[Congressional Record Volume 161, Number 101 (Tuesday, June 23, 2015)]
[House]
[Pages H4563-H4564]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              UNITED STATES COTTON FUTURES ACT AMENDMENTS

  Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 2620) to amend the United States Cotton Futures 
Act to exclude certain cotton futures contracts from coverage under 
such Act, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2620

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. EXCLUDING CERTAIN COTTON FUTURES CONTRACTS FROM 
                   COVERAGE UNDER UNITED STATES COTTON FUTURES 
                   ACT.

       (a) In General.--Subsection (c)(1) of the United States 
     Cotton Futures Act (7 U.S.C. 15B(c)(1)) is amended--
       (1) by striking ``except that any cotton futures contract'' 
     and inserting the following: ``except that--
       ``(A) any cotton futures contract'';
       (2) in subparagraph (A) (as designated by paragraph (1)), 
     by striking the period at the end and inserting ``; and''; 
     and
       (3) by adding at the end the following new subparagraph:
       ``(B) any cotton futures contract that permits tender of 
     cotton grown outside of the United States is excluded from 
     the coverage of this paragraph and section to the extent that 
     the cotton grown outside of the United States is tendered for 
     delivery under the cotton futures contract.''.
       (b) Application.--The amendments made by subsection (a) 
     shall apply with respect to cotton futures contracts entered 
     into on or after the date of the enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Georgia (Mr. Austin Scott) and the gentleman from Georgia (Mr. David 
Scott) each will control 20 minutes.
  The Chair recognizes the gentleman from Georgia (Mr. Austin Scott).


                             General Leave

  Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I ask unanimous consent 
that all Members may have 5 legislative days within which to revise and 
extend their remarks and include extraneous materials on the bill under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Georgia?
  There was no objection.
  Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I yield myself such time as 
I may consume.
  I rise in strong support of H.R. 2620. This bill would amend the 
United States Cotton Futures Act to allow for the creation of a world 
cotton contract listed on the United States exchange.

[[Page H4564]]

  Current law, which requires sampling and classing by the USDA of 
every bale of cotton tendered under contracts listed on a U.S. exchange 
reflects an antiquated picture of the global cotton market. Some market 
participants need to hedge price fluctuations in foreign markets, and 
the current law limits their ability to do so. We need to update our 
law to reflect the modern nature of this marketplace.
  H.R. 2620 accomplishes this by providing an option for cotton 
produced and delivered in foreign markets to be classed by rating 
facilities closer to the point of delivery rather than by the United 
States Department of Agriculture. It makes no changes to the treatment 
of domestically produced and delivered cotton.
  This legislation will allow any willing exchange to meet industry 
demand to design a world cotton contract. For example, ICE Futures 
U.S., which has already worked with market participants, has publicly 
announced their intention and preference to list a world cotton 
contract side by side with the domestically focused Cotton No. 2 
contract they already list.
  H.R. 2620 allows for an important new contract for cotton hedging to 
be developed, which would be beneficial to commercial hedgers. However, 
it is important specifically to me and to others to note, it would not 
disrupt the industry's benchmark hedging contract, the No. 2 contract, 
which is relied upon by U.S. cotton producers in my district and around 
the country.
  Before I close, I would like to thank Chairman Conaway both for his 
continued leadership on the Agriculture Committee and his efforts on 
this legislation. Additionally, I want to thank Ranking Member David 
Scott for working with me on this issue over the last few months. And I 
would like to acknowledge Lynn Westmoreland's work in this as well. He 
was instrumental in advancing this issue.
  I urge my colleagues to join me in support of H.R. 2620.
  Mr. Speaker, I reserve the balance of my time.
  Mr. DAVID SCOTT of Georgia. Mr. Speaker, I yield myself such time as 
I may consume.
  I, too, have enjoyed working with my colleague from Georgia, the 
chairman of our Subcommittee on Commodity Exchanges, Energy, and 
Credit, Congressman Austin Scott.
  Mr. Speaker, our bill, H.R. 2620, will modernize the way in which 
cotton futures contracts are listed and regulated under the 1916 Cotton 
Futures Act.
  More specifically, as many of you know, the main tool used in the 
marketplace for hedging cotton is the No. 2 contract. Currently, the 
No. 2 contract only permits cotton grown within the United States. That 
cotton is delivered to only five United States cities: Galveston, 
Texas; Houston, Texas; Dallas/Fort Worth, Texas; Greenville, South 
Carolina; and Memphis, Tennessee.
  Now, under the 1916 Cotton Futures Act, every bale of cotton tendered 
under a contract listed on a U.S. exchange must be sampled and classed 
or graded by the United States Department of Agriculture. However, 
seeing that cotton is grown all over the world, my bill targets cotton 
that is grown and delivered outside of the United States' borders.
  Now, Mr. Speaker, here is the problem, the concern that our bill is 
solving. As I mentioned earlier, because of the fact that there are 
only five domestic cities that are cotton delivery points listed under 
the 1916 Cotton Futures Act, there has been much concern that the 
Cotton No. 2 contract cannot accurately reflect price movement in 
foreign markets and, therefore, cannot provide an effective risk 
management tool. That is simply the problem.
  Now, to solve this problem, what our bill will do is simply allow 
U.S.-based future exchanges flexibility in how they handle foreign-
grown cotton and foreign delivery points that will never touch the 
United States at all.
  Mr. Speaker, we live now and we operate in a rapidly changing global 
economy. It is very important that we not put our cotton producers or 
our commodities exchanges into a disadvantaged position competitively 
when it comes to being able to get the price fluctuations that occur in 
foreign markets, thereby providing our businesses with the most 
effective tool by which they can manage their risk.
  So because the United States Department of Agriculture does not have 
the manpower to deploy personnel all over the world at one time, our 
bill will allow cotton grown outside the United States to be classed by 
either a United States Department of Agriculture testing lab inside the 
United States or an international lab deemed to have comparable 
comprehensive rules and regulations equivalent to the United States. 
That is it. It is clean and simple.
  Our bill solves this problem. It gives our cotton producers and it 
gives our exchanges that ability to be able to know how prices are 
sliding in each foreign country that is producing cotton while, at the 
same time, our producers and our exchanges, without that, cannot apply 
good risk management. That is why this is so essential.
  So let me state again, as my colleague from Georgia, Mr. Austin 
Scott, made clear, I, too, want to make clear that our bill does not 
change the fact that 100 percent of all domestically produced and 
delivered cotton will be classed by the United States Department of 
Agriculture. There is absolutely no change here.
  Furthermore, the bill does not change or alter the Cotton No. 2 
contract. What our bill does is simply allow our U.S.-based futures 
exchanges that much-needed flexibility that is needed in order to list 
cotton that will never touch the United States through a world cotton 
contract.
  As I said, we live in a global marketplace. It is important that our 
rules and regulations reflect the modernization that has happened in 
our global markets since this act was written 100 years ago. It is 
important, Mr. Speaker, that we keep the United States economy the 
strongest economy in the world, and our bill, H.R. 2620, will do just.
  Mr. Speaker, I urge passage of H.R. 2620.
  I yield back the balance of my time.
  Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, as my colleague, Mr. Scott, 
and I have said, this is simply a necessary, minor change. I would just 
ask all Members to support passage of H.R. 2620.
  I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Georgia (Mr. Austin Scott) that the House suspend the 
rules and pass the bill, H.R. 2620, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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