FERC -- (Senate - September 25, 2008)
Mr. CORNYN. Madam President, I note that the distinguished ranking member of the Committee on Energy and Natural Resources is on the floor. I wonder if I might address a question to my good friend from New Mexico. Many are alleging that one of the root causes of our current financial distress stems from insufficient regulatory oversight of financial markets. That is a criticism which some allege to be applicable to our Nation's energy markets--the theory apparently being that lax oversight has allowed speculators and manipulators to artificially increase prices for oil and gas. Given that you were Chairman of the Energy Committee at the time of passage of the Energy Policy Act of 2005 I wonder if you might want to comment on the regulatory authorities that were addressed in that act. As I recall, EPACT significantly increased the Federal Energy Regulatory Commission's ability to not only oversee markets but to punish manipulation within those markets.
Mr DOMENICI. The Senator is absolutely correct. We enhanced FERC's authority to police and prevent market manipulation and we increased the Commission's authority to levy fines to $1 million per day. It was our thinking that the potential for fines of this magnitude would serve as a meaningful deterrent to market manipulation. While I am a long time supporter of markets, I agreed to the grant of enhanced penalty authority to the FERC as a step to ensure that those markets were conducted fairly, openly, and without the exercise of market power by any of the participants.
Mr. CORNYN. Madam President, I appreciate the comments of my colleague, and I share his sentiment both toward the desirability of markets and the need to ensure that those markets operate fairly and efficiently. My specific inquiry relates to the standard of review which attaches to any enforcement proceedings under these enhanced authorities. While I agree with the need for greater oversight in the operation of these markets, it seems to me that along with its enhanced oversight authority the FERC has an obligation
to protect the due process rights for those against whom it might bring causes of action. Did EPACT bring about any change in the standards of review which would attach to enforcement proceedings under these new authorities?
Mr. DOMENICI. I think the Senator's question is well informed, and I can assure him that there was no intent to change the standard of review which would attach to any enforcement proceeding. The longstanding practice has been for the accused party to have rights to a de novo review of the charges in Federal court. Such rights are necessary to ensure that the agency does not act as both prosecutor and judge in any enforcement proceeding. That right is clear, not just in the case law but in other statutes administered by the FERC, including the Federal Power Act and the Natural Gas Policy Act. There is no suggestion and there can be no inference that we intended to change that standard with our enhanced market oversight provisions in the Natural Gas Act.
Mr. CORNYN. I thank my good friend for that clarification and for the wisdom he has brought to Federal energy policy.
I yield the floor.