Congress Approves Measure to Close "Enron Loophole"

Press Release

- Measure included in Senate-approved Farm Bill conference report -

The United States Congress has approved a measure to close the "Enron Loophole." The measure was included in the Farm Bill conference report. This legislation was sponsored by U.S. Senators Dianne Feinstein (D-Calif.), Carl Levin (D-Mich.), Olympia Snowe (R-Maine), Maria Cantwell (D-Wash.), Susan Collins (R-Maine), Byron Dorgan (D-N.D.), Ron Wyden (D-Ore.), and Charles Schumer (D-N.Y.) and others who appeared at a news conference today to discuss the legislation.

The conference report was approved by the House yesterday, the Senate today, and will now be sent to the President.

"Today, the Senate sends the President a bill to close the Enron Loophole once and for all," Senator Feinstein said. "This bill is really our best bet to deter unscrupulous traders from manipulating energy prices and engaging in excessive speculation. This has been a long, hard road - and this is a major legislative victory."

"The provisions in the farm bill closing the Enron loophole are the culmination of five years of work to put the cop back on the beat in energy markets that have for too long escaped federal oversight and regulation," said Senator Levin. "This legislation provides new tools to stop price manipulation, excessive speculation, and trading abuses that have too often clobbered American families with unfair energy price hikes."

"The entire country is struggling to cope with the record high prices at the pump while energy executives enjoy record-high profits," Senator Snowe said. "At a time when the price of oil reaches new highs every week, Congress has an obligation to ensure that our energy markets are free from the possibility of tampering and manipulation that costs Americans in their excessive energy bills."

"We have taken an important first step in the right direction towards closing the Enron Loophole," said Senator Cantwell. "But we have more work to do to stomp out potential manipulation in energy commodity markets. When Amaranth found room in the Enron Loophole in 2006 to manipulate the natural gas market, natural gas prices skyrocketed to record levels and cost consumers over $9 billion. And now, we have oil company executives testifying before Congress that oil should be around $50-60 a barrel. We must establish a clear, bright line to help protect consumers from any illegal activity that could be causing these out of control gas price hikes."

Senator Collins said, "The high price of gasoline, home heating oil, and diesel is creating a tremendous hardship for families, truckers, and small businesses. Many causes appear to have contributed to the sharp rise in oil prices and, as we first examined during an investigation hearing of the Senate Homeland Security Committee two years ago, excessive speculation on futures markets may well be one of them. Unfortunately, despite this investigation, there is still a lack of publicly available data to track the effort of speculation on prices and manipulation still could go undetected on certain electronic markets that are unregulated. This legislation would help expand the authority of the federal government to provide greater regulation and transparency to guard against price manipulation."

"Right now, there is an orgy of speculation in the energy markets, which drive up prices for consumers and hurt our economy," said Senator Dorgan. "Closing this loophole is one important step in our efforts to prevent price manipulation and to wring some of this speculation out of the market in order to put downward pressure on gas prices."

"Today, we begin peeling back the cloak of secrecy that Enron and other energy traders got eight years ago," said Senator Wyden. "I want to commend Sen. Feinstein and Sen. Levin for their leadership on this issue - Congress after Congress. We wouldn't be here today without their determination and commitment."

"In 2000, in the dead of night, Senate Republicans passed a bill that exempted oil trading from regulation by the CFTC, the agency that oversees futures trading for all other commodities. As a result, oil traders have been operating in the shadows, without transparency and without oversight. This bill will put the CFTC watchdog back on the prowl," Senator Schumer said.

Specifically, the bill would:

* Require electronic energy traders to provide an audit trail and record-keeping;
* Monitor for market manipulation;
* Impose firm speculation limits; and
* Significantly increase financial penalties for cases of market manipulation and excessive speculation.

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