The US Commodity Futures Trading Commission last week unveiled a flurry of last-minute, no-action letters designed to offer energy companies and others relief from various aspects of its new swaps regulatory regime.
But one area the CFTC has yet to address is the issue of whether natural gas or other commodity transportation and storage contracts should be regulated as swaps.
Last week, a joint letter from four gas and petroleum industry groups requested no-action relief for such gas and other commodity contracts, saying they "do not have the characteristics of options and hence are not options subject to the swap definition."
"The CFTC has not yet acted on our request for no action," Daphne Magnuson, a spokeswoman for the Natural Gas Supply Association, one of the petitioning groups, said Monday.
The letter was also signed by the American Gas Association, American Petroleum Institute and Independent Petroleum Association of America. It followed a similar letter requesting relief for gas contracts, specifically, by the Interstate Natural Gas Association of America.
The groups wrote that they "believe that Congress never intended for natural gas transportation and storage contracts ... to be regulated as swaps and that the commission did not intend to regulate them as such."
Fees related to transportation and storage contracts "are not designed to shift economic risk to the pipeline or storage facility owner or provide a loss-limiting instrument to the customer," they said. Rather, they are "simply reasonable economic means" to accommodate the costs of building and maintaining the infrastructure.
Moreover, reservation fees, under a US Federal Energy Regulatory Commission-approved tariff, are designed to recover the variable costs of transportation or storage service and "should not be the basis for characterization of such contracts as options," the groups said.
