WASHINGTON, DC – In response to a letter from Democratic leaders to the Federal Trade Commission last Friday, the Commission announced it would take the first step in writing new rules governing the agency’s market manipulation authority, as enacted under the 2007 Energy Independence and Security Act. Majority Leader Hoyer (MD) released the following statement:
“With gas prices breaking records daily, I welcome the announcement by the Federal Trade Commission that it will move forward in fulfilling its statutory obligation to protect consumers against illegal market manipulation by the oil industry. American families and businesses struggling with rising fuel costs deserve the guarantee that record prices are not the result of such manipulation. The FTC’s announcement is a good first step that I hope is followed by a commitment to conduct vigorous oversight and enforcement against anticompetitive practices.
“Meanwhile, Democrats continue to fight for other measures to address rising fuel costs, such as cracking down on price gouging, holding OPEC accountable for price fixing, and repealing subsidies to the Big 5 oil companies. The multi-billion dollar profits reported for the first quarter of 2008 by these corporations - while Americans pay record prices at the pump - amounts to nothing less than an embarrassment of riches. It makes little sense to continue this policy.
“The Democratic Congress has passed legislation to repeal these unnecessary subsidies and instead invest in clean, alternative and renewable energy sources and energy efficiency. Doing so is necessary to becoming more energy independent and ensuring American pocketbooks aren’t beholden to a volatile oil market. We are already paying the price of a misguided energy policy; it’s time for a new direction.”
FTC letter below.
May 2, 2008
The Honorable Steny H. Hoyer
U.S. House of Representatives
United States Congress
Washington, DC 20515
Dear Congressman Hoyer:
Thank you for the letter of April 25, 2008, from you and your House colleagues about the Federal Trade Commission's new authority, under Section 811 of the Energy Independence and Security Act of2007, regarding manipulation in wholesale crude oil, gasoline, or petroleum distillate markets. Today, the Commission will make public an Advance Notice of Proposed Rulemaking (ANPR), and our goal is to complete the Rulemaking process this year. We look forward to working with you and your colleagues as this Rule making moves forward.
Our staff has worked hard to move as speedily as possible. To date, an FTC task force has examined the development and use of anti-manipulation authority by other federal agencies, as well as by the states; met with other government officials (including the Commodity Futures Trading Commission, the Federal Energy Regulatory Commission, and the Securities and Exchange Commission); and, undertaken other tasks, both substantive and administrative, in connection with this legislation. The ANPR announces a comment period of 30 days, following which the agency expects expeditiously to analyze the comments received, draft a proposed rule, and issue a Notice of Proposed Rulemaking (NPR), with a 30-day comment period. We appreciate your efforts to combat high and volatile gasoline prices, and we will keep you apprised of significant developments throughout the Rulemaking process.
The learning that will accompany the ANPRINPR process is crucial. The Commission has not previously sought to develop a legal definition of the term "manipulation" or prosecuted a case alleging manipulation. Moreover, there are challenges involved in appropriately applying this broad concept to markets that, unlike electricity or natural gas, are not subject to comprehensive regulatory, disclosure, or reporting regimes. The pursuit of a case alleging manipulation in wholesale markets for crude oil, gasoline, or distillates may encounter other complexities arising from the differences between such products and the other markets in which manipulation cases have been brought, but we hope to overcome those challenges as we avail ourselves of the methods and opportunities contemplated by the ANPR/NPR procedures. Specifically, we believe that there is no better way to generate meaningful comments that will assist in our development of a workable rule for the benefit of the American public.
Enclosed please find a copy of the ANPR which we expect to be published in the Federal Register on Monday, May 5, 2008. The Commission greatly appreciates your interest in this topic. Please feel free to contact Chairman Kovacic at any time with any additional questions or comments, or have your staff call Jeanne Bumpus, the Director of our Office of Congressional Relations, at (202) 326-2195.
William E. Kovacic
Pamela Jones Harbour
J. Thomas Rosch