[Congressional Record (Bound Edition), Volume 159 (2013), Part 6]
[House]
[Pages 8737-8741]
[From the U.S. Government Publishing Office, www.gpo.gov]




      BUSINESS RISK MITIGATION AND PRICE STABILIZATION ACT OF 2013

  Mr. HENSARLING. Madam Speaker, I move to suspend the rules and pass 
the bill (H.R. 634) to provide end user exemptions from certain 
provisions of the Commodity Exchange Act and the Securities Exchange 
Act of 1934, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                H.R. 634

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Business Risk Mitigation and 
     Price Stabilization Act of 2013''.

     SEC. 2. MARGIN REQUIREMENTS.

       (a) Commodity Exchange Act Amendment.--Section 4s(e) of the 
     Commodity Exchange Act (7 U.S.C. 6s(e)), as added by section 
     731 of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act, is amended by adding at the end the following 
     new paragraph:
       ``(4) Applicability with respect to counterparties.--The 
     requirements of paragraphs (2)(A)(ii) and (2)(B)(ii), 
     including the initial and variation margin requirements 
     imposed by rules adopted pursuant to paragraphs (2)(A)(ii) 
     and (2)(B)(ii), shall not apply to a swap in which a 
     counterparty qualifies for an exception under section 
     2(h)(7)(A), or an exemption issued under section 4(c)(1) from 
     the requirements of section 2(h)(1)(A) for cooperative 
     entities as defined in such exemption, or satisfies the 
     criteria in section 2(h)(7)(D).''.
       (b) Securities Exchange Act Amendment.--Section 15F(e) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78o-10(e)), as 
     added by section 764(a) of the Dodd-Frank Wall Street Reform 
     and Consumer Protection Act, is amended by adding at the end 
     the following new paragraph:
       ``(4) Applicability with respect to counterparties.--The 
     requirements of paragraphs (2)(A)(ii) and (2)(B)(ii) shall 
     not apply to a security-based swap in which a counterparty 
     qualifies for an exception under section 3C(g)(1) or 
     satisfies the criteria in section 3C(g)(4).''.

     SEC. 3. IMPLEMENTATION.

       The amendments made by this Act to the Commodity Exchange 
     Act shall be implemented--
       (1) without regard to--
       (A) chapter 35 of title 44, United States Code; and
       (B) the notice and comment provisions of section 553 of 
     title 5, United States Code;

[[Page 8738]]

       (2) through the promulgation of an interim final rule, 
     pursuant to which public comment will be sought before a 
     final rule is issued; and
       (3) such that paragraph (1) shall apply solely to changes 
     to rules and regulations, or proposed rules and regulations, 
     that are limited to and directly a consequence of such 
     amendments.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Hensarling) and the gentleman from Michigan (Mr. Peters) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. HENSARLING. Madam Speaker, I ask unanimous consent that all 
Members have 5 legislative days within which to revise and extend their 
remarks and submit extraneous materials for the Record on H.R. 634, as 
amended, currently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. HENSARLING. Madam Speaker, I yield myself as much time as I may 
consume.
  Madam Speaker, H.R. 634, the Business Risk Mitigation and Price 
Stabilization Act of 2013, is bipartisan legislation. It will help 
provide America's job creators with greater certainty so that they can 
invest more in our still-struggling economy and help create desperately 
needed jobs for the millions who remain either unemployed or 
underemployed.
  Again, when our so-called recovery has produced 4 million fewer jobs 
than the average recovery of the last 70 years, clearly nothing is more 
important than finding solutions that will help grow our economy and 
create more and better jobs for those who need them.
  Americans want and deserve a healthier economy and a more secure 
future. But, regrettably, all too often Washington, either 
inadvertently or on purpose, creates piles and piles, mountains upon 
mountains of unnecessary red tape for our entrepreneurs or small 
business people and our job creators.
  Quite often, Madam Speaker, this institution makes the goal of 
economic growth and job creation more difficult. But the bipartisan 
bill before us today is helpful. It is needed to help protect 
manufacturers, ranchers, thousands of Main Street businesses across the 
Nation from unnecessary red tape that would divert their resources and 
time away from the activities to make their businesses successful and 
thus create more jobs.
  One manufacturer told the Financial Services Committee earlier this 
year, a Mr. Thomas Deas, who works for a chemical manufacturing company 
in Pennsylvania, he testified before our committee that without H.R. 
634, manufacturers and other end-users of derivatives, which this 
legislation deals with, would be forced to comply with unnecessary 
regulation that he said ``means less funding is available to grow their 
businesses and expand employment.''
  Now, improving the Dodd-Frank Act, regardless of its relative merit, 
it did at least make clear that Congress intended that manufacturers, 
ranchers, and, again, Main Street businesses that this bill is intended 
to address, that they would not be subject to certain regulations 
regarding margin requirements for end-users of derivatives.
  Still, despite Congress' clear intent on the subject, such 
requirements have been proposed by Washington regulators. And so this 
resulting legislation would contain provisions that would modify and 
provide greater clarity to the Dodd-Frank Act regarding the intentions 
of Congress in dealing with the end-user exemption.
  We have heard from Federal Reserve Chairman Bernanke, who stated 
before the Senate Banking Committee earlier this year that because the 
Dodd-Frank Act is ``a very big, complicated piece of legislation'' that 
regulators like the Federal Reserve needed ``clarity'' from Congress on 
what ``to do about end-users.''
  So H.R. 634 provides that clarity by stating clearly that end-users 
of derivatives shall be exempt from the onerous margin requirements 
imposed by Title VII of the Dodd-Frank Act.
  As I said earlier, Madam Speaker, this is a bill with very strong 
bipartisan support. The Financial Services Committee reported this bill 
out of committee on a recorded vote of 59-0. Let me repeat that, Madam 
Speaker: the Financial Services Committee reported this bill out of 
committee on a recorded vote of 59-0.
  Likewise, the Agriculture Committee approved this bill on a voice 
vote, meaning it has received no opposition in either committee.
  And, Madam Speaker, I should note that this substantially similar 
legislation was overwhelmingly passed by the House last year with 370 
bipartisan votes.
  In closing, I want to thank our colleague, Agriculture Committee 
Chairman Frank Lucas, for advancing this bipartisan bill on which our 
committees share jurisdiction. And I also want to thank the bipartisan 
supporters of this bill, particularly the gentleman from New York (Mr. 
Grimm) and the gentleman from Michigan (Mr. Peters), who are 
outstanding leaders in our committee, as well as the gentleman from 
Georgia (Mr. Austin Scott), the gentleman from North Carolina (Mr. 
McIntyre), leaders on the Agriculture Committee.
  H.R. 634 is sound policy, and it is necessary to ensure that 
regulators do not further hurt our economy by forcing manufacturers, 
ranchers, and Main Street businesses to needlessly divert resources 
away from creating more and better jobs for an American public that is 
more than ready for them.
  Madam Speaker, I urge the House to approve this needed bipartisan 
legislation today.
  I reserve the balance of my time.

                              {time}  1250

  Mr. PETERS of Michigan. Madam Speaker, I ask unanimous consent to 
yield 10 minutes of my time to the gentleman from North Carolina and a 
member of the Agriculture Committee, Mr. McIntyre, and that he be 
allowed to control that time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Michigan?
  There was no objection.
  Mr. PETERS of Michigan. Madam Speaker, I now yield myself as much 
time as I may consume.
  I rise today in support of H.R. 634, the Business Risk Mitigation and 
Price Stabilization Act of 2013. I'm proud to have coauthored this 
bipartisan legislation with my colleague, Michael Grimm. I appreciate 
his hard work on this important legislation and his willingness to work 
across the aisle. I would also like the thank our partners on the 
Agriculture Committee, Representatives Austin Scott and Mike McIntyre. 
We all worked together on this bill to keep costs down for families and 
small businesses for a wide range of goods and services like groceries, 
air travel, and autos. I would like to thank Chairman Hensarling and 
Ranking Member Waters for their support on this crucial legislation.
  While this bill improves financial regulation, this is truly a Main 
Street bill. Derivatives end users represent a broad cross section of 
businesses across our Nation, from farmers worried about the price of 
fertilizer to manufacturers concerned about fluctuating interest rates. 
Businesses in all of our districts use derivatives to ensure that they 
pay a reasonable price for the products they need and keep consumer 
prices stable no matter what happens in the financial markets. This 
bill is about protecting businesses across Michigan and the United 
States that rely on derivatives to responsibly manage risk.
  During consideration of the Wall Street Reform, there was bipartisan 
recognition that regulations to curb excessive risk taking in the 
financial sector should not stifle job creation in the agriculture or 
manufacturing industries. Michigan is a State that builds and grows 
things, and I will continue to fight to make sure that we always will 
be.
  Let me be clear: as a member of the conference committee that 
approved the final version of the Dodd-Frank Act, I can say with 
certainty that Wall

[[Page 8739]]

Street Reform was not written or signed into law to hinder the 
hardworking folks building autos or growing apples.
  End users, companies that use derivative contracts to offset 
legitimate business risks, were specifically exempted from the clearing 
requirements, and Congress did not specifically direct regulators to 
require end users to post margin. Our bipartisan bill simply clarifies 
congressional intent that nonfinancial end users are exempt from the 
Dodd-Frank margin requirements.
  Forcing nonfinancial end users to post margin could have several 
negative consequences: unnecessarily increasing prices for consumers 
across a range of goods, slowing job growth here in the United States, 
and driving businesses to foreign, less transparent derivatives 
markets.
  Our bill passed the House last year with overwhelming bipartisan 
support because it is about protecting jobs and clarifying 
congressional intent, and it passed the House Financial Services 
Committee earlier this year, as we heard, with unanimous, bipartisan 
support by a vote of 59-0.
  This bill will ensure congressional intent to protect our 
manufacturing and agricultural industries is carried out. I look 
forward to this crucial legislation passing the House later today, and 
I urge my colleagues to support it. I will continue to work to get the 
Business Risk Mitigation and Price Stabilization Act signed into law.
  I reserve the balance of my time.
  Mr. HENSARLING. Madam Speaker, I now yield 4 minutes to the gentleman 
from New York (Mr. Grimm), an outstanding member of the Financial 
Services Committee and the coauthor and lead Republican on this 
legislation.
  Mr. GRIMM. Madam Speaker, I proudly rise in support of this 
legislation, H.R. 634, the Business Risk Mitigation and Price 
Stabilization Act of 2013. H.R. 634, as has already been noted by the 
chairman and my colleague, is truly a bipartisan piece of legislation 
that has passed this House previously in the 112th Congress with 
overwhelming support.
  I would like to thank my colleague, Mr. Peters, for working on this 
with me--this is an extremely important issue, and it is a pleasure to 
work across the aisle--as well as my colleagues on the Agriculture 
Committee, Mr. Austin Scott and Mr. McIntyre. Of course, I want to 
thank Chairman Hensarling for his leadership on this issue, as well as 
for his leadership as chairman of the full committee, and also thank 
Ranking Member Waters.
  H.R. 634, as has been noted, will clarify the intent of Congress 
under the Dodd-Frank Act by providing an explicit exemption for the 
true commercial, nonfinancial end users of over-the-counter derivatives 
from having to post margin on uncleared derivatives transactions. This 
exemption is extremely important for job creation and economic growth, 
as well as price stabilization for average consumers.
  Despite clear legislative history to the contrary, regulators 
continue to misinterpret the Dodd-Frank Act as giving them authority to 
impose margin requirements on true end users. H.R. 634 will ensure that 
nonfinancial end users remain exempt from margin requirements and that 
the regulators do not--I emphasize, they do not--exercise authorities 
that were not specifically given to them by the Congress.
  If margin requirements were imposed on these nonfinancial end users, 
it would harm our economy by very simply diverting working capital from 
productive uses such as reinvestment into the business or job creation. 
And this legislation prevents this, and that's also extremely important 
to protecting American jobs and our economy.
  True end users are firms and companies that use derivatives to manage 
their various financial risks. For example, firms use these products to 
protect against changes in interest rates if they've sold floating rate 
debt as well as to protect their profits earned in other currencies 
from variations in foreign exchange markets.
  The benefits of this legislation are not limited to American 
businesses but extend into the heart of our communities. This bill will 
help keep consumption prices stable for hardworking families and for 
individuals. If true nonfinancial end users were required to post 
margin, their hedging costs could become so high that they could 
abandon the practice. This would lead to larger variations in consumer 
prices for a whole host of products, which has been said, things like 
groceries and airline tickets, and would create economic instability.
  There's a study that has shown that imposing a 3 percent margin 
requirement on over-the-counter derivatives held by the S&P 500 
companies could cut capital spending by $5.1 billion to $6.7 billion 
and cost 100,000 to 130,000 U.S. jobs. With the unemployment rate at 
7.6 percent, this is a consequence that simply cannot be overlooked.
  So, in closing, I ask that my colleagues once again support this 
commonsense, bipartisan pro-jobs legislation.
  Mr. PETERS of Michigan. I yield 2 minutes to the gentlewoman from New 
York (Mrs. Maloney).
  Mrs. CAROLYN B. MALONEY of New York. I thank the gentleman for 
yielding and for his leadership on this important issue along with 
Congressmen McIntyre, Grimm, Hensarling, and many, many others.
  Madam Speaker, I rise today in support of H.R. 634, the Business Risk 
Mitigation and Price Stabilization Act. This bill will make it easier 
for companies to manage their risks and plan for their future by 
clarifying that Dodd-Frank does not require end users of derivatives to 
post collateral on these trades. Congress never intended for these 
companies to be required to post collateral on their derivatives, 
because that would needlessly raise their costs and could even 
discourage companies from prudently managing their risks.
  But because of a drafting error in Dodd-Frank, end users of 
derivatives currently face uncertainty about whether the regulators 
will require them to post collateral. Both Federal Reserve Chairman Ben 
Bernanke and CFTC Chairman Gary Gensler have stated that they support 
this bill because it would provide them with much-needed clarity on 
whether their rules on posting collateral should apply to end users.
  This bipartisan effort to correct a problem with Dodd-Frank is not an 
attempt by opponents to weaken the safeguards of the bill but, rather, 
an attempt to make good legislation even better. Congress needs to step 
in and ensure that companies that use derivatives to manage their day-
to-day commercial risk are not subject to unnecessary collateral 
requirements.
  It was reported out in a very strong bipartisan vote from Financial 
Services Committee, and for these reasons, I urge my colleagues on both 
sides of the aisle to support H.R. 634.
  Mr. HENSARLING. Madam Speaker, at this time, I'm pleased to yield 1 
minute to the gentleman from Illinois (Mr. Hultgren), another leader on 
H.R. 634.
  Mr. HULTGREN. Thank you, Chairman Hensarling.
  Like many of my colleagues here, I am confident the House will pass 
H.R. 634 today and present this deserving bill to the Senate--again. 
After years of inaction bordering on dereliction, it's time for the 
Senate Banking Committee to act on Title VII before potentially 
irreparable and self-inflicting harm is done to our economy.

                              {time}  1300

  Unaddressed, end user margin requirements could lock up billions of 
dollars that would otherwise be put to productive use, dollars that 
could go to hiring new employees.
  This bill, the Business Risk Mitigation and Price Stabilization Act 
of 2013, is a jobs bill. Without this bill, company treasurers 
complying with new margin requirements will have to pull money from 
somewhere, choking off funding for other business operations.
  And these businesses, by definition, are those that only use these 
tools to avoid risk, not for speculation. These businesses do not pose 
systemic risk; they didn't contribute to the crisis of 2008. Yet going 
against what Congress intended, regulators are roping them in.

[[Page 8740]]

  I hope this bill passes with a large majority so it cannot be ignored 
by the Senate and President.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. I yield the gentleman an additional 30 seconds.
  Mr. HULTGREN. I thank the chairman.
  My constituents in Illinois need this legislation. Our farmers and 
manufacturers, big and small, have voiced their clear support. Thank 
you to the sponsors of this legislation, Mr. Grimm and Mr. Peters.
  Mr. PETERS of Michigan. Madam Speaker, I have no further requests for 
time from the Financial Services Committee.
  I ask unanimous consent to allow the gentleman from North Carolina 
(Mr. McIntyre) from the Agriculture Committee to control the rest of 
the time.
  The SPEAKER pro tempore. Without objection, the gentleman from North 
Carolina will control the time.
  There was no objection.
  Mr. McINTYRE. Madam Speaker, I rise today in support of this bill of 
which I'm a strong supporter and lead cosponsor, H.R. 634, and would 
like to thank my colleagues--Representatives Hensarling, Grimm, Peters, 
and Scott--for their commitment to working together on this, as you've 
heard, in the discussion that has occurred thus far.
  This bipartisan bill is a prime example--something our Nation is 
yearning for to see here in Congress--that Members can and will work 
together when we need to to find solutions that we can come across the 
aisle and reach, and reach them quickly.
  The Business Risk Mitigation and Price Stabilization Act will clarify 
that true derivatives end users are exempt from the margin requirement 
supplied by the Dodd-Frank Wall Street Reform and the Consumer 
Protection Act to many derivatives contracts.
  These true end users use derivatives to manage actual business risk 
and protect against fluctuating prices, currency rates, or interest 
rates--not to speculate. Margin requirements would place undue burden 
on responsible end users not only back home in eastern North Carolina 
where I'm from, but also, indeed, across the country.
  Our farmers, agriculture co-ops, and community banks all use 
financial products to mitigate risk, provide security for their 
businesses, and maintain prices for consumers. By removing margin 
requirements, this bill will free up capital--something we all hear 
about that our small businesses are screaming for--free up capital and 
allow businesses to plan for the future, shield these plans from risk, 
and provide certainty needed to create American jobs. And those battle 
cries of freeing up capital and providing certainty is something I know 
all of our colleagues on both sides of the aisle can agree on. We do 
want to help with jobs and small business.
  In the previous Congress, the House overwhelmingly passed an 
identical bill, as has been mentioned earlier. It is my hope that this 
House will again pass this important bipartisan legislation today and 
send a strong message that Congress can and will work together to pass 
commonsense solutions that protect our businesses, our farmers, our 
cooperatives and others from burdensome and misguided regulations.
  With that, I reserve the balance of my time.
  Mr. HENSARLING. Madam Speaker, I now yield 3 minutes to the gentleman 
from Georgia (Mr. Scott), who is the lead cosponsor of this bill from 
the Agriculture Committee.
  Mr. AUSTIN SCOTT of Georgia. I thank the chairman.
  Madam Speaker, I rise today in support of H.R. 634, the Business Risk 
Mitigation and Price Stabilization Act of 2013. And I, too, would like 
to thank many of the Members on the other side of the aisle, as well as 
mine, specifically, Mr. McIntyre from North Carolina for his work on 
the Ag Committee on this piece of legislation.
  This bill clarifies congressional intent by providing a clear 
exemption for non-financial end users that qualify for the clearing 
exception under Title VII of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act.
  Across the country, consumers and businesses alike are confronted 
with risks that are associated with their day-to-day operations. To 
manage these risks, businesses use over-the-counter derivatives to 
provide price certainty. Consumers, in turn, benefit from these risk-
management practices through lower volatility in the day-to-day prices 
of the goods and services that they purchase.
  By passing this legislation, Congress is providing a specific 
exemption from clearing and margin requirements for businesses and 
individuals who are not financial institutions. This accounts for less 
than 10 percent of the capital of the derivatives markets. It relieves 
the burdensome regulations and keeps the U.S. economy moving. This 
balance protects the consumer while providing a pro-growth environment 
for business.
  To further the initial goal, H.R. 634 clarifies Congress' intent of 
keeping much-needed capital in the U.S. markets, which plays an 
important role in our country's continued economic growth.
  I would also like to reiterate the fact that last year Congress 
passed this same piece of legislation 370-24. For this reason, I ask my 
colleagues to support H.R. 634, so that businesses and individuals may 
benefit from the day-to-day risk-management prices that this will 
provide.
  Mr. McINTYRE. I reserve the balance of my time.
  Mr. HENSARLING. Madam Speaker, I now yield 2 minutes to the 
gentlelady from Missouri (Mrs. Hartzler), also a member of the 
Agriculture Committee.
  Mrs. HARTZLER. I rise today in strong support of H.R. 634, the 
Business Risk Mitigation and Price Stabilization Act of 2013.
  This bipartisan, commonsense piece of legislation is critical for 
commercial end users like farm credit companies and rural electric 
cooperatives to be able to use swaps to manage their long-term risks.
  Earlier this year, I introduced H.R. 2136, the School Business Credit 
Availability Act, to address this very issue. I'm pleased that my 
colleagues have put together this important legislation which addresses 
the concerns that I have with clearing and margin requirements for 
rural electric cooperatives.
  It's important to every family in my district to be able to count on 
reasonable and stable electric bills without unplanned price 
fluctuations. This bill ensures that the rural electric cooperatives in 
my district will be able to manage their long-term risk without the 
burden of costly clearing and margin requirements that would ultimately 
be passed on to my constituents.
  I want to especially thank the chairman and ranking member of both 
committees for including language ensuring that cooperatives that have 
clearing exemption are also excluded from costly margin requirements. 
Dodd-Frank never intended for end users like rural electric 
cooperatives and farm credit companies to be subject to clearing and 
margin requirements.
  Rural cooperatives in my district provide a great service at the 
lowest rates possible. Requiring these rural cooperatives to post 
margin on their swaps merely ties up working capital and will 
unnecessarily lead to higher electricity costs across the U.S.
  I was pleased to see that earlier this year the CFTC included many of 
these end users, like rural cooperatives, in their proposed rulemaking 
on the clearing exemption. I support this legislation's directive to 
close the loophole by granting margin exemptions to those same entities 
as well.
  Again, I support H.R. 634, and I urge my colleagues to vote for this 
legislation.
  Mr. McINTYRE. I reserve the balance of my time.
  Mr. HENSARLING. Madam Speaker, I'm prepared to close, and I reserve 
the balance of my time.
  Mr. McINTYRE. Madam Speaker, I do want to emphasize the fact that we 
have great bipartisan support and would like to see this bill passed 
right away.
  I yield back the balance of my time.
  Mr. HENSARLING. Madam Speaker, I just want to urge all my colleagues 
to

[[Page 8741]]

support this bipartisan legislation to bring some relief to end users, 
promote economic growth and jobs, and make congressional intent clear.
  Again, I urge all of my colleagues to adopt it, and I yield back the 
balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Texas (Mr. Hensarling) that the House suspend the rules 
and pass the bill, H.R. 634, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. McINTYRE. Madam Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this motion will be postponed.

                          ____________________