II 110th CONGRESS 2d Session S. 3131 IN THE SENATE OF THE UNITED STATES June 12, 2008 Mrs. Feinstein (for herself and Mr. Stevens) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry A BILL To amend the Commodity Exchange Act to ensure the application of speculation limits to speculators in energy markets, and for other purposes.

1.

Short title

This Act may be cited as the Oil Speculation Control Act of 2008.

2.

Definition of institutional investor

(a)

Definition

Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended— (1)by redesignating paragraphs (22) through (34) as paragraphs (23) through (35), respectively; and (2)by inserting after paragraph (21) the following: (22)

Institutional investor

The term institutional investor means a long-term investor in financial markets (including pension funds, endowments, and foundations) that— (A)invests in energy commodities as an asset class in a portfolio of financial investments; and (B)does not take or make physical delivery of energy commodities on a frequent basis, as determined by the Commission. . (b)

Conforming amendments

(1)Section 13106(b)(1) of the Food, Conservation, and Energy Act of 2008 is amended by striking section 1a(32) and inserting section 1a. (2)Section 402(d)(1)(B) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27(d)(1)(B)) is amended by striking section 1a(33) and inserting section 1a.

3.

Inspector General

Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) is amended by adding at the end the following: (13)

Inspector General

(A)

Office

There shall be in the Commission, as an independent office, an Office of the Inspector General. (B)

Appointment

The Office shall be headed by an Inspector General, appointed in accordance with the Inspector General Act of 1978 (5 U.S.C. App.). (C)

Compensation

The Inspector General shall be compensated at the rate provided for level IV of the Executive Schedule under section 5315 of title 5, United States Code. (D)

Administration

The Inspector General shall exert independent control of the budget allocations, expenditures, and staffing levels, personnel decisions and processes, procurement, and other administrative and management functions of the Office. .

4.

Trading practices review with respect to index traders, swap dealers, and institutional investors

Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is amended by adding at the end the following: (e)

Trading practices review with respect to index traders, swap dealers, and institutional investors

(1)

Review

(A)

In general

Not later than 30 days after the date of enactment of this subsection, the Commission shall carry out a review of the trading practices of index traders, swap dealers, and institutional investors in markets under the jurisdiction of the Commission— (i)to ensure that index trading is not adversely impacting the price discovery process; (ii)to determine whether different practices or regulations should be implemented; and (iii)to gather data for use in proposing regulations to limit the size and influence of institutional investor positions in commodity markets. (B)

Emergency authority

For the 60-day period described in subparagraph (A), in accordance with each applicable rule adopted under section 5(d)(6), the Commission shall exercise the emergency authority of the Commission to prevent institutional investors from increasing the positions of the institutional investors in— (i)energy commodity futures; and (ii)commodity future index funds. (2)

Report

Not later than 30 days after the date described in paragraph (1)(A), the Commission shall submit to the appropriate committees of Congress a report that contains recommendations for such legislation as the Commission determines to be necessary to limit the size and influence of institutional investor positions in commodity markets. .

5.

Bona fide hedging transactions or positions

Section 4a(c) of the Commodity Exchange Act (7 U.S.C. 6a(c)) is amended by striking (c) No rule and inserting the following: (c)

Bona fide hedging transactions or positions

(1)

Definition of bona fide hedging transaction or position

The term bona fide hedging transaction or position means a transaction or position that represents a hedge against price risk exposure relating to physical transactions involving an energy commodity. (2)

Application with respect to bona fide hedging transactions or positions

No rule .

6.

Speculation limits relating to speculators in energy markets

Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) is amended by adding at the end the following: (f)

Speculation limits relating to speculators in energy markets

(1)

Definition of speculator

In this subsection, the term speculator includes any institutional investor or investor of an investment fund that holds a position through an intermediary broker or dealer. (2)

Enforcement of speculation limits

The Commission shall enforce speculation limits with respect to speculators in energy markets. .

7.

Large trader reporting with respect to index traders, swap dealers, and institutional investors

Section 4g of the Commodity Exchange Act (7 U.S.C. 6g) is amended by adding at the end the following: (g)

Large trader reporting with respect to index traders, swap dealers, and institutional investors

(1)

In general

Each recordkeeping and reporting requirement under this section relating to large trader transactions and positions shall apply to index traders, swaps dealers, and institutional investors in markets under the jurisdiction of the Commission. (2)

Promulgation of regulations

As soon as practicable after the date of enactment of this subsection, the Commission shall promulgate regulations to establish separate classifications for index traders, swaps dealers, and institutional investors— (A)to enforce the recordkeeping and reporting requirements described in paragraph (1); and (B)to enforce position limits and position accountability levels with respect to energy commodities under section 4a(f). .

8.

Institutional investor speculation limits

(a)

Core principles applicable to significant price discovery contracts

Section 2(h)(7)(C)(ii)(IV) of the Commodity Exchange Act (7 U.S.C. 2(h)(7)(C)(ii)(IV)) is amended by inserting after speculators the following: (including institutional investors that do not take delivery of energy commodities and that hold positions in energy commodities through swaps dealers or other third parties). (b)

Core Principles for Contract Markets

Section 5(d)(5) of the Commodity Exchange Act (7 U.S.C. 7(d)(5)) is amended by inserting after speculators the following: (including institutional investors that do not take delivery of energy commodities and that hold positions in energy commodities through swaps dealers or other third parties).