I 

109TH CONGRESS 

2D SESSION H. R. 5248 

To regulate over-the-counter trading of energy derivatives. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 27, 2006 

Mr. STUPAK (for himself, Mr. DINGELL, Mr. LARSON of Connecticut, Mr. 

NADLER, Mrs. MCCARTHY, Mr. HINCHEY, Mr. BAIRD, Mrs. 

NAPOLITANO, Mr. CHANDLER, Ms. SCHWARTZ of Pennsylvania, Mr. 

TIERNEY, Mr. INSLEE, Ms. MCKINNEY, Mr. ALLEN, Mr. AL GREEN of 

Texas, Mr. DEFAZIO, Mrs. CAPPS, Mr. PASCRELL, Mr. DOGGETT, Mr. 

RUPPERSBERGER, and Mr. BISHOP of New York) introduced the following bill; which was referred to the Committee on Agriculture 

A BILL 

To regulate over-the-counter trading of energy derivatives. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Prevent Unfair Manip5 ulation of Prices Act of 2006’’. 


ccoleman on PROD1PC71 with BILLS
2 

•HR 5248 IH

1 SEC. 2. OVER-THE-COUNTER TRANSACTIONS IN ENERGY 

2 COMMODITIES. 

3 (a) DEFINITIONS.—Section 1a of the Commodity Ex4 change Act (7 U.S.C. 1a) is amended by adding at the 

5 end the following: 

6 ‘‘(34) INCLUDED ENERGY TRANSACTION.—The 

7 term ‘included energy transaction’ means a contract, 

8 agreement, or transaction in an energy commodity 

9 that is— 

10 ‘‘(A)(i) executed or traded on an electronic 

11 trading facility; and 

12 ‘‘(ii) entered into on a principal-to-prin13 cipal basis solely between persons that are eligi14 ble commercial entities at the time the persons 

15 enter into the agreement, contract, or trans16 action; or 

17 ‘‘(B)(i) executed or traded not on or 

18 through a trading facility; and 

19 ‘‘(ii) entered into solely between persons 

20 that are eligible contract participants at the 

21 time the persons enter into the agreement, con22 tract, or transaction, regardless of the means of 

23 execution of the agreement, contract, or trans24 action. 

25 ‘‘(35) ENERGY COMMODITY.— 


ccoleman on PROD1PC71 with BILLS
3 

•HR 5248 IH

1 ‘‘(A) IN GENERAL.—The term ‘energy 

2 commodity’ means a commodity (other than an 

3 excluded commodity, a metal, or an agricultural 

4 commodity) that is used as a source of energy. 

5 ‘‘(B) INCLUSIONS.—The term ‘energy com6 modity’ includes— 

7 ‘‘(i) coal; 

8 ‘‘(ii) crude oil, gasoline, diesel fuel, 

9 heating oil, and propane; 

10 ‘‘(iii) electricity; and 

11 ‘‘(iv) natural gas. 

12 ‘‘(36) ELECTRONIC ENERGY TRADING FACIL13 ITY.—The term ‘electronic energy trading facility’ 

14 means an electronic trading facility on or through 

15 which included energy transactions are traded or ex16 ecuted.’’. 

17 (b) OFF-EXCHANGE TRANSACTIONS IN ENERGY

18 COMMODITIES.—Section 2(g) of the Commodity Exchange 

19 Act (7 U.S.C. 2(g)) is amended— 

20 (1) by inserting ‘‘or an energy commodity’’ 

21 after ‘‘agricultural commodity’’; 

22 (2) by redesignating paragraphs (1) through 

23 (3) as subparagraphs (A) through (C), respectively; 

24 (3) by striking ‘‘No provision’’ and inserting 

25 the following: 


ccoleman on PROD1PC71 with BILLS
4 

•HR 5248 IH

1 ‘‘(1) IN GENERAL.—No provision’’; and 

2 (4) by adding at the end the following: 

3 ‘‘(2) TRANSACTIONS IN ENERGY COMMOD4 ITIES.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subparagraphs (B) and (C) and subsection 

7 (h)(7), nothing in this Act applies to an in8 cluded energy transaction. 

9 ‘‘(B) PROHIBITED CONDUCT.— 

10 ‘‘(i) IN GENERAL.—An included en11 ergy transaction shall be subject to— 

12 ‘‘(I) sections 5b, 12(e)(2)(B), 

13 and 22(a)(4); and 

14 ‘‘(II) the prohibitions in sections 

15 4b, 4c(a), 4c(b), 4o, 6(c), 6(d), 6c, 6d, 

16 8a, and 9(a)(2). 

17 ‘‘(ii) TRANSACTIONS EXEMPTED BY

18 COMMISSION ACTION.—Notwithstanding 

19 any exemption by the Commission under 

20 section 4(c), an included energy trans21 action shall be subject to the sections spec22 ified in clause (i) of this subparagraph, 

23 subparagraph (C), and subsection (h)(7). 

24 ‘‘(C) REPORTING AND RECORDKEEPING

25 REQUIREMENTS.— 


ccoleman on PROD1PC71 with BILLS
5 

•HR 5248 IH

1 ‘‘(i) IN GENERAL.—An eligible con2 tract participant that enters into or exe3 cutes an included energy transaction that 

4 performs, or together with other such 

5 transactions performs, a significant price 

6 discovery function in the cash market for 

7 an energy commodity or in any other mar8 ket for agreements, contracts, or trans9 actions relating to an energy commodity, 

10 and an eligible commercial entity that en11 ters into or executes an included energy 

12 transaction described in section 1a(34)(A) 

13 shall— 

14 ‘‘(I) provide to the Commission 

15 on a timely basis the information re16 quired under clause (ii); and 

17 ‘‘(II)(aa) consistent with section 

18 4i, maintain books and records relat19 ing to each included energy trans20 action, for a period of at least 5 years 

21 after the date of the transaction, in 

22 such form as the Commission shall re23 quire; and 

24 ‘‘(bb) keep the books and records 

25 open to inspection by any representaVerDate Aug 31 2005 04:06 May 02, 2006 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5248.IH H5248

ccoleman on PROD1PC71 with BILLS
6 

•HR 5248 IH

1 tive of the Commission or the Attor2 ney General. 

3 ‘‘(ii) REQUIRED INFORMATION.— 

4 ‘‘(I) IN GENERAL.—The Commis5 sion shall require that such informa6 tion regarding included energy trans7 actions be provided to the Commission 

8 as the Commission considers nec9 essary to assist in detecting and pre10 venting price manipulation. 

11 ‘‘(II) INFORMATION TO BE IN12 CLUDED.—Such information shall in13 clude information regarding large 

14 trading positions obtained through 1 

15 or more included energy transactions 

16 that involve— 

17 ‘‘(aa) substantial quantities 

18 of the commodity in the cash 

19 market; or 

20 ‘‘(bb) substantial positions, 

21 investments, or trades in agree22 ments or contracts related to en23 ergy commodities. 

24 ‘‘(III) MANNER OF COMPLI25 ANCE.—The Commission shall specify 


ccoleman on PROD1PC71 with BILLS
7 

•HR 5248 IH

1 when and how such information shall 

2 be provided and maintained by eligible 

3 contract participants and eligible com4 mercial entities. 

5 ‘‘(IV) PRICE DISCOVERY TRANS6 ACTIONS.— 

7 ‘‘(aa) IN GENERAL.—In 

8 specifying the information to be 

9 provided under this paragraph, 

10 the Commission shall identify the 

11 transactions or class of trans12 actions that the Commission con13 siders to perform a significant 

14 price discovery function. 

15 ‘‘(bb) CONSIDERATIONS.—In 

16 determining which included en17 ergy transactions perform a sig18 nificant price discovery function, 

19 the Commission shall consider 

20 the extent to which— 

21 ‘‘(AA) standardized 

22 agreements are used to exe23 cute the transactions; 


ccoleman on PROD1PC71 with BILLS
8 

•HR 5248 IH

1 ‘‘(BB) the transactions 

2 involve standardized types or 

3 measures of a commodity; 

4 ‘‘(CC) the prices of the 

5 transactions are reported to 

6 third parties, published, or 

7 disseminated; 

8 ‘‘(DD) the prices of the 

9 transactions are referenced 

10 in other transactions; and 

11 ‘‘(EE) other factors 

12 considered appropriate by 

13 the Commission. 

14 ‘‘(V) PERSONS FILING.— 

15 ‘‘(aa) IN GENERAL.—The 

16 Commission, in its discretion, 

17 may allow large trader position 

18 reports required to be provided 

19 by an eligible commercial entity 

20 to be provided by an electronic 

21 energy trading facility if the eli22 gible commercial entity author23 izes the facility to provide such 

24 information on its behalf. 


ccoleman on PROD1PC71 with BILLS
9 

•HR 5248 IH

1 ‘‘(bb) INFORMATION AND

2 ENFORCEMENT.—Nothing in an 

3 authorization under item (aa) 

4 shall impair the ability of the 

5 Commission to obtain informa6 tion from an eligible commercial 

7 entity or otherwise enforce this 

8 Act. 

9 ‘‘(VI) REGULATIONS.—Not later 

10 than 180 days after the date of enact11 ment of this paragraph, the Commis12 sion shall issue a notice of proposed 

13 rulemaking, and not later than 1 year 

14 after the date of enactment of this 

15 paragraph, the Commission shall pro16 mulgate final regulations, specifying 

17 the information to be provided and 

18 maintained under this subpara19 graph.’’. 

20 SEC. 3. ELECTRONIC TRADING FACILITIES FOR ENERGY 

21 COMMODITIES. 

22 Section 2(h) of the Commodity Exchange Act (7 

23 U.S.C. 2(h)) is amended— 


ccoleman on PROD1PC71 with BILLS
10 

•HR 5248 IH

1 (1) in paragraph (1), by inserting after ‘‘an ex2 empt commodity’’ the following: ‘‘, other than an en3 ergy commodity,’’; 

4 (2) in paragraph (3), by inserting after ‘‘an ex5 empt commodity’’ the following: ‘‘, other than an en6 ergy commodity,’’; and 

7 (3) by adding at the end the following: 

8 ‘‘(7) ENERGY TRANSACTIONS.— 

9 ‘‘(A) IN GENERAL.—To the extent that the 

10 Commission determines to be appropriate under 

11 subparagraph (C), an electronic energy trading 

12 facility shall— 

13 ‘‘(i) be subject to the requirements of 

14 section 5a, to the extent provided in sec15 tions 5a(g) and 5d; 

16 ‘‘(ii)(I) consistent with section 4i, 

17 maintain books and records relating to the 

18 business of the electronic energy trading 

19 facility, including books and records relat20 ing to each transaction in such form as the 

21 Commission may require; and 

22 ‘‘(II) make the books and records re23 quired under this section available to rep24 resentatives of the Commission and the At25 torney General for inspection for a period 


ccoleman on PROD1PC71 with BILLS
11 

•HR 5248 IH

1 of at least 5 years after the date of each 

2 included energy transaction; 

3 ‘‘(iii) make available to the public in4 formation on trading volumes, settlement 

5 prices, open interest (where applicable), 

6 and opening and closing ranges (or daily 

7 highs and lows, as appropriate) for in8 cluded energy transactions; and 

9 ‘‘(iv) provide the information to the 

10 Commission in such form and at such 

11 times as the Commission may require. 

12 ‘‘(B) APPLICABILITY OF OTHER PROVI13 SIONS.— 

14 ‘‘(i) PARAGRAPH (5).—An electronic 

15 energy trading facility shall comply with 

16 paragraph (5). 

17 ‘‘(ii) PARAGRAPH (6).—Paragraph (6) 

18 shall apply with respect to a subpoena 

19 issued to any foreign person that the Com20 mission believes is conducting or has con21 ducted transactions on or through an elec22 tronic energy trading facility. 

23 ‘‘(C) REGULATIONS.—Not later than 180 

24 days after the date of enactment of this para25 graph, the Commission shall issue a notice of 


ccoleman on PROD1PC71 with BILLS
12 

•HR 5248 IH

1 proposed rulemaking, and not later than 1 year 

2 after the date of enactment of this paragraph, 

3 the Commission shall promulgate final regula4 tions, specifying the information to be provided, 

5 maintained, or made available to the public 

6 under subparagraphs (A) and (B). 

7 ‘‘(8) NONDISCLOSURE OF PROPRIETARY INFOR8 MATION.—In carrying out paragraph (7) and sub9 section (g)(2), the Commission shall not— 

10 ‘‘(A) require the real-time publication of 

11 proprietary information; 

12 ‘‘(B) prohibit the commercial sale or li13 censing of real-time proprietary information; or 

14 ‘‘(C) publicly disclose information regard15 ing market positions, business transactions, 

16 trade secrets, or names of customers, except as 

17 provided in section 8.’’. 

18 SEC. 4. NO EFFECT ON OTHER AUTHORITY. 

19 (a) NO EFFECT ON FERC AUTHORITY.—Nothing 

20 contained in this title shall affect the jurisdiction of the 

21 Federal Energy Regulatory Commission with respect to 

22 the authority of the Federal Energy Regulatory Commis23 sion under the Federal Power Act (16 U.S.C. 791a et 

24 seq.), the Natural Gas Act (15 U.S.C. 717 et seq.), or 

25 other law to obtain information or otherwise carry out the 


ccoleman on PROD1PC71 with BILLS
13 

•HR 5248 IH

1 responsibilities of the Federal Energy Regulatory Commis2 sion. 

3 (b) NO EFFECT ON EXCLUDED COMMODITIES.—The 

4 amendments made by this title have no effect on the regu5 lation of excluded commodities under the Commodity Ex6 change Act (7 U.S.C. 1a et seq.). 

7 (c) NO EFFECT ON METALS.—The amendments 

8 made by this title have no effect on the regulation of met9 als under the Commodity Exchange Act (7 U.S.C. 1a et 

10 seq.). 

11 SEC. 5. PROHIBITION OF FRAUDULENT TRANSACTIONS. 

12 Section 4b of the Commodity Exchange Act (7 U.S.C. 

13 6b) is amended by striking subsection (a) and inserting 

14 the following: 

15 ‘‘(a) PROHIBITIONS.— 

16 ‘‘(1) IN GENERAL.—It shall be unlawful(A) for 

17 any person, in or in connection with any order to 

18 make, or the making of, any contract of sale of any 

19 commodity for future delivery or in interstate com20 merce, that is made, or to be made, on or subject 

21 to the rules of a designated contract market, for or 

22 on behalf of any other person, or(B) for any person, 

23 in or in connection with any order to make, or the 

24 making of, any contract of sale of any commodity 

25 for future delivery or other agreement, contract or 


ccoleman on PROD1PC71 with BILLS
14 

•HR 5248 IH

1 transaction subject to paragraphs (1) and (2) of sec2 tion 5a(g), that is made, or to be made, for or on 

3 behalf of or with, any other person, other than on 

4 or subject to the rules of a designated contract mar5 ket— 

6 ‘‘(i) to cheat or defraud or attempt to 

7 cheat or defraud the other person; 

8 ‘‘(ii) willfully to make or cause to be made 

9 to such other person any false report or state10 ment or willfully to enter or cause to be entered 

11 for the other person any false record; 

12 ‘‘(iii) willfully to deceive or attempt to de13 ceive the other person by any means whatsoever 

14 in regard to any order or contract or the dis15 position or execution of any order or contract, 

16 or in regard to any act of agency performed, 

17 with respect to any order or contract for (or, in 

18 the case of a contract described in subpara19 graph (B), with the other person) such person; 

20 or 

21 ‘‘(iv)(I) to bucket an order represented by 

22 the person as an order to be executed, for or on 

23 behalf of the other person, on an organized ex24 change; or 

25 ‘‘(II) to— 


ccoleman on PROD1PC71 with BILLS
15 

•HR 5248 IH

1 ‘‘(aa) fill an order by offset against 

2 the order or orders of the other person; or 

3 ‘‘(bb) willfully and knowingly and 

4 without the prior consent of the other per5 son, to— 

6 ‘‘(AA) become the buyer in re7 spect to any selling order of the other 

8 person; or 

9 ‘‘(BB) become the seller in re10 spect to any buying order of the other 

11 person, 

12 if the order is to be executed on or subject to 

13 the rules of a designated contract market. 

14 ‘‘(2) LIMITATION.—This subsection does not 

15 obligate any person, in connection with a transaction 

16 in a contract of sale of a commodity for future deliv17 ery with another person, to disclose to any other 

18 person nonpublic information that may be material 

19 to the market price of the commodity or transaction, 

20 except as necessary to make any statement made to 

21 the other person in connection with the transaction 

22 not misleading in any material respect.’’. 


ccoleman on PROD1PC71 with BILLS
16 

•HR 5248 IH

1 SEC. 6. CRIMINAL AND CIVIL PENALTIES. 

2 (a) ENFORCEMENT POWERS OF COMMISSION.—Sec3 tion 6(c) of the Commodity Exchange Act (7 U.S.C. 9, 

4 15) is amended in clause (3) of the tenth sentence— 

5 (1) by inserting ‘‘(A)’’ after ‘‘assess such per6 son’’; and 

7 (2) by inserting after ‘‘each such violation’’ the 

8 following: ‘‘, or (B) in any case of manipulation of, 

9 or attempt to manipulate, the price of any com10 modity, a civil penalty of not more than the greater 

11 of $1,000,000 or triple the monetary gain to such 

12 person for each such violation,’’. 

13 (b) MANIPULATIONS AND OTHER VIOLATIONS.—Sec14 tion 6(d) of the Commodity Exchange Act (7 U.S.C. 13b) 

15 is amended in the first sentence— 

16 (1) by striking ‘‘paragraph (a) or (b) of section 

17 9 of this Act’’ and inserting ‘‘subsection (a), (b), or 

18 (f) of section 9’’; and 

19 (2) by striking ‘‘said paragraph 9(a) or 9(b)’’ 

20 and inserting ‘‘subsection (a), (b), or (f) of section 

21 9’’. 

22 (c) NONENFORCEMENT OF RULES OF GOVERNMENT

23 OR OTHER VIOLATIONS.—Section 6b of the Commodity 

24 Exchange Act (7 U.S.C. 13a) is amended— 

25 (1) in the first sentence, by inserting before the 

26 period at the end the following: ‘‘, or, in any case 


ccoleman on PROD1PC71 with BILLS
17 

•HR 5248 IH

1 of manipulation of, or an attempt to manipulate, the 

2 price of any commodity, a civil penalty of not more 

3 than $1,000,000 for each such violation’’; and 

4 (2) in the second sentence, by inserting before 

5 the period at the end the following: ‘‘, except that 

6 if the failure or refusal to obey or comply with the 

7 order involved any offense under section 9(f), the 

8 registered entity, director, officer, agent, or employee 

9 shall be guilty of a felony and, on conviction, shall 

10 be subject to penalties under section 9(f)’’. 

11 (d) ACTION TO ENJOIN OR RESTRAIN VIOLATIONS.— 

12 Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 

13 13a–1(d)) is amended by striking ‘‘(d)’’ and all that fol14 lows through the end of paragraph (1) and inserting the 

15 following: 

16 ‘‘(d) CIVIL PENALTIES.—(1) In any action brought 

17 under this section, the Commission may seek and the 

18 court shall have jurisdiction to impose, on a proper show19 ing, on any person found in the action to have committed 

20 any violation— 

21 ‘‘(A) a civil penalty in the amount of not more 

22 than the greater of $100,000 or triple the monetary 

23 gain to the person for each violation; or 

24 ‘‘(B) in any case of manipulation of, or an at25 tempt to manipulate, the price of any commodity, a 


ccoleman on PROD1PC71 with BILLS
18 

•HR 5248 IH

1 civil penalty in the amount of not more than the 

2 greater of $1,000,000 or triple the monetary gain to 

3 the person for each violation.’’. 

4 (e) VIOLATIONS GENERALLY.—Section 9(a) of the 

5 Commodity Exchange Act (7 U.S.C. 13) is amended— 

6 (1) by striking ‘‘(or $500,000 in the case of a 

7 person who is an individual)’’; 

8 (2) by striking ‘‘five years’’ and inserting ‘‘10 

9 years’’; and 

10 (3) in paragraph (2), by striking ‘‘false or mis11 leading or knowingly inaccurate reports’’ and insert12 ing ‘‘knowingly false, misleading, or inaccurate re13 ports’’. 

14 SEC. 7. CONFORMING AMENDMENTS. 

15 (a) Section 2 of the Commodity Exchange Act (7 

16 U.S.C. 2) is amended— 

17 (1) in subsection (d)(1), by striking ‘‘section 

18 5b’’ and inserting ‘‘section 5a(g), 5b,’’; 

19 (2) in subsection (e)(1), by inserting ‘‘(1)’’ after 

20 ‘‘(g)’’; and 

21 (3) in subsection (i)— 

22 (A) in paragraph (1)— 

23 (i) by striking ‘‘No provision’’ and in24 serting ‘‘IN GENERAL.—Subject to subVerDate Aug 31 2005 04:06 May 02, 2006 Jkt 049200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\H5248.IH H5248

ccoleman on PROD1PC71 with BILLS
19 

•HR 5248 IH

1 sections (g)(2) and (h)(7), no provision’’; 

2 and 

3 (ii) in subparagraph (A), by inserting 

4 ‘‘(1)’’ after ‘‘2(g)’’; and 

5 (B) in paragraph (2), by striking ‘‘No pro6 vision’’ and inserting ‘‘IN GENERAL.—Subject 

7 to subsections (g)(2) and (h)(7), no provision’’. 

8 (b) Section 4i of the Commodity Exchange Act (7 

9 U.S.C. 6i) is amended in the first sentence by inserting 

10 ‘‘, or pursuant to an exemption under section 4(c)’’ after 

11 ‘‘transaction execution facility’’. 

12 (c) Section 8a(9) of the Commodity Exchange Act (7 

13 U.S.C. 12a(9)) is amended— 

14 (1) by inserting ‘‘or an electronic energy trad15 ing facility’’ after ‘‘direct the contract market’’; 

16 (2) by inserting after ‘‘liquidation of any fu17 tures contract’’ the following: ‘‘or included energy 

18 transaction’’; and 

19 (3) by inserting ‘‘or an electronic energy trad20 ing facility’’ after ‘‘given by a contract market’’. 

Æ 


ccoleman on PROD1PC71 with BILLS