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The RTO-ISO Order

On March 28, 2013, the Commodity Futures Trading Commission (CFTC) issued an Order (the RTO-ISO Order), which exempted certain electric energy transactions conducted in particular regional transmission organizations (RTOs) and independent system operators (ISOs) from the Commodity Exchange Act (CEA) and CFTC Regulations, with the exception of certain enumerated provisions – specifically, CFTC’s general anti-fraud and anti-manipulation authority, and intent-based prohibitions. The exempted transactions specifically enumerated in and defined by the RTO-ISO Order included “Financial Transmission Rights,” “Energy Transactions,” “Forward Capacity Transactions,” and “Reserve or Regulation Transactions” (collectively, Covered Transactions). To qualify, Covered Transactions, among other conditions, had to be offered under the authority of a tariff approved by the Federal Energy Regulatory Commission (FERC) or the Public Utility Commission of Texas. While the RTO-ISO Order set forth the above-referenced surviving CEA authority, it did not address the availability of CEA Section 22, which provides for private rights of action by plaintiffs injured by alleged violations of the CEA.

Because Section 22 was not within the specifically-enumerated sections of the CEA that survived the blanket exemption, many believed that private rights of action for alleged violations of the CEA by the entities covered by the RTO-ISO Order were thereby extinguished. Federal courts agreed.

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