The D.C. Circuit clarifies that FERC may prohibit
manipulative trading only in markets outside of the CFTC's
exclusive jurisdiction over commodity futures
contracts.
On March 15, the U.S. Court of Appeals for the District of
Columbia Circuit ruled in Hunter v. FERC1 that
the Federal Energy Regulatory Commission (FERC) lacks authority
over commodity futures contracts and therefore cannot assess fines
for manipulation of the natural gas futures market. This decision
undercuts FERC's interpretation of its enforcement jurisdiction
under the Natural Gas Act (NGA) to regulate the natural gas
markets.
FERC alleged that, over the span of three months in 2006, Brian
Hunter, a natural gas trader for a hedge fund, sold a significant
number of natural gas futures contracts at the end of trading day
and was able to depress the natural gas settlement price on the New
York Mercantile Exchange. Hunter's portfolio benefited from
this reduction in price. On July 25, 2007, the
