[Congressional Record Volume 151, Number 23 (Thursday, March 3, 2005)]
[Senate]
[Pages S2014-S2017]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN (for herself, Mr. Levin, Mr. Wyden, Mr. Harkin, 
        and Ms. Cantwell):
  S. 509. A bill to improve the operation of energy markets; to the 
Committee on Agriculture, Nutrition, and Forestry.
  Mrs. FEINSTEIN. Mr. President, in light of the most recent evidence 
uncovered about Enron's participation in the Western Energy Crisis, I 
rise today to introduce the Energy Market Oversight Bill with Senators 
Levin, Harkin, Cantwell and Wyden.
  This bill would: Improve Price Transparency in Wholesale Electricity 
Markets. The bill directs the Federal Energy Regulatory Commission to 
establish an electronic system to provide information about the price 
and availability of wholesale electricity to buyers, and sellers, and 
the public.
  Prohibit Round Trip Electricity Trades. The bill prohibits the 
simultaneous buying and selling of the same quantity of electricity at 
the same price in the same location with no financial gain or loss. 
Round trip or ``wash trades'' are essentially bogus trades whereby no 
electricity changes hands, but the profit from the trades enriches the 
bottom-line of a company's financial report.
  Increase Penalties for Violations of Federal Power Act. Maximum fines 
for violations of the Federal Power Act are increased from $5,000 to 
$1,000,000.; and maximum sentences are increased from 2 to 5 years. 
Current fines are extraordinarily low and therefore provide no 
deterrence to illegal activity.
  Increase Penalties for Violations of Natural Gas Act. The bill 
increases maximum fines for violations of the Natural Gas Act from 
$5,000 to $1,000,000.
  Prohibit Manipulation in Electricity Markets. Manipulation is 
prohibited in the wholesale electricity markets and FERC is given 
discretionary authority to revoke market-based rates for violations. 
Strangely enough, manipulation of energy markets is not specifically 
prohibited. This would add language to Part II of the Federal Power 
Act.
  Repeal the ``Enron exemption''. Repeals the Commodities Future 
Modernization Act exemption for large traders in energy commodities and 
applies the anti-manipulation and anti-fraud provisions of the 
Commodities Exchange Act to all Over the Counter trades in energy 
commodities and derivatives. In my view, when Congress exempted energy 
from the Commodity Futures Modernization Act of 2000, it created the 
playing field for the Western Energy Crisis of 2000 and 2001, and cost 
millions of people millions of dollars.
  Provide CFTC the Tools to Monitor OTC Energy Markets. For Over the 
Counter trades in energy commodities and derivatives that perform a 
significant price discovery function, including trades on electronic 
trading facilities, the bill requires large sophisticated traders to 
keep records and report large trades to the CFTC. This does not change 
the law, only applies the law that exists for futures contracts to over 
the counter trades in the energy markets.
  Limit on Use of Data. Requires the Commodity Futures Trading 
Commission to seek information that is necessary for the limited 
purposes of detecting and preventing manipulation in the futures and 
over the counter markets for energy; to keep proprietary trade and 
business data confidential except when used for law enforcement 
purposes. This does not require the real-time publication of 
proprietary data.
  No Effect on Non-Energy Commodities or Derivatives. The bill would 
not alter or affect the regulation of futures markets, financial 
derivatives, or metals. We have specifically stated on page 20 the 
following: ``The amendments made by this title have no effect on the 
regulation of excluded commodities under the Commodity Exchange Act.''
  In addition, the bill states: ``The amendments made by this title 
have no effect on the regulation of metals under the Commodity Exchange 
Act.''
  The Western Energy Crisis of 2000-2001 has still not been resolved. 
Meanwhile, more and more information about Enron's role in the crisis 
emerges. On February 3, 2005, the Snohomish Public Utility District 
released transcripts of tapes showing that on January 17, 2001, Enron 
traders concocted false repairs for a Las Vegas power plant--making 
power unavailable that would have been delivered to California--on the 
very same day that supplies were so tight that Northern California 
experienced a Stage 3 power emergency and rolling blackouts hit as many 
as 2 million consumers.
  By taking the plant offline, Enron was also in direct violation of an 
Emergency Power Order by U.S. Energy Secretary Bill Richardson that 
required power generators to make power available to California.
  Telephone transcripts between Enron and the Las Vegas plant 
confirming the effort to falsify repairs read as follows:

       Bill: Rich: Ah, we want you guys to get a little creative.
       Rich: OK.
       Bill: And come up with a reason to go down.
       Rich: OK.
       Bill: Anything you want to do over there? Any----
       Rich: Ah----
       Bill: Cleaning, anything like that?
       Rich: Yeah, Yeah. There's some stuff we could be doing.

  Enron knew exactly what it was doing when it manipulated the Western 
Energy markets. Enron traders tested gaming techniques in the 
California market as early as May 1998, creating imbalances in the 
California market as a result of loopholes it discovered in the system.
  The schemes the company used in 2000-2001 had already been rehearsed 
in

[[Page S2015]]

Canada. ``Project Stanley'' was one such technique--Enron traders 
inflated energy prices in Alberta, Canada by colluding with other 
energy marketers.
  Enron advocated for ``de-regulation'' of California's energy markets 
while drafting language that was full of loopholes it could exploit. 
Similarly, the company was the main force behind a provision that 
exempted it from federal oversight. This exemption, known as the 
``Enron loophole,'' was created in 2000 when Congress passed the 
Commodity Futures Modernization Act.
  The loophole exempted energy trading from regulatory oversight and 
excluded it completely if the trade was done electronically.
  We must close this loophole in order to prohibit fraud and price 
manipulation in all over-the-counter energy commodity transactions, and 
provide the Commodity Futures Trading Commission the authority it needs 
to investigate and prosecute allegations of fraud and manipulation.
  We need to give the CFTC this authority because we learned during the 
Western Energy Crisis that there was pervasive manipulation and fraud 
in energy markets, and that FERC and the CFTC were unable or unwilling 
to use the authority they had to intervene.
  We need to give the CFTC this authority because we need regulators to 
protect consumers and make sure they're not taken advantage of.
  We need to give the CFTC this authority because when there are 
inadequate regulations, consumers are ripped off.
  The Western Energy Crisis cost California about $40 billion. 
California has been asking for $9 billion in refunds. However, given 
the fact that Enron is in bankruptcy, it would be a miracle if the 
State receives even half of that amount.
  Yet there is nothing preventing another energy crisis from happening 
again, in my State or elsewhere.
  Therefore, we need Federal oversight of our energy markets.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 509

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Energy 
     Markets Improvement Act of 2005''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

         TITLE I--TRANSPARENCY IN WHOLESALE ELECTRICITY MARKETS

Sec. 101. Market transparency.
Sec. 102. Round trip trading.
Sec. 103. Enforcement.
Sec. 104. Refund effective date.
Sec. 105. Discovery and evidentiary hearings under the Federal Power 
              Act.

                     TITLE II--MARKET MANIPULATION

Sec. 201. Prohibition of market manipulation.

                   TITLE III--ENERGY MARKET OVERSIGHT

Sec. 301. Over-the-counter transactions in energy commodities.
Sec. 302. Electronic trading facilities for energy commodities.
Sec. 303. No effect on other authority.
Sec. 304. Prohibition of fraudulent transactions.
Sec. 305. Criminal and civil penalties.
Sec. 306. Conforming amendments.

         TITLE I--TRANSPARENCY IN WHOLESALE ELECTRICITY MARKETS

     SEC. 101. MARKET TRANSPARENCY.

       Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 215. MARKET TRANSPARENCY.

       ``(a) In General.--Not later than 180 days after the date 
     of enactment of this section, the Commission shall promulgate 
     regulations establishing an electronic information system to 
     provide the Commission and the public with access to such 
     information as is appropriate to facilitate price 
     transparency and participation in markets subject to the 
     jurisdiction of the Commission.
       ``(b) Information To Be Made Available.--
       ``(1) In general.--The system under subsection (a) shall 
     provide information about the availability and market price 
     of wholesale electric energy and transmission services to the 
     Commission, State commissions, buyers and sellers of 
     wholesale electric energy, users of transmission services, 
     and the public.
       ``(2) Protection of consumers and competitive markets.--In 
     determining the information to be made available under the 
     system and the time at which to make such information 
     available, the Commission shall seek to ensure that consumers 
     and competitive markets are protected from false or 
     misleading information and from the adverse effects of 
     potential collusion or other anticompetitive behaviors that 
     can be facilitated by untimely public disclosure of 
     transaction-specific information.
       ``(c) Authority To Obtain Information.--The Commission 
     shall have authority to obtain information described in 
     subsections (a) and (b) from any electric utility or 
     transmitting utility (including any entity described in 
     section 201(f)).
       ``(d) Exemption.--The Commission shall exempt from 
     disclosure information that the Commission determines would, 
     if disclosed--
       ``(1) be detrimental to the operation of an effective 
     market; or
       ``(2) jeopardize system security.
       ``(e) Applicability.--The system under subsection (a) shall 
     not apply to an entity described in section 212(k)(2)(B) with 
     respect to transactions for the purchase or sale of wholesale 
     electric energy and transmission services within the area 
     described in section 212(k)(2)(A).''.

     SEC. 102. ROUND TRIP TRADING.

       Part II of the Federal Power Act (16 U.S.C. 824 et seq.) 
     (as amended by section 101) is amended by adding at the end 
     the following:

     ``SEC. 216. ROUND TRIP TRADING.

       ``(a) Prohibition.--It shall be unlawful for any person or 
     entity (including an entity described in section 201(f)) 
     knowingly to enter into any contract or other arrangement to 
     execute a round trip trade.
       ``(b) Definition of Round Trip Trade.--In this section, the 
     term `round trip trade' means a transaction (or combination 
     of transactions) in which a person or entity, with the intent 
     to affect reported revenues, trading volumes, or prices--
       ``(1) enters into a contract or other arrangement to 
     purchase from, or sell to, any other person or entity 
     electric energy at wholesale; and
       ``(2) simultaneously with entering into the contract or 
     arrangement described in paragraph (1), arranges a 
     financially offsetting trade with the other person or entity 
     for the same electric energy at substantially the same 
     location, price, quantity, and terms so that, collectively, 
     the purchase and sale transactions in themselves result in a 
     de minimis or no financial gain or loss.''.

     SEC. 103. ENFORCEMENT.

       (a) Complaints.--Section 306 of the Federal Power Act (16 
     U.S.C. 825e) is amended--
       (1) in the first sentence--
       (A) by inserting ``(including an electric utility)'' after 
     ``Any person''; and
       (B) by inserting ``, transmitting utility,'' after 
     ``licensee''; and
       (2) in the second sentence, by inserting ``, transmitting 
     utility,'' after ``licensee''.
       (b) Investigations.--Section 307(a) of the Federal Power 
     Act (16 U.S.C. 825f(a)) is amended in the first sentence by 
     inserting ``(including a transmitting utility)'' after ``any 
     person''.
       (c) Review of Commission Orders.--Section 313(a) of the 
     Federal Power Act (16 U.S.C. 825l) is amended in the first 
     sentence by inserting ``(including an electric utility)'' 
     after ``Any person''.
       (d) Criminal Penalties.--Section 316 of the Federal Power 
     Act (16 U.S.C. 825o) is amended--
       (1) in subsection (a)--
       (A) by striking ``$5,000'' and inserting ``$1,000,000''; 
     and
       (B) by striking ``two years'' and inserting ``5 years'';
       (2) in subsection (b), by striking ``$500'' and inserting 
     ``$25,000''; and
       (3) by striking subsection (c).
       (e) Civil Penalties.--Section 316A of the Federal Power Act 
     (16 U.S.C. 825o-1) is amended--
       (1) in subsections (a) and (b), by striking ``section 211, 
     212, 213, or 214'' each place it appears and inserting ``part 
     II''; and
       (2) in subsection (b), by striking ``$10,000'' and 
     inserting ``$1,000,000''.
       (f) General Penalties.--Section 21 of the Natural Gas Act 
     (15 U.S.C. 717t) is amended--
       (1) in subsection (a), by striking ``$5,000'' and inserting 
     ``$1,000,000'', and by striking ``two years'' and inserting 
     ``5 years''; and
       (2) in subsection (b), by striking ``$500'' and inserting 
     ``$50,000''.

     SEC. 104. REFUND EFFECTIVE DATE.

       Section 206(b) of the Federal Power Act (16 U.S.C. 824e(b)) 
     is amended--
       (1) in the second sentence, by striking ``the date 60 days 
     after the filing of such complaint nor later than 5 months 
     after the expiration of such 60-day period'' and inserting 
     ``the date of the filing of the complaint nor later than 5 
     months after the filing of the complaint'';
       (2) in the third sentence--
       (A) by striking ``60 days after the'' and inserting ``of''; 
     and
       (B) by striking ``expiration of such 60-day period'' and 
     inserting ``publication date''; and
       (3) by striking the fifth sentence and inserting the 
     following: ``If no final decision is rendered by the 
     conclusion of the 180-day period that begins on the date of 
     institution of a proceeding under this section, the 
     Commission shall state the reasons why the Commission has 
     failed to do so and shall state its best estimate as to when 
     the Commission reasonably expects to render a final 
     decision.''.

     SEC. 105. DISCOVERY AND EVIDENTIARY HEARINGS UNDER THE 
                   FEDERAL POWER ACT.

       The Federal Power Act is amended--

[[Page S2016]]

       (1) in section 206 (16 U.S.C. 824e), by adding at the end 
     the following:
       ``(e) Discovery and Evidentiary Hearings.--On receipt of a 
     complaint by a State or a State Commission under subsection 
     (a), the Commission shall provide--
       ``(1) an opportunity for the State or the State Commission 
     to conduct reasonable discovery; and
       ``(2) on request of the State or the State Commission and a 
     showing of a dispute as to material facts, an evidentiary 
     hearing.''; and
       (2) in section 306 (16 U.S.C. 825e)--
       (A) by inserting ``(a) In General.--'' before ``Any 
     person''; and
       (B) by adding at the end the following:
       ``(b) Discovery and Evidentiary Hearings.--On receipt of a 
     complaint by a State or State Commission under this section, 
     the Commission shall provide--
       ``(1) an opportunity for the State or the State Commission 
     to conduct reasonable discovery; and
       ``(2) on request of the State or the State Commission and a 
     showing of dispute as to material facts, an evidentiary 
     hearing.''.

                     TITLE II--MARKET MANIPULATION

     SEC. 201. PROHIBITION OF MARKET MANIPULATION.

       (a) In General.--Part II of the Federal Power Act (as 
     amended by section 102) is amended by adding at the end the 
     following:

     ``SEC. 217. PROHIBITION OF MARKET MANIPULATION.

       ``(a) In General.--It shall be unlawful for any person, 
     directly or indirectly, to knowingly use or employ, in 
     connection with the purchase or sale of electric energy or 
     the purchase or sale of transmission services subject to the 
     jurisdiction of the Commission, any manipulative or deceptive 
     device or contrivance to affect the price, availability, or 
     reliability of the electric energy or transmission services.
       ``(b) Regulations.--The Commission may promulgate 
     regulations as appropriate in the public interest or for the 
     protection of electric ratepayers to enforce this section.''.
       (b) Additional Remedy for Market Manipulation.--Section 206 
     of the Federal Power Act (16 U.S.C. 824e) is amended by 
     adding at the end the following:
       ``(e) Remedy for Market Manipulation.--If the Commission 
     finds that a public utility has knowingly employed any 
     manipulative or deceptive device or contrivance in violation 
     of this Act (including a regulation promulgated under this 
     Act), the Commission may, in addition to any other remedy 
     available under this Act, revoke the authority of the public 
     utility to charge market-based rates.''.

                   TITLE III--ENERGY MARKET OVERSIGHT

     SEC. 301. OVER-THE-COUNTER TRANSACTIONS IN ENERGY 
                   COMMODITIES.

       (a) Definitions.--Section 1a of the Commodity Exchange Act 
     (7 U.S.C. 1a) is amended by adding at the end the following:
       ``(34) Included energy transaction.--The term `included 
     energy transaction' means a contract, agreement, or 
     transaction in an energy commodity that is--
       ``(A)(i) executed or traded on an electronic trading 
     facility; and
       ``(ii) entered into on a principal-to-principal basis 
     solely between persons that are eligible commercial entities 
     at the time the persons enter into the agreement, contract, 
     or transaction; or
       ``(B)(i) executed or traded not on or through a trading 
     facility; and
       ``(ii) entered into solely between persons that are 
     eligible contract participants at the time the persons enter 
     into the agreement, contract, or transaction, regardless of 
     the means of execution of the agreement, contract, or 
     transaction.
       ``(35) Energy commodity.--
       ``(A) In general.--The term `energy commodity' means a 
     commodity (other than an excluded commodity, a metal, or an 
     agricultural commodity) that is used as a source of energy.
       ``(B) Inclusions.--The term `energy commodity' includes--
       ``(i) coal;
       ``(ii) crude oil, gasoline, heating oil, and propane;
       ``(iii) electricity; and
       ``(iv) natural gas.
       ``(36) Electronic energy trading facility.--The term 
     `electronic energy trading facility' means an electronic 
     trading facility on or through which included energy 
     transactions are traded or executed.''.
       (b) Off-Exchange Transactions in Energy Commodities.--
     Section 2(g) of the Commodity Exchange Act (7 U.S.C. 2(g)) is 
     amended--
       (1) by inserting ``or an energy commodity'' after 
     ``agricultural commodity'';
       (2) by redesignating paragraphs (1) through (3) as 
     subparagraphs (A) through (C), respectively;
       (3) by striking ``No provision'' and inserting the 
     following:
       ``(1) In general.--No provision''; and
       (4) by adding at the end the following:
       ``(2) Transactions in Energy Commodities.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C) and subsection (h)(7), nothing in this Act applies to 
     an included energy transaction.
       ``(B) Prohibited conduct.--
       ``(i) In general.--An included energy transaction shall be 
     subject to--

       ``(I) sections 5b, 12(e)(2)(B), and 22(a)(4); and
       ``(II) the prohibitions in sections 4b, 4c(a), 4c(b), 4o, 
     6(c), 6(d), 6c, 6d, 8a, and 9(a)(2).

       ``(ii) Transactions exempted by commission action.--
     Notwithstanding any exemption by the Commission under section 
     4(c), an included energy transaction shall be subject to the 
     sections specified in clause (i) of this subparagraph, 
     subparagraph (C), and subsection (h)(7).
       ``(C) Reporting and recordkeeping requirements.--
       ``(i) In general.--An eligible contract participant that 
     enters into or executes an included energy transaction that 
     performs, or together with other such transactions performs, 
     a significant price discovery function in the cash market for 
     an energy commodity or in any other market for agreements, 
     contracts, or transactions relating to an energy commodity, 
     or an eligible commercial entity that enters into or executes 
     an included energy transaction described in section 1a(34)(A) 
     shall--

       ``(I) provide to the Commission on a timely basis the 
     information required under clause (ii); and
       ``(II)(aa) consistent with section 4i, maintain books and 
     records relating to each included energy transaction, for a 
     period of at least 5 years after the date of the transaction, 
     in such form as the Commission shall require; and
       ``(bb) keep the books and records open to inspection by any 
     representative of the Commission or the Attorney General.

       ``(ii) Required information.--

       ``(I) In general.--The Commission shall require that such 
     information regarding included energy transactions be 
     provided to the Commission as the Commission considers 
     necessary to assist in detecting and preventing price 
     manipulation.
       ``(II) Information to be included.--Such information shall 
     include information regarding large trading positions 
     obtained through 1 or more included energy transactions that 
     involve--

       ``(aa) substantial quantities of the commodity in the cash 
     market; or
       ``(bb) substantial positions, investments, or trades in 
     agreements or contracts related to energy commodities.

       ``(III) Manner of compliance.--The Commission shall specify 
     when and how such information shall be provided and 
     maintained by eligible contract participants and eligible 
     commercial entities.
       ``(IV) Price discovery transactions.--

       ``(aa) In general.--In specifying the information to be 
     provided under this paragraph, the Commission shall identify 
     the transactions or class of transactions that the Commission 
     considers to perform a significant price discovery function.
       ``(bb) Considerations.--In determining which included 
     energy transactions perform a significant price discovery 
     function, the Commission shall consider the extent to which--

       ``(AA) standardized agreements are used to execute the 
     transactions;
       ``(BB) the transactions involve standardized types or 
     measures of a commodity;
       ``(CC) the prices of the transactions are reported to third 
     parties, published, or disseminated;
       ``(DD) the prices of the transactions are referenced in 
     other transactions; and
       ``(EE) other factors considered appropriate by the 
     Commission.
       ``(V) Persons filing.--

       ``(aa) In general.--The Commission, in its discretion, may 
     allow large trader position reports required to be provided 
     by an eligible commercial entity to be provided by an 
     electronic energy trading facility if the eligible commercial 
     entity authorizes the facility to provide such information on 
     its behalf.
       ``(bb) Information and enforcement.--Nothing in an 
     authorization under item (aa) shall impair the ability of the 
     Commission to obtain information from an eligible commercial 
     entity or otherwise enforce this Act.

       ``(VI) Regulations.--Not later than 180 days after the date 
     of enactment of this paragraph, the Commission shall issue a 
     notice of proposed rulemaking, and not later than 1 year 
     after the date of enactment of this paragraph, the Commission 
     shall promulgate final regulations, specifying the 
     information to be provided and maintained under this 
     subparagraph.''.

     SEC. 302. ELECTRONIC TRADING FACILITIES FOR ENERGY 
                   COMMODITIES.

       Section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h)) 
     is amended--
       (1) in paragraph (1), by inserting after ``an exempt 
     commodity'' the following: ``other than an energy 
     commodity'';
       (2) in paragraph (3), by inserting after ``an exempt 
     commodity'' the following: ``other than an energy 
     commodity''; and
       (3) by adding at the end the following:
       ``(7) Energy transactions.--
       ``(A) In general.--To the extent that the Commission 
     determines to be appropriate under subparagraph (C), an 
     electronic energy trading facility shall--
       ``(i) be subject to the requirements of section 5a, to the 
     extent provided in sections 5a(g) and 5d;
       ``(ii)(I) consistent with section 4i, maintain books and 
     records relating to the business of the electronic energy 
     trading facility, including books and records relating to 
     each transaction in such form as the Commission may require; 
     and
       ``(II) make the books and records required under this 
     section available to representatives of the Commission and 
     the Attorney General for inspection for a period of at least 
     5 years after the date of each included energy transaction;
       ``(iii) make available to the public information on trading 
     volumes, settlement

[[Page S2017]]

     prices, open interest (where applicable), and opening and 
     closing ranges (or daily highs and lows, as appropriate) for 
     included energy transactions; and
       ``(iv) provide the information to the Commission in such 
     form and at such times as the Commission may require.
       ``(B) Applicability of other provisions.--
       ``(i) Paragraph 5.--An electronic energy trading facility 
     shall comply with paragraph (5).
       ``(ii) Paragraph 6.--Paragraph (6) shall apply with respect 
     to a subpoena issued to any foreign person that the 
     Commission believes is conducting or has conducted 
     transactions on or through an electronic energy trading 
     facility.
       ``(C) Regulations.--Not later than 180 days after the date 
     of enactment of this paragraph, the Commission shall issue a 
     notice of proposed rulemaking, and not later than 1 year 
     after the date of enactment of this paragraph, the Commission 
     shall promulgate final regulations, specifying the 
     information to be provided, maintained, or made available to 
     the public under subparagraphs (A) and (B).
       ``(8) Nondisclosure of proprietary information.--In 
     carrying out paragraph (7) and subsection (g)(2), the 
     Commission shall not--
       ``(A) require the real-time publication of proprietary 
     information;
       ``(B) prohibit the commercial sale or licensing of real-
     time proprietary information; or
       ``(C) publicly disclose information regarding market 
     positions, business transactions, trade secrets, or names of 
     customers, except as provided in section 8.''.

     SEC. 303. NO EFFECT ON OTHER AUTHORITY.

       (a) No Effect on FERC Authority.--Nothing contained in this 
     title shall 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.''.
       (b) No Effect on Excluded Commodities.--The amendments made 
     by this title have no effect on the regulation of excluded 
     commodities under the Commodity Exchange Act (7 U.S.C. 1a et 
     seq.).
       (c) No Effect on Metals.--The amendments made by this title 
     have no effect on the regulation of metals under the 
     Commodity Exchange Act (7 U.S.C. 1a et seq.).

     SEC. 304. PROHIBITION OF FRAUDULENT TRANSACTIONS.

       Section 4b of the Commodity Exchange Act (7 U.S.C. 6b) is 
     amended by striking subsection (a) and inserting the 
     following:
       ``(a) Prohibitions.--
       ``(1) In general.--It shall be unlawful (A) for any person, 
     in or in connection with any order to make, or the making of, 
     any contract of sale of any commodity for future delivery or 
     in interstate commerce, that is made, or to be made, on or 
     subject to the rules of a designated contract market, for or 
     on behalf of any other person, or (B) for any person, in or 
     in connection with any order to make, or the making of, any 
     contract of sale of any commodity for future delivery or 
     other agreement, contract or transaction subject to 
     paragraphs (1) and (2) of section 5a(g), that is made, or to 
     be made, for or on behalf of or with, any other person, other 
     than on or subject to the rules of a designated contract 
     market--
       ``(i) to cheat or defraud or attempt to cheat or defraud 
     the other person;
       ``(ii) willfully to make or cause to be made to such other 
     person any false report or statement or willfully to enter or 
     cause to be entered for the other person any false record;
       ``(iii) willfully to deceive or attempt to deceive the 
     other person by any means whatsoever in regard to any order 
     or contract or the disposition or execution of any order or 
     contract, or in regard to any act of agency performed, with 
     respect to any order or contract for (or, in the case of a 
     contract described in subparagraph (B), with the other 
     person); or
       ``(iv)(I) to bucket an order represented by the person as 
     an order to be executed, for or on behalf of the other 
     person, on an organized exchange; or
       ``(II) to--
       ``(aa) fill an order by offset against the order or orders 
     of the other person; or
       ``(bb) willfully and knowingly and without the prior 
     consent of the other person, to--

       ``(AA) become the buyer in respect to any selling order of 
     the other person; or
       ``(BB) become the seller in respect to any buying order of 
     the other person;

     if the order is to be executed on or subject to the rules of 
     a designated contract market.
       ``(2) Limitation.--This subsection does not obligate any 
     person, in connection with a transaction in a contract of 
     sale of a commodity for future delivery with another person, 
     to disclose to any other person nonpublic information that 
     may be material to the market price of the commodity or 
     transaction, except as necessary to make any statement made 
     to the other person in connection with the transaction not 
     misleading in any material respect.''.

     SEC. 305. CRIMINAL AND CIVIL PENALTIES.

       (a) Enforcement Powers of Commission.--Section 6(c) of the 
     Commodity Exchange Act (7 U.S.C. 9, 15) is amended in 
     paragraph (3) of the tenth sentence--
       (1) by inserting ``(A)'' after ``assess such person''; and
       (2) by inserting after ``each such violation'' the 
     following: ``, or (B) in any case of manipulation of, or 
     attempt to manipulate, the price of any commodity, a civil 
     penalty of not more than the greater of $1,000,000 or triple 
     the monetary gain to such person for each such violation,''.
       (b) Manipulations and Other Violations.--Section 6(d) of 
     the Commodity Exchange Act (7 U.S.C. 13b) is amended in the 
     first sentence--
       (1) by striking ``paragraph (a) or (b) of section 9 of this 
     Act'' and inserting ``subsection (a), (b), or (f) of section 
     9''; and
       (2) by striking ``said paragraph 9(a) or 9(b)'' and 
     inserting ``subsection (a), (b), or (f) of section 9''.
       (c) Nonenforcement of Rules of Government or Other 
     Violations.--Section 6b of the Commodity Exchange Act (7 
     U.S.C. 13a) is amended--
       (1) in the first sentence, by inserting before the period 
     at the end the following: ``, or, in any case of manipulation 
     of, or an attempt to manipulate, the price of any commodity, 
     a civil penalty of not more than $1,000,000 for each such 
     violation''; and
       (2) in the second sentence, by inserting before the period 
     at the end the following: ``, except that if the failure or 
     refusal to obey or comply with the order involved any offense 
     under section 9(f), the registered entity, director, officer, 
     agent, or employee shall be guilty of a felony and, on 
     conviction, shall be subject to penalties under section 
     9(f)''.
       (d) Action To Enjoin or Restrain Violations.--Section 6c(d) 
     of the Commodity Exchange Act (7 U.S.C. 13a-1(d)) is amended 
     by striking ``(d)'' and all that follows through the end of 
     paragraph (1) and inserting the following:
       ``(d) Civil Penalties.--In any action brought under this 
     section, the Commission may seek and the court shall have 
     jurisdiction to impose, on a proper showing, on any person 
     found in the action to have committed any violation--
       ``(1) a civil penalty in the amount of not more than the 
     greater of $100,000 or triple the monetary gain to the person 
     for each violation; or
       ``(2) in any case of manipulation of, or an attempt to 
     manipulate, the price of any commodity, a civil penalty in 
     the amount of not more than the greater of $1,000,000 or 
     triple the monetary gain to the person for each violation.''.
       (e) Violations Generally.--Section 9(a) of the Commodity 
     Exchange Act (7 U.S.C. 13) is amended--
       (1) by striking ``(or $500,000 in the case of a person who 
     is an individual)'';
       (2) by striking ``five years'' and inserting ``10 years''; 
     and
       (3) in paragraph (2), by striking ``false or misleading or 
     knowingly inaccurate reports'' and inserting ``knowingly 
     false, misleading, or inaccurate reports''.

     SEC. 306. CONFORMING AMENDMENTS.

       (a) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is 
     amended--
       (1) in subsection (d)(1), by striking ``section 5b'' and 
     inserting ``section 5a(g), 5b,'';
       (2) in subsection (e)(1), by inserting ``(1)'' after 
     ``(g)''; and
       (3) in subsection (i)--
       (A) in paragraph (1)--
       (i) by striking ``No provision'' and inserting ``In 
     general.--Subject to subsections (g)(2) and (h)(7), no 
     provision''; and
       (ii) in subparagraph (A), by inserting ``(1)'' after 
     ``2(g)''; and
       (B) in paragraph (2), by striking ``No provision'' and 
     inserting ``In general.--Subject to subsections (g)(2) and 
     (h)(7), no provision''.
       (b) Section 4i of the Commodity Exchange Act (7 U.S.C. 6i) 
     is amended in the first sentence by inserting ``, or pursuant 
     to an exemption under section 4(c)'' after ``transaction 
     execution facility''.
       (c) Section 8a(9) of the Commodity Exchange Act (7 U.S.C. 
     12a(9)) is amended--
       (1) by inserting ``or an electronic energy trading 
     facility'' after ``direct the contract market'';
       (2) by inserting after ``liquidation of any futures 
     contract'' the following: ``or included energy transaction''; 
     and
       (3) by inserting ``or an electronic energy trading 
     facility'' after ``given by a contract market''.
                                 ______