Julia Sullivan Talks to Law360 on FERC’s Market-Manipulation Case Against BP

Law360, for its article “In Pursuing BP, FERC Unafraid To Cast Wide Enforcement Net,” quoted Akin Gump energy regulation, markets and enforcement practice co-head Julia Sullivan on the Federal Energy Regulatory Commission’s (FERC) market-manipulation case against BP PLC and its potential impact on the commission’s jurisdiction.

According to the article, in 2008, FERC accused BP of manipulating the natural gas market in Texas. Although BP and others have challenged the bounds of the commission’s jurisdiction, FERC cites the Energy Policy Act to claim authority over any entity involved in manipulation if that conduct is “in connection with” a transaction within its jurisdiction. On May 15, 2014, FERC rejected BP’s bid to dismiss the market-manipulation allegations, sending the case to an evidentiary hearing.

Sullivan said, however, that, among the transactions in which BP claims to have engaged are physical gas sales and transportation assets—two areas in which FERC has limited jurisdiction.

She also noted that FERC interpreted the Energy Policy Act’s ‘in connection with’ language “so broadly that if the nonjurisdictional transaction will affect an index, and the index is then used for a jurisdictional transaction, then FERC has jurisdiction under its market-manipulation authority.” She said this could mean that “virtually all physical gas trading would be under FERC's anti-manipulation authority.”

Sullivan also discussed parallels between the BP case and FERC’s earlier attempts to fine a trader who allegedly attempted to manipulate the natural gas futures market, as well as the potential need for more companies to have a FERC compliance plan.

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