Overview

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) will have a major impact on the energy industry. The Act dramatically expands the Commodity Futures Trading Commission's (CFTC) jurisdiction regarding over-the-counter derivatives and enables what Chairman Gary Gensler has promised to be "robust oversight" of the over-the-counter derivatives marketplace. The CFTC has identified 30 key subject areas that will require rulemaking. Because the Act leaves much to the CFTC's discretion, the choices made in the CFTC rulemaking processes will largely determine the regulatory impact to energy companies. Examples of critical concern to energy companies and risk managers include:

* How the CFTC will define the terms "swap dealer," "major swap participant," "commercial risk," and "bona fide hedges," which will determine the extent to which end users of swaps are exempted from burdensome capital, margin, and clearing requirements.

* Whether the CFTC's anti-manipulation rules will sweep more broadly than existing market manipulation regulations of the Federal Trade Commission, the Federal Energy Regulatory Commission, and the Securities Exchange Commission.

The CFTC rulemaking process, which will unfold over the next year, has already begun with some important deadlines in the near term. Further, the CFTC is currently soliciting input on its website on the rule-writing process for all 30 subject areas referenced above.