INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, et al., Plaintiffs, v. UNITED STATES COMMODITY FUTURES TRADING COMMISSION, Defendant.
Civil Action No. 11-cv-2146 (RLW)
United States District Court, District of Columbia.
Sept. 28, 2012.
887 F. Supp. 2d 259
Jonathan L. Marcus, Lawrence DeMille-Wagman, Mary T. Connelly, Ajay Bhagwandas Sutaria, U.S. Commodity Futures Trading Commission, Washington, DC, for Defendant.
MEMORANDUM OPINION
ROBERT L. WILKINS, District Judge.
Plaintiffs International Swaps and Derivatives Association (“ISDA“) and Securities Industry and Financial Markets
The heart of Plaintiffs’ challenge is that the CFTC misinterpreted its statutory authority under the
FACTUAL BACKGROUND
ISDA is a trade association with more than 825 members that “represents participants in the privately negotiated derivatives industry.” (Compl. ¶ 9). SIFMA is an “association of hundreds of securities firms, banks, and asset managers” whose claimed mission is to “support a strong financial industry, investor opportunity, capital formation, job creation, and economic growth, while building trust and confidence in the financial markets.” (Id. ¶ 10). According to Plaintiffs, the commodity derivatives markets are “crucial for helping producers and purchasers of commodities manage risk, ensuring sufficient market liquidity for bona fide hedgers, and promoting price discovery of the underlying market.” (Id. ¶ 15). The CFTC, of course, is an agency of the U.S. government with regulatory authority over the commodity derivatives market.
Relevant Derivatives Contracts
Three types of commodity derivatives are implicated in this case: futures contracts, options contracts and swaps. (Dkt. No. 31 at 5). A futures contract is a contract between parties to buy or sell a specific quantity of a commodity at a particular date and location in the future. (Id. at 3). An options contract is a contract between parties where the buyer has the right, but not the obligation, to buy or sell a specific quantity of a commodity at a point in the future. (Id.). Futures contracts and options contracts result in either physical delivery or a cash settlement between parties. (Id.). In a physical delivery contract, the buyer takes physical delivery of the commodity when the con-
A position limit “caps the maximum number of derivatives contracts to purchase (long) or sell (short) a commodity that an individual trader or group of traders may own during a given period.” (Compl. ¶ 21). A position limit may impose a ceiling on either a “spot-month” position or a “non-spot-month” position. (Id. at ¶ 22). A “spot month” is a specific period of time (which varies by commodity under the rules) that immediately precedes the date of delivery of the commodity under the derivatives contract. (Id.). As Plaintiffs explain, “[a] spot-month position limit, therefore, caps the position that a trader may hold or control in contracts approaching their expiration. A non-spot-month position limit caps the position that may be held or controlled in contracts that expire in periods further in the future or in all months combined.” (Id.).
Commodity Exchange Act of 1936 and the 2010 Dodd-Frank Amendments
The main issue in this case is whether the Dodd-Frank amendments to Section 4a of the CEA (codified at
The Position Limits Rule
Notice of Proposed Rulemaking
Dodd-Frank went into effect on July 21, 2010. On January 26, 2011, the CFTC issued a Notice of Proposed Rulemaking (“NPRM“), stating that Title VII of Dodd-Frank “requires” the Commission “to establish position limits for certain physical commodity derivatives.”
In the NPRM, the CFTC proposed to establish position limits for futures contracts, options contracts and swaps for 28 physical commodities. In discussing its
not required to find that an undue burden on interstate commerce resulting from excessive speculation exists or is likely to occur in the future in order to impose position limits. Nor is the Commission required to make an affirmative finding that position limits are necessary to prevent sudden or unreasonable fluctuations or unwarranted changes in prices or otherwise necessary for market protection. Rather the Commission may impose position limits prophylactically, based on its reasonable judgment that such limits are necessary for the purpose of ‘diminishing, eliminating, or preventing’ such burdens on interstate commerce....
[P]ursuant to the Dodd-Frank Act, Congress significantly expanded the Commission‘s authority and mandate to establish position limits beyond futures and options contracts to include, for example, economically equivalent derivatives. Congress expressly directed the Commission to set limits in accordance with the standards set forth in sections [6]a(a)(1) and [6]a(a)(3) of the Act, thereby reaffirming the Commission‘s authority to establish position limits as it finds necessary in its discretion to address excessive speculation.
Id. at 4755 (emphasis added). At this stage of the rulemaking, therefore, when discussing the “standards set forth in section [6]a(a)(1),” the Commission directly referred to its authority to “establish position limits as it finds necessary in its discretion to address excessive speculation.” Id.
The Final Rule
During an open meeting on October 18, 2011, the CFTC adopted the Position Limits Rule by a vote of 3 to 2.
Position limits are, in my opinion, a side-show that has unnecessarily diverted human and fiscal resources away from actions to prevent another financial crisis. To be clear, no one has proven that the looming specter of excessive speculation in the futures market re-regulated even exist, let alone played any role whatsoever in the financial crisis of 2008. Even so, Congress has tasked the CFTC with preventing excessive speculation by imposing position limits. This is the law.
The law is clear, and I will follow the law.
10/18/11 Tr. at 11, 13 (emphasis added).
Commissioner Gensler supported Commissioner Dunn‘s view, stating that by “the Dodd-Frank Act, Congress mandated that the CFTC set aggregate position limits for certain physical commodity derivatives.”
Commissioners Sommers and O‘Malia voted against the final rule and published written dissents. Sommers claimed that, while she was not philosophically opposed to position limits, she did “not believe position limits will control prices or market volatility” in this market.
Commissioner O‘Malia claimed that, although he had a number of serious concerns about the Rule, his “principal disagreement is with the Commission‘s restrictive interpretation of the statutory mandate under Section 4a [
- “Historically, the Commission has taken a much more disciplined and fact-based approach in considering the question of position limits; a process that is lacking from the current proposal.” Id. at 71,700.
- “The Commission voted on this multifaceted rule package without the benefit of performing an objective factual analysis based on the necessary data to determine whether these particular limits ... will effectively prevent or deter excessive speculation.” Id. at 71,702.
- “By failing to put forward data evidencing that commodity prices are threatened by the negative influence of a defined level of speculation that we can define as ‘excessive speculation,’ and that today‘s measures are appropriate (i.e. necessary and effective) in light of such findings, I believe that we have failed under the Administrative Procedure Act to provide a meaningful and informed opportunity for public comment.” Id.
is defined as a Core Referenced Futures Contract or a futures contract, options contract, swap or swaption directly or indirectly linked to either the price of a Core Referenced Futures Contract or to the price of the commodity underlying a Core Referenced Futures Contract for delivery at the same location as the commodity underlying the relevant Core Referenced Futures Contract.
Id. (internal quotation marks omitted). The Rule identifies 28 Core Referenced Futures Contracts that will be subject to its provisions. Id. The Rule specifies that spot-month position limits shall be based on one-quarter of the estimated spot month deliverable supply as established by the Commission, and will apply to both physical delivery and cash-settled contracts separately. Id. at 14. For non-spot-months, different position limit rules apply for legacy Referenced Contracts and non-legacy Referenced Contracts. Id. at 15. Legacy Referenced Contracts are contracts that were previously subject to position limits by the CFTC. Id. These contracts will remain subject to the preexisting regulations set forth in
Non-legacy Referenced Contracts are contracts that were not previously subject to position limits. Id. The position limits for these contracts are fixed by the Commission based on “10 percent of the first 25,000 contracts of average all-months combined aggregated open interest with a marginal increase of 2.5 percent thereafter.” Id. In addition to these regulations, the Rule also established circumstances where a trader must aggregate positions held in multiple accounts. Id. at 16. Subject to some exceptions, traders must aggregate all counts in which they have at least a 10% ownership or equity interest. Id.
Claims
Plaintiffs assert the following claims against the CFTC based on the Position Limits Rule: 1) Count One: Violation of the CEA and APA—Failure to Determine the Rule to be Necessary and Appropriate under
ANALYSIS
I. Standard of Review
When ruling on a summary judgment motion in a case involving final review of an agency action under the APA, the standards of
II. The Parties’ Arguments Regarding the Interpretation of the Dodd-Frank Amendments
This case largely turns on whether the CFTC, in promulgating the Position Limits Rule, correctly interpreted Section 6a as amended by Dodd-Frank. Although both sides forcefully argue that the statute is clear and unambiguous, their respective interpretations lead to two very different results: one which mandates the Commission to set position limits without regard to whether they are necessary or appropriate, and one which requires the Commission to find such limits are necessary and appropriate before imposing them.
Plaintiffs argue that Section 6a is clear and unambiguous, and that the statute required the CFTC to make statutorily-required findings of necessity prior to promulgating the Position Limits Rule. (Dkt. No. 31 at 18-19). Plaintiffs argue that the CFTC misinterpreted the plain text of Dodd-Frank to mean that the CFTC must impose position limits without regard to whether such limits were appropriate or necessary. Plaintiffs argue that the statutory requirement included an obligation to determine whether specific position limits and the specific commodities to which they were tied were necessary and appropriate. (Dkt. No. 14 at 19).
Plaintiffs point out that, under Section 6a(a)(1), the CFTC has the discretion to establish position limits from time to time “as the Commission finds are necessary to diminish, eliminate, or prevent” the burden on interstate commerce caused by excessive speculation. (Id. at 19). Under Plaintiffs’ view, that necessity standard applies to any position limits set pursuant to Dodd-Frank because the Dodd-Frank amendments expressly incorporate that standard. See
Plaintiffs also argue that the CFTC failed to find that it was appropriate to set position limits, in violation of the clear language of Sections 6a(a)(2) and (a)(5). See
Finally, Plaintiffs argue that the CFTC‘s interpretation of the statute is internally inconsistent. By imposing position limits for contracts related to only certain (and not all) commodities, the Commission “ac-
For its part, the Commission also argues that Section 6a is clear and unambiguous. The Commission, however, takes the unwavering position that Congress mandated the agency to set position limits and stripped it of all discretion not to impose limits. The CFTC argues that it was not required to find that position limits were necessary or appropriate before imposing them and that, by adding Sections 6a(a)(2)-(7), Congress made the imposition of speculative limits mandatory. (Dkt. No. 25 at 20-23). Specifically, the CFTC points out that Congress stated that “with respect to physical commodities ... the Commission shall by rule, regulation or order establish limits on the amounts of positions, as appropriate, ... that may be held by any person ...”
The Commission also argues that Congress referred to the position limits as “required” and imposed time limits on the agency under Sections 6a(a)(2)(B)(i) (“... the limits required under subparagraph (A) shall be established within 180 days ...“) and 6a(a)(2)(B)(ii) (“... the limits required under subparagraph (A) shall be established within 270 days ...“), further reflecting the fact that the Dodd-Frank amendments were a mandate to set position limits. The CFTC points to other mandatory language to support its view, including Sections 6a(a)(2)(C) (“in establishing the limits required under subparagraph (A) ...“) and 6a(a)(3) (“in establishing the limits required in paragraph (2), the Commission, as appropriate, shall set limits....“). According to the CFTC, if Congress intended for the CFTC to establish limits on a case-by-case basis, it would not have required that the limits be imposed on such short deadlines. Moreover, the CFTC argues that, under Plaintiffs’ view, the Dodd-Frank amendments to Section 6a would be rendered meaningless.
Finally, the CFTC argues that, under Dodd-Frank, Congress directed the Commission to “conduct a study of the effects (if any) of the position limits imposed ... within 12 months after the imposition of the limits.” Congress further directed that the Commission “shall” submit a copy of that report to Congress, and Congress shall conduct a hearing within 30 days. See
In sum, although each party believes the statute is clear and unambiguous, their respective “plain readings” compel different results. Ultimately, however, this Court need not choose between the competing interpretations. As explained below, Section 6a is ambiguous as to the precise question at issue: whether the CFTC is required to find that position limits are necessary and appropriate prior to imposing them. Because the Position Limits Rule is based on the CFTC‘s erroneous conclusion that the CEA is unambiguous on this issue, the Court “may neither
III. The CFTC‘s Interpretation of Section 6a as Amended by Dodd-Frank
a. Chevron Step One
Because this case involves the CFTC‘s interpretation of a statute it is charged with implementing, this Court applies the two-part test of Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). See Peter Pan Bus Lines, Inc. v. Fed. Motor Carrier Safety Admin., 471 F.3d 1350, 1353 (D.C. Cir. 2006). Under step one of the Chevron test, the Court first must consider “whether Congress has directly spoken to the precise question at issue.” Pub. Citizen v. Nuclear Regulatory Comm‘n, 901 F.2d 147, 154 (D.C. Cir. 1990) (quoting Chevron, 467 U.S. at 842). If so, the Court and the agency “must give effect to the unambiguously expressed intent of Congress.” Arizona v. Thompson, 281 F.3d 248, 253 (D.C. Cir. 2002) (quoting Chevron, 467 U.S. at 842-43); see also Northeast Hosp. Corp. v. Sebelius, 657 F.3d 1, 4 (D.C. Cir. 2011) (citing Chevron, 467 U.S. at 842-43).
Under Chevron Step One, the Court examines the statute de novo, employing traditional tools of statutory construction. Nat‘l Ass‘n of Clean Air Agencies v. EPA, 489 F.3d 1221, 1228 (D.C. Cir. 2007). The Court must assess the statutory text at issue, the statute as a whole, and review legislative history where appropriate. Coal Employment Project v. Dole, 889 F.2d 1127, 1131 (D.C. Cir. 1989) (citing K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (1988) and Ohio v. U.S. Dep‘t of the Interior, 880 F.2d 432, 441 (D.C. Cir. 1989)). “This inquiry using the traditional tools of construction may be characterized as a search for the plain meaning of the statute. If this search yields a clear result, then Congress has expressed its intention as to the question, and deference [to the agency‘s interpretation] is not appropriate.” Bell Atl. Tel. Co. v. FCC, 131 F.3d 1044, 1047 (D.C. Cir. 1997) (citing Hammontree v. NLRB, 894 F.2d 438, 441 (D.C. Cir. 1990)).
If, however, the statute is silent or ambiguous, the Court moves on to Chevron Step Two and defers to the agency‘s interpretation if it is based on a permissible construction of the statute. Peter Pan, 471 F.3d at 1353 (internal quotation marks and citations omitted). “A statute is considered ambiguous [under Chevron] if it can be read more than one way.” Am. Fed‘n of Labor & Cong. of Indus. Org. v. Fed. Election Comm‘n, 333 F.3d 168, 173 (D.C. Cir. 2003) (citing United States v. Nofziger, 878 F.2d 442, 446-47 (D.C. Cir. 1989)). “Because the judiciary functions as the final authority on issues of statutory construction, an agency is given no deference at all on the question whether a statute is ambiguous.” Wells Fargo Bank, N.A. v. Fed. Deposit Ins. Corp., 310 F.3d 202, 205-06 (D.C. Cir. 2002) (internal citations and quotation marks omitted).
i. Section 6a(a)(1) Plainly Requires the CFTC to Find That Position Limits are Necessary.
The first question for the Court is whether Section 6a(a)(1) requires the Commission to find that position limits are necessary prior to imposing them. This is important, of course, because the so-called “mandate” of Dodd-Frank in Section 6a(a)(2) expressly incorporates the “standards” of paragraph (1). The relevant portion of Section 6a(a)(1) states:
For the purpose of diminishing, eliminating, or preventing such burden, the Commission shall, from time to time, after due notice and opportunity for hearing, by rule, regulation, or order, proclaim and fix such limits on the amounts of trading which may be done or positions which may be held by any person ... under contracts of sale of such commodity for future delivery on or subject to the rules of any contract market or derivatives transaction execution facility, or swaps traded on or subject to the rules of a designated contract market or a swap execution facility, or swaps not traded on or subject to the rules of a designated contract market or a swap execution facility that performs a significant price discovery function with respect to a registered entity, as the Commission finds are necessary to diminish, eliminate, or prevent such burden.
The Commission does not argue—nor could it—that this section standing alone strips the agency of any discretion not to set position limits if it would be unnecessary to do so. In fact, the statute expressly directs the agency to set position limits “from time to time.” Id. The precise question, therefore, is whether the language of Section 6a(a)(1) clearly and unambiguously requires the Commission to make a finding of necessity prior to imposing position limits. The answer is yes.
The contested language in Section 6a(a)(1) has remained largely unchanged from the initial passage of the CEA to the Dodd-Frank amendments. Compare
Consistent with this longstanding requirement, the Commission made necessity findings in its rulemakings establishing position limits for 45 years after the passage of the CEA. See In the Matter of Limits on Position and Daily Trading in Wheat, Corn, Oats, Barley, Rye and Flaxseed for Future Delivery, 3 Fed.Reg. 3145, 3146 (Dec. 24, 1938) (“[T]rading in any one grain for future delivery on a contract market, by a person who holds or controls a speculative net position of more than 2,000,000 bushels, long or short in any one future or in all futures combined in such grain on such contract market, tends to cause sudden and unreasonable fluctuations and changes in the price of such grain ... in order to diminish, eliminate, or prevent the undue burden of excessive
The CFTC argues that, although it made necessity findings in these prior rulemakings, the agency never stated that a finding of necessity was required. (Dkt. No. 38 at 19, n. 12). This argument is without merit. The plain text of the statute requires that position limits be set “as the Commission finds are necessary to diminish, eliminate, or prevent [excessive speculation].”
ii. The Commission‘s Arguments That Section 6a(a)(1) Does Not Require a Necessity Finding Are Unavailing.
For 45 years after the passage of the CEA, the CFTC made necessity findings prior to imposing position limits under Section 6a(a). The CFTC has not cited to any express interpretation in which the CFTC took the position that no necessity finding was required. Nor has the CFTC cited to any prior interpretation in which the CFTC took the position that the specific language of Section 6a(a) (now Section 6a(a)(1)) was ambiguous on this point. Fully aware that Section 6a(a)(1) is problematic for its current position, the CFTC makes a number of arguments in an attempt to get out from underneath the statute‘s plain language requiring a necessity finding. Notwithstanding the CFTC‘s various—and at times inconsistent—interpretations, the necessity requirement remains in Section 6a(a)(1).
“Necessary” Only Modifies the “Amounts of Trading”
First, in its Opposition to Plaintiffs’ Motion for Preliminary Injunction, the CFTC argued that, because “necessary” is more closely preceded by the phrase “proclaim and fix such limits on the amounts of trading,” it is “far more plausible” to interpret this provision as requiring the Commission only to find that amounts of trading were necessary, not that limits in general are necessary. (Dkt. No. 25 at 24). The Commission has wisely abandoned this interpretation on summary judgment. The plain language of
The Dodd-Frank Amendments “Converted” Section 6a(a)(1)
At oral argument on Plaintiffs’ Motion for Preliminary Injunction, the Commis-
Section 6a(a)(1) Imposes No Substantive Requirements on the Commission
Now, on summary judgment, the Commission argues that the “necessary” language actually imposes no substantive requirement at all. (Dkt. No. 38 at 19). Seemingly inconsistent with its earlier position that Section 6a(a)(1) requires the CFTC to find only that the actual “amounts of trading” are “necessary,” the Commission argues that the language only means that this Court must afford deference to the CFTC to “make a judgment,” and that any action the agency takes must be “rationally related to the purpose of the statute or its specific provisions.” (Dkt. No. 38 at 19) (relying principally on Mourning v. Family Publications Service, Inc., 411 U.S. 356 (1973)). Again, the CFTC‘s argument is without merit. First, the Court must give effect to the meaning of each word of the statute, which states that the Commission shall impose limits as the agency “finds are necessary.”
In relying on Mourning, it appears that the Commission is confusing two different issues with respect to Section 6a(a)(1). Section 6a(a)(1) contains a clear statutory requirement that the CFTC find that any position limits “are necessary to diminish, eliminate, or prevent” the burden on interstate commerce described in the statute. That point is wholly different from whether any particular rule, regulation or order is “necessary to diminish, eliminate or prevent such burden.” Whether Section 6a(a)(1) requires such a finding is clear and unambiguous. Whether any particular regulation setting position limits is actually “necessary to diminish, eliminate or prevent such burden” is not before this Court because the CFTC has taken the position that it is not required to make that finding.
The distinction between these two questions is illustrated in the D.C. Circuit‘s opinion in AFL-CIO v. Chao. In that case, the Circuit considered whether the Secretary of Labor exceeded her authority
Ultimately, the Circuit held that the Secretary had exceeded her authority under the statute because the rule “reache[d] information unconnected to the circumvention or evasion of union Title II reporting requirements.” Id. Thus, although the Secretary was entitled to deference under Chevron Step Two as to whether the specific rule promulgated was “necessary” to meet the specific purpose of the statute, what was not ambiguous was that there was a “statutory requirement” that she must “make such findings.” Id. For precisely these reasons, this Court is not persuaded by the CFTC‘s argument that Section 6a(a)(1) imposes no “substantive” requirements on the agency.
The CFTC‘s 1981 Rulemaking Renders the Necessity Finding Unnecessary
Finally, relying on a 1981 rulemaking, the CFTC asks this Court to accept its argument that the Commission is no longer required to make a finding that position limits are necessary prior to imposing them. The CFTC attempts to validate its interpretation in two ways. First, the CFTC argues that its interpretation of Section 6a(a)(1) doing away with a necessity finding is entitled to Chevron deference. (Dkt. No. 38 at 18, n. 10; Dkt. No. 55 at 6, n. 4). Second, the Commission argues that Congress ratified its interpretation and, therefore, the Commission is no longer required to make a necessity finding as it did numerous times between 1936 and 1981.
As set forth above, the language of Section 6a(a)(1) is clear and unambiguous regarding the Commission‘s duty to make a necessity finding. Accordingly, the CFTC‘s interpretation of the statute is not entitled to any Chevron deference, particularly where the agency has never treated the statute as ambiguous. See Arizona, 281 F.3d at 253 (quoting Chevron, 467 U.S. at 842-43 for the proposi-
Moreover, Congress has not ratified any CFTC interpretation of 6a(a)(1) doing away with the necessity finding requirement. The CFTC argues that, in its 1981 rulemaking, it changed its interpretation of Section § 6a(a) to allow for the establishment of position limits without a finding of necessity. (Dkt. No. 38 at 19). The CFTC relies on the fact that, in that rulemaking, the CFTC required exchanges to establish position limits for all futures contracts for which there were not already limits. (Id. at 20). In doing so, the CFTC did not require exchanges to make a finding that excessive speculation was a problem or that position limits were the correct solution. Id. The CFTC also cites to the rule‘s preamble which states that “Section 4a(1) represents an express Congressional finding that excessive speculation is harmful to the market, and a finding that speculative limits are an effective prophylactic measure.” Establishment of Speculative Position Limits, 46 Fed.Reg. 50,938, 50,940 (Oct. 16, 1981). The CFTC argues that Congress ratified the CFTC‘s interpretation of § 6a(a) when it amended the CEA in 1982 without overturning the CFTC‘s construction of the statute. (Dkt. No. 38 at 20-21).
The CFTC takes a roundabout route to ratification, and one that this Court declines to follow. The CFTC has not offered any longstanding agency interpretation that abrogated the agency‘s duty to make necessity findings under § 6a(a)(1). Nothing that the CFTC relies on in the 1981 rulemaking speaks directly to the interpretation of § 6a(a)(1) that CFTC now advances in this case. Moreover, the 1981 interpretation that the CFTC does cite—that the statute allows the agency to prophylactically impose position limits and that the CFTC need not find that excessive speculation actually exists beforehand—does not appear to be in dispute in this case. This authority is squarely in the plain text of Section 6a. See
The fact that the CFTC did not make a necessity finding in its 1981 rulemaking does not constitute an interpretation from which this Court can infer congressional ratification. See Autolog Corp. v. Regan, 731 F.2d 25, 32 (D.C. Cir. 1984) (“When an agency interpretation has been officially published and consistently followed, Congress is presumed to be aware of the administrative interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change.“) (emphasis added) (internal citations and quotation marks omitted).5 To accept the agen-
iii. Sections 6a(a)(2), (a)(3) and (a)(5) are Ambiguous
Although the CFTC seeks Chevron deference as to its reading of Section 6a(a)(1), the CFTC “is not claiming deference with respect to Congress’ mandate (which comes from the Dodd-Frank amendments, sections 6a(a)(2)-(7)).” (Dkt. No. 55 at 6, n. 4). Upon a review of the entire amended Section 6a, the Court cannot hold that the Dodd-Frank amendments in sections 6a(a)(2), (a)(3) and (a)(5) constitute a clear and unambiguous mandate.
1. “In accordance with the standards set forth in paragraph (1)”
First, it is wholly unclear to what extent the CFTC‘s authority in Section 6a(a)(2) is dependent on the statutory requirement in subsection 6a(a)(1) that the agency find position limits “necessary.” The very first clause of Section 6a(a)(2) begins “[i]n accordance with the standards set forth in paragraph (1) of this subsection ... the Commission shall by rule, regulation, or order establish limits on the amount of positions ....” Section § 6a(a)(2) (emphasis added). It is clear that Congress incorporated and directed the agency to set any limits in Section 6a(a)(2) “in accordance with the standards” of the CFTC‘s existing authority in Section 6a(a)(1). What is unclear, however, is what “standards” Congress meant to govern any limits set pursuant to Section 6a(a)(2).
The CFTC argues that the term “standards” in Section 6a(a)(2) does not refer to the “necessary” standard of paragraph (1), but rather the so-called aggregation standards to “positions held and trading done by any persons directly or indirectly controlled by such person ....”
Finally, and most importantly, the CFTC‘s current position regarding the introductory clause of subsection (a)(2) is not based on any reasoned interpretation in which the CFTC engaged at the agency level. The Commission has neither pointed to—nor can this Court locate—any interpretation of this clause in the final rule. There appears to be nothing in the final rule giving any effect to or explaining how the position limits set were “in accordance with the standards of paragraph (1).” The only reference that this Court can locate exists in the NPRM. That reference, however, suggests that the CFTC (at least initially) interpreted the introductory clause of subsection (a)(2) as Plaintiffs currently interpret it:
Congress expressly directed the Commission to set limits in accordance with the standards set forth in sections 4a(a)(1) and 4a(a)(3) of the Act, thereby reaffirming the Commission‘s authority to establish position limits as it finds necessary in its discretion to address excessive speculation.
This Court is left with no clear indication of Congress’ intent when it directed the Commission to set position limits in Section 6a(a)(2) “in accordance with the standards set forth in paragraph (1) of this subsection....” It is unclear whether Con-
2. “As appropriate”
The parties also disagree over whether the Dodd-Frank amendments to Section 6a required the CFTC to determine that imposing position limits was “appropriate.” The “as appropriate” language appears in three contested sections (emphasis added in each):
Section 6a(a)(2)(A):
In accordance with the standards set forth in paragraph (1) of this subsection ... the Commission shall by rule, regulation, or order establish limits on the amount of positions, as appropriate, other than bona fide hedge positions, that may be held by any person ...
Section 6a(a)(3):
In establishing the limits required in paragraph (2), the Commission, as appropriate, shall set limits—
(A) on the number of positions that may be held by any person for the spot month, each other month, and the aggregate number of positions that may be held by any person for all months; and
(B) to the maximum extent practicable, in its discretion ...
Section 6a(a)(5)(A):
Notwithstanding any other provision of this section, the Commission shall establish limits on the amount of positions, including aggregate position limits, as appropriate, other than bona fide hedge positions....
Again, each party believes the statute is clear and unambiguous. Neither party disputes that the “as appropriate” language in these sections confers discretion in the agency. The parties part ways, however, when it comes to what exactly that phrase was meant to modify. The CFTC contends that Congress meant “as appropriate” in Sections 6a(a)(2)(A) and 6a(a)(5)(A) to modify the actual levels of the limits, whereas Plaintiffs contend that “as appropriate” was meant to modify “shall.” The answer, of course, is material. If Plaintiffs are correct, then the CFTC had the authority to determine that position limits were not “appropriate” at this particular time and, thus, not impose them at all.
The statute, however, is ambiguous on this point. The CFTC fails to offer any compelling authority for its argument that, because the term “as appropriate” is closer to or comes after “establish limits on the amount of positions” in subsections (a)(2) and (a)(5), the CFTC was only required to find the “amount of positions” appropriate. (Dkt. No. 25 at 24; Dkt. No. 38 at 25). In its Opposition to Plaintiffs’ Motion for Preliminary Injunction, the CFTC relied on the Rule of Last Antecedent, as described in Sutherland Statutory Construction § 47:33, as support for its construction of the “as appropriate” language. (Dkt. No. 25 at 24). The CFTC‘s argument, however, is wrong for at least two reasons. First, a complete review of the authority upon which the CFTC relies reveals that the Rule of the Last Antecedent is not dispositive here:
Referential and qualifying words and phrases, where no contrary intention appears, refer solely to the last antecedent. ... The rule is another aid to discovery of intent or meaning and is not inflexible and uniformly binding. Where the sense of the entire act requires that a qualifying word or phrase apply to several preceding or even succeeding sections, the word or phrase will not be restricted to its immediate antecedent. Evidence that a qualifying phrase is supposed to apply to all antecedents instead of only to the immediately preceding one may be found in the fact that it is separated from the antecedents by a comma.
2A N. Singer & J. Singer, SUTHERLAND STATUTORY CONSTRUCTION § 47:33 (7th ed. 2011) (hereinafter “Sutherland“) (emphasis added).
In this case, the “as appropriate” clauses in (a)(2) and (a)(5) are separated from their antecedents by a comma on either side. According to Sutherland, this fact is evidence that the phrase was “supposed to apply to all antecedents instead of only to the immediately preceding one.” Id. If that is the case, “as appropriate” modifies both “shall” in subsections 6a(a)(2) and (a)(5) as well as the “amount of positions.” Moreover, unlike the traditional cases in which the Rule of the Last Antecedent has been found to apply, the clauses in question are not part of a list. See United States v. Pritchett, 470 F.2d 455, 456, 458-59 (D.C. Cir. 1972) (holding that, in statute providing that “provisions of section 22-3204 shall not apply to marshals, sheriffs, prison or jail wardens, or their deputies, policemen or other duly appointed law-enforcement officers, or to members of the Army, Navy, or Marine Corps of the United States or of the National Guard or Organized Reserves when on duty,” the phrase “on duty” modified only the last antecedent).
In their amicus brief, members of the House Democratic Conference Committee on H.R. 4173 point to legislative history of an early iteration of the Act as reflected in House Report 111-385. That language stated that “Section 6(a) requires the CFTC to set appropriate position limits for all physical commodities other than excluded commodities.” (Dkt. No. 49 at 3). According to amici, this reflects that the use of the word “appropriate” in the text was intended to describe the level of the position limit, not whether the limits themselves were appropriate. (Id. at 3-4). But that is not the final language Congress used. Congress set the “as appropriate” language apart from all other clauses with commas. It could have merely, as written in the legislative history, placed the word “appropriate” before “limits” in subsections (a)(2)(A) and (a)(5). This portion of legislative history, thus, does not conclusively explain how the statute, as written, clearly indicates that the phrase “as appropriate” modifies position limits. Nor does this legislative history exclude the interpretation that the CFTC could find it appropriate to set no position limits for some commodities.
Second, the CFTC‘s construction of the statute as a mandate is at least partially undermined by Congress’ use of the clause “as appropriate” in subsection (a)(3): “In establishing the limits required in paragraph (2), the Commission, as appropriate, shall set limits ....”
Further lending to the ambiguity is that subsection (a)(5)(A) governing “economically equivalent contracts” begins with the
In short, it is wholly unclear whether Congress meant “as appropriate” in subsections (a)(2)(A), (a)(3) and (a)(5)(A) to modify the verb “shall” or other parts of those subsections. The CFTC did not recognize these ambiguities and interpret the statute accordingly in the first instance. The Court cannot conclude that the “as appropriate” clauses clearly modify the verb “shall” in each instance, nor can it conclude given traditional tools of statutory construction that “as appropriate” was meant only to grant the Commission authority to set the “amount of positions” as it saw “appropriate.”
3. Section 6a(a)(6)
There appears to be no dispute that Section 6a(a)(6) is a mandate upon the Commission to set aggregate position limits in at least three circumstances. See
The Court declines, however, to reach a determination on whether the aggregation standards promulgated in the final rule are arbitrary and capricious under
Given that several provisions of the aggregation rules—rules which the Commission refers to as a “central feature of any position limits regime“—are under consideration and may be modified, it is not appropriate for this Court to interfere in the rulemaking at this stage. (Dkt. No. 38
at 42). Indeed, it is wholly unclear whether any challenges to the aggregation rules are even ripe at this time. See Abbott Labs. v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967) (prudential ripeness principles protects “the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.“); Ohio Forestry Ass‘n Inc. v. Sierra Club, 523 U.S. 726, 735, 118 S.Ct. 1665, 140 L.Ed.2d 921 (1998) (administrative claim is not ripe where the “possibility that further consideration will actually occur before [implementation] is not theoretical, but real.“). Because the entire rule will be vacated, the Commission can on remand, if it so chooses, modify and finalize any aggregation rules as part of any new regime it may promulgate.
4. Interpretation of Section 6a as a Whole
The Court is mindful that, in searching for the plain meaning of Section 6a, the Court must not take words in isolation, must view them in context, and must attempt to give effect to all words in the statute. Doing so does not, however, elucidate any of the ambiguities of the statute.
There is no question, as the CFTC argues, that Congress used traditionally mandatory language throughout the Dodd-Frank amendments to Section 6a. The CFTC relies on that language as support for its view that Congress stripped the CFTC of any discretion not to impose position limits even if the agency did not find it “necessary” or “appropriate” to do so. (Dkt. No. 25 at 23-24). For example, the CFTC relies on language stating that the Commission “shall” establish limits (
Upon a review of the entire Section 6a as amended by Dodd-Frank, the Court finds that there are at least two plausible readings of the statute. First is the CFTC‘s interpretation: that the CFTC was mandated to set position limits, that it was stripped of any discretion not to set limits, that it was not required to find (either implicitly or explicitly) that the imposition of position limits both generally and with respect to certain commodities was necessary, that it was not required to determine whether the actual imposition of limits was appropriate both generally and with respect to certain commodities, and that it was required to impose those limits expeditiously.6
This interpretation, however, renders other parts of Section 6a mere surplusage. Significantly, it fails to give any meaningful effect to the very first clause of Section
The other plausible interpretation of Section 6a is the one that Plaintiffs offer. As Plaintiffs argue, “[t]he only reasonable reading of the Dodd-Frank amendments to Section 6a is that Congress intended the Commission to immediately gather evidence relating to whether excessive speculation was harming commodity markets and to impose position limits where necessary and appropriate to prevent an undue burden on the economy.” (Dkt. No. 26 at 9). In other words, Plaintiffs do not seem to contest that the CFTC may be required to impose position limits, but that that obligation does not arise until the Commission first makes a finding that such position limits are necessary to combat the burden described in
This Circuit has instructed that when “construing a statute we are obliged to give effect, if possible, to every word Congress used.” Murphy Exploration & Prod. Co. v. U.S. Dep‘t of Interior, 252 F.3d 473, 481 (D.C.Cir.2001) (quoting Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979)). Moreover, it is well-settled that a statute is considered ambiguous when it is capable of being understood by reasonably well-informed persons in two or more different senses. See Nofziger, 878 F.2d at 446-47 (statute is ambiguous if it can be read in more than one way); see also SUTHERLAND at §§ 46:4, 45:2. Simply because a statute “is susceptible of one construction does not render its meaning plain if it is also sus
In sum, the Dodd-Frank amendments do not constitute a clear and unambiguous mandate to set position limits, as the Commission argues. Nor are those amendments clear and unambiguous in Plaintiffs’ favor. The Court cannot uphold the CFTC‘s interpretation of the amendments under Chevron Step One. Nor, as set forth below, is this Court able to review the agency‘s interpretation under Chevron Step Two.
b. Chevron Step Two
Under Chevron step two, if a statute is silent or ambiguous on a particular issue, the Court must defer to the agency‘s interpretation of the statute if it is reasonable and consistent with the statutory purpose. See Pub. Citizen, 901 F.2d at 154 (citing Chevron, 467 U.S. at 844-45, 104 S.Ct. 2778). The law of this Circuit is clear, however, that “Chevron step 2 deference is reserved for those instances when an agency recognizes that the Congress‘s intent is not plain from the statute‘s face.” Peter Pan, 471 F.3d at 1354; see also Arizona, 281 F.3d at 254 (stating that “[d]eference to an agency‘s statutory interpretation is only appropriate when the agency has exercised its own judgment, not when it believes that interpretation is compelled by Congress.“) (internal quotation marks omitted).
It is well-settled in this Circuit that “deference to an agency‘s interpretation of a statute is not appropriate when
The CFTC correctly concedes that it is not entitled to Chevron deference with regard to its interpretation of Sections
The Commission continued to take this position during this litigation. See Dkt. No. 38 at 23 (“There is only one plausible reading of the Dodd-Frank amendments: Congress unconditionally required the Commission to impose limits and to do so expeditiously“); id. (“[N]o other confirmation of the mandate beyond the language and structure of the Dodd-Frank amendments is needed“); id. at 1 (“But Plaintiffs ignore that Congress mandated that the Commission promulgate the Rule.“).
As discussed above, the Dodd-Frank amendments to Section 6a are ambiguous and lend themselves to more than one plausible interpretation. When a statute is ambiguous, “it is incumbent upon the agency not to rest simply on its parsing of the statutory language. It must bring its experience and expertise to bear in light of competing interests at stake” to resolve the ambiguities in the statute. PDK Labs., 362 F.3d at 794, 797-98 (holding that agency‘s interpretation of statute was not entitled to deference because
The law of this Circuit, therefore, requires in this circumstance that the Court remand the rule to the agency so that it can fill in the gaps and resolve the ambiguities.7 See PDK Labs., 362 F.3d at 798; see also Alarm Indus., 131 F.3d at 1072 (holding that statute did not have a plain meaning, as the Commission believed it did, and vacating and remanding the case to the Commission to resolve the ambiguity); Humane Soc‘y, 579 F.Supp.2d at 13 (noting that “when an agency wrongly concludes that its interpretation is mandated by the statute, a court will not impose its own interpretation of the statute.“).
The Court expresses no opinion on whether the construction of Section 6a the CFTC now advances is permissible under Chevron Step Two. Although the Court does not foreclose the possibility that the CFTC could, in the exercise of its discretion, determine that it should impose position limits without a finding of necessity and appropriateness, it is not plain and
c. View of Congressional Amici and Legislative History
The Court received two amicus curiae briefs from members of Congress that were involved in the development of the Dodd-Frank Act. (Dkt. Nos. 48 & 49). Both groups wrote in support of the CFTC. In one brief, the House Democratic Members of the Conference Committee (“House Democratic Members“) on H.R. 4173 assert that the CFTC has historically had the power to establish position limits prophylactically. (Dkt. No. 49 at 2). The House Members state that the “CFTC was not required or even expected to analyze and determine whether or not it considered position limits to be efficacious in addressing possible harm from speculative trading.” (Id. at 3). To support this proposition, they cite to instances in the legislative history where Congress made statements referring to the amendments as a “mandate” or a “requirement.” (Id. at 3-5).
Another amicus brief was filed by 19 current United States Senators, some (but not all) of whom were involved in the development of the Dodd-Frank Act. (Dkt. No. 48 at 1). The Senators similarly state
The Court appreciates the efforts of amici to assist in determining the meaning of the relevant provisions of the CEA. The Court has considered amici‘s interpretations of both the legislative history and statutory text. Given the fundamental ambiguities in the statute, however, the Court
IV. Vacatur and Remand
Plaintiffs request that this Court vacate the Position Limits Rule and remand this matter back to the agency. (Dkt. No. 31 at 18, n. 12). The CFTC contends that, even were this Court to find in Plaintiffs’ favor, the Court has discretion to—and should—remand the rule to the CFTC without vacatur. (Dkt. No. 38 at 15, n. 9).
The CFTC is correct that the Court has discretion to decide whether to vacate the rule on remand. See Advocates for Highway & Auto Safety v. Fed. Motor Carrier Safety Admin., 429 F.3d 1136, 1151 (D.C.Cir.2005) (“While unsupported agency action normally warrants vacatur ... this court is not without discretion.“) (internal quotation marks and citations omitted). When deciding whether to vacate the Court considers two factors: “ser
First, as set forth above, the CFTC‘s error in this case was that it fundamentally misunderstood and failed to recognize the ambiguities in the statute. In circumstances such as this, our Circuit has found it appropriate to vacate the agency action on remand. See, e.g., Peter Pan, 471 F.3d at 1354-55; Nat‘l Cement, 494 F.3d at 1077; PDK Labs., 362 F.3d at 799. By failing to acknowledge the statutory ambiguities in Section 6a, the CFTC instead relied exclusively on a “plain meaning” reading of the statute. The agency failed to bring its expertise and experience to bear when interpreting the statute and offered no explanation for how its interpretation comported with the policy objectives of the Act. The Court cannot be sure that the agency will interpret the statute in the same way and arrive at the same conclusion after further review and cannot be sure whether a similar position limits rule will withstand challenge under the APA. See Humane Soc‘y, 579 F.Supp.2d at 21.
Second, it would be far more disruptive if the Position Limits Rule were allowed to go into effect while on remand. As Plaintiffs note, remand without vacatur is often warranted once a rule has gone into effect and, as such, there is no apparent way to restore the status quo. (Dkt. No. 31 at 18, n. 12); Sugar Cane Growers Coop. of Florida v. Veneman, 289 F.3d 89, 97 (D.C.Cir.2002) (holding that remand without vacatur was warranted where the rule had already gone into effect and, as such “[t]he egg ha[d] been scrambled and there [was] no apparent way to restore the status quo ante.“). In this case, the Position Limits
CONCLUSION
For the foregoing reasons, the Position Limits Rule is vacated and remanded to the Commission for further proceedings consistent with this Opinion. Moreover, Plaintiffs’ Motion for Summary Judgment is granted and Defendant‘s Motion for Summary Judgment is denied. An Order accompanies this Memorandum.
APPENDIX A
Effective: July 21, 2010
§ 6a. Excessive speculation
(a) Burden on interstate commerce; trading or position limits
(1) In general
Excessive speculation in any commodity under contracts of sale of such commodity for future delivery made on or subject to the rules of contract markets or derivatives transaction execution facilities, or on electronic trading facilities with respect to swaps that perform or affect a significant price discovery contract function with respect to registered entities causing sudden or unreasonable fluctuations or unwarrant
(2) Establishment of limitations
(A) In general
In accordance with the standards set forth in paragraph (1) of this subsection and consistent with the good faith exception cited in subsection (b)(2), with respect to physical commodities other than excluded commodities as defined by the Commission, the Commission shall by rule, regulation, or order establish limits on the amount of positions, as appropriate, other than bona fide hedge positions, that may be held by any person with respect to contracts of sale for future delivery or with respect to options on the contracts or commodities traded on or subject to the rules of a designated contract market.
(B) Timing
(i) Exempt commodities
For exempt commodities, the limits required under subparagraph (A) shall be established within 180 days after July 21, 2010.
(ii) Agricultural commodities
For agricultural commodities, the limits required under subparagraph (A) shall be established within 270 days after July 21, 2010.
(C) Goal
In establishing the limits required under subparagraph (A), the Commission shall strive to ensure that trading on foreign boards of trade in the same commodi
(3) Specific limitations
In establishing the limits required in paragraph (2), the Commission, as appropriate, shall set limits—
(A) on the number of positions that may be held by any person for the spot month, each other month, and the aggregate number of positions that may be held by any person for all months; and
(B) to the maximum extent practicable, in its discretion—
(i) to diminish, eliminate, or prevent excessive speculation as described under this section;
(ii) to deter and prevent market manipulation, squeezes, and corners;
(iii) to ensure sufficient market liquidity for bona fide hedgers; and
(iv) to ensure that the price discovery function of the underlying market is not disrupted.
(4) Significant price discovery function
In making a determination whether a swap performs or affects a significant price discovery function with respect to regulated markets, the Commission shall consider, as appropriate:
(A) Price linkage
The extent to which the swap uses or otherwise relies on a daily or final settlement price, or other major price parameter, of another contract traded on a regulated market based upon the same underlying commodity, to value a position, transfer or convert a position, financially settle a position, or close out a position.
(B) Arbitrage
The extent to which the price for the swap is sufficiently related to the price of another contract traded on a regulated market based upon the same underlying commodity so as to permit market participants to effectively arbitrage between the markets by simultaneously maintaining positions or executing trades in the swaps on a frequent and recurring basis.
(C) Material price reference
The extent to which, on a frequent and recurring basis, bids, offers, or transactions in a contract traded on a regulated market are directly based on, or are determined by referencing, the price generated by the swap.
(D) Material liquidity
The extent to which the volume of swaps being traded in the commodity is sufficient to have a material effect on another contract traded on a regulated market.
(E) Other material factors
Such other material factors as the Commission specifies by rule or regulation as relevant to determine whether a swap serves a significant price discovery function with respect to a regulated market.
(5) Economically equivalent contracts
(A) Notwithstanding any other provision of this section, the Commission shall establish limits on the amount of positions, including aggregate position limits, as appropriate, other than bona fide hedge positions, that may be held by any person with respect to swaps that are economically equivalent to contracts of sale for future delivery or to options on the contracts or commodities traded on or subject to the rules of a designated contract market subject to paragraph (2).
(i) develop the limits concurrently with limits established under paragraph (2), and the limits shall have similar requirements as under paragraph (3)(B); and
(ii) establish the limits simultaneously with limits established under paragraph (2).
(6) Aggregate position limits
The Commission shall, by rule or regulation, establish limits (including related hedge exemption provisions) on the aggregate number or amount of positions in contracts based upon the same underlying commodity (as defined by the Commission) that may be held by any person, including any group or class of traders, for each month across—
(A) contracts listed by designated contract markets;
(B) with respect to an agreement contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, contracts traded on a foreign board of trade that provides members or other participants located in the United States with direct access to its electronic trading and order matching system; and
(C) swap contracts that perform or affect a significant price discovery function with respect to regulated entities.
(7) Exemptions
The Commission, by rule, regulation, or order, may exempt, conditionally or unconditionally, any person or class of persons, any swap or class of swaps, any contract of sale of a commodity for future delivery or class of such contracts, any
(b) Prohibition on trading or positions in excess of limits fixed by Commission
The Commission shall, in such rule, regulation, or order, fix a reasonable time (not to exceed ten days) after the promulgation of the rule, regulation, or order; after which, and until such rule, regulation, or order is suspended, modified, or revoked, it shall be unlawful for any person—
(1) directly or indirectly to buy or sell, or agree to buy or sell, under contracts of sale of such commodity for future delivery on or subject to the rules of the contract market or markets, or derivatives transaction swap execution facility or facilities or electronic trading facility with respect to a significant price discovery contract, to which the rule, regulation, or order applies, any amount of such commodity during any one business day in excess of any trading limit fixed for one business day by the Commission in such rule, regulation, or order for or with respect to such commodity; or
(2) directly or indirectly to hold or control a net long or a net short position in any commodity for future delivery on or subject to the rules of any contract market or derivatives transaction swap execution facility or electronic trading facility with respect to a significant price discovery contract in excess of any position limit fixed by the Commission for or with respect to such commodity: Provided, That such position limit shall not apply to a position acquired in good faith prior to the effective date of such rule, regulation, or order.
(1) No rule, regulation, or order issued under subsection (a) of this section shall apply to transactions or positions which are shown to be bona fide hedging transactions or positions as such terms shall be defined by the Commission by rule, regulation, or order consistent with the purposes of this chapter. Such terms may be defined to permit producers, purchasers, sellers, middlemen, and users of a commodity or a product derived therefrom to hedge their legitimate anticipated business needs for that period of time into the future for which an appropriate futures contract is open and available on an exchange. To determine the adequacy of this chapter and the powers of the Commission acting thereunder to prevent unwarranted price pressures by large hedgers, the Commission shall monitor and analyze the trading activities of the largest hedgers, as determined by the Commission, operating in the cattle, hog, or pork belly markets and shall report its findings and recommendations to the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture in its annual reports for at least two years following January 11, 1983.
(2) For the purposes of implementation of subsection (a)(2) for contracts of sale for future delivery or options on the contracts or commodities, the Commission shall define what constitutes a bona fide hedging transaction or position as a transaction or position that—
(A)(i) represents a substitute for transactions made or to be made or positions taken or to be taken at a later time in a physical marketing channel;
(ii) is economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise; and
(iii) arises from the potential change in the value of—
(I) assets that a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising;
(II) liabilities that a person owns or anticipates incurring; or
(III) services that a person provides, purchases, or anticipates providing or purchasing; or
(B) reduces risks attendant to a position resulting from a swap that—
(i) was executed opposite a counterparty for which the transaction would qualify as a bona fide hedging transaction pursuant to subparagraph (A); or
(ii) meets the requirements of subparagraph (A).
(d) Persons subject to regulation; applicability to transactions made by or on behalf of United States
This section shall apply to a person that is registered as a futures commission merchant, an introducing broker, or a floor broker under authority of this chapter only to the extent that transactions made by such person are made on behalf of or for the account or benefit of such person. This section shall not apply to transactions made by, or on behalf of, or at the direction of, the United States, or a duly authorized agency thereof.
(e) Rulemaking power and penalties for violation
Nothing in this section shall prohibit or impair the adoption by any contract mar
Patti L. CAESAR, Plaintiff,
v.
Eric K. SHINSEKI, Secretary of Veterans Affairs, Defendant.
Civil Action No. 10-40005-FDS.
United States District Court, D. Massachusetts.
Jan. 25, 2012.