Sections 720 and 722 of this bill are intended to clarify the respective authorities of the

Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory
Commission (FERC) over agreements, contracts, and transactions within Regional Transmission
Organizations (RTOs) and Independent System Operators (ISOs). The language will also apply
to State regulatory authorities.

Section 722 amends Section 2(a)(I) of the CEA by adding two new subsections to clarify
the respective jurisdictions of the FERC and the CFTC in these areas. Subsection (e)(I)(i) states
that the nothing in the CEA shall limit or affect the authority of the FERC over an agreement,
contract, or transaction that is entered into pursuant to a FERC or state approved tariff or rate
schedule that is: (1) not executed, traded, or cleared on a CFTC-registered entity or trading
facility; or (2) is executed, traded or cleared on a registered entity or trading facility owned by an
RTO or ISO. Subsection (e)(I)(ii)(I) states that, in addition to the authority of the FERC
described in subsection (e)(I)(i), the CFTC retains its statutory authority over any agreement,
contract, or transaction entered into pursuant to a FERC or state approved tariff or rate schedule
that is not executed, traded or cleared on a registered entity or trading facility, or executed,
traded or cleared on a registered entity or trading facility that is owned or operated by a RTO or
ISO. Subsection (e)(I)(ii)(II) states that nothing in this subsection, including subsection (e)(I)(i),
shall limit or affect the exclusive jurisdiction of the CFTC with respect to an agreement, contract,
or transaction that is executed, traded or cleared on a registered entity or trading facility that is
not owned or operated by a RTO or ISO.

Section 722 amends Section 4(c) of the CEA by adding a new subsection (6) that states
that if the Commission determines that an exemption would be consistent with the public interest
and the purposes of the CEA, the Commission shall, in accordance with paragraphs (1) and (2) of
section 4(c), exempt from the requirements of the CEA an agreement, contract, or transaction
that is entered into pursuant to a tariff or rate schedule approved or permitted to take effect by the
FERC, state or municipality having jurisdiction to regulate rates and charges for the sale of
electric energy within the state or municipality, or between entities described in section 20I(±) of
the Federal Power Act (Federal entities, municipalities, cooperatives receiving financing under
the Rural Electrification Act of 1936 and small electric cooperatives).

Section 722(g) states that nothing in the Wall Street Transparency and Accountability Act
of20IO or the amendments to the CEA limits or affects FERC's statutory anti-manipulation
enforcement authority under section 222 of the Federal Power Act and section 4A of the Natural
Gas Act that existed prior to the effective date of the legislation.

Section 720 requires the CFTC and the FERC to enter into two memoranda of
understanding within 180 days of enactment of the legislation. The first memorandum of
understanding will establish procedures for applying their respective authorities in a manner so
as to ensure effective and efficient regulation in the public interest, resolving conflicts
concerning overlapping jurisdiction, and avoiding conflicting or duplicative regulation. The
second memorandum of understanding will describe how the agencies will share information that
may be requested where either Commission is conducting an investigation into potential
manipulation, fraud, or market power abuse in markets subject to such Commission's regulation
or oversight.

CFTC-CREW-0752