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Exercising the authority provided by Congress under the Energy Independence and Security Act of 2007 (EISA), the Federal Trade Commission today announced the approval of an Advance Notice of Proposed Rulemaking (ANPR) to solicit public comments on the appropriate way to interpret and enforce the EISA’s provisions related to preventing market manipulation in the petroleum industry.

The ANPR is the first step in a formal rulemaking process that will assist the Commission in determining whether, and in what ways, it should develop a formal rule defining and prohibiting market manipulation in the petroleum industry. The Commission intends to conclude the rulemaking process by the end of the year.

“We understand that consumers are being hurt by high gas prices, and the Commission remains vigilant in using its full authority to prevent unlawful behavior that affects gas prices,” FTC Chairman William E. Kovacic said. “Today’s request for public comments is an important part of our efforts to assess, quickly and thoughtfully, how the Commission’s new market manipulation authority may be used to protect the American people.”


In December of last year, Congress passed the EISA, which includes two sections respectively giving the FTC new authority to promulgate regulations prohibiting “market manipulation” and to enforce the statutory prohibition against the provision of “false or misleading” information in the petroleum industry. Specifically, Section 811 states that it is against the law for anyone, in connection with wholesale purchases or sales of crude oil, gasoline, or petroleum distillates, to use any “manipulative or deceptive device or contrivance, in contravention of such rules and regulations as the Federal Trade Commission may prescribe as necessary or appropriate in the public interest or for the protection of United States citizens.” The ANPR seeks public comments about whether and how the Commission should develop a rule under Section 811 that would prohibit such market manipulation.

Section 812 of the new statute prohibits anyone from reporting information to a federal agency related to the wholesale price of crude oil, gasoline, or petroleum distillates (1) that the person “knew, or reasonably should have known,” to be false or misleading; (2) that was legally required to be reported to such federal agency; and (3) as to which “the person intended the false or misleading data to affect data compiled . . . for statistical or analytical purposes” with respect to the market for such products. As the notice points out, the FTC’s authority to enforce Section 812 became effective when the EISA was enacted. Accordingly, the Commission already has the authority to seek relief for Section 812 violations through federal district court actions.

In seeking public comments before proposing a formal rule on market manipulation pursuant to Section 811, the FTC seeks guidance on how best to ensure that the proposed rule “on balance carries out the objectives of the statute by prohibiting practices that constitute manipulative or deceptive devices or contrivances to the benefit of the public interest.” The Commission will combine this guidance with its extensive knowledge of the petroleum industry as well as its expertise in pursuing its dual competition and consumer protection missions to determine whether and how a rule can effectuate the objectives of Section 811 to the benefit of American consumers.

The EISA describes how the Commission could enforce the Act and states that any violation of Subtitle B shall be treated as an “unfair or deceptive act or practice” proscribed by a rule issued pursuant to the FTC Act. Under the EISA, the FTC can take the same range of actions against anyone violating a rule against market manipulation allowed under its independent FTC Act authority, including filing a civil action in federal district court seeking, for example, a temporary restraining order or a preliminary injunction to prevent the violation of any Commission rule developed under the EISA.

The Commission also could seek other relief, such as an asset freeze or the seizure of ill-gotten gains, or monetary redress for consumers. The FTC Act allows the Commission to recover civil penalties of up to $11,000 per violation, and the EISA subjects anyone violating Subtitle B to penalties prescribed by the FTC Act. Moreover, in addition to penalties available under the FTC Act, Subtitle B provides that any supplier violating Section 811 or Section 812 faces a civil penalty of up to $1 million.

Questions for Commenters

The ANPR contains a series of questions and issues for consideration by commenters. They focus primarily on the definition of manipulative or deceptive behavior to help the agency develop a possible rule that would prohibit such conduct.

The notice first contains a proposed definition of market manipulation for the purpose of the Section 811 rulemaking. It seeks comments on whether the definition is “necessary or appropriate in the public interest or for the protection of United States citizens,” as the statute requires. The agency also is seeking comments on how legal precedent established for violations of other rules against manipulation – such as those established by the Commodity Futures Trading Commission (CFTC), the Federal Energy Regulatory Commission (FERC), and the Securities and Exchange Commission (SEC) – may impact the FTC’s development of such a rule, and on whether the rule should require evidence of “intentional, willful, or reckless conduct designed to deceive or defraud by controlling or artificially affecting market practices or market activity.” Next, the ANPR seeks comments on what effect the magnitude of such penalties – up to $1 million per day per violation – might have on market participants’ behavior.

The ANPR also seeks comments concerning potential overlaps between the FTC’s jurisdiction and that of the other agencies on which Congress has bestowed anti-manipulation authority. The ANPR also requests comments on other proposals for formal rule provisions regarding industry practices. Finally, it presents two case studies and questions arising from each on which commenters may wish to offer views.

The Rulemaking Process

As the Commission noted in letters sent to Senator Maria Cantwell and several other U.S. Senators, as well as to Speaker Nancy Pelosi and several other U.S. Representatives, “there is no better way [than through the ANPR process] to generate meaningful comments that will assist in our development of a workable rule for the benefit of the American public.” The ANPR announced today is subject to a 30-day public comment period, after which the FTC will analyze the comments received, draft a proposed rule, and issue a Notice of Proposed Rulemaking (NPR) that also will be subject to a 30-day public comment period. The goal is to complete the rulemaking process by the end of the year.

The Commission vote to issue the ANPR was 4-0. It will be available on the FTC’s Web site and will be published in the Federal Register by May 6. Comments must be received by June 6, 2008. The ANPR describes how and where written and electronic comments should be submitted.

Copies of the Advance Notice of Proposed Rulemaking are available from the FTC’s Web site at and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click: or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click

(FTC File No. P082900)

Contact Information

Mitchell J. Katz,
Office of Public Affairs
David P. Wales, Deputy Director
Bureau of Competition
(202) 326-3772

John H. Seesel, Associate General Counsel for Energy
Office of the General Counsel
(202) 326-3772