II
Calendar No. 882
110th CONGRESS
2d Session
S. 3268
IN THE SENATE OF THE UNITED STATES
July 15, 2008
Mr. Reid (for himself, Mr. Durbin, Mr. Dorgan, Mrs. Murray, Mr. Schumer, Mr. Casey, Ms. Mikulski, Mr. Carper, Ms. Klobuchar, Mr. Brown, Mr. Cardin, Mr. Leahy, Mr. Menendez, Mr. Reed, Mr. Lautenberg, Mr. Wyden, Mr. Johnson, and Mr. Dodd) introduced the following bill; which was ordered read the first time
July 16, 2008
Read the second time and placed on the Calendar
A BILL
To amend the Commodity Exchange Act to prevent excessive price speculation with respect to energy commodities, and for other purposes.
Short title; table of contents
Short title
This Act may be cited
as the Stop Excessive Energy
Speculation Act of 2008
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definition of energy commodity.
Sec. 3. Speculative limits and transparency of off-shore trading.
Sec. 4. Authority of Commodity Futures Trading Commission with respect to certain traders.
Sec. 5. Working group of international regulators.
Sec. 6. Elimination of manipulation and excessive speculation as cause of high oil, gas, and energy prices.
Sec. 7. Large over-the-counter transactions.
Sec. 8. Index traders and swap dealers.
Sec. 9. Disaggregation of index funds and other data in energy markets.
Sec. 10. Additional Commodity Futures Trading Commission employees for improved enforcement.
Sec. 11. Working Group on Energy Markets.
Sec. 12. Study of regulatory framework for energy markets.
Sec. 13. Collection and analysis of information on energy commodities.
Sec. 14. National natural gas market investigation.
Sec. 15. Studies; reports.
Sec. 16. Expedited procedures.
Definition of energy commodity
Definition of energy commodity
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended—
by redesignating paragraphs (13) through (34) as paragraphs (14) through (35), respectively; and
by inserting after paragraph (12) the following:
Energy commodity
The term energy commodity means—
a petroleum product; and
natural gas.
.
Conforming amendments
Section 2(c)(2)(B)(i)(II)(cc) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)(cc)) is amended—
in subitem (AA),
by striking section 1a(20)
and inserting section
1a(21)
; and
in subitem (BB),
by striking section 1a(20)
and inserting section
1a(21)
.
Section
13106(b)(1) of the Food, Conservation, and Energy Act of 2008 is amended by
striking section 1a(32)
and inserting section
1a
.
Section 402 of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27) is amended—
in subsection
(a)(7), by striking section 1a(20)
and inserting section
1a
; and
in subsection (d)—
in paragraph
(1)(B), by striking section 1a(33)
and inserting section
1a
; and
in paragraph
(2)(D), by striking section 1a(13)
and inserting section
1a
.
Speculative limits and transparency of off-shore trading
Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is amended by adding at the end the following:
Foreign boards of trade
In general
The Commission may not permit a foreign board of trade to provide to the members of the foreign board of trade or other participants located in the United States, or otherwise subject to the jurisdiction of the Commission, direct access to the electronic trading and order matching system of the foreign board of trade with respect to an agreement, contract, or transaction in an energy commodity that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, unless—
the foreign board of trade—
makes public daily trading information regarding the agreement, contract, or transaction that is comparable to the daily trading information published by the registered entity for the 1 or more contracts against which the foreign board of trade settles; and
promptly notifies the Commission of any change regarding—
the information that the foreign board of trade will make publicly available;
the position limits, speculation limits, and position accountability provisions that the foreign board of trade will adopt and enforce;
the position reductions required to prevent manipulation; and
any other area of interest expressed by the Commission to the foreign board of trade; and
the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade)—
adopts position limits (including related hedge exemption provisions), speculation limits, or position accountability provisions for speculators for the agreement, contract, or transaction that are comparable to the position limits (including related hedge exemption provisions), speculation limits, or position accountability provisions adopted by the registered entity for the 1 or more contracts against which the foreign board of trade settles;
has the authority to require or direct market participants to limit, reduce, or liquidate any position the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade) determines to be necessary to prevent or reduce the threat of price manipulation, excessive speculation, price distortion, or disruption of delivery or the cash settlement process; and
provides information to the Commission regarding the extent of legitimate and nonlegitimate hedge trading in the agreement, contract, or transaction that is comparable to the information that the Commission determines to be necessary to publish the commitments of traders report of the Commission for the 1 or more contracts against which the foreign board of trade settles.
Existing foreign boards of trade
Paragraph (1) shall not be effective with respect to any agreement, contract, or transaction in an energy commodity executed on a foreign board of trade to which the Commission had granted direct access permission prior to the date of enactment of this subsection until the date that is 180 days after the date of enactment of this subsection.
.
Authority of Commodity Futures Trading Commission with respect to certain traders
In general
Restriction of futures trading to contract markets or derivatives transaction execution facilities
Section 4(b) of the Commodity Exchange Act (7 U.S.C.
6(b)) is amended by inserting after the first sentence the following:
The Commission may adopt rules and regulations requiring the maintenance
of books and records by any person that is located within the United States
(including the territories and possessions of the United States) or that enters
trades directly into the trade matching system of a foreign board of trade from
the United States (including the territories and possessions of the United
States).
Excessive speculation as a burden on interstate commerce
Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) is amended—
in subsection (e), in the second sentence—
by
striking this Act for any person
and inserting this Act
for (1) any person
; and
by
inserting after to section 5c(c)(1)
the following: , and
(2) any person that is located within the United States (including the
territories and possessions of the United States) or that enters trades
directly into the trade matching system of a foreign board of trade from the
United States (including the territories and possessions of the United States)
to violate any bylaw, rule, regulation, or resolution of any foreign board of
trade or foreign futures authority fixing limits on the amount of trading that
may be carried out or positions that may be held under any contract of sale of
an energy commodity for future delivery or under any option on such contract or
energy commodity, that settles against any price (including the daily or final
settlement price) of 1 or more contracts listed for trading on a registered
entity
; and
by adding at the end the following:
Consultation
Before taking any action under subsection (e), the Commission shall consult with the appropriate—
foreign board of trade; and
foreign futures authority.
.
Violations
Section
9(a) of the Commodity Exchange Act (7 U.S.C. 13(a)) is amended by inserting
(including any person trading on a foreign board of trade)
after
Any person
each place it appears.
Effect
No amendment made by this subsection limits any of the otherwise applicable authorities of the Commodity Futures Trading Commission.
Working group of international regulators
Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) (as amended by section 4(a)(2)(B)) is amended by adding at the end the following:
Working group of international regulators
Not later than 90 days after the date of enactment of this subsection, the Commission shall convene a working group of international regulators to develop uniform international reporting and regulatory standards to ensure the protection of the energy futures markets from nonlegitimate hedge trading, excessive speculation, manipulation, location shopping, and lowest common dominator regulation, each of which pose systemic risks to all energy futures markets, countries, and consumers.
.
Elimination of manipulation and excessive speculation as cause of high oil, gas, and energy prices
Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) (as amended by section 5) is amended by adding at the end the following:
Elimination of excessive speculation and nonlegitimate hedge trading as a cause of high oil, gas, and energy prices
Definition of legitimate hedge trading
In general
The term legitimate hedge trading means the conduct of trading that involves transactions by commercial producers and purchasers of actual physical petroleum and energy commodities for future delivery and the direct counterparties to such trades (regardless of whether the counterparties are commercial producers or purchasers).
Inclusion
To
the extent a commercial producer or purchaser of an actual physical energy
commodity for future delivery trades with an intermediary (referred to in this
subparagraph as an initial trade
), each subsequent trade by the
intermediary arising solely due to the initial trade and that directly results
from such initial trade (referred to in this subparagraph as a follow-on
trade
) shall be considered to be the conduct of legitimate hedge
trading if each follow-on trade executed by the intermediary is—
done proximate to the initial trade; and
in the aggregate, economically the same in size and substance as the initial trade.
Identification of legitimate hedge trading
In carrying out this Act, the Commission shall distinguish between—
legitimate hedge trading; and
all other trading in energy commodities.
Type of trading
Notwithstanding any other provision of this Act, the Commission shall modify (or delegate any appropriate entity to modify) such definitions, classifications, and data collection under this Act as are necessary to ensure that all direct and indirect parties and counterparties to all trades in the energy commodities market are clearly identified for all purposes as engaging in—
legitimate hedge trading; or
any other type of trading.
Elimination of excessive speculation
In general
Notwithstanding any other provision of this Act, the
Commission shall review all regulations, rules, exemptions, exclusions,
guidance, no action letters, orders, and other actions taken by or on behalf of
the Commission (including any action or inaction taken pursuant to delegated
authority by an exchange, self-regulatory organization, or any other entity)
regarding all energy futures market participants or market activity (referred
to in this subsection individually as a prior action
) to ensure
that—
legitimate hedge trading is protected and promoted; and
excessive speculation is eliminated.
Prior action
In general
The Commission shall consider modifying or revoking the application after the date of enactment of this subsection of any prior action taken by the Commission (including any prior action taken pursuant to delegated authority by any other entity) with respect to any trade on any market, exchange, foreign board of trade, swap or swap transaction, index or index market participant or trade, hedge fund, pension fund, and any other transaction, trade, trader, or petroleum or energy futures market activity unless the Commission affirmatively determines that such prior action will protect and promote legitimate hedge trading and does not permit or encourage excessive speculation.
Revocation
In carrying out this subparagraph, the Commission shall consider modifying or revoking the results of each prior action that, in whole or in part, has the direct or indirect affect of limiting, reducing, or eliminating the filing of any report or data regarding any direct or indirect trade or trader, including the filing of large trader reports.
Speculative position limits applicable to nonlegitimate hedge trading in energy commodities and derivatives
Speculative position limits
In general
Not later than 30 days after the date of enactment of this subsection, the Commission shall impose, by rule, regulation, or order, speculative position limits on trading that is not legitimate hedge trading.
Application
The Commission shall apply the limits imposed under subclause (I) to any person who executes accounts, agreements, or transactions involving an energy commodity for the own account of the person and to any person for whom an agent in fact or substance executes accounts, agreements, or transactions involving an energy commodity, on a registered entity or in covered over-the-counter trading.
Advisory group
In general
Not later than 30 days after the date of enactment of this subsection, the Commission shall convene an advisory group primarily consisting of commercial producers and purchasers of actual physical energy commodities for future delivery.
Recommendations
Not later than 60 days after the date on which the advisory group is convened under subclause (I), and annually thereafter, the advisory group shall submit to the Commission recommendations regarding an appropriate level for position limits—
that are designed for traders or entities that are not legitimate hedge traders; and
to replace the position limits imposed by the Commission under clause (i)(I).
Applicability of FACA
The advisory group shall be subject to the Federal Advisory Committee Act (5 U.S.C. App.).
Review of recommendations
Not later than 270 days after the date of enactment of this subsection, the Commission shall—
analyze and review the recommendations submitted by the advisory group under clause (ii)(II); and
submit to the appropriate committees of Congress a report describing each recommendation (including each modification to the statutory authority of the Commission that the Commission determines to be necessary to effectuate each recommendation).
Rulemaking
In general
Not later than 18 months after the date of enactment of this subsection, the Commission shall promulgate a final rule that establishes speculative position limits—
for any person engaged in nonlegitimate hedge trading of an energy commodity; and
that are consistent with this Act.
Effective date
The final rule described in subclause (I) shall take effect on the date that is 30 days after the date on which the Commission promulgates the final rule.
Development of methodology
In general
Not later than 180 days after the date of enactment of this subsection, the Commission shall propose a methodology to determine and set aggregate speculative position limits at the control entity level for all nonlegitimate traders of energy commodities—
on designated contract markets;
on derivatives transaction execution facilities; and
in over-the-counter commodity derivatives.
Report
Not later than 180 days after the date of enactment of this subsection, the Commission shall submit to the appropriate committees of Congress a report that contains—
any recommendations regarding any additional statutory authority that the Commission determines to be necessary for the imposition of the speculative position limits described in subclause (I); and
a description of the resources that the Commission considers to be necessary to implement the speculative position limits.
Maximum level of speculative position limits
In general
In establishing speculative position limits under this section (including subparagraph (C)(iv)), the Commission shall set the limits at the maximum level practicable—
to ensure sufficient market liquidity for the conduct of legitimate hedging activities;
to ensure that price discovery is not disrupted;
to protect and promote legitimate hedge trading;
to minimize nonlegitimate hedge trading; and
to eliminate excess speculation.
Effect
In general
Nothing in this subparagraph modifies the spot month position limitation of 3,000 contracts that is designed to prevent a corner or squeeze at the delivery date.
Commission action
If the Commission sets position limits under clause (i) that are different from the spot month position limit described in subclause (I), the Commission shall include in the report required under subparagraph (C)(v)(II) an analysis describing the reasons for the position limits.
.
Large over-the-counter transactions
Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by adding at the end the following:
Over-the-counter transactions
Definitions
In this subsection:
Covered over-the-counter transaction
The term covered over-the-counter transaction means an over-the-counter transaction the reporting of which is required by the Commission as the result of a determination made under paragraph (3)(C).
Covered person
The term covered person means a person that enters into a covered over-the-counter transaction.
Major market disturbance
The term major market disturbance means any disturbance in a commodity market that disrupts the liquidity and price discovery function of that market from accurately reflecting the forces of supply and demand for a commodity, including—
a threatened or actual market manipulation or corner;
excessive speculation;
nonlegitimate hedge trading; and
any action of the United States or a foreign government that affects a commodity.
Market disturbance
The term market disturbance shall be interpreted in accordance with section 8a(9)).
Over-the-counter transaction
The term over-the-counter transaction means a contract, agreement, or transaction in a petroleum or energy commodity that is—
entered into only between persons that are eligible contract participants at the time the persons enter into the agreement, contract, or transaction;
not entered into on a trading facility; and
not a sale of any cash commodity for deferred shipment or delivery.
Commission oversight authority
In general
In the case of a major market disturbance, as determined by the Commission, the Commission may require any trader subject to the reporting requirements described in paragraph (3) to take such action as the Commission considers to be necessary to maintain or restore orderly trading in any contract listed for trading on a registered entity, including—
the liquidation of any over-the-counter transaction; and
the fixing of any limit that may apply to a market position involving any over-the-counter transaction acquired in good faith before the date of the determination of the Commission.
Judicial review
Any action taken by the Commission under subparagraph (A) shall be subject to judicial review carried out in accordance with section 8a(9).
Reporting; recordkeeping
In general
The Commission shall require each covered person to submit to the Commission a report—
at such time and in such manner as the Commission determines to be appropriate; and
containing the information required under subparagraph (B) to assist the Commission in detecting and preventing potential price manipulation of, or excessive speculation in, any contract listed for trading on a registered entity.
Contents of report
A report required under subparagraph (A) shall contain—
information describing large trading positions of the covered person obtained through 1 or more over-the-counter transactions that involve—
substantial quantities of a commodity in the cash market; or
substantial positions, investments, or trades in agreements or contracts relating to the commodity;
any other information relating to each covered over-the-counter transaction carried out by the covered person that the Commission determines to be necessary to accomplish the purposes described in subparagraph (A); and
information distinguishing legitimate hedge trading from nonlegitimate hedge trading.
Determination of covered over-the-counter transactions
In general
The Commission shall identify each large over-the-counter transaction or class of large over-the-counter transactions the reporting of which the Commission determines to be appropriate to assist the Commission in detecting and preventing potential price manipulation of, or excessive speculation in, any contract listed for trading on a registered entity.
Mandatory factors for determinations
In general
In carrying out a determination under clause (i), the Commission shall consider the extent to which each factor described in subclause (II) applies.
Factors
The factors required for carrying out a determination under clause (i) include whether—
a standardized agreement is used to execute the over-the-counter transaction;
the over-the-counter transaction settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity;
the price of the over-the-counter transaction is reported to a third party, published, or otherwise disseminated;
the price of the over-the-counter transaction is referenced in any other transaction;
there is a significant volume of the over-the-counter transaction or class of over-the-counter transactions; and
there is any other factor that the Commission determines to be appropriate.
Recordkeeping
The Commission, by rule, shall require each covered person—
in accordance with section 4i, to maintain such records as directed by the Commission for a period of 5 years, or longer, if directed by the Commission; and
to provide such records upon request to the Commission or the Department of Justice.
Protection of proprietary information
In carrying out this subsection, the Commission may not—
require the real-time publication of any proprietary information;
prohibit the commercial sale or licensing of any real-time proprietary information; and
except as provided in section 8, publicly disclose any information relating to any market position, business transaction, trade secret, or name of any customer of a covered person.
Applicability
Notwithstanding subsections (g) and (h), and any exemption issued by the Commission for any energy commodity, each over-the-counter transaction shall be subject to this subsection.
Savings clause
Nothing in this subsection modifies or alters—
the guidance of the Commission; or
any applicable requirements with respect the disclosure of proprietary information.
.
Index traders and swap dealers
Section 4 of the Commodity Exchange Act (7 U.S.C. 6) (as amended by section 3) is amended by adding at the end the following:
Index traders and swap dealers
Not later than 60 days after the date of enactment of this subsection, the Commission shall—
routinely require detailed reporting from index traders and swap dealers in markets under the jurisdiction of the Commission;
reclassify the types of traders for regulatory and reporting purposes to distinguish between index traders and swaps dealers;
review the trading practices for index traders in markets under the jurisdiction of the Commission—
to ensure that index trading is not adversely impacting the price discovery process; and
to determine whether different practices or regulations should be implemented; and
ensure, to the maximum extent practicable, that the reports required under this subsection distinguish between legitimate and nonlegitimate hedge trading.
.
Disaggregation of index funds and other data in energy markets
Section 4 of the Commodity Exchange Act (7 U.S.C. 6) (as amended by section 8) is amended by adding at the end the following:
Disaggregation of index funds and other data in energy markets
The Commission shall disaggregate and make public monthly—
the number of positions and total value of index funds and other passive, long-only positions in energy markets; and
data on speculative positions relative to bona fide physical hedgers in those markets.
.
Additional Commodity Futures Trading Commission employees for improved enforcement
Section 2(a)(7) of the Commodity Exchange Act (7 U.S.C. 2(a)(7)) is amended by adding at the end the following:
Additional employees
As soon as practicable after the date of enactment of this subparagraph, the Commission shall appoint at least 100 full-time employees (in addition to the employees employed by the Commission as of the date of enactment of this subparagraph)—
to increase the public transparency of operations in energy futures markets;
to improve the enforcement of this Act in those markets; and
to carry out such other duties as are prescribed by the Commission.
.
Working Group on Energy Markets
Establishment
There is established a Working Group on Energy Markets.
Composition
The Working Group shall be composed of—
the Secretary of Energy (referred to in this section as the Secretary);
the Secretary of the Treasury;
the Chairman of the Federal Energy Regulatory Commission;
the Chairman of Federal Trade Commission;
the Chairman of the Securities and Exchange Commission;
the Chairman of the Commodity Futures Trading Commission; and
the Administrator of the Energy Information Administration.
Chairperson
Initial Chairperson
The Secretary shall serve as the Chairperson of the Working Group for the 1-year period beginning on the date of enactment of this Act.
Rotation of Chairpersons
For each 1-year period following the period described in paragraph (1), each individual described in subsection (b) shall serve as the Chairperson of the Working Group in the order corresponding to which the individual is described in that subsection.
Purpose and function
The Working Group shall—
investigate the effect of speculation in energy commodities on energy prices and the energy security of the United States;
recommend to the President and Congress laws (including regulations) that may be needed to prevent excessive speculation in energy commodities to prevent or minimize the adverse impact of high energy prices on consumers and the economy of the United States; and
review energy security considerations posed by developments in international energy markets.
Administration
The Secretary shall provide the Working Group with such administrative and support services as may be necessary for the performance of the functions of the Working Group.
Cooperation of other agencies
The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group with such information as the Working Group requires to carry out this section.
Consultation
The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, other major market participants, consumers, and the general public.
Study of regulatory framework for energy markets
Study
The Working Group established under section 11(a) shall conduct a study to—
identify the factors that affect the pricing of crude oil and refined petroleum products, including an examination of the effects of market speculation on prices; and
review and assess the roles, missions, and structures of relevant Federal agencies, examine interagency coordination, and identify and assess the gaps that need to be filled for the Federal Government to effectively oversee and regulate markets critical to the energy security of the United States.
Elements of study
The study shall include—
an examination of price formation with respect to crude oil and refined petroleum products;
an examination of relevant international regulatory regimes; and
an examination of the degree to which changes in energy market transparency, liquidity, and structure have influenced or driven abuse, manipulation, excessive speculation, or inefficient price formation.
Report and recommendations
Not later than 1 year after the date of enactment of this Act, the Secretary of Energy shall submit to the appropriate committees of Congress a report that—
describes the results of the study; and
provides options and the recommendations of the Working Group for appropriate Federal coordination of oversight and regulatory actions to ensure transparency of crude oil and refined petroleum product pricing and the elimination of excessive speculation.
Authorization of appropriations
There are authorized to be appropriated such sums as are necessary to carry out this section.
Collection and analysis of information on energy commodities
Accurate and complete information on energy producing companies
Section 205(h)(1) of the Department of Energy Organization Act (42 U.S.C. 7135(h)(1)) is amended by adding at the end the following:
Information on energy-producing companies
Notwithstanding any other provision of law, the head of each Federal department or agency shall provide to the Administrator, on the request of the Administrator, such information as the Administrator may require to identify each energy-producing company.
.
Enhanced data on ownership of critical energy commodities
Section 205 of the Department of Energy Organization Act (42 U.S.C. 7135) is amended by adding at the end the following:
Collection of information on ownership of energy commodities
In general
To ensure transparency of information with respect to critical energy infrastructure and product ownership in the United States, the Administrator shall collect on a weekly basis information identifying the ownership of all commercially held oil and natural gas inventories in the United States.
Company-specific data
The information shall include company-specific data, including—
volumes of product under ownership; and
storage and transportation capacity (including owned and leased capacity).
Protection of proprietary information
Section 11(d) of the Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C. 796(d)) shall apply to information collected under this section.
Monthly reporting on energy commodity transactions
In general
In accordance with paragraph (2), to improve the ability to evaluate the energy security of the United States, any person holding or controlling energy futures contracts or energy commodity swaps (as defined in section 202 of the Energy Policy and Conservation Act) at a level to be determined by the Secretary for which the underlying energy commodity is physically delivered within the United States shall report on a monthly basis, with respect to the energy commodities and the byproducts of the energy commodities—
the quantity of physical stocks owned;
the quantity of fixed price purchase commitments open;
the quantity of fixed price sales commitments open;
the physical storage capacity owned or leased; and
such other information as the Secretary determines is necessary to provide adequate transparency with respect to entities that control critical energy assets in the United States.
Use of data
Any data collected under paragraph (1) shall not be made public in a manner that is inconsistent with this Act.
Financial Market Analysis Office
Establishment
There shall be within the Energy Information Administration a Financial Market Analysis Office, headed by a director, who shall report directly to the Administrator of the Energy Information Administration.
Duties
The Office shall be responsible for analysis of the financial aspects of energy markets.
Analyses
The Administrator of the Energy Information Administration shall take analyses by the Office into account in conducting analyses and forecasting of energy prices.
.
Conforming amendment
Section 645 of the Department of Energy Organization
Act (42 U.S.C. 7255) is amended by inserting (15 U.S.C. 3301 et seq.)
and the Natural Gas Act (15 U.S.C. 717 et seq.)
after Natural
Gas Policy Act of 1978
.
National natural gas market investigation
In general
Not later than 30 days after the date of enactment of
this Act, in order to ensure the integrity of natural gas markets, the Federal
Energy Regulatory Commission (referred to in this section as the
Commission
) shall commence an investigation into the role of
financial institutions in natural gas markets, including—
trends in investment in natural gas storage, transportation capacity, and pipeline infrastructure;
factors contributing to potential effects on wholesale natural gas prices, including the mechanisms covered by physical natural gas supply contracts;
the character and number of positions held in related financial markets; and
any international considerations the Commission considers relevant.
Assessment
The Commission may include in the investigation an assessment of real-time market dynamics during the 2008 winter heating season.
Required data
Each Federal department and agency shall comply with any request from the Commission for records, papers, and information in the possession of the department or agency relating to any agreement, contract, or transaction for the sale of an energy commodity for future delivery in interstate or foreign commerce, or any energy commodity swap.
Reports
Not later than 270 days after the date of enactment of this Act, the Commission shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives a report on the findings, conclusions, and recommendations of the investigation conducted under this section.
Additional investigations
On an annual basis and during any other period the Commission determines necessary, the Commission shall—
conduct an investigation that is similar to the investigation required under subsections (a) through (c); and
submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives a report on the findings, conclusions, and recommendations of the investigation.
Authorization of appropriations
There are authorized to be appropriated such sums as are necessary to carry out this section.
Studies; reports
Study relating to international regulation of energy commodity markets
In general
The Comptroller General of the United States shall conduct a study of the international regime for regulating the trading of energy commodity futures and derivatives.
Analysis
The study shall include an analysis of, at a minimum—
key common features and differences among countries in the regulation of energy commodity trading, including with respect to market oversight and enforcement standards and activities;
variations among countries with respect to the use of position limits, accountability limits, or other thresholds to detect and prevent price manipulation, excessive speculation, or other unfair trading practices;
variations in practices regarding the differentiation of commercial and noncommercial trading;
agreements and practices for sharing market and trading data among regulatory bodies and among individual regulators and the entities that the bodies and regulators oversee; and
agreements and practices for facilitating international cooperation on market oversight, compliance, and enforcement.
Report
Not later than 1 year after the date of enactment of this Act, the Comptroller General shall submit to the appropriate committees of Congress a report that—
describes the results of the study;
addresses the effects of excessive speculation and energy price volatility on energy futures; and
provides recommendations to improve openness, transparency, and other necessary elements of a properly functioning market in a manner that protects consumers in the United States.
Study relating to effects of noncommercial speculators on energy futures markets and energy prices
Study
The Comptroller General of the United States shall conduct a study of the effects of noncommercial speculators on energy futures markets and energy prices.
Analysis
The study shall include an analysis of, at a minimum—
the effect of increased amounts of capital in energy futures markets;
the impact of the roll-over of positions by index fund traders and swap dealers on energy futures markets and energy prices; and
the extent to which each factor described in subparagraphs (A) and (B) and noncommercial speculators—
affect—
the pricing of energy commodities; and
risk management functions; and
contribute to economically efficient price discovery.
Report
Not later than 2 years after the date of enactment of this Act, the Comptroller General shall submit to the appropriate committees of Congress a report that describes the results of the study.
Reports of Commodity Futures Trading Commission
In general
The Commission shall submit to Congress—
not later than 60 days after the date of enactment of this Act, a report that describes in detail the actions the Commission has taken, is taking, and intends to take to carry out this subsection (including any recommended legislative changes that are necessary to carry out this subsection); and
not later than 45 days after the date described in subparagraph (A) and every 45 days thereafter until the date of implementation of this subsection, an update on the report required under subparagraph (A).
Additional employees or resources
Not later than 60 days after the date of enactment of this Act, the Commission shall submit to Congress a report that describes the number of additional positions and resources that the Commission determines to be necessary to carry out this subsection (including the specific duty of each additional employee).
Expedited procedures
In general
Subject to subsection (b), the Commodity Futures Trading Commission (referred to in this section as the Commission) shall use emergency and expedited procedures (including any administrative or other procedure as appropriate) to carry out this Act (including the amendments made by this Act).
Report
If the Commission decides not to use the procedures described in subsection (a) in a specific instance, not later than 30 days after the date of the decision, the Commission shall submit to Congress a detailed report that describes in each instance the reasons for not using the procedures.
July 16, 2008
Read the second time and placed on the Calendar