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CFTC

13 September 2016

FERC files response regarding supplemental authorities in Silkman case

On August 29, FERC filed a response to Silkman’s filing of supplemental authorities (the recent decisions in the Maxim Power and City Power cases on de novo review) before the U.S. district court in Maine.  FERC’s response repeats many of the arguments it made in opposing Silkman’s request for discovery.  According to FERC, Judge Woodlock has already decided the threshold issue that was before the Maxim Power and City Power courts:  whether FERC conducted an adjudication subject to judicial review or whether a plenary trial is required.  Based on Judge Woodlock’s decision denying the motion to dismiss and transferring the case to Maine, FERC argues that it is the law of this case that FERC conducted an adjudication subject to judicial review.  According to FERC, “The Court should focus instead on the question left open by Judge Woodlock’s ruling:  how the Court will perform its review; that is, whether the Court will rule immediately after its review of the administrative record or whether its review requires supplementation of the administrative record through discovery, a hearing, or both.”  Arguing that Judge Woodlock’s prior decision is not “clearly erroneous,” FERC asserts that the decision by the Maxim Power and City Power courts to proceed in a different manner should not affect how this case proceeds.

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13 September 2016

Maxim Power files answer to FERC complaint

On September 2, Maxim Power filed its answer to FERC’s complaint in the U.S. District Court for the District of Massachusetts. As we previously reported, Judge Mastroianni issued an order denying Maxim Power’s motion to dismiss FERC’s case on July 21. Maxim Power’s answer denies many of the allegations in FERC’s complaint. Maxim Power also asserts a number of defenses, including that FERC’s complaint fails to state a claim for which relief can be granted, Maxim Power made no false statements or material omissions, the alleged misstatements are non-actionable statements containing expressions of opinion, and lack of fair notice.

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12 September 2016

BP files motion for modification of payment directive at FERC

On September 8, BP filed a  motion for modification of the payment directive in FERC’s natural gas market manipulation proceeding against BP.  As you may recall, FERC ordered BP to disgorge its unjust profits in the amount of $207,169 to the Low Income Home Energy Assistance Program (LIHEAP) of the state of Texas for the benefit of its energy consumers.  In its request for rehearing, BP sought clarification of the disgorgement, requesting that it be permitted to post a bond (under protest) during the pendency of the review proceedings.  FERC has not yet acted on the clarification, and the payment of the disgorgement is due by September 9.  Thus, BP contacted the Texas Department of Housing, the state agency that administers the LIHEAP program for Texas.  BP was informed that the Texas Department of Housing is only permitted to disburse amounts approved by the Texas legislature and is not set up to receive amounts directed by FERC.  BP has been provided with a list of charities that reportedly administer LIHEAP in Texas.  BP’s motion requests that FERC modify the payment directive to specify the charities to which BP should pay the disgorgement amount, and grant such other relief as may be warranted.

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10 September 2016

FERC settles with National Energy and David Silva

On September 1, FERC issued orders approving separate settlements with National Energy and its former employee David Silva.  The settlements involve allegations that National Energy and Silva manipulated natural gas prices at several trading hubs.  National Energy agreed to pay a civil penalty of $1.15 million and disgorgement of $305,780.  Silva agreed to pay a civil penalty of $40,000 and a one-year ban from trading in FERC-jurisdictional natural gas markets.  Considering the fact that National Energy is no longer a going concern, Enforcement recommended a downward departure from its Penalty Guidelines for the penalty against National Energy.  National Energy and Silva neither admitted nor denied the allegations.

(more…)

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02 September 2016

TOTAL requests revised judgment and files amended complaint in district court

On August 12, TOTAL filed a motion to alter judgment and motion to file a second amended complaint in federal district court.  This case involves TOTAL’s declaratory judgment action in federal court in Texas claiming FERC lacked jurisdiction to adjudicate the manipulation claims against TOTAL.  As we previously reported, U.S. District Judge Nancy F. Atlas issued an order on July 15 dismissing TOTAL’s declaratory judgment action against FERC.  TOTAL argues that it is entitled to a declaratory judgment stating that FERC must litigate alleged market manipulation violations in federal district court because such a process is mandated by Section 24 of the Natural Gas Act, as well as the Constitution and the Administrative Procedure Act.  FERC’s response to TOTAL’s motion is due by August 29.

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01 September 2016

City Power files answer to FERC complaint

On August 24, City Power filed its answer to FERC’s complaint in the U.S. District Court for the District of Columbia. As we previously reported, Judge Bates issued an order denying City Power’s motion to dismiss in FERC’s case on August 10. City Power’s answer denies many of the allegations in FERC’s complaint. City Power also asserts a number of defenses, including that FERC’s complaint fails to state a claim for which relief can be granted, due process violations, FERC’s lack of jurisdiction over the UTC trades at issue, and lack of fair notice.

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31 August 2016

FERC files response on regarding supplemental authorities in the Barclays case

On August 16, FERC filed a response to the Barclays filing of supplemental authorities (the recent decisions in the Maxim Power and City Power cases on de novo review). FERC states that it “respectfully disagrees” with those courts’ holdings that Section 31(d)(3) of the Federal Power Act requires application of the Federal Rules of Civil Procedure and a regular civil trial. In addition, FERC points to some of the language from the City Power decision supporting its position on liability, including that: (a) FERC is not required to show harm; (b) traders are presumed to be trading based on their best estimates of the security’s economic value, and trading for other purposes can be deceptive; and (c) de novo review does not eliminate Chevron deference.

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31 August 2016

FERC files complaint against ETRACOM in federal district court

On August 17, FERC filed its complaint against ETRACOM and Michael Rosenberg in the U.S. District Court for the Eastern District of California.  As we previously reported in June, FERC issued an Order Assessing Civil Penalties finding that ETRACOM and Rosenberg violated FERC’s anti-manipulation rule through a scheme to submit virtual supply transactions at the New Melones intertie at the CAISO border in order to affect power prices and economically benefit ETRACOM’s Congestion Revenue Rights sourced at that location.  FERC assessed $2,400,000 against ETRACOM and $100,000 against Rosenberg in civil penalties, plus $315,072 in disgorgement.  Since ETRACOM elected the de novo review procedures under Section 31(d)(3) of the Federal Power Act and then did not pay the penalty within 60 days, FERC instituted the instant proceeding in district court seeking an order affirming the assessment of a civil penalty.  The case has been assigned to Judge Troy L. Nunley, the same judge presiding over the Barclays case.

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30 August 2016

FERC settles with Saracen over tariff violations

On August 22, FERC issued an order approving a settlement between FERC’s Office of Enforcement and Saracen Energy Midwest, LP (Saracen) that resolves Enforcement’s investigation into whether Saracen violated the Southwest Power Pool, Inc. (SPP) tariff by submitting bids for Transmission Congestion Rights (TCRs) at Electronically Equivalent Settlement Locations (EESLs) for auctions in September and October 2014, and March and April 2015.  Enforcement determined that in five separate auction rounds across these four different auction months, Saracen submitted TCR bids at EESLs, which is prohibited under the SPP tariff.  Saracen neither admitted nor denied the violations and agreed to pay a civil penalty of $25,000.  Saracen also agreed to implement measures designed to ensure compliance in the future, including submitting an annual compliance report.

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23 August 2016

FERC issues new NAVs to National Energy and David Silva

On August 3, FERC issued similar Staff Notices of Alleged Violations (NAV) stating that FERC Enforcement Staff has preliminarily determined that National Energy and David Silva violated FERC’s anti-manipulation rule.  According to the NAVs, Staff alleges that National Energy and Silva fraudulently traded physical basis at Texas Eastern M3 during the January 2012 bid-week to increase the value of their financial basis positions.  In particular, Staff alleges that National Energy and Silva sold physical basis at arbitrarily low prices early in the morning to benefit a large short financial basis position acquired before bid-week, a large part of which they repurchased after making their physical basis sales.  Staff also alleges that National Energy fraudulently traded physical basis at Henry Hub during the April 2014 bid-week to increase the value of its financial exposure, which included trading physical basis after the close of the NYMEX solely to benefit National Energy’s exposure to the Henry Hub Inside FERC index.

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