The CFTC and FERC Increase the Maximum Limits for Civil Monetary Penalties

The Commodity Futures Trading Commission (the “CFTC”) and the Federal Energy Regulatory Commission (“FERC”) have announced required annual adjustments to their existing rules governing the maximum amount of civil monetary penalties (“CMPs”) that they may assess against market participants in 2023 for violations of the Commodity Exchange Act (the “CEA”), the Federal Power Act, the Natural Gas Act, the Natural Gas Policy Act of 1978, the Interstate Commerce Act, and regulations that they administer.1  These increased amounts, together with the expansive approach regulators take to counting the number of violations (e.g., daily, per transaction, number of parties, market harm, etc.), continue the substantial escalation in civil penalties for regulatory violations in the commodity and derivatives markets.

CFTC Adjusted CMPs

On January 11, 2023, the CFTC amended its existing rule governing the maximum CMP amounts that may be imposed under the CEA to adjust for inflation.  The amended rule establishes increased maximum, inflation-adjusted MP amounts that the CFTC may assess for violations of Sections 6(b) and 6(c) of the CEA and any relevant CFTC rules, regulations, and orders promulgated pursuant to the CEA.  The amended rule and increased CMPs took effect on January 11, 2023, and are applicable to penalties assessed after January 15, 2023.  The new adjusted maximum penalty amounts are set forth in the table below.

Civil Monetary Penalty Description

Penalty Amount Prior to January 11, 20232

New Adjusted Maximum Penalty Amount3

Civil Monetary Penalty Imposed by the Commission in an Administrative Action

Any person other than a registered entity

Non-manipulation or attempted manipulation

$180,714

$194,710

Any person other than a registered entity

Manipulation or attempted manipulation

$1,303,559

$1,404,520

A registered entity or any of its directors, officers, or employees

Non-manipulation or attempted manipulation

$995,471

$1,072,570

A registered entity or any of its directors, officers, or employees

Manipulation or attempted manipulation

$1,303,559

$1,404,520

Civil Monetary Penalty Imposed by a Federal District Court in a
Civil Injunctive Action

Any person

Non-manipulation or attempted manipulation

$199,094

$214,514

Any person

Manipulation or attempted manipulation

$1,303,559

$ 1,404,520

 

FERC Adjusted CMPs

On January 12, 2023, FERC amended its existing rule governing the maximum CMP amounts that may be imposed under the Federal Power Act, the Natural Gas Act, the Natural Gas Policy Act of 1978, and the Interstate Commerce Act to adjust for inflation.  The amended rule increases the maximum, inflation-adjusted CMP amounts that FERC may assess for violations of these statutes and any relevant FERC rules, regulations, and orders promulgated thereunder. The amended rule and increased CMPs are effective as of January 12, 2023, and the new adjusted maximum penalty amounts are set forth in the table below.

Statutory Provision Pursuant to which CMP is Imposed

Penalty Amount Prior to
January 11, 20234

New Adjusted Maximum Penalty Amount5

16 U.S.C. 825o-1(b), Sec. 316A of the Federal Power Act

$1,388,496 per violation, per day

$1,496,035 per violation, per day

16 U.S.C. 823b(c), Sec. 31(c) of the Federal Power Act

$25,075 per violation, per day

$27,017 per violation, per day

16 U.S.C. 825n(a), Sec. 315(a) of the Federal Power Act

$1,388,496 per violation, per day

$1,496,035 per violation, per day

15 U.S.C. 717t-1, Sec. 22 of the Natural Gas Act

$1,388,496 per violation, per day

$1,496,035 per violation, per day

15 U.S.C. 3414(b)(6)(A)(i), Sec. 504(b)(6)(A)(i) of the Natural Gas Policy Act of 1978

$1,388,496 per violation, per day

$1,496,035 per violation, per day

49 App. U.S.C. 6(10) (1988), Sec. 6(10) of the Interstate Commerce Act

$1,453 per offense and $73 per day after the first day

$1,566 per offense and $78 per day after the first day

49 App. U.S.C. 16(8) (1988), Sec. 16(8) of the Interstate Commerce Act

$14,536 per violation, per day

$15,662 per violation, per day

49 App. U.S.C. 19a(k) (1988), Sec. 19a(k) of the Interstate Commerce Act

$1,453 per offense, per day

$1,566 per offense, per day

49 App. U.S.C. 20(7)(a) (1988), Sec. 20(7)(a) of the Interstate Commerce Act

$1,453 per offense, per day

$1,566 per offense, per day

 

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[1]       The Federal Civil Penalties Inflation Adjustment Act of 1990 and a 2015 amendment to the Act require federal agencies annually to adjust CMP amounts by January 15th of each year to account for inflation.

[2]       Annual Adjustment of Civil Monetary Penalties To Reflect Inflation—2023, 88 Fed. Reg. 1501, 1502 (Jan. 11, 2023) (amending 17 C.F.R. Part 143).

[3]       Id.

[4]       182 FERC ¶ 61,002 (2023) at 4.

[5]       Id.

 

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