred to in subsection (e). The Commission may issue a temporary
order requiring the respondent to cease and desist from the violation
or threatened violation and to take such action to prevent the
violation or threatened violation and to prevent dissipation or
conversion of assets, significant harm to energy consumers, or
substantial harm to the public interest, frustration of the
Commission's ability to conduct the proceedings, or frustration of the
Commission's ability to redress said violation at the conclusion of the
proceedings, as the Commission deems appropriate pending completion of
such proceedings. Such an order shall be entered only after notice and
opportunity for a hearing, unless the Commission determines that notice
and hearing prior to entry would be impracticable or contrary to the
public interest. A temporary order shall become effective upon service
upon the respondent and, unless set aside, limited, or suspended by the
Commission or a court of competent jurisdiction, shall remain effective
and enforceable pending the completion of the proceedings.
``(h) Review of Temporary Orders.--
``(1) Commission review.--At any time after the respondent
has been served with a temporary cease-and-desist order
pursuant to subsection (g), the respondent may apply to the
Commission to have the order set aside, limited, or suspended.
If the respondent has been served with a temporary cease-and-
desist order entered without a prior Commission hearing, the
respondent may, within 10 days after the date on which the
order was served, request a hearing on such application and the
Commission shall hold a hearing and render a decision on such
application at the earliest possible time.
``(2) Judicial review.--Within--
``(A) 10 days after the date the respondent was
served with a temporary cease-and-desist order entered
with a prior Commission hearing; or
``(B) 10 days after the Commission renders a
decision on an application and hearing under paragraph
(1), with respect to any temporary cease-and-desist
order entered without a prior Commission hearing, the
respondent may apply to the United States district
court for the district in which the respondent resides
or has its principal place of business, or for the
District of Columbia, for an order setting aside,
limiting, or suspending the effectiveness or
enforcement of the order, and the court shall have
jurisdiction to enter such an order. A respondent
served with a temporary cease-and-desist order entered
without a prior Commission hearing may not apply to the
court except after hearing and decision by the
Commission on the respondent's application under
paragraph (1) of this subsection.
``(3) No automatic stay of temporary order.--The
commencement of proceedings under paragraph (2) of this
subsection shall not, unless specifically ordered by the court,
operate as a stay of the Commission's order.
``(4) Exclusive review.--Sections 19(d) and 24 shall not
apply to a temporary order entered pursuant to this section.
``(i) Implementation.--The Commission is authorized to adopt rules,
regulations, and orders as it deems appropriate to implement this
subsection.''.
(b) Federal Power Act.--Section 314 of the Federal Power Act (16
U.S.C. 825m) is amended by adding the following at the end:
``(e) Cease-and-Desist Proceedings; Temporary Orders; Authority of
the Commission.--If the Commission finds, after notice and opportunity
for hearing, that any entity may be violating, may have violated, or
may be about to violate any provision of this Act, or any rule,
regulation, restriction, condition, or order made or imposed by the
Commission under the authority of this Act, the Commission may publish
its findings and issue an order requiring such entity, and any other
entity that is, was, or would be a cause of the violation, due to an
act or omission the entity knew or should have known would contribute
to such violation, to cease and desist from committing or causing such
violation and any future violation of the same provision, rule, or
regulation. Such order may, in addition to requiring an entity to cease
and desist from committing or causing a violation, require such entity
to comply, to provide an accounting and disgorgement, or to take steps
to effect compliance, with such provision, rule, or regulation, upon
such terms and conditions and within such time as the Commission may
specify in such order. Any such order may, as the Commission deems
appropriate, require future compliance or steps to effect future
compliance, either permanently or for such period of time as the
Commission may specify.
``(f) Hearing.--The notice instituting proceedings pursuant to
subsection (e) shall fix a hearing date not earlier than 30 days nor
later than 60 days after service of the notice unless an earlier or a
later date is set by the Commission with the consent of any respondent
so served.
``(g) Temporary Order.--Whenever the Commission determines that the
alleged violation or threatened violation specified in the notice
instituting proceedings pursuant to subsection (e), or the continuation
thereof, is likely to result in significant dissipation or conversion
of assets, significant harm to energy consumers, or substantial harm to
the public interest, prior to the completion of the proceedings
referred to in subsection (e), the Commission may issue a temporary
order requiring the respondent to cease and desist from the violation
or threatened violation and to take such action to prevent the
violation or threatened violation and to prevent dissipation or
conversion of assets, significant harm to energy consumers, or
substantial harm to the public interest, frustration of the
Commission's ability to conduct the proceedings, or frustration of the
Commission's ability to redress said violation at the conclusion of the
proceedings, as the Commission deems appropriate pending completion of
such proceedings. Such an order shall be entered only after notice and
opportunity for a hearing, unless the Commission determines that notice
and hearing prior to entry would be impracticable or contrary to the
public interest. A temporary order shall become effective upon service
upon the respondent and, unless set aside, limited, or suspended by the
Commission or a court of competent jurisdiction, shall remain effective
and enforceable pending the completion of the proceedings.
``(h) Review of Temporary Orders.--
``(1) Commission review.--At any time after the respondent
has been served with a temporary cease-and-desist order
pursuant to subsection (g), the respondent may apply to the
Commission to have the order set aside, limited, or suspended.
If the respondent has been served with a temporary cease-and-
desist order entered without a prior Commission hearing, the
respondent may, within 10 days after the date on which the
order was served, request a hearing on such application and the
Commission shall hold a hearing and render a decision on such
application at the earliest possible time.
``(2) Judicial review.--Within--
``(A) 10 days after the date the respondent was
served with a temporary cease-and-desist order entered
with a prior Commission hearing; or
``(B) 10 days after the Commission renders a
decision on an application and hearing under paragraph
(1), with respect to any temporary cease-and-desist
order entered without a prior Commission hearing, the
respondent may apply to the United States district
court for the district in which the respondent resides
or has its principal place of business, or for the
District of Columbia, for an order setting aside,
limiting, or suspending the effectiveness or
enforcement of the order, and the court shall have
jurisdiction to enter such an order. A respondent
served with a temporary cease-and-desist order entered
without a prior Commission hearing may not apply to the
court except after hearing and decision by the
Commission on the respondent's application under
paragraph (1) of this subsection.
``(3) No automatic stay of temporary order.--The
commencement of proceedings under paragraph (2) of this
subsection shall not, unless specifically ordered by the court,
operate as a stay of the Commission's order.
``(4) Exclusive review.--Section 317 shall not apply to a
temporary order entered pursuant to this section.
``(i) Implementation.--The Commission is authorized to adopt rules,
regulations, and orders as it deems appropriate to implement this
subsection.''.
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