II 

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. 

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 2008’’. 


jbell on PROD1PC69 with BILLS
2 

•S 3185 IS

1 SEC. 2. REGULATION OF CERTAIN TRANSACTIONS IN DE2 RIVATIVES INVOLVING ENERGY COMMOD3 ITIES. 

4 (a) ENERGY COMMODITY DEFINED.—Section 1a of 

5 the Commodity Exchange Act (7 U.S.C. 1a) is amended— 

6 (1) in paragraph (14), by inserting ‘‘, an energy 

7 commodity,’’ after ‘‘excluded commodity’’; 

8 (2) by redesignating paragraphs (13) through 

9 (21) and paragraphs (22) through (34) as para10 graphs (14) through (22) and paragraphs (24) 

11 through (36), respectively; 

12 (3) by inserting after paragraph (12) the fol13 lowing: 

14 ‘‘(13) ENERGY COMMODITY.—The term ‘energy 

15 commodity’ means— 

16 ‘‘(A) coal; 

17 ‘‘(B) crude oil, gasoline, diesel fuel, jet 

18 fuel, heating oil, and propane; 

19 ‘‘(C) electricity; 

20 ‘‘(D) natural gas; and 

21 ‘‘(E) any other substance (other than an 

22 excluded commodity, a metal, or an agricultural 

23 commodity) that is used as a source of energy, 

24 as the Commission, in its discretion, deems ap25 propriate.’’; and 


jbell on PROD1PC69 with BILLS
3 

•S 3185 IS

1 (4) by inserting after paragraph (22) (as so re2 designated by paragraph (2) of this subsection) the 

3 following: 

4 ‘‘(23) INCLUDED ENERGY TRANSACTION; BI5 LATERAL ENERGY TRANSACTION.—The term ‘in6 cluded energy transaction’ means a contract, agree7 ment, or transaction in an energy commodity for fu8 ture delivery that provides for a delivery point of the 

9 energy commodity in the United States, or that is 

10 transacted on a computer terminal located in the 

11 United States. The term ‘bilateral included energy 

12 transaction’ means an included energy transaction 

13 that is executed or traded other than on or through 

14 a trading facility.’’. 

15 (b) EXTENSION OF REGULATORY AUTHORITY TO

16 SWAPS INVOLVING INCLUDED ENERGY TRANSACTIONS.— 

17 Section 2(g) of such Act (7 U.S.C. 2(g)) is amended— 

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

19 after ‘‘agricultural commodity’’; and 

20 (2) by inserting ‘‘not an included energy trans21 action and is’’ before ‘‘—’’. 

22 (c) EXEMPTION FOR TRANSACTIONS IN ENERGY

23 COMMODITIES THAT ARE NOT INCLUDED ENERGY

24 TRANSACTIONS.—Section 2 of such Act (7 U.S.C. 2) is 

25 amended by adding at the end the following: 


jbell on PROD1PC69 with BILLS
4 

•S 3185 IS

1 ‘‘(j) EXEMPTION FOR TRANSACTIONS IN ENERGY

2 COMMODITIES WHICH ARE NOT INCLUDED ENERGY

3 TRANSACTIONS.—This Act shall not apply to a contract, 

4 agreement, or transaction in an energy commodity which 

5 is not an included energy transaction.’’. 

6 (d) EXTENSION OF REGULATORY AUTHORITY TO IN7 CLUDED ENERGY TRANSACTIONS ON FOREIGN BOARDS

8 OF TRADE.—Section 4 of such Act (7 U.S.C. 6) is amend9 ed— 

10 (1) in subsection (a), by inserting ‘‘, and which 

11 is not an included energy transaction’’ after ‘‘terri12 tories or possessions’’ the 2nd place it appears; and 

13 (2) in subsection (b), by adding at the end the 

14 following: ‘‘The preceding sentence shall not apply 

15 with respect to included energy transactions.’’. 

16 (e) LIMITATION OF CFTC AUTHORITY TO PROVIDE

17 CERTAIN EXEMPTIONS WITH RESPECT TO INCLUDED

18 ENERGY TRANSACTIONS.— 

19 (1) IN GENERAL.—Section 4(c) of such Act (7 

20 U.S.C. 6(c)) is amended by adding at the end the 

21 following: 

22 ‘‘(6) The Commission may not exempt any in23 cluded energy transaction from the requirements of 

24 subsection (a), unless the Commission provides 60 

25 days advance notice to the Congress and solicits 


jbell on PROD1PC69 with BILLS
5 

•S 3185 IS

1 public comment about the provision of the exemp2 tion.’’. 

3 (2) NULLIFICATION OF NO-ACTION LETTER EX4 EMPTIONS TO CERTAIN REQUIREMENTS APPLICABLE

5 TO INCLUDED ENERGY TRANSACTIONS.—Beginning 

6 180 days after the date of the enactment of this Act, 

7 any exemption provided by the Commodity Futures 

8 Trading Commission that has allowed included en9 ergy transactions (as defined in section 1a(13) of 

10 the Commodity Exchange Act) to be conducted with11 out regard to the requirements of section 4(a) of 

12 such Act shall be null and void. 

13 (f) REQUIREMENT TO ESTABLISH UNIFORM POSI14 TION LIMITS FOR INCLUDED ENERGY TRANSACTIONS.— 

15 Section 4a(a) of such Act (7 U.S.C. 6a(a)) is amended— 

16 (1) by inserting after the 2nd sentence the fol17 lowing: ‘‘With respect to included energy trans18 actions, the Commission shall fix limits on the ag19 gregate number of positions which may be held by 

20 any person for the prompt month, and the aggregate 

21 number of positions which may be held by any per22 son for each month, and the aggregate number of 

23 positions which may be held by any person for all 

24 months, in all markets subject to the jurisdiction of 

25 the Commission.’’; and 


jbell on PROD1PC69 with BILLS
6 

•S 3185 IS

1 (2) in the 4th sentence by inserting ‘‘, con2 sistent with the 3rd sentence,’’ after ‘‘Commission’’. 

3 (g) SWAPS INVOLVING INCLUDED ENERGY TRANS4 ACTIONS EXCLUDED FROM EXEMPTION FOR BONA FIDE

5 HEDGING TRANSACTIONS.—Section 4a(c) of such Act (7 

6 U.S.C. 6a(c)) is amended by adding at the end the fol7 lowing: ‘‘The preceding provisions of this subsection shall 

8 not apply to swaps that involve an included energy trans9 action.’’. 

10 (h) SPECIAL RULES APPLICABLE TO BILATERAL IN11 CLUDED ENERGY TRANSACTIONS.— 

12 (1) EXEMPTION FROM REQUIREMENT THAT

13 TRANSACTIONS BE MADE ON OR THROUGH A DES14 IGNATED CONTRACT MARKET, ETC.—Section 4(a) of 

15 such Act (7 U.S.C. 6(a)), as amended by subsection 

16 (d)(1) of this section, is amended by inserting 

17 ‘‘(other than a bilateral included energy trans18 action)’’ after ‘‘any transaction’’. 

19 (2) REPORTING AND RECORDKEEPING RE20 QUIREMENTS.— 

21 (A) IN GENERAL.—Section 4g of such Act 

22 (7 U.S.C. 6g) is amended by adding at the end 

23 the following: 

24 ‘‘(g) REQUIREMENTS APPLICABLE TO BILATERAL

25 INCLUDED ENERGY TRANSACTIONS.— 


jbell on PROD1PC69 with BILLS
7 

•S 3185 IS

1 ‘‘(1) IN GENERAL.—An eligible contract partici2 pant that enters into or executes a bilateral included 

3 energy transaction shall— 

4 ‘‘(A) provide to the Commission on a time5 ly basis the information required under para6 graph (2); 

7 ‘‘(B) consistent with section 4i, maintain 

8 books and records relating to the transaction 

9 for at least 5 years after the date of the trans10 action, in such form as the Commission shall 

11 require; and 

12 ‘‘(C) keep the books and records open to 

13 inspection by any representative of the Commis14 sion or the United States Department of Jus15 tice. 

16 ‘‘(2) REQUIRED INFORMATION.— 

17 ‘‘(A) IN GENERAL.—The Commission shall 

18 require eligible contract participants to provide 

19 the Commission with such information regard20 ing bilateral included energy transactions en21 tered into or executed by the participants as the 

22 Commission considers necessary to assist in de23 tecting and preventing price manipulation. 

24 ‘‘(B) INFORMATION TO BE PROVIDED.— 

25 The information to be provided shall include inVerDate Aug 31 2005 04:55 Jun 25, 2008 Jkt 069200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3185.IS S3185

jbell on PROD1PC69 with BILLS
8 

•S 3185 IS

1 formation regarding large trading positions (as 

2 defined by the Commission) obtained through 1 

3 or more bilateral included energy transactions 

4 that involve— 

5 ‘‘(i) substantial quantities of the un6 derlying energy commodity in the cash 

7 market; or 

8 ‘‘(ii) substantial positions, invest9 ments, or trades in agreements or con10 tracts related to energy commodities.’’. 

11 (B) REGULATIONS.—Not later than 180 

12 days after the date of the enactment of this 

13 Act, the Commodity Futures Trading Commis14 sion shall issue a notice of proposed rule15 making, and not later than 1 year after such 

16 date of enactment, the Commission shall pro17 mulgate final regulations, specifying the infor18 mation to be maintained and provided under 

19 section 4g(g)(2) of the Commodity Exchange 

20 Act. 

21 (i) PUBLIC DISCLOSURE OF NUMBER AND VALUE OF

22 POSITIONS HELD IN COMMODITY INDEX FUNDS.—Sec23 tion 8 of such Act (7 U.S.C. 12) is amended by adding 

24 at the end the following: 


jbell on PROD1PC69 with BILLS
9 

•S 3185 IS

1 ‘‘(j) The Commission shall publish on its website 

2 monthly the aggregate number and value of the long posi3 tions, and the aggregate number and value of the short 

4 positions, that are held by any person in any portfolio con5 structed to match or track the components of an index 

6 of all commodities, and the portion of the positions that 

7 are net long positions in included energy transactions.’’. 

8 (j) NO EFFECT ON FERC AUTHORITY.—Section 2 

9 of such Act (7 U.S.C. 2), as amended by subsection (c) 

10 of this section, is amended by adding at the end the fol11 lowing: 

12 ‘‘(k) NO EFFECT ON FERC AUTHORITY.—This Act 

13 shall not be interpreted to affect the jurisdiction of the 

14 Federal Energy Regulatory Commission with respect to 

15 the authority of the Federal Energy Regulatory Commis16 sion under the Federal Power Act (16 U.S.C. 791a et 

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

18 other law to obtain information or otherwise carry out the 

19 responsibilities of the Federal Energy Regulatory Commis20 sion.’’. 

21 SEC. 3. CEASE-AND-DESIST AUTHORITY. 

22 (a) NATURAL GAS ACT.—Section 20 of the Natural 

23 Gas Act (15 U.S.C. 717s) is amended by adding the fol24 lowing at the end: 


jbell on PROD1PC69 with BILLS
10 

•S 3185 IS

1 ‘‘(e) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY

2 ORDERS; AUTHORITY OF THE COMMISSION.—If the Com3 mission finds, after notice and opportunity for hearing, 

4 that any entity may be violating, may have violated, or 

5 may be about to violate any provision of this Act, or any 

6 rule, regulation, restriction, condition, or order made or 

7 imposed by the Commission under the authority of this 

8 Act, the Commission may publish its findings and issue 

9 an order requiring such entity, and any other entity that 

10 is, was, or would be a cause of the violation, due to an 

11 act or omission the entity knew or should have known 

12 would contribute to such violation, to cease and desist 

13 from committing or causing such violation and any future 

14 violation of the same provision, rule, or regulation. Such 

15 order may, in addition to requiring an entity to cease and 

16 desist from committing or causing a violation, require such 

17 entity to comply, to provide an accounting and 

18 disgorgement, or to take steps to effect compliance, with 

19 such provision, rule, or regulation, upon such terms and 

20 conditions and within such time as the Commission may 

21 specify in such order. Any such order may, as the Commis22 sion deems appropriate, require future compliance or steps 

23 to effect future compliance, either permanently or for such 

24 period of time as the Commission may specify. 


jbell on PROD1PC69 with BILLS
11 

•S 3185 IS

1 ‘‘(f) HEARING.—The notice instituting proceedings 

2 pursuant to subsection (e) shall fix a hearing date not ear3 lier than 30 days nor later than 60 days after service of 

4 the notice unless an earlier or a later date is set by the 

5 Commission with the consent of any respondent so served. 

6 ‘‘(g) TEMPORARY ORDER.—Whenever the Commis7 sion determines that the alleged violation or threatened 

8 violation specified in the notice instituting proceedings 

9 pursuant to subsection (e), or the continuation thereof, is 

10 likely to result in significant dissipation or conversion of 

11 assets, significant harm to energy consumers, or substan12 tial harm to the public interest, prior to the completion 

13 of the proceedings referred to in subsection (e). The Com14 mission may issue a temporary order requiring the re15 spondent to cease and desist from the violation or threat16 ened violation and to take such action to prevent the viola17 tion or threatened violation and to prevent dissipation or 

18 conversion of assets, significant harm to energy con19 sumers, or substantial harm to the public interest, frustra20 tion of the Commission’s ability to conduct the pro21 ceedings, or frustration of the Commission’s ability to re22 dress said violation at the conclusion of the proceedings, 

23 as the Commission deems appropriate pending completion 

24 of such proceedings. Such an order shall be entered only 

25 after notice and opportunity for a hearing, unless the 


jbell on PROD1PC69 with BILLS
12 

•S 3185 IS

1 Commission determines that notice and hearing prior to 

2 entry would be impracticable or contrary to the public in3 terest. A temporary order shall become effective upon 

4 service upon the respondent and, unless set aside, limited, 

5 or suspended by the Commission or a court of competent 

6 jurisdiction, shall remain effective and enforceable pending 

7 the completion of the proceedings. 

8 ‘‘(h) REVIEW OF TEMPORARY ORDERS.— 

9 ‘‘(1) COMMISSION REVIEW.—At any time after 

10 the respondent has been served with a temporary 

11 cease-and-desist order pursuant to subsection (g), 

12 the respondent may apply to the Commission to have 

13 the order set aside, limited, or suspended. If the re14 spondent has been served with a temporary cease15 and-desist order entered without a prior Commission 

16 hearing, the respondent may, within 10 days after 

17 the date on which the order was served, request a 

18 hearing on such application and the Commission 

19 shall hold a hearing and render a decision on such 

20 application at the earliest possible time. 

21 ‘‘(2) JUDICIAL REVIEW.—Within— 

22 ‘‘(A) 10 days after the date the respondent 

23 was served with a temporary cease-and-desist 

24 order entered with a prior Commission hearing; 

25 or 


jbell on PROD1PC69 with BILLS
13 

•S 3185 IS

1 ‘‘(B) 10 days after the Commission ren2 ders a decision on an application and hearing 

3 under paragraph (1), with respect to any tem4 porary cease-and-desist order entered without a 

5 prior Commission hearing, the respondent may 

6 apply to the United States district court for the 

7 district in which the respondent resides or has 

8 its principal place of business, or for the Dis9 trict of Columbia, for an order setting aside, 

10 limiting, or suspending the effectiveness or en11 forcement of the order, and the court shall have 

12 jurisdiction to enter such an order. A respond13 ent served with a temporary cease-and-desist 

14 order entered without a prior Commission hear15 ing may not apply to the court except after 

16 hearing and decision by the Commission on the 

17 respondent’s application under paragraph (1) of 

18 this subsection. 

19 ‘‘(3) NO AUTOMATIC STAY OF TEMPORARY

20 ORDER.—The commencement of proceedings under 

21 paragraph (2) of this subsection shall not, unless 

22 specifically ordered by the court, operate as a stay 

23 of the Commission’s order. 


jbell on PROD1PC69 with BILLS
14 

•S 3185 IS

1 ‘‘(4) EXCLUSIVE REVIEW.—Sections 19(d) and 

2 24 shall not apply to a temporary order entered pur3 suant to this section. 

4 ‘‘(i) IMPLEMENTATION.—The Commission is author5 ized to adopt rules, regulations, and orders as it deems 

6 appropriate to implement this subsection.’’. 

7 (b) FEDERAL POWER ACT.—Section 314 of the Fed8 eral Power Act (16 U.S.C. 825m) is amended by adding 

9 the following at the end: 

10 ‘‘(e) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY

11 ORDERS; AUTHORITY OF THE COMMISSION.—If the Com12 mission finds, after notice and opportunity for hearing, 

13 that any entity may be violating, may have violated, or 

14 may be about to violate any provision of this Act, or any 

15 rule, regulation, restriction, condition, or order made or 

16 imposed by the Commission under the authority of this 

17 Act, the Commission may publish its findings and issue 

18 an order requiring such entity, and any other entity that 

19 is, was, or would be a cause of the violation, due to an 

20 act or omission the entity knew or should have known 

21 would contribute to such violation, to cease and desist 

22 from committing or causing such violation and any future 

23 violation of the same provision, rule, or regulation. Such 

24 order may, in addition to requiring an entity to cease and 

25 desist from committing or causing a violation, require such 


jbell on PROD1PC69 with BILLS
15 

•S 3185 IS

1 entity to comply, to provide an accounting and 

2 disgorgement, or to take steps to effect compliance, with 

3 such provision, rule, or regulation, upon such terms and 

4 conditions and within such time as the Commission may 

5 specify in such order. Any such order may, as the Commis6 sion deems appropriate, require future compliance or steps 

7 to effect future compliance, either permanently or for such 

8 period of time as the Commission may specify. 

9 ‘‘(f) HEARING.—The notice instituting proceedings 

10 pursuant to subsection (e) shall fix a hearing date not ear11 lier than 30 days nor later than 60 days after service of 

12 the notice unless an earlier or a later date is set by the 

13 Commission with the consent of any respondent so served. 

14 ‘‘(g) TEMPORARY ORDER.—Whenever the Commis15 sion determines that the alleged violation or threatened 

16 violation specified in the notice instituting proceedings 

17 pursuant to subsection (e), or the continuation thereof, is 

18 likely to result in significant dissipation or conversion of 

19 assets, significant harm to energy consumers, or substan20 tial harm to the public interest, prior to the completion 

21 of the proceedings referred to in subsection (e), the Com22 mission may issue a temporary order requiring the re23 spondent to cease and desist from the violation or threat24 ened violation and to take such action to prevent the viola25 tion or threatened violation and to prevent dissipation or 


jbell on PROD1PC69 with BILLS
16 

•S 3185 IS

1 conversion of assets, significant harm to energy con2 sumers, or substantial harm to the public interest, frustra3 tion of the Commission’s ability to conduct the pro4 ceedings, or frustration of the Commission’s ability to re5 dress said violation at the conclusion of the proceedings, 

6 as the Commission deems appropriate pending completion 

7 of such proceedings. Such an order shall be entered only 

8 after notice and opportunity for a hearing, unless the 

9 Commission determines that notice and hearing prior to 

10 entry would be impracticable or contrary to the public in11 terest. A temporary order shall become effective upon 

12 service upon the respondent and, unless set aside, limited, 

13 or suspended by the Commission or a court of competent 

14 jurisdiction, shall remain effective and enforceable pending 

15 the completion of the proceedings. 

16 ‘‘(h) REVIEW OF TEMPORARY ORDERS.— 

17 ‘‘(1) COMMISSION REVIEW.—At any time after 

18 the respondent has been served with a temporary 

19 cease-and-desist order pursuant to subsection (g), 

20 the respondent may apply to the Commission to have 

21 the order set aside, limited, or suspended. If the re22 spondent has been served with a temporary cease23 and-desist order entered without a prior Commission 

24 hearing, the respondent may, within 10 days after 

25 the date on which the order was served, request a 


jbell on PROD1PC69 with BILLS
17 

•S 3185 IS

1 hearing on such application and the Commission 

2 shall hold a hearing and render a decision on such 

3 application at the earliest possible time. 

4 ‘‘(2) JUDICIAL REVIEW.—Within— 

5 ‘‘(A) 10 days after the date the respondent 

6 was served with a temporary cease-and-desist 

7 order entered with a prior Commission hearing; 

8 or 

9 ‘‘(B) 10 days after the Commission ren10 ders a decision on an application and hearing 

11 under paragraph (1), with respect to any tem12 porary cease-and-desist order entered without a 

13 prior Commission hearing, the respondent may 

14 apply to the United States district court for the 

15 district in which the respondent resides or has 

16 its principal place of business, or for the Dis17 trict of Columbia, for an order setting aside, 

18 limiting, or suspending the effectiveness or en19 forcement of the order, and the court shall have 

20 jurisdiction to enter such an order. A respond21 ent served with a temporary cease-and-desist 

22 order entered without a prior Commission hear23 ing may not apply to the court except after 

24 hearing and decision by the Commission on the 


jbell on PROD1PC69 with BILLS
18 

•S 3185 IS

1 respondent’s application under paragraph (1) of 

2 this subsection. 

3 ‘‘(3) NO AUTOMATIC STAY OF TEMPORARY

4 ORDER.—The commencement of proceedings under 

5 paragraph (2) of this subsection shall not, unless 

6 specifically ordered by the court, operate as a stay 

7 of the Commission’s order. 

8 ‘‘(4) EXCLUSIVE REVIEW.—Section 317 shall 

9 not apply to a temporary order entered pursuant to 

10 this section. 

11 ‘‘(i) IMPLEMENTATION.—The Commission is author12 ized to adopt rules, regulations, and orders as it deems 

13 appropriate to implement this subsection.’’. 

Æ 


jbell on PROD1PC69 with BILLS