[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3185 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 3185

  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 SENATE OF THE UNITED STATES

                June 24 (legislative day, June 23), 2008

Ms. Cantwell (for herself, Mr. Whitehouse, Mr. Sanders, Mr. Kerry, Mr. 
Wyden, and Mr. Nelson of Florida) introduced the following bill; which 
was read twice and referred to the Committee on Agriculture, Nutrition, 
                              and Forestry

_______________________________________________________________________

                                 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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