[Congressional Record (Bound Edition), Volume 160 (2014), Part 8]
[House]
[Pages 10657-10686]
[From the U.S. Government Publishing Office, www.gpo.gov]




              CUSTOMER PROTECTION AND END USER RELIEF ACT

  The SPEAKER pro tempore. Pursuant to House Resolution 629 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the state of the Union for the consideration of the bill, H.R. 4413.
  The Chair appoints the gentleman from Utah (Mr. Bishop) to preside 
over the Committee of the Whole.

                              {time}  1911


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 4413) to reauthorize the Commodity Futures Trading Commission, to 
better protect futures customers, to provide end users with market 
certainty, to make basic reforms to ensure transparency and 
accountability at the Commission, to help farmers, ranchers, and end 
users manage risks to help keep consumer costs low, and for other 
purposes, with Mr. Bishop of Utah in the chair.
  The Clerk read the title of the bill.
  The CHAIR. Pursuant to the rule, the bill is considered read the 
first time.
  The gentleman from Oklahoma (Mr. Lucas) and the gentleman from 
Minnesota (Mr. Peterson) each will control 30 minutes.
  The Chair recognizes the gentleman from Oklahoma.
  Mr. LUCAS. Mr. Chairman, I yield myself as much time as I might 
consume.
  Mr. Chairman, I rise today in strong support of H.R. 4413, the 
Customer Protection and End User Relief Act.
  This is a bipartisan bill to reauthorize the Commodity Futures 
Trading Commission that I introduced along with my colleagues, Ranking 
Member Collin Peterson and chairman and ranking member of the 
Subcommittee on General Farm Commodities and Risk Management, Mike 
Conaway and David Scott.
  This bill is years in the making, and I want to thank my colleagues 
on both sides of the aisle for all of the hard work that they have put 
in to get us to this point.
  Throughout this process, the committee, as well as the Subcommittee 
on General Farm Commodities and Risk Management, held numerous 
hearings, heard from a variety of stakeholders with a wide variety of 
perspectives.
  We heard from end users representing farmers, ranchers, 
manufacturers, energy firms, and utilities. We heard testimony from 
every CFTC Commissioner and even foreign regulators. We also heard from 
exchanges, futures customers, and numerous other market participants.
  Ultimately, we developed legislation to reauthorize and reform the 
CFTC in a way that would not only improve operations at the agency, but 
also protect customers from another market failure, as we saw with MF 
Global or PFGBEST.
  Our efforts will also increase certainty in the marketplace and 
provide a more balanced approach to regulations impacting job creators.
  I am proud to say this overwhelmingly bipartisan bill passed 
unanimously out of the Agriculture Committee by a voice vote.
  First of all, H.R. 4413 will better protect farmers and ranchers who 
use the futures markets to manage their risk by cementing several new 
and existing protections into law.
  These protections are designed to restore confidence in the 
marketplace following the failure of MF Global and PFGBEST, where 
customers, who thought their money was safely segregated, suffered 
severe financial loss due to the illegal use of their funds.
  Such protections include requiring firms to calculate and report 
customer account balances electronically to regulators, requiring firms 
who become undercapitalized to immediately notify regulators, and 
imposing strict reporting and permission requirements before the 
movement of a customer's funds from one account to another.
  Now, as for the reforms of the Commission, H.R. 4413 reauthorizes the 
appropriations to the agency through 2018. Furthermore, the bill 
strives to enhance the efficiency of the Commission operations and 
ensure all Commissioners' voices are heard in the regular order of a 
well-reasoned rulemaking process.
  For example, H.R. 4413 closely follows an executive order issued by 
President Obama to improve the quality of cost-benefit analysis 
performed by the Commission prior to promulgating rules; requires 
division directors to serve at the pleasure of the entire Commission, 
rather than solely at the whim of the chairman; and clarifies the 
judicial review process of agency rules.

                              {time}  1915

  The Commission reform title also calls for the development of a much-
needed strategic technology plan to enhance market surveillance and the 
interpretation of collected data.
  Importantly, H.R. 4413 also provides much-needed relief to end users. 
Those are the market participants who account for only 10 percent of 
the swaps market and had nothing to do with the 2008 financial crisis, 
yet represent 94 percent of U.S. job creators, including farmers, 
ranchers, manufacturers, energy firms, and utilities.
  Due to the consideration of the Dodd-Frank Act, Congress clearly 
intended to exempt end users from some of the most costly new 
regulations. However, the CFTC has narrowly interpreted the law, 
resulting in burdensome and often arbitrary compliance requirements 
which have negatively impacted end users by making it more difficult 
and costly to manage the risks associated with their businesses.
  To address these concerns, H.R. 4413 includes provisions which 
relieve business owners from arbitrary and costly record-keeping 
requirements, allow businesses to continue successful fuel-hedging 
strategies, and prevent the physical delivery of commodities from being 
unnecessarily regulated as swaps.
  H.R. 4413 provides help to America's job creators by including five 
carefully crafted measures designed to enhance market certainty, which 
have previously passed the House of Representatives Agriculture 
Committee and the United States House of Representatives, with 
overwhelming bipartisan support, three of which received over 400 votes 
in favor.
  In closing, the Customer Protection and End User Relief Act is a 
wide-ranging, bipartisan CFTC reauthorization

[[Page 10658]]

bill that provides a blueprint for the newly elected Chairman and 
Commissioners to use in making numerous improvements at the Commission, 
better protects futures customers, and reduces burdens on America's job 
creators. I urge each of my colleagues to join me in supporting this 
bipartisan legislation.
  I reserve the balance of my time.

                                         House of Representatives,


                                     Committee on Agriculture,

                                     Washington, DC, May 21, 2014.
     Hon. Bob Goodlatte,
     Chairman, Committee on the Judiciary, House of 
         Representatives, Rayburn House Office Building, 
         Washington, DC.
       Dear Mr. Chairman: Thank you for your letter regarding H.R. 
     4413, the Customer Protection and End User Relief Act. As you 
     noted, there are provisions of the bill that fall within the 
     Rule X jurisdiction of the Committee on the Judiciary.
       I appreciate your willingness to forgo action on H.R. 4413, 
     and I agree that your decision should not prejudice the 
     Committee on the Judiciary with respect to the appointment of 
     conferees or its jurisdictional prerogatives on this or 
     similar legislation.
       I will also include a copy of our exchange of letters in 
     the Congressional Record during floor debate.
       Thank you for your courtesy in this matter and I look 
     forward to continued cooperation between our respective 
     committees.
           Sincerely,
                                                   Frank D. Lucas,
     Chairman.
                                  ____

                                         House of Representatives,


                                   Committee on the Judiciary,

                                     Washington, DC, May 22, 2014.
     Hon. Frank D. Lucas,
     Chairman, Committee on Agriculture, Longworth House Office 
         Building, Washington, DC.
       Dear Chairman Lucas, I am writing with respect to H.R. 
     4413, the ``Customer Protection and End User Relief Act,'' 
     which the Committee on Agriculture ordered reported favorably 
     on April 9, 2014. As a result of your having consulted with 
     us on provisions in H.R. 4413 that fall within the Rule X 
     jurisdiction of the Committee on the Judiciary, I agree to 
     forego consideration of this bill so that it may proceed 
     expeditiously to the House floor for consideration.
       The Judiciary Committee takes this action with our mutual 
     understanding that by foregoing consideration of H.R. 4413 at 
     this time, we do not waive any jurisdiction over subject 
     matter contained in this or similar legislation, and that our 
     Committee will be appropriately consulted and involved as 
     this bill or similar legislation moves forward so that we may 
     address any remaining issues in our jurisdiction. Our 
     Committee also reserves the right to seek appointment of an 
     appropriate number of conferees to any House-Senate 
     conference involving this or similar legislation, and asks 
     that you support any such request.
       I would appreciate a response to this letter confirming 
     this understanding with respect to H.R. 4413, and would ask 
     that a copy of our exchange of letters on this matter be 
     included in the Congressional Record during Floor 
     consideration of H.R. 4413.
           Sincerely,
                                                    Bob Goodlatte,
                                                         Chairman.

  Mr. PETERSON. Mr. Chairman, I yield myself such time as I might 
consume.
  The bill before us today is bipartisan, reasonable legislation to 
reauthorize the CFTC. I believe this bill strikes the necessary balance 
to actually become law.
  The Dodd-Frank Act tasked the CFTC with implementing a variety of new 
regulations to better protect the derivative market participants, and 
while the Commission has made great progress, recent cases have 
demonstrated there is more work that needs to be done.
  H.R. 4413 better protects farmers and ranchers who use the futures 
markets by cementing into law several new regulatory provisions that 
arose out of the MF Global bankruptcy and the fraud that occurred at 
Peregrine Financial. The bill requires electronic confirmation of 
customer fund account balances held at depository institutions and 
prohibits firms from moving customer funds from one account to another 
without regulators' knowledge. The bill also examines two issues that 
have recently gained notoriety: high-frequency trading and funding for 
the CFTC.
  Michael Lewis' book ``Flash Boys'' has made high-frequency trading a 
hot topic. But what many people don't realize is that high-frequency 
trading in securities markets is very different from high-frequency 
trading in futures and other derivatives markets. This is why the bill 
directs the CFTC to thoroughly examine this practice and report back to 
Congress their findings. And once we have a better understanding of 
high-frequency trading in the markets regulated by the CFTC, we can 
then determine if further legislative action is necessary.
  The bill also directs GAO to examine CFTC's funding needs. There has 
been a lot of debate in the House about the agency's funding level and 
how the fund should be used. And I am not sure anybody really knows. So 
having an independent third party, like the GAO, look at this question 
will better inform the debate going forward.
  As the chairman said, H.R. 4413 also provides some much-needed 
clarity to end users, agriculture and energy producers, and others who 
actually use the derivatives market to hedge against risk and did not 
cause the financial collapse. Congress never intended for these end 
users to be regulated in the same manner as financial entities, and 
H.R. 4413 makes that clear. The bill also incorporates legislation 
already passed by the House, with strong bipartisan support, including 
end user margin exemptions, indemnification requirements, and relief 
for municipal utilities.
  I know Members have raised concerns about two particular provisions 
in this bill, the cost-benefit section and the cross-border section. 
The cost-benefit language mirrors President Obama's Executive Order 
13563, which imposed cost-benefit assessment standards on all 
government departments. I didn't hear any complaints about increased 
workload when the executive order was issued. But there are some 
complaints about what is in this bill.
  I guess because the executive order exempted cost-benefit standards 
from legal challenges, some have suggested that the financial industry 
will use this bill's new standards to challenge CFTC rulemaking. But, 
frankly, I think the financial industry will continue to sue the CFTC 
regardless of whether we change the cost-benefit standards or not. It 
is the industry's nature to fight regulation. We will also be 
considering some amendments to address these concerns, and I look 
forward to this debate tonight.
  Finally, I have heard some fears that this bill gives some foreign 
interests an automatic exemption from U.S. swap rules. So let's be 
clear. The CFTC has adopted these cross-border provisions. The SEC has 
not. And what it says in this bill is, if they don't agree, then the 
current regulations stay in place. So the CFTC's cross-border guidance 
is going to continue to be effective and remain in place, and whatever 
cross-border rule the SEC finalizes next week will also be effective. 
And what it says in this bill is that if they can ever reconcile those 
two things, then there could be some changes in how the cross-border 
rule is administered.
  But given the history of these two agencies, the chances of them 
actually coming together on this are probably slim to none. We have 
been waiting 14 years for joint rules regarding portfolio margining for 
products under their respective jurisdictions. So their record of 
cooperation is not good. And as I said, right now, the CFTC has rules. 
They say that if somebody is doing business in the U.S., they are going 
to have to come under U.S. law, and that is the way it is going to 
stay.
  So, Mr. Chairman, this bill is not perfect. But if we waited for 
perfection, we would be waiting forever, and we wouldn't be able to 
vote for anything. This bill deserves our support so we can move the 
process along to the Senate and hopefully see a bill signed into law 
before the CFTC reauthorization expires in September.
  I urge my colleagues to support H.R. 4413, and I reserve the balance 
of my time.
  Mr. LUCAS. Mr. Chairman, I yield 4 minutes to the gentleman from the 
great State of Texas (Mr. Hensarling), the chairman of the Financial 
Services Committee.
  Mr. HENSARLING. I thank the gentleman for yielding and for his 
leadership on this bill.
  Mr. Chairman, regrettably, our Nation is still faced with the 
weakest, slowest, nonrecovery recovery since the Great Depression. Tens 
of millions of our fellow countrymen remain unemployed and 
underemployed. And if

[[Page 10659]]

you speak to practically any business--large, small, medium--they will 
tell you that the sheer weight in volume and complexity of regulation--
especially Federal regulation--is perhaps the primary reason that they 
can't expand their business and that they can't create more jobs for 
those who need them.
  As one small businessman in my district put it: ``The complexity of 
all the different rules and regulations that the government imposes is 
just incomprehensible confusion.''
  Mr. Chairman, that is not the way we create jobs in America. Yet 
Washington continues to drown our small businesses and our job creators 
in so many regulations and red tape. We have got to change that.
  The legislation before us, H.R. 4413, contains a number of measures 
that originated in the Financial Services Committee and have already 
passed the House with bipartisan support. For example, section 395 of 
the bill was originally introduced as H.R. 1256, bipartisan legislation 
sponsored by Mr. Garrett of New Jersey and Mr. Carney of Delaware. It 
will simplify and rationalize the regulation of derivatives activity 
that occurs across U.S. and foreign markets today.
  American companies obviously use derivatives to manage risk and to 
provide products and services to consumers at competitive prices, yet 
today they face the troubling prospect of having to comply with 
conflicting cross-border requirements from two Washington regulators, 
the CFTC and the SEC.
  On the one hand, the Securities and Exchange Commission has issued a 
proposed rule that recognizes equivalent derivatives requirements in 
foreign countries as valid substitutes for U.S. regulation. On the 
other hand, the CFTC staff outside the formal rulemaking process has 
issued guidance that treats countries with well-established regulatory 
systems, including Canada, the U.K., Germany, and Japan, as rogue 
nations. The CFTC decided all on its own to inappropriately extend U.S. 
derivatives rules into foreign markets. It is no wonder that the CFTC's 
irresponsible guidance has been challenged in Federal court and 
routinely criticized by a number of our U.S. and European regulators.
  This unapproved guidance will harm U.S. markets. It will harm 
consumers. It will harm job-seekers. It will harm our economy. It will 
result in higher costs on everything, from a John Deere tractor for a 
farmer in east Texas who wants to buy one to a cold six-pack for a 
worker in a mesquite factory who wants to finally rest after the day's 
end. It will even impact the price of an airline ticket for a 
grandmother in Garland as she tries to afford a trip to go visit the 
grandkids.
  Mr. Chairman, farmers, workers, grandmothers, and, indeed, all 
Americans are already paying more for food, for gas, and for 
everything. Let's not let the CFTC add to their burden. The bill before 
us today, H.R. 4413, would help solve this case of government overreach 
by requiring U.S. regulators to issue one--one--clear rule to govern 
cross-border derivatives activities.
  Let's bring some common sense back. Let's protect our consumers. 
Let's get America back to work. I urge my colleagues to support H.R. 
4413.
  Mr. PETERSON. Mr. Chairman, I am now pleased to yield 5 minutes to 
the gentlewoman from California (Ms. Waters), the ranking member of the 
Financial Services Committee.
  Ms. WATERS. I thank the gentleman from Minnesota for yielding.
  Mr. Chairman, I rise in opposition to our H.R. 4413 legislation that 
would reauthorize the Commodity Futures Trading Commission. This 
measure addresses an important goal for this Congress: reauthorization 
of the CFTC, our regulator whose mission it is to ensure fair rules of 
the road for the majority of derivatives traded by U.S. firms.
  I know that Representative Peterson and Representative Scott, the 
ranking members of the committee and subcommittee respectively, have 
worked in good faith to improve this legislation and that they care 
deeply about making the CFTC work for farmers, manufacturers, and other 
businesses that use futures and derivatives. I thank them for their 
efforts.
  However, I am concerned about provisions in the bill unrelated to the 
reauthorization of the Commission that I believe would undermine the 
CFTC's authority and hamstring its ability to regulate a complex and 
important marketplace. Mr. Chairman, this legislation imposes heavy 
administrative burdens that will prevent, delay, or weaken CFTC's 
efforts to implement important reforms called for by the Dodd-Frank 
Wall Street Reform and Consumer Protection Act.
  H.R. 4413 would also make it much more difficult for the CFTC and the 
SEC to regulate derivatives transactions involving foreign operations 
of U.S. banks. It does so by establishing hard-to-overturn exemptions 
that allow their operations to substitute Dodd-Frank rules in favor of 
more lenient foreign rules in foreign markets, despite the fact that 
the risks may come back to the United States.

                              {time}  1930

  These types of derivatives transactions contributed to the massive 
taxpayer bailout of AIG in 2008, created enormous losses to JPMorgan in 
the London Whale episode in 2012, and brought down the hedge fund Long-
Term Capital Management in the 1990s. This bill makes the job of the 
CFTC and the SEC to police derivatives operations of large U.S. banks 
and their foreign affiliates much more difficult.
  In addition, under the guise of cost-benefit analysis, the bill 
imposes heavy administrative hurdles and new litigation risk on the 
CFTC, significantly impairing the Commission's ability to do its job of 
regulating our derivatives markets.
  Like other agencies, the CFTC already considers the costs and 
benefits pursuant to numerous existing laws, and unlike any other 
regulator, the CFTC goes even further, considering the protection of 
market participants and the public, the effect on futures markets, 
price discovery, sound risk management practices, and other public 
interest matters.
  Even the courts have weighed in, finding that the CFTC has fulfilled 
its duty to consider the cost and benefits.
  H.R. 4413 not only burdens an agency already facing limited funding 
with additional administrative burdens, but it also opens up new 
avenues for special interests to endlessly challenge the CFTC in court.
  Former CFTC Chairman Gensler noted that, if this provision in H.R. 
4413 is enacted, ``It may well be hard to get any rule out of the 
building.''
  Together, these changes undermine the CFTC's ability to guard against 
some of the most complex and risky activities in our financial system, 
and it is all just part of a multifaceted Republican effort to undercut 
laws and regulations that protect consumers, investors, and the 
economy.
  It also comes just a week after House Republicans proposed an 
appropriations measure that dangerously underfunds the CFTC at 22 
percent below the President's request, a level which will lead to 
either agencywide closures or employee layoffs.
  Mr. Chairman, we cannot continue to undercut and underfund Wall 
Street's top derivatives cop with the authority to ensure compliance 
with the law. This bill is widely opposed by the Obama administration, 
the AFL/CIO, broad coalition groups like Americans for Financial Reform 
and the Consumer Federation of America, as well as derivatives end 
users like the Petroleum Marketers Association of America.
  So I would urge my colleagues to oppose this legislation. I insert in 
the Record the opposition, including the White House opposition to this 
legislation.

                                               Public Citizen,

                                                    June 16, 2014.
       Dear Representative: Public Citizen opposes H.R. 4413, 
     ``The Customer Protection and End User Relief Act.'' Several 
     provisions will severely undermine financial reform. These 
     include:
       Adding unworkable cost-benefit analysis requirements that 
     will only empower industry interests to bring litigation that 
     will delay or negate important rules and do nothing to 
     improve Commodity Futures Trading Commission (CFTC) 
     regulations.
       Prohibiting the CFTC from supervising US swap operations 
     overseas, which will invite

[[Page 10660]]

     riskier activity and raise the potential for more bailouts;
       Eliminating the ability of the CFTC to require certain 
     safety rules for swaps.


     New Cost-Benefit Requirements Don't Pass The Cost-Benefit Test

       Wall Street has exploited the courts to delay, dilute and 
     even overturn needed reform laws intended to return the 
     financial industry to safer practices. Instead of making the 
     CFTC more effective and efficient by bolstering their 
     authority and improving their standing vis a vis the courts, 
     H.R. 4413 actually makes the CFTC even more vulnerable to 
     Wall Street lawsuits. The net effect will be weaker rules 
     that will take the CFTC longer to finalize and will be more 
     prone to reversal in court. In sum, this legislation will 
     significantly damage, not improve, the CFTC's ability to 
     adopt strong financial reforms that protect consumers and the 
     public.
       H.R. 4413 patently ignores the fact that the CFTC takes 
     their cost-benefit requirements very seriously. In September 
     2010, the CFTC's General Counsel and Acting Chief Economist 
     directed staff to produce cost-benefit analyses in proposed 
     rulemakings and conceptual cost-benefit analyses in adopting 
     releases. This is above and beyond existing CFTC 
     requirements. In a follow-up memo, rule-making teams were 
     directed to ``incorporate the principles of Executive Order 
     13563'' when writing rules. This order applied cost-benefit 
     analysis requirements for departments overseen by the 
     President. In May 2012, the CFTC, in an unprecedented move, 
     entered into a memorandum of understanding with the Office of 
     Information and Regulatory Affairs (OIRA) where OIRA provides 
     ``technical assistance'' to CFTC staff during implementation 
     of the Dodd-Frank Act, ``particularly with respect'' to cost-
     benefit analysis.
       Thus, the litany of additional cost-benefit analyses 
     imposed by H.R. 4413 in no way improves the existing and 
     extensive cost-benefit analysis practices at the CFTC. Rather 
     the direct effect will be to convert the cost-benefit 
     analyses the CFTC already conducts as a matter of best 
     practice into numerous new legal grounds for Wall Street to 
     challenge CFTC rules in court. Thus, the beneficiaries of 
     these changes will be big Wall Street banks and their high-
     priced lawyers while the public pays the price of a far 
     slower CFTC that must jump through even more hoops before 
     putting common-sense Wall Street reforms in place.


                         Evading US Supervision

       Some of the most dangerous financial practices by US firms 
     leading to the financial crisis of 2008 were conducted 
     overseas. AIG sold a form of bond insurance called credit 
     default swaps from its London office, out of view of American 
     supervisors. When AIG could not pay massive claims from bond 
     defaults, taxpayers bailed out AIG's clients with $160 
     billion. More recently, JP Morgan's ``Whale'' transactions 
     used US deposits for speculative derivatives trading in 
     London, leading to a loss of more than $6 billion.
       Section 359 nullifies the CFTC's rubric for overseeing 
     American firms with foreign-based swaps business. Instead, it 
     permits US firms to establish foreign-incorporated affiliates 
     that would escape US supervision altogether. Already, certain 
     US firms have begun to exploit a loophole in the CFTC's 
     current rules to escape US supervision. This involves 
     removing the guarantee of the US parent for the foreign-
     originated swap.
       Permitting foreign supervision is misguided because foreign 
     supervisors won't have the same motivation as US supervisors 
     to enforce prudential rules since a failure would fall on US 
     taxpayers. In fact, foreign governments would be incentivized 
     to relax oversight so as to attract more traders and the 
     associated income tax revenue they would generate. The 
     financial sector provides more than 11 percent of total tax 
     revenue for the United Kingdom. Not only does this 
     legislation increase the chance for another US taxpayer 
     bailout, it would sacrifice US tax revenue by incentivizing 
     American firms to relocate their derivatives business abroad.


                       Safety margins prohibited

       Unregulated swaps were at the heart of the financial crash, 
     as derivatives dealers who failed to back up their swaps with 
     adequate collateral spread financial contagion. This 
     legislation removes some of the tools that the CFTC could use 
     to promote safety. For example, H.R. 4413 prohibits the CFTC 
     from requiring that end-users post margin collateral. The 
     CFTC has declared that it would not require such margin, but 
     it is important for the agency to retain this power if the 
     market becomes unsafe in the future.
       This is just one example of the flaws of this bill. There 
     are many other sections that limit the ability of the CFTC to 
     accomplish its mission of protecting investors and the public 
     from misconduct in the $700 trillion swaps market. We believe 
     Congress should be exploring ways to strengthen the agency, 
     such as with self-funding and a larger budget, rather than 
     working to undermine it.
       We urge the House to reject H.R. 4413.
       For more information, please contact Public Citizen's 
     Congress Watch Advocates: Amit Narang, Regulatory Policy 
     Advocate at [email protected];, or Bartlett Naylor, 
     Financial Policy Advocate, at [email protected].
           Sincerely,
     Amit Narang.
     Bartlett Naylor.
                                  ____



                               Consumer Federation of America,

                                                    June 17, 2014.
     Re Oppose H.R. 4413.

       Dear Representative: We are writing on behalf of the 
     Consumer Federation of America (CFA) to ask you to oppose 
     ``The Customer Protection and End User Relief Act'' (H.R. 
     4413), which the House is expected to vote on this month. 
     This legislation would hamstring the Commodity Futures 
     Trading Commission (CFTC) from effectively overseeing and 
     regulating commodities and derivatives markets, leaving 
     consumers exposed to fraud, manipulation, abusive practices 
     and putting the safety and stability of the U.S. financial 
     system at risk. This bill includes harmful provisions that 
     are strikingly similar to other bills that have been brought 
     to the House floor, which were clearly aimed at undermining 
     the Dodd-Frank Act, and which the Obama Administration 
     opposed. Please stand firm against these continuing attacks 
     on financial reform by voting no on H.R. 4413.
       First, this bill would impose an assortment of new, onerous 
     cost-benefit analysis requirements on the CFTC which are 
     likely to delay and obstruct agency action. Under the 
     Commodity Exchange Act, the CFTC already has a statutory 
     mandate to evaluate the costs and benefits of its actions in 
     light of numerous considerations, including the protection of 
     market participants and the public, efficiency, 
     competitiveness, financial integrity, price discovery, and 
     sound risk management practices. This bill would add six new 
     considerations that the CFTC would have to evaluate, and 
     require that a new Office of the Chief Economist provide 
     qualitative and quantitative analysis to justify the agency's 
     actions. Included in the new economic analysis regime is a 
     requirement to evaluate the costs of complying with the 
     proposed regulation, provide a methodology for quantifying 
     the costs, assess available alternatives to direct 
     regulation, and, determine whether, in choosing among 
     alternative regulatory approaches, those alternatives 
     maximize the net benefits, which likely will mean adopting an 
     approach that best benefits industry. Essentially, the CFTC 
     will be required to undertake an in-depth, burdensome 
     economic analysis for each regulation it proposes and compare 
     its proposal to every conceivable alternative. Such a 
     framework likely will create insurmountable barriers that 
     cripple the agency from putting forth rule proposals and 
     finalizing them in a timely manner so as to effectively 
     protect market participants and the overall economy.
       The new cost-benefit analysis requirements also are likely 
     to result in increasing opportunities to thwart CFTC 
     regulations through legal challenges. The practical effect of 
     the new heightened requirements will be that any time an 
     industry participant objects to new rules, it will have 
     several new bases for a lawsuit, and it will seek to defeat 
     those rules by claiming that the agency did not undertake a 
     proper economic analysis by considering, and then disposing 
     of, all the possible theoretical alternatives. It is 
     reasonable to believe that armed with such strong ammunition, 
     industry-supported lawsuits seeking to dismantle any new 
     regulations will be successful, a problem made worse by the 
     agency's lack of funding to effectively defend against such 
     suits.
       The provisions in this bill that would apply to the CFTC 
     reflect the same approach that the House took last year 
     against the Securities and Exchange Commission (SEC) in H.R. 
     1062, the ``SEC Regulatory Accountability Act,'' for which 
     the White House issued a Statement of Administration Policy 
     (SAP). That bill also imposed numerous unnecessary cost-
     benefit analysis requirements to rulemakings by the SEC, in 
     addition to the cost-benefit requirements that the SEC 
     already has to undertake. Similar to H.R. 4413, H.R. 1062 
     required the SEC to separately analyze the costs and benefits 
     of the entire set of ``available regulatory alternatives'' 
     and make a determination whether a regulation imposed the 
     ``least burden possible'' among all possible regulatory 
     options. We urge you to oppose this renewed attempt to impose 
     onerous, unnecessary cost-benefit analysis bills aimed at 
     undermining financial regulators' ability to implement the 
     Dodd-Frank Act.
       This legislation also subverts the CFTC's authority to 
     regulate foreign derivatives activities that have a direct 
     and significant effect on U.S. commerce. As our nation has 
     learned painfully and repeatedly from the collapses of Long 
     Term Capital Management, AIG, and Lehman Bros., and from the 
     recent JPMorgan London Whale trading debacle, even when 
     derivatives contracts are booked through a foreign subsidiary 
     of a U.S. financial institution, the risks of those 
     derivatives often flow back to the U.S., threatening the U.S. 
     economy and potentially putting U.S. taxpayers on the hook 
     for any resulting losses. That is why Dodd-Frank gave the 
     CFTC broad authority to regulate overseas derivatives when 
     they put our national economic interests in peril. Pursuant 
     to that cross-border framework, the CFTC allows a foreign 
     host country's regulations to substitute for U.S. regulations 
     only after the

[[Page 10661]]

     CFTC has made a finding that the foreign host country's 
     regulations are comparable to U.S. rules. However, this bill 
     would create a presumption that a foreign host country's 
     regulations should apply unless the CFTC determines that 
     those regulations are not ``broadly equivalent'' to U.S. 
     regulations, and in each instance, requires the CFTC to 
     submit a written report to Congress articulating the basis 
     for the agency's determination. Switching the presumption 
     will subjugate the CFTC's authority, with the default 
     position allowing a foreign country's rules to apply, and 
     then requiring the CFTC to prove why they should not apply. 
     Combining the reversed presumption, required Congressional 
     report, and overwhelming cost-benefit analysis requirements, 
     the CFTC will be forced to overcome daunting and possibly 
     insurmountable hurdles if this legislation is adopted. As a 
     result of this legislation, the agency's ability to protect 
     the U.S. economy from the dangers resulting from foreign 
     derivatives transactions will be impaired.
       The cross-border provisions in this bill are almost 
     identical to the provisions of a bill that the House voted on 
     last year, H.R. 1256, ``Swap Jurisdiction Certainty Act,'' 
     for which the White House issued another SAP. We urge you to 
     oppose this renewed attempt on the CFTC's ability to regulate 
     cross-border derivatives.
       Derivatives markets affect the U.S. economy in profound 
     ways, and the risks that derivatives pose to the U.S. economy 
     are well-known. The Dodd-Frank Act brought meaningful reforms 
     to increase transparency and accountability in the 
     derivatives markets and provided the CFTC the necessary 
     authority to properly oversee and regulate the market. 
     However, this legislation would put those reforms at risk and 
     hamper the CFTC's ability to adequately protect consumers, 
     market participants, and the U.S. economy. We cannot afford 
     to suffer the grave consequences of another derivatives-laced 
     financial crisis, but this legislation makes it more likely 
     that we will. Accordingly, we urge you to oppose H.R. 4413.
           Sincerely,
                                                   Micah Hauptman,
                                       Financial Services Counsel.
                                                    Barbara Roper,
     Director of Investor Protection.
                                  ____



                                               Better Markets,

                                    Washington, DC, June 19, 2014.

     House CFTC Reauthorization Bill Protects Wall Street Banks by 
   Handcuffing the CFTC Derivatives Cops on the Wall Street Beat and 
                      Dismantling Financial Reform


  Measure Defies Public Opinion and Fails to Learn a Lesson from Eric 
                             Cantor's Loss

       Dennis Kelleher, President and CEO of Better Markets, an 
     independent nonprofit organization that promotes the public 
     interest in the financial markets, made the following 
     statement about the upcoming vote on H.R. 4413, the CFTC 
     Reauthorization bill in the House of Representatives:
       ``Wall Street's political allies in the House of 
     Representatives have filled the CFTC Reauthorization bill 
     with Wall Street's wish list of deregulation provisions that 
     put Americans at risk of another devastating financial crash. 
     Reckless, high risk derivatives gambling by Wall Street's 
     biggest banks was at the core of causing the 2008 financial 
     crash, which is going to cost the U.S. more than $13 
     trillion. The CFTC are the derivatives cops on the Wall 
     Street beat trying to prevent Wall Street from doing that 
     again. This bill will handcuff those cops, kill essential 
     derivatives reforms, roll back protections vital to every 
     American, and make future financial crises and bailouts more 
     likely.''
       ``For example, the bill will prohibit the CFTC from 
     stopping Wall Street firms shifting their U.S. derivatives 
     business overseas to avoid essential financial reform rules. 
     As a result, when Wall Street's future overseas derivatives 
     deals blow up, like AIG did in 2008, it will send the bill 
     back to the American taxpayer. The Reauthorization bill will 
     also impose numerous crippling burdens on the CFTC. While 
     innocently named `cost-benefit analysis,' these onerous, 
     time-consuming provisions are really `industry cost-only 
     analysis,' which will require the CFTC to overweight 
     industry's inflated cost claims and to discount the costs to 
     the public of another derivatives-fueled financial crash and 
     economic catastrophe. This legislation also has numerous 
     other indefensible provisions that will prevent CFTC staff 
     from doing their job to protect the American people from Wall 
     Street's excesses.''
       ``Elected officials who support these provisions are 
     ignoring the American people who do not want their 
     representatives protecting Wall Street at their expense. 
     Recently defeated Majority Leader Eric Cantor just learned 
     that lesson the hard way. This was confirmed by a new 
     national poll showing voters' disgust with Wall Street and 
     its Washington enablers. Indeed, 89% of voters view 
     government efforts to reign in Wall Street as `poor' or `only 
     fair' and many think that's because Wall Street and 
     Washington are in cahoots. The pro-Wall Street, anti-Main 
     Street provisions in this Reauthorization bill are why voters 
     believe this. Elected officials must stop protecting Wall 
     Street banks and bankers' bonuses and get back to protecting 
     the voters who elected them.''
                                  ____


                   Statement of Administration Policy


         H.R. 4413--Customer Protection and End User Relief Act

                (Rep. Lucas, R-Oklahoma, June 19, 2014)

       The Administration is firmly committed to strengthening the 
     Nation's financial system through the implementation of key 
     reforms to safeguard derivatives markets and ensure a 
     stronger and fairer financial system for investors and 
     consumers. The full benefit to the Nation's citizens and the 
     economy cannot be realized unless the entities charged with 
     establishing and enforcing the rules of the road have the 
     resources to do so.
       The Administration strongly opposes the passage of H.R. 
     4413 because it undermines the efficient functioning of the 
     Commodity Futures Trading Commission (CFTC) by imposing a 
     number of organizational and procedural changes and offers no 
     solution to address the persistent inadequacy of the agency's 
     funding. The CFTC is one of only two Federal financial 
     regulators funded through annual discretionary 
     appropriations, and the funding the Congress has provided for 
     it over the past four years has failed to keep pace with the 
     increasing complexity of the Nation's financial markets. The 
     enactment of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act resulted in significant expansion of the 
     CFTC's responsibilities. The proposed changes would hinder 
     the CFTC's progress in successfully implementing these 
     critical responsibilities and would unnecessarily disrupt the 
     effective management and operation of the agency, without 
     providing the more robust and reliable funding that the 
     agency needs.
                                  ____

                                           The Petroleum Marketers


                                       Association of America,

                                                    June 19, 2014.
     Re The Customer Protection and End User Relief Act of 2014 
         (H.R. 4413).

     House of Representatives,
     The Capitol Building,
     Washington, DC.
       Dear Representative: Tomorrow, the House will consider the 
     ``Customer Protection and End User Relief Act'' (H.R. 4413), 
     also known as the Commodity Futures Trading Commission (CFTC) 
     Reauthorization Act. The bill would reauthorize the CFTC for 
     five years and modify certain reforms included in the Dodd-
     Frank Wall Street Reform and Consumer Protection Act of 2010. 
     Some of these changes would jeopardize rules designed to 
     increase market transparency and stability and to prevent 
     fraud, manipulation and excessive speculation in the 
     commodity markets. Please vote ``no'' on H.R. 4413 unless 
     amendments are passed to remove harmful provisions.
       The Petroleum Marketers Association of America (PMAA) is a 
     national federation of 48 state and regional trade 
     associations representing over 8,000 independent petroleum 
     marketers. These companies own 60,000 convenience store/
     gasoline stations and supply motor fuels such as gasoline and 
     diesel fuel to an additional 40,000 stores. The New England 
     Fuel Institute (NEFI) is the nation's largest independent 
     home heating oil trade association, representing more than 
     1,000 home heating oil, kerosene and propane dealers and 
     related services companies. Together, NEFI and PMAA members 
     provide nearly all the gasoline, diesel fuel and heating oil 
     sold in the U.S.
       For decades, PMAA and NEFI members have used derivatives 
     (i.e., futures, options and swaps) to protect their 
     businesses and consumers from risk associated with the price 
     of gasoline, diesel fuel, home heating oil and propane. They 
     rely on these markets to communicate prices for these 
     commodities that are reflective of supply and demand. For 
     this reason, we have been supportive of the vigorous 
     implementation and enforcement of derivative reforms included 
     in Title VII of the Dodd-Frank Act. This law expands the 
     authority of the CFTC to conduct oversight of previously 
     unregulated over-the-counter and off-shore markets and 
     strengthens rules designed to increase market transparency 
     and prevent fraud, manipulation and excessive speculation.
       We are pleased that H.R. 4413 includes reforms to address 
     the MF Global crisis (Sections 102-106). Several of our 
     members were affected by the collapse of the commodity 
     brokerage firm in October of 2011 and we commend the Congress 
     for acting on this issue. We also are pleased with the 
     inclusion of studies on the impact of high frequency trading 
     or HFT (Section 107) and the adequacy of CFTC resources 
     (Section 213). We support the DeFazio Amendment (#16) to 
     expand the HFT study to include the effect of such trading on 
     market volatility.
       Unfortunately, several provisions in this bill would 
     jeopardize progress on vital new commodity trading rules. 
     This includes Section 203, which would double the number of 
     hurdles the CFTC must jump when considering the costs and 
     benefits of any rule, regulation or order. This would stymie 
     the rulemaking process and make it easier for opponents of 
     reform to challenge these rules in court. We also oppose 
     Section 212, which would shift responsibility for judicial 
     review of CFTC rules and regulations from the U.S. District 
     Court of the District of Columbia to

[[Page 10662]]

     the U.S. Court of Appeals. The Court of Appeals has a history 
     of ruling in favor of large banks and other financial 
     institutions. Therefore, we support respective amendments to 
     remove these provisions from the bill and preserve existing 
     law, Moore (#2) and Jackson Lee (#13).
       Again, while we support consumer and end-user protections 
     included in H.R. 4413, we cannot support this legislation 
     unless Congress strikes provisions that would compromise 
     progress on key reforms designed to protect market 
     participants and the American public from fraud, manipulation 
     and the reckless financial speculation that has straddled 
     businesses and consumers with volatile energy prices and 
     unhinged the market from real-world market fundamentals.
       Thank you in advance for your consideration.
           Sincerely,
     Dan Gilligan,
       President, PMAA.
     Michael C. Trunzo,
       President & CEO, NEFI.

  Mr. LUCAS. Mr. Chairman, I wish to yield 2 minutes to the gentleman 
from North Carolina, Congressman Hudson, who has crafted a key 
component of this major reform bill.
  Mr. HUDSON. Mr. Chairman, I rise today to urge my colleagues to 
support H.R. 4413, which includes language from my bill, H.R. 3814, the 
Risk Management Certainty Act.
  This bill would require CFTC Commissioners to partake in a formal 
rulemaking process before placing undue burdens on job creators. 
Without this critical piece of legislation, a misguided CFTC rule will 
automatically lump costly new regulations on public utilities, energy 
companies, and other end users that played no part in the financial 
crisis.
  As the regulations currently stand, if a company does more than $8 
billion worth of swap business per year, it must register with the CFTC 
as a swap dealer. Despite rules requiring a study to determine if the 
threshold is appropriately set, the CFTC is set to arbitrarily lower 
that level to $3 billion without a vote.
  In today's world, where the cost of living continues to rise for 
millions of American families, we cannot afford for our Nation's job 
creators and energy providers to bear the brunt of yet another 
regulatory burden without a full and fair debate and a vote. This bill 
solves that problem and gives the public the ability to weigh in before 
a decision is made.
  I remain committed to protecting consumers and reducing regulatory 
burdens on our job creators, and I urge my colleagues to join me in 
support of this legislation.
  Mr. PETERSON. Mr. Chairman, I am now pleased to yield 6 minutes to 
the gentleman from Georgia (Mr. David Scott), the ranking member of the 
relevant subcommittee.
  Mr. DAVID SCOTT of Georgia. Mr. Chairman, we have before us perhaps 
the most important piece of legislation to add fluidity to a very 
complex, complicated financial arena in which we are in; and that is in 
the area of derivatives, swaps dealing, and dealing on the 
international stage as the world's number one economy--very complex, 
very complicated.
  History has shown that the United States is a leader in the world, 
particularly in economic affairs. We are here today to deal with 
reauthorization of the CFTC at a time when we have just come out of a 
very serious economic downturn.
  Now, I agree with my distinguished ranking member. We have worked 
very closely on this, and quite honestly, there is nobody in Congress 
that has the knowledge of financial services as does our ranking 
member. The ranking member and I have worked diligently to try to bring 
a serious bit of compromise to this area. She raises a good point.
  Let me take a couple of her concerns, so I can share with you how we 
have addressed those. The first one is the cross border. The claim that 
we are opening up and doing business with foreign governments and 
foreign jurisdictions that have no regulations there and we acquire 
risk--here is what we are doing, and I want to make sure we are clear.
  I serve on the Agriculture Committee as the ranking member on the 
Derivatives Subcommittee, and I serve on the Financial Services 
Committee. The very cross border that we are talking about has been 
debated, has been argued, and has been passed by this House in the form 
of H.R. 1256.
  Now, here is what needs to be understood: we have minimized totally 
any risk of importation of damage to our economy with the exemption of 
the top nine--not all the foreign governments and not the foreign 
jurisdictions--we are exempting the top nine largest swap dealers who 
deal in derivatives of foreign jurisdictions, and it will be the CFTC, 
in conjunction and jointly through joint rulemaking with the SEC.
  As Chairman Peterson pointed out, they are at loggerheads now. The 
first order of business is to get them to agree on a rule, and 270 days 
after that, that rule would go into effect, and immediately, the top 
five of those foreign jurisdictions that have rules and regulations 
that are equitable to ours--which, again, will be determined jointly by 
the SEC and the CFTC--will go into effect.
  One year after that, the remaining four will go into effect, so what 
we have here is a check and balance right there. They will determine 
that criteria. We put something else in there, as well, to address Ms. 
Waters' very legitimate concern.
  We said that: look, once the CFTC has done this jointly with the SEC, 
then what we will do is any one of those foreign jurisdictions who do 
not measure up to having the equal amount of robust regime on their 
regulations, they will disavow them, and within 30 days, they must send 
to the Congress of the United States--specifically to the House 
Financial Services Committee, the Senate Banking Committee, the House 
Agriculture Committee, and the Senate Agriculture Committee--the reason 
why. Stop right there. That back door is closed tight. There will be no 
seepage.
  If these nine foreign countries that we work with--and, Mr. Chairman, 
you must realize that, historically, we are the leader, we have to show 
the way here, and we are not going to put in practice any way where 
there is any leakage that will come back to us that will be damaging to 
our system, it will be in the hands of where it needs to be, the 
regulators.
  They will determine if their rules and regulations meet ours, and if 
they don't, they will let Congress know, and then they will not be 
allowed.
  The other point, Mr. Chairman, is we have end users. This bill isn't 
just about banking. This bill is about farmers. This bill is about 
people who make things. We are the world's leading economy.
  We don't do business just in the United States; we do them all around 
the world. If we don't put this in--this cross border in--we will be 
putting our business community on the international stage in a very 
disadvantaged competitive position. So I submit to my friend, Ms. 
Waters, that we have certainly dealt with that.
  Now, the cost-benefit analysis--first of all, Ms. Waters should take 
credit for this because she really, on H.R. 1062, which was a mandate 
that we do, we changed that, thanks to you, and this is clearly an 
adjustment.
  The CHAIR. The time of the gentleman has expired.
  Mr. PETERSON. I yield the gentleman an additional 1 minute.
  Mr. DAVID SCOTT of Georgia. We had a bill, H.R. 1062. Ms. Waters was 
absolutely right because that bill mandated the benefit and the cost, 
and it was beneficial, in a way, to certain industries. I voted against 
that bill with Ms. Waters.
  I took Ms. Waters' suggestion, and we went back, and we said that we 
can't mandate this. So what did we do with this bill? We simply said: 
let's consider how we can protect the market. Let's consider, let's 
assess how we can do that and not mandate it.
  Again, as Mr. Peterson has pointed out, we modeled this directly 
after what President Obama's executive order mandated, that you take a 
risk management assessment before you make the decisions.
  Mr. LUCAS. Mr. Chairman, I wish to yield 2 minutes to the gentleman 
from Georgia (Mr. Austin Scott), an outstanding Member who also has 
worked

[[Page 10663]]

a key portion of this bill, and his legislation reflects it.
  Mr. AUSTIN SCOTT of Georgia. Mr. Chairman, I also rise today in 
support of H.R. 4413, the Customer Protection and End User Relief Act.
  This legislation clarifies congressional intent concerning end users 
under the Dodd-Frank law by providing a clear exemption for 
nonfinancial end users who qualify for the clearing exception under 
title 7 of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act.
  Across the country, consumers and businesses alike are confronted 
with financial risks associated with their day-to-day operations. To 
manage these risks, they use over-the-counter derivatives to provide 
price certainty. Consumers, in turn, benefit from these risk management 
practices through greater stability in the day-to-day prices of the 
goods that we purchase.
  By passing this legislation, Congress provides an exemption from 
clearing and margin requirements and, therefore, reduces the costs for 
businesses and individuals who are not financial institutions.
  With this exemption, less than 10 percent of the capital involved in 
the derivatives market is relieved of burdensome regulations. This 
balance protects the consumer while providing a pro-growth environment 
for businesses, and we passed very similar legislation in the 112th 
Congress 370-24.
  For this reason, I ask my colleagues to support H.R. 4413, so that we 
can provide businesses and individuals the tools necessary to manage 
day-to-day operational risk, while providing much-needed certainty to 
the American people.
  Mr. PETERSON. Mr. Chairman, I am now pleased to yield 2 minutes to 
the gentlewoman from Connecticut (Ms. DeLauro).

                              {time}  1945

  Ms. DeLAURO. Mr. Chairman, I will include for the Record a document 
from the Institute for Agriculture and Trade Policy, and I rise in 
strong opposition to this bill. To cater to special interests, it 
deliberately weakens the essential regulatory and oversight functions 
of the Commodity Futures Trading Commission, and it fails to address 
the CFTC's biggest challenge--its flawed funding mechanism.
  Simply put, this bill is a recipe for another disaster on Wall 
Street, like the one that caused the Great Recession. Americans want to 
see more accountability from big banks and oil speculators and fewer 
reckless transactions, market failures, and bailouts. That is what the 
CFTC's job is, to rein in gambling with risky derivatives on Wall 
Street and prevent undue speculation on oil.
  Unfortunately, this bill goes in the wrong direction. It includes 
provisions that will make it harder for the CFTC to regulate 
derivatives transactions between the United States and foreign banks. 
It goes out of its way to impose new hurdles and litigation risks to 
prevent the Commission from doing its job. It fails to address the 
CFTC's flawed funding mechanism, hamstringing its ability to create 
fair and transparent derivatives and futures markets.
  The CFTC is the only financial regulator that is completely dependent 
upon the general fund to provide for its operations. Every other 
financial regulator--SEC, FDIC, FHFA, the list goes on--collects user 
fees.
  Fixing this structural flaw has been proposed by every President 
since Ronald Reagan. It is all the more important since Congress 
greatly expanded the CFTC's responsibilities 4 years ago in response to 
the bad behavior that precipitated a devastating financial crisis.
  According to Acting Chairman Wetjen:

       The unfortunate reality is that, at current funding levels, 
     the Commission is unable to adequately fulfill the mission 
     given to it by Congress.

  I submitted an amendment that would have addressed this flaw, yet the 
House majority refused to allow it to be heard.
  We should not undermine the CFTC's ability to oversee risky market 
behaviors, protect consumers, and enforce the law. I urge a ``no'' 
vote.

                                         Institute for Agriculture


                                             and Trade Policy,

                                                    June 16, 2014.
     Representative,
     House of Representatives, Washington, DC.
       Dear Representative, I write on behalf of the Institute for 
     Agriculture and Trade Policy (IATP) a non-profit, non-
     governmental organization based in Minneapolis, MN to urge 
     you to vote against H.R. 4413, ``Customer Protection and End 
     User Relief Act.'' A vote for H.R. 4413 annuls or amends 
     major portions of Title VII of the Dodd Frank Act Wall Street 
     Reform and Consumer Protection Act (DFA) and per Title IV's 
     retro-active application to July 2010, makes regulations and 
     guidance issued under the DFA authorities vulnerable to legal 
     challenge by the regulated entities.
       Furthermore, if enacted, H.R. 4413 would impede DFA Title 
     VI implementation by, among other measures:
       1) preventing the cross-border application of DFA 
     authorized rules unless the Commodity Futures Trading 
     Commission and the Securities Exchange Commission jointly 
     determine that foreign jurisdiction rules are not ``broadly 
     equivalent'' to DFA rules (Section 359);
       2) micro-managing the CFTC Division Directors, Chief 
     Economist and staff (Sections 204, 205 and 206);
       3) micro-managing and possibly impeding CFTC enforcement 
     activities (Section 209);
       4) imposing cost-benefit analysis of each CFTC rule prior 
     to implementation, and as required of no other independent 
     agency, under terms that would paralyze CFTC rulemaking that 
     did not conform to industry demands (Section 203); and
       5) by requiring that CFTC voluntary guidance to industry be 
     subject to the same Administrative Procedures Act (APA) 
     requirements as for legally binding rulemakings (Section 
     212).
       IATP began to work on commodity derivatives issues in June 
     2008, when grain elevators stopped forward contracting with 
     farmers and rural banks stopped loaning to elevators, due to 
     extreme price volatility and price levels in commodity 
     derivatives markets, which resulted from excessive 
     speculation by financial institution. IATP has participated 
     in the Commodity Markets Oversight Coalition (CMOC) since 
     2009, and the Derivatives Task Force of Americans for 
     Financial Reform (AFR) since 2010. IATP has contributed to 
     and signed on to numerous CMOC and AFR letters in support of 
     Title VII of the DFA. IATP has submitted several comments on 
     CFTC rulemaking, and on consultation papers of the 
     International Organization of Securities Commissions, the 
     Financial Stability Board, the European Securities and 
     Markets Authority, and the European Commission's Directorate 
     General for Internal Markets.
       H.R. 4413 offers terrible trade-offs that no member of 
     Congress should be forced to vote for. As H.R. 4413 is 
     constructed, you can only vote for the widely agreed customer 
     protections in Title 1, if, e.g. you also vote to require the 
     CFTC Commissioners to vote on the length of a subpoena, the 
     renewal of the subpoena and whether the Division of 
     Enforcement has a ``legitimate purpose'' for each 
     investigation it undertakes (Section 209). Title 1 could and 
     should be proposed as a separate bill, for which you should 
     be able to get sponsors from Republicans, as well as 
     Democrats.
       IATP also requests that you propose and vote for deletion 
     or amendment of certain sections of the bill, because its 
     passage is very likely. It is crucial that there be recorded 
     votes on all amendments to or deletions of H.R. 4413. Here 
     are IATP's top five priorities for deletions, since 
     amendments may not be possible, given the short amount of 
     time before the amendment deadline of Tuesday at 3 p.m. ET.
       1. Section 359: This section (paragraph a) first requires 
     the CFTC to issue rules jointly with the Securities Exchange 
     Commission on the cross-border application of DFA rules. The 
     CFTC has authority over about 96.5% of the gross notional 
     value of the U.S. derivatives market, whereas the SEC has 
     authority over 3.5% of this market. The SEC has authority 
     over just one asset class of derivatives, equity-based 
     derivatives. The House would give equal rulemaking authority 
     with the CFTC to an agency that has historic competence and 
     legal authority for only a small sliver of the derivatives 
     market. This section further seeks to impede the CFTC's 
     ability to apply DFA authorized rules to foreign affiliate 
     swaps of U.S. swaps dealers that have a ``direct and 
     significant'' impact on the U.S. economy (Sect. 722, DFA). It 
     does so first by requiring that the CFTC's international 
     memoranda of understanding (MoUs) with foreign market 
     regulators comply with APA requirements for binding 
     rulemaking (paragraph c). MoUs are not binding rules, but 
     diplomatic agreements whose implementation and enforcement 
     does not depend entirely on U.S. law or regulations. Here, 
     again, H.R. 4413 seeks to micro-manage the CFTC's work, this 
     time in negotiations with foreign governments.
       Most perniciously, Section 359 grants a blanket exemption 
     from compliance with DFA authorized derivatives rules for 
     ``Countries or Administrative Regions Having Nine

[[Page 10664]]

     Largest Markets,'' [sic] unless the CFTC and SEC ``jointly 
     determine that the regulatory requirements'' of these 
     countries and regions are not ``broadly equivalent'' to U.S. 
     regulatory requirements (paragraph d). Given the 
     aforementioned huge disparity in the ``market share'' of the 
     CFTC's and SEC's authority over the swaps market, this co-
     determination requirement is grotesque. Furthermore, taking 
     into account the markets in the 28 member states of the 
     European Union, plus the next eight largest market 
     jurisdictions, Section 359 exempts more than 90 percent of 
     the foreign swaps market from compliance with the cross-
     border application of the DFA. The seven largest U.S. bank 
     holding companies have 4939 foreign subsidiaries and 
     thousands of more affiliates. Trading losses by these 
     subsidiaries and affiliates resulted in default cascades by 
     their U.S. parent companies, saved from bankruptcy only by at 
     least $19 trillion in emergency loans from the Federal 
     Reserve Bank, plus $10 trillion to foreign central banks to 
     bail out their banks with U.S. affiliates from 2007-2010. The 
     regulatory regimes of the foreign jurisdictions to which the 
     Fed loaned at ultra-low interest rates had been judged to be 
     ``broadly equivalent'' during the Bush Administration.
       2. Section 203: Cost Benefit Analysis. The CFTC, unlike 
     other independent regulatory agencies, is required to do a 
     cost-benefit analysis prior to each regulation it issues. 
     This section does not operate consistently with Executive 
     Order 13563, as House supporters claim, since 13563 applies 
     only to non-independent agencies. Paragraph H requires the 
     CFTC to tabulate the costs of compliance by ``all regulated 
     entities,'' in effect requiring the CFTC to accept as fact 
     the compliance costs claimed by the regulated entities. These 
     claimed compliance costs often have been shown to be wildly 
     overstated. Paragraph J requires that the CFTC demonstrate 
     prior to implementation that each of the agency's regulatory 
     approaches ``maximize net benefits.'' These two paragraphs 
     alone should ensure that DFA authorized rules are not 
     implemented unless they satisfy the cost-benefit demands of 
     the regulated entities. Ex-ante cost-benefit analyses 
     traditionally are done on the basis of econometric modeling, 
     and not by the peculiar dependence on regulated entity claims 
     featured in this section.
       3. Section 209: Subpoena duration and renewal. This section 
     authorizes the Commissioners to determine the length of a 
     subpoena that the Division of Enforcement shall use to compel 
     testimony and production of documents relative to an 
     investigation. It will require the Commission to vote on 
     whether the Division of Enforcement has a ``legitimate 
     purpose'' for requesting the subpoena, what the duration of 
     the subpoena will be and whether to renew the subpoena. Well-
     funded subjects of an investigation will be advised by their 
     lawyers to delay complying with any subpoena in the event 
     that a majority of Commissioners decides to override the 
     Division of Enforcement and not renew a subpoena. It is one 
     thing to disagree with an investigation. It is quite another 
     for the House to vote for a section that would impede 
     enforcement of the law.
       4. Section 204: Division Directors. This section requires 
     that each Division Director report to and be reviewed 
     (``serve at the pleasure of'') by each Commissioner. In the 
     event that the Commissioners disagree about any activity of a 
     Division, the Division Director could be taking contradictory 
     instructions from the Commissioners. Disagreements among 
     Commissioners must be resolved among the Commissioners and 
     not transmitted to Division Directors in the form of 
     contradictory orders. This section offers a high degree of 
     opportunity for one Commissioner to paralyze the work of the 
     Commission. At best, the section ensures delay of DFA 
     implementation through Commission micro-management of 
     Division Directors and the staff (see also our Comments on 
     Section 205 and 206).
       5. Section 353: While the title of this section indicates 
     that it would give ``relief'' from record-keeping to farmers 
     and grain elevator participants in the derivatives market, 
     the application in the exemption from record-keeping could 
     and almost certainly will be applied to much larger 
     participants in the derivatives markets. By requiring only a 
     written record of the final agreement of swaps for 
     participants in unregistered designated contract markets or 
     swaps execution facilities, this section precludes the CFTC 
     from seeking interim documentation of swaps transactions, 
     including cell phone records if needed. This section makes 
     constructing audit trails in investigations more difficult 
     and otherwise limits enforcement activities.
       Other sections that IATP believes you should consider for 
     deletion from HR 4413 include:
       Section 205: The Office of the Chief Economist. This 
     section requires that the Chief Economist report to and be 
     reviewed by each Commissioner. Our concerns are the same as 
     those of Section 204.
       Section 206: This proposal to require a seven day advance 
     notice to review each and every staff letter and to allow the 
     Commission to delay, review and revise staff letters, puts 
     the Commission in charge of micro-managing the staff. Many of 
     the staff no action letters that are the subject of the 
     complaint in the House agricultural committee report on HR 
     4413 are the result of the need to reply to industry 
     questions and complaints, and to postpone compliance by 
     foreign affiliates of U.S. swaps dealers, as foreign 
     jurisdiction rulemaking is delayed by industry opposition. A 
     staff whose budget, personnel and computer infrastructure has 
     been severely constrained by the House has operated as 
     efficiently and effectively as their meager resources allow. 
     This section is not an attempt to improve CFTC transparency 
     and openness but another tactic to micro-manage the staff.
       Section 211: Requires that CFTC voluntary guidance to 
     industry be subject to the same Administrative Procedures Act 
     (APA) requirements as legally binding rulemakings. This 
     section represents the plaintiff's position in a court case 
     involving the CFTC's guidance on the cross border application 
     of DFA rules and would pre-empt the result of that case. If 
     the House wishes to require that APA procedures for issuing 
     guidance are the same as for rulemaking, it should amend the 
     APA, rather than single out one agency for this peculiar pre-
     emption of a court ruling and unique application of the APA 
     to one agency.
       Section 212: This section allows plaintiffs to file a 
     lawsuit in the District of Columbia or ``in the circuit where 
     the party resides or has the principal place of business'' 
     (paragraph a). If the CFTC were a self-financed regulatory 
     agency or had a budget corresponding to its greatly expanded 
     duties under the DFA, the extra costs of litigating outside 
     the District of Columbia might not be a financial burden for 
     agency. Given the House's budgetary expression of hostility 
     to the CFTC, this section represents another tactic to 
     increase the burden on the agency to defend the DFA in court.
       Section 362: One of the advantages of trading Over the 
     Counter is the delay in reporting, relative to the near real 
     time reporting required of exchanges for futures and options 
     contracts. OTC traders take advantage of price, volatility 
     and other information provided by the public and regulated 
     markets while providing no information of their own, a huge 
     competitive advantage. This section would allow traders of 
     uncleared and ``illiquid swaps'' to delay reporting up to 30 
     days after a trade's execution, an eternity in financial 
     markets, to protect the identity of individual traders. 
     Because swaps can be structured to be illiquid, this section 
     does not consider that the exemption from reporting in near 
     real time could be part of a regulatory evasion strategy. If 
     the industry wishes to petition the CFTC for a reporting 
     exemption on illiquid swaps, let it do so. Legislators should 
     not be involved in designing reporting exemptions.
       Section 355: The asset class indiscriminate de minimis of 
     $8 billion of swaps dealing before a swaps dealer is required 
     to register with the CFTC and be subject to CFTC rules may be 
     lowered only with a vote of the Commission. It is dangerous 
     to remove the CFTC's regulatory discretion in determining the 
     justification for a de minimis. Whereas $8 billion of 
     interest swaps is a low de minimis relative to the more than 
     $150 trillion annual gross notional value of interest rate 
     swaps, an $8 billion de minimis is a very, very high de 
     minimis for commodity swaps. Again, here is another section 
     where the House is acting to micro-manage the CFTC's 
     rulemaking discretion and authority.
       In sum, notwithstanding Title I on customer protections and 
     some sections of Title II and III, HR 4413 is a bill that 
     reauthorizes the CFTC, only to impede it from carrying out 
     its statutory duties. IATP urges you to vote against this 
     bill and to vote to delete the aforementioned sections. I 
     would be pleased to work with your staff on any amendments or 
     deletions that you may wish to offer. Thank you for your 
     consideration of our views on HR 4413.
           Respectfully,
                                              Steve Suppan, Ph.D.,
                                            Senior Policy Analyst.

  Mr. LUCAS. Mr. Chairman, I yield 4 minutes to the gentleman from 
Texas (Mr. Conaway), who not only has a key component of this bill, but 
in his role as chairman of the Subcommittee on General Farm Commodities 
and Risk Management carried the lion's share of the subcommittee 
hearing work and the day-to-day efforts that came to be known as H.R. 
4413.
  Mr. CONAWAY. Mr. Chairman, I would like to start by thanking the 
chairman of the committee, Frank Lucas, and our ranking member, Collin 
Peterson, for the bipartisan tone that they have set on all of the work 
that we do in the Agriculture Committee. Under their leadership, we 
work together to examine the issues under our jurisdiction, and we work 
together to develop legislative solution to the problems we discover. 
Their leadership is reflected in the bill we have before us today.
  Over the past 2 years, the General Farm Commodities and Risk 
Management Subcommittee has heard from

[[Page 10665]]

two Commissioners, the exchanges and SROs, market participants, end 
users, and foreign regulators on a broad cross section of issues facing 
the CFTC. The testimony and questions that we heard formed the 
foundation of what has become the Customer Protection and End User 
Relief Act.
  True to its name, the Customer Protection and End User Relief Act 
makes important progress in protecting Main Street. We strengthen 
safeguards against another MF Global or PFGBest and significantly 
reduce damage a failed FCM can inflict on its customers.
  We also protect end users from being roped into registration, 
reporting, or regulatory requirements that are inappropriate for the 
level of risk they can impose on financial markets. It is clear that 
end users did not cause the financial crisis. They do not pose a 
systemic risk to the financial markets, and they should not be treated 
like financial entities.
  As we drafted this reauthorization, we also examined the internal 
organization and processes of the Commission. Over the past 5 years, it 
has become clear that Dodd-Frank has fundamentally changed the role of 
the CFTC. The law has moved the Commission from a conferring, 
principles-based regulator to a more adversarial, rules-based 
regulator. As the Commission changes, so must the rules that Congress 
sets for its operation.
  Today's legislation addresses these changes by making the CFTC more 
responsive and accountable to each Commissioner, and by ensuring that 
each Commissioner, not just the Chairman, is given a greater voice on 
Commission and staff activities. It also creates and defines the Office 
of Chief Economist to provide every Commissioner with objective 
economic data and analysis.
  Finally, one of the most important changes this bill makes is to 
require a meaningful quantification of the costs and benefits of a rule 
when it is first proposed. This analysis, done by the chief economist, 
will strengthen the rulemaking process and will result in better 
regulations and safer markets. This small mandate on the economists at 
the CFTC will ensure that regulatory burdens are justified in the real 
world, not just in the pages of the Federal Register. Rules that 
reflect the impact of a proper cost-benefit analysis will be better 
accepted by those being regulated and may result in less acrimony 
during the rules-making process.
  As I close, I would also like to thank my ranking member, David 
Scott. Over the past year and a half, we have examined these CFTC 
issues together and collaborated on legislation and hearings. I am 
pleased with the fruits of our labor, and I couldn't ask for a better 
partner on our subcommittee.
  The Customer Protection and End User Relief Act is a commonsense, 
bipartisan reform package. In it we protect customers and end users 
from overreach and make meaningful changes to the operation of the 
commission. I urge my colleagues to support passage of the bill.
  Mr. PETERSON. Mr. Chairman, I am pleased to yield 2 minutes to the 
gentlewoman from New York (Mrs. Carolyn B. Maloney).
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I thank the 
gentleman for yielding and for his leadership in so many ways in this 
body.
  I rise in opposition to H.R. 4413. This bill would impose unnecessary 
burdens on the CFTC and would restrict our financial regulators' 
ability to regulate cross-border derivatives.
  Dodd-Frank brought the previously unregulated derivatives market out 
of the shadows and created a robust regulatory regime for derivatives. 
One of the core principles of this regulatory regime was that if the 
United States is ultimately bearing the risk on a derivative, then you 
have to comply with the Dodd-Frank rules.
  One of the reasons that the U.S. markets are so strong is because 
investors have confidence in our markets and in our market 
participants. I am concerned that this bill, particularly in the cross-
border area, could undermine that confidence.
  For foreign derivatives entered into by a U.S. bank, the bank can 
only avoid complying with Dodd-Frank rules if they are already 
complying with regulations that are at least equivalent or stronger 
than Dodd-Frank rules. This bill, unfortunately, establishes a 
presumption that the derivatives rules in London and the EU are 
equivalent to Dodd-Frank, even though we know that is not true. The 
truth is London and the EU are well behind the United States on 
financial reform, and it may take many years for them to become 
equivalent to our rules. This is in my view a very real concern and 
presents an undue risk to the United States financial system and to our 
investors and to our taxpayers. This is why I cannot support this bill.
  Mr. Chairman, I include for the Record two letters, one from 
Americans for Financial Reform and one from the Center For Progressive 
Reform.

                               Americans for Financial Reform,

                                    Washington, DC, June 16, 2014.
       Dear Representative, on behalf of Americans for Financial 
     Reform, we are writing to express our opposition to HR 4413, 
     ``The Customer Protection and End User Relief Act''. This 
     legislation would have a severe negative impact on the 
     Commodity Futures Trading Commission (CFTC) and its ability 
     to police commodities and derivatives markets crucial to our 
     economy. The new restrictions it places on CFTC rulemaking 
     would require additional years of bureaucratic and legal red 
     tape prior to agency action, even in areas where Congress has 
     clearly directed the CFTC to act and where action is badly 
     needed to protect the public interest.
       This legislation also includes no provisions that address 
     the CFTC's most fundamental problem--the lack of resources to 
     accomplish its mission. Due to both the agency's new 
     responsibilities under the Dodd-Frank Act for hundreds of 
     trillions of dollars in previously unregulated derivatives 
     markets, and the growth of the commodities markets the agency 
     has traditionally regulated, the size of CFTC-regulated 
     markets has increased roughly 15-fold over the last decade. 
     But funding for the agency lags enormously behind. As CFTC 
     commissioner Mark Wetjen recently stated, ``The unfortunate 
     reality is that, at current funding levels, the agency is 
     unable to adequately fulfill the mission given to it by 
     Congress: to prevent disruptions to market integrity, to 
     protect customer assets, monitor and reduce the build-up of 
     systemic risk, and ensure to the greatest degree possible 
     that derivatives markets are free of fraud and 
     manipulation''. The agency authorization process could and 
     should be an opportunity to supplement appropriations with 
     some form of agency self-funding. Self-funding mechanisms are 
     used by all other financial regulatory agencies and have been 
     endorsed by the Obama Administration.
       Instead of addressing the pressing problem of funding, HR 
     4413 would instead load down the CFTC with additional 
     mandates that would drain resources and act as a roadblock to 
     necessary oversight and enforcement. HR 4413 would more than 
     double the number of cost benefit analyses the agency must 
     perform prior to taking any action. Since any of these 
     analyses could serve as grounds for a lawsuit, this measure 
     would greatly expand Wall Street's ability to dispute any 
     agency action in court, tilting the regulatory playing field 
     still further in their favor. The legislation would also 
     create an initial presumption that CFTC rules did not apply 
     to so-called `cross-border' transactions, which include a 
     vast number of transactions involving foreign subsidiaries of 
     U.S. banks. The agency would have to perform a 
     `determination' (jointly with the Securities and Exchange 
     Commission) each time it wanted to regulate such 
     transactions. HR 4413 also includes additional internal 
     process requirements for the CFTC that would also act as 
     barriers to action. These additional requirements would 
     affect everything from the supervision of key employees to 
     the ability to respond to public requests for information.
       In combination, these changes would greatly reduce the 
     CFTC's capacity to effectively police Wall Street. HR 4413 
     also includes many additional changes. Some of them, such as 
     amendments to indemnification requirements for swaps data 
     repositories, are reasonable. Other changes--including (but 
     not limited to) provisions that expand the definition of 
     `commercial end user' to include financial entities (Sections 
     321 and 352), exemptions for entities with billions of 
     dollars in swaps business from `swap dealer' oversight 
     (Section 355), provisions that would permit marketing of 
     complex institutional commodity pools to retail investors 
     (Section 357), and provisions that weaken limits on commodity 
     market speculation (Section 358)--raise serious questions of 
     their own.
       But even before considering these issues, the major new 
     restrictions on the agency created by the cost-benefit and 
     cross-border provisions of this bill mean that supporting 
     needed derivatives regulation requires opposing this 
     legislation.

[[Page 10666]]




    Provisions Related to Cost Benefit Analysis and Judicial Review

       The CFTC already has a statutory requirement to consider 
     the costs and benefits of its actions, and to evaluate these 
     costs and benefits as applied to a long list of 
     considerations, including market efficiency, price discovery, 
     and protection of the public. Section 203 of HR 4413 would 
     massively expand this requirement. The section would more 
     than double than number of different factors the CFTC must 
     evaluate in any rulemaking, order, or guidance, and change 
     the standard of evaluation from consideration of costs and 
     benefits to a more extensive and burdensome `reasoned 
     determination' of costs and benefits. The section also 
     includes a particularly sweeping mandate that would require 
     the agency to determine whether an action 'maximizes net 
     benefits' compared to all possible regulatory alternatives. 
     This requirement alone, which seems to require comparison of 
     any actual regulation to a potentially vast number of 
     theoretical alternatives, could be read to require dozens of 
     additional agency analyses.
       Some of this cost-benefit language does replicate cost-
     benefit instructions from the Office of Management and Budget 
     that already applies to agencies within the executive branch, 
     although not to independent financial regulatory agencies 
     like the CFTC. In addition to this extension of reach, a 
     crucial difference is that since HR 4413 would add this 
     language in statute, each and every additional instruction 
     regarding cost-benefit analysis could become grounds for a 
     Wall Street lawsuit against a CFTC rule. The extensive new 
     cost-benefit requirements in Section 203 amount to a roadmap 
     for industry interests to tie up regulations in endless 
     litigation, delays, and red tape. With critical rulemakings 
     to implement new requirements like position limits to control 
     commodity price manipulation still incomplete almost four 
     years after they became law, the addition of new barriers to 
     action would be dramatic movement in the wrong direction.
       Heightening the effect of the new cost-benefit provisions 
     are new internal process requirements in Section 204 of the 
     legislation. Section 204 would apparently change the CFTC's 
     internal structure so that the entire five-member Commission 
     directly supervised the activities of all key division 
     directors. These key employees would `serve at the pleasure' 
     of the entire Commission, `report directly' to the entire 
     Commission, and perform duties as prescribed by the entire 
     Commission. Currently, as in other Federal agencies 
     supervised by a multi-member Commission, the Chair of the 
     CFTC supervises the employees of the Commission. Giving 
     direct control of all employee activities to an entire five-
     member Commission is a recipe for endless delay and 
     bureaucratic red tape. Currently, individual Commissioners 
     are able to hire their own personal staff and express their 
     views on Commission activities through the voting process. 
     Should this legislation pass, any individual Commissioner, 
     even if their views were in the minority, could interfere 
     directly with the activities of Commission staff in 
     implementing the law.


        Provisions Relating to International Derivatives Markets

       Section 359 of the bill contains sweeping new restrictions 
     on the ability of the CFTC to properly oversee derivatives 
     transactions conducted through foreign subsidiaries of U.S. 
     banks, even when such transactions have a direct and 
     significant connection to the U.S. economy. We need only look 
     at the example of J.P. Morgan's `London Whale' transactions, 
     or the London derivatives transactions of AIG Financial 
     Products which resulted in the largest bailout in U.S. 
     history, to see that derivatives transactions conducted 
     through nominally overseas entities can have a profound 
     impact on the U.S. economy. Over half of Wall Street 
     derivatives transactions are currently booked in nominally 
     foreign subsidiaries, and it is very likely that more could 
     easily be transacted in this way if there was an incentive to 
     do so to avoid regulation.
       Section 359 of the bill, mirroring the `Swaps Jurisdiction 
     Certainty Act', controversial legislation which recently 
     passed the House on a 301 to 124 vote, would create a 
     presumption that U.S. rules would not govern transactions 
     booked in major foreign jurisdictions. The legislation would 
     force U.S. regulators to accept foreign rules for derivatives 
     transactions booked by U.S. banks in any of the nine largest 
     global financial markets. The CFTC could overturn this 
     presumption that foreign rules would apply, but only through 
     a complex procedure involving a joint determination with the 
     Securities and Exchange Commission that foreign rules were 
     not `broadly equivalent' to U.S. rules, supported by an 
     official report to Congress. Furthermore, any rules governing 
     these cross-border derivatives would have to be identical 
     between the SEC and the CFTC, despite the fact that these 
     agencies regulate very different parts of the derivatives 
     markets and have differing jurisdictional authority under the 
     Dodd-Frank Act.
       The drastic new limitations placed on CFTC jurisdiction 
     over cross-border derivatives would have a profound impact on 
     the ability of U.S. regulators to properly oversee 
     derivatives transactions. It would effectively overturn a key 
     provision in Section 722 of the Dodd Frank Act that gives the 
     CFTC jurisdiction over all swaps transactions that have a 
     `direct and significant' effect on the U.S. economy. This 
     provision of Dodd-Frank was put in place precisely to ensure 
     that the trillions of dollars in swaps booked in offshore 
     subsidiaries would be properly regulated and would not 
     endanger the U.S. economy.
       As mentioned above, this legislation also includes numerous 
     other provisions targeted at various areas of CFTC 
     regulation. Some of these provisions would take positive 
     steps, while others could roll back financial protection in 
     troubling ways. But even before considering these and other 
     provisions positive or negative, the major new burdens the 
     cost-benefit and international derivatives provisions of this 
     bill place on the basic ability of the CFTC to do its job 
     create overwhelming reasons to reject this legislation as 
     currently written.
       We urge you to vote against HR 4413 and preserve the CFTC's 
     capacity to properly regulate crucial futures and derivatives 
     markets. Thank you for your consideration. For more 
     information please contact AFR's Policy Director, Marcus 
     Stanley.
           Sincerely,
     Americans for Financial Reform.
                                  ____



                                Center for Progressive Reform,

                                    Washington, DC, June 23, 2014.
       Dear Representative, We, the undersigned, are Member 
     Scholars with the Center for Progressive Reform (CPR), a 
     research and education organization working to protect 
     health, safety, and the environment. Collectively, we have 
     several decades of experience in studying, writing about, and 
     teaching administrative law in law schools across the United 
     States. Based on this experience, we are submitting these 
     comments with regard to Amendment 17 for H.R. 4413, the 
     Consumer Protection and End-User Relief Act. This Amendment 
     would change the standard of judicial review that courts 
     would conduct for the cost-benefit analyses that the 
     Commodity Futures Trading Commission (CFTC) would have to 
     undertake for their rules under the bill from the ``arbitrary 
     and capricious'' standard to the ``abuse of discretion'' 
     standard.
       This amendment appears to be based on a misunderstanding 
     that the ``abuse of discretion'' standard is more lenient 
     than the ``arbitrary and capricious'' standard. For all 
     practical purposes, though, the two standards of review are 
     identical in how they have been applied by reviewing courts. 
     The real problem with this aspect of H.R. 4413 is that it 
     permits judicial review of the CFTC's cost-benefit analyses 
     at all. In reality, judicial review of these analyses is 
     highly unusual and would therefore invite unnecessary 
     unpredictability into the rulemaking process, which is 
     probably why the authors of the judicial review provision in 
     the Unfunded Mandates Reform Act, 2 U.S.C. 1571, chose to 
     preclude judicial review of the cost-benefit analysis itself 
     and instead required that it be made part of the entire 
     rulemaking record considered by the court in any judicial 
     review of a rule.
       We thank you for taking these views under consideration.
           Sincerely,
     William Funk,
       Robert E. Jones Professor of Advocacy and Ethics, Lewis & 
     Clark Law School.
     Richard Murphy,
       AT&T Professor of Law, Texas Tech University.
     Thomas O. McGarity,
       Joe R. and Teresa Lozano Long, Endowed Chair in 
     Administrative Law, University of Texas School of Law.


      Following are the partners of Americans for Financial Reform

       All the organizations support the overall principles of AFR 
     and are working for an accountable, fair and secure financial 
     system. Not all of these organizations work on all of the 
     issues covered by the coalition or have signed on to every 
     statement.
       AARP, A New Way Forward, AFL-CIO, AFSCME, Alliance For 
     Justice, American Income Life Insurance, American Sustainable 
     Business Council, Americans for Democratic Action, Inc., 
     Americans United for Change, Campaign for America's Future, 
     Campaign Money.
       Center for Digital Democracy, Center for Economic and 
     Policy Research, Center for Economic Progress, Center for 
     Media and Democracy, Center for Responsible Lending, Center 
     for Justice and Democracy, Center of Concern.
       Center for Effective Government, Change to Win, Clean Yield 
     Asset Management, Coastal Enterprises Inc., Color of Change, 
     Common Cause, Communications Workers of America, Community 
     Development Transportation Lending Services, Consumer Action, 
     Consumer Association Council.
       Consumers for Auto Safety and Reliability, Consumer 
     Federation of America, Consumer Watchdog, Consumers Union, 
     Corporation for Enterprise Development, CREDO Mobile, CTW 
     Investment Group, Demos, Economic

[[Page 10667]]

     Policy Institute, Essential Action, Green America.
       Greenlining Institute, Good Business International, HNMA 
     Funding Company, Home Actions, Housing Counseling Services, 
     Home Defender's League, Information Press, Institute for 
     Agriculture and Trade Policy, Institute for Global 
     Communications, Institute for Policy Studies: Global Economy 
     Project, International Brotherhood of Teamsters, Institute of 
     Women's Policy Research, Krull & Company.
       Laborers' International Union of North America, Lawyers' 
     Committee for Civil Rights Under Law, Main Street Alliance, 
     Move On, NAACP, NASCAT, National Association of Consumer 
     Advocates, National Association of Neighborhoods, National 
     Community Reinvestment Coalition, National Consumer Law 
     Center (on behalf of its low-income clients), National 
     Consumers League, National Council of La Raza.
       National Council of Women's Organizations, National Fair 
     Housing Alliance, National Federation of Community 
     Development Credit Unions, National Housing Resource Center, 
     National Housing Trust, National Housing Trust Community 
     Development Fund, National NeighborWorks Association, 
     National Nurses United, National People's Action, National 
     Urban League, Next Step, OpenTheGovernment.org.
       Opportunity Finance Network, Partners for the Common Good, 
     PICO National Network, Progress Now Action, Progressive 
     States Network, Poverty and Race Research Action Council, 
     Public Citizen, Sargent Shriver Center on Poverty Law, SEIU, 
     State Voices, Taxpayer's for Common Sense.
       The Association for Housing and Neighborhood Development, 
     The Fuel Savers Club, The Leadership Conference on Civil and 
     Human Rights, The Seminal, TICAS, U.S. Public Interest 
     Research Group, UNITE HERE, United Food and Commercial 
     Workers, United States Student Association.
       USAction, Veris Wealth Partners, Western States Center, We 
     the People Now, Woodstock Institute, World Privacy Forum, 
     UNET, Union Plus, Unitarian Universalist for a Just Economic 
     Community.


                    List of State and Local Partners

       Alaska PIRG, Arizona PIRG, Arizona Advocacy Network, 
     Arizonans For Responsible Lending, Association for 
     Neighborhood and Housing Development NY, Audubon Partnership 
     for Economic Development LDC, New York NY, BAC Funding 
     Consortium Inc., Miami FL, Beech Capital Venture Corporation, 
     Philadelphia PA, California PIRG, California Reinvestment 
     Coalition, Century Housing Corporation, Culver City CA, 
     CHANGER NY.
       Chautauqua Home Rehabilitation and Improvement Corporation 
     (NY), Chicago Community Loan Fund, Chicago IL, Chicago 
     Community Ventures, Chicago IL, Chicago Consumer Coalition, 
     Citizen Potawatomi CDC, Shawnee OK, Colorado PIRG, Coalition 
     on Homeless Housing in Ohio, Community Capital Fund, 
     Bridgeport CT, Community Capital of Maryland, Baltimore MD, 
     Community Development Financial Institution of the Tohono 
     O'odham Nation, Sells AZ, Community Redevelopment Loan and 
     Investment Fund, Atlanta GA, Community Reinvestment 
     Association of North Carolina.
       Community Resource Group, Fayetteville A, Connecticut PIRG, 
     Consumer Assistance Council, Cooper Square Committee (NYC), 
     Cooperative Fund of New England, Wilmington NC, Corporacion 
     de Desarrollo Economico de Ceiba, Ceiba PR, Delta Foundation, 
     Inc., Greenville MS, Economic Opportunity Fund (EOF), 
     Philadelphia PA, Empire Justice Center NY, Empowering and 
     Strengthening Ohio's People (ESOP), Cleveland OH, 
     Enterprises, Inc., Berea KY, Fair Housing Contact Service OH, 
     Federation of Appalachian Housing.
       Fitness and Praise Youth Development, Inc., Baton Rouge LA, 
     Florida Consumer Action Network, Florida PIRG, Funding 
     Partners for Housing Solutions, Ft. Collins CO, Georgia PIRG, 
     Grow Iowa Foundation, Greenfield IA, Homewise, Inc., Santa Fe 
     NM, Idaho Nevada CDFI, Pocatello ID, Idaho Chapter, National 
     Association of Social Workers, Illinois PIRG, Impact Capital, 
     Seattle WA, Indiana PIRG, Iowa PIRG.
       Iowa Citizens for Community Improvement, JobStart 
     Chautauqua, Inc., Mayville NY, La Casa Federal Credit Union, 
     Newark NJ, Low Income Investment Fund, San Francisco CA, Long 
     Island Housing Services NY, MaineStream Finance, Bangor ME, 
     Maryland PIRG, Massachusetts Consumers Coalition, MASSPIRG, 
     Massachusetts Fair Housing Center, Michigan PIRG, Midland 
     Community Development Corporation, Midland TX.
       Midwest Minnesota Community Development Corporation, 
     Detroit Lakes MN, Mile High Community Loan Fund, Denver CO, 
     Missouri PIRG, Mortgage Recovery Service Center of L.A., 
     Montana Community Development Corporation, Missoula MT, 
     Montana PIRG, New Economy Project, New Hampshire PIRG, New 
     Jersey Community Capital, Trenton NJ, New Jersey Citizen 
     Action, New Jersey PIRG, New Mexico PIRG, New York PIRG.
       New York City Aids Housing Network, New Yorkers for 
     Responsible Lending, NOAH Community Development Fund, Inc., 
     Boston MA, Nonprofit Finance Fund, New York NY, Nonprofits 
     Assistance Fund, Minneapolis MN, North Carolina PIRG, 
     Northside Community Development Fund, Pittsburgh PA, Ohio 
     Capital Corporation for Housing, Columbus OH, Ohio PIRG, 
     OligarchyUSA, Oregon State PIRG, Our Oregon.
       PennPIRG, Piedmont Housing Alliance, Charlottesville VA, 
     Michigan PIRG, Rocky Mountain Peace and Justice Center, CO, 
     Rhode Island PIRG, Rural Community Assistance Corporation, 
     West Sacramento CA, Rural Organizing Project OR, San 
     Francisco Municipal Transportation Authority, Seattle 
     Economic Development Fund, Community Capital Development, 
     TexPIRG, The Fair Housing Council of Central New York.
       The Loan Fund, Albuquerque NM, Third Reconstruction 
     Institute NC, Vermont PIRG, Village Capital Corporation, 
     Cleveland OH, Virginia Citizens Consumer Council, Virginia 
     Poverty Law Center, War on Poverty--Florida, WashPIRG, 
     Westchester Residential Opportunities Inc., Wigamig Owners 
     Loan Fund, Inc., Lac du Flambeau WI, WISPIRG.


                            Small Businesses

       Blu, Bowden-Gill Environmental, Community MedPAC, 
     Diversified Environmental Planning, Hayden & Craig, PLLC, Mid 
     City Animal Hospital, Phoenix AZ, UNET.

  Mr. LUCAS. Mr. Chairman, I yield 3 minutes to the gentleman from 
California (Mr. LaMalfa) whose good work as a freestanding bill passed 
unanimously in this body.
  Mr. LaMALFA. Mr. Chairman, I thank the chairman of the committee, Mr. 
Lucas, for his help and support, as well as the big picture bill, H.R. 
4413, which is a necessary and reasonable approach to the modest 
reforms that are needed to the overall legislation.
  This measure includes badly needed reforms and policy changes that 
are necessary for the CFTC to run more efficiently, stabilize the 
commodities industry, and ensure continued growth in our agricultural 
sector.
  The U.S. needs regulatory relief for end users and certainty for our 
markets. That is why I am pleased to report that my legislation, H.R. 
1038, which the chairman mentioned, which passed the House on June 12, 
2013, with unanimous support, is included in this bill.
  H.R. 1038, the Public Power Risk Management Act, is a targeted reform 
that protects over 47 million Americans from unnecessary electricity 
and natural gas rate increases. These 47 million Americans are 
ratepayers of over 2,000 publicly owned utilities who use swaps and 
energy futures to manage their risks and stabilize costs.
  Unfortunately, the Dodd-Frank Act, which was intended to make reforms 
to our Nation's financial industry, has inadvertently restricted public 
utilities' access to natural gas, electricity, and other energy 
futures.
  For example, in my own district, the city of Redding's municipal 
utility believes that limitations to hedging options in the future will 
increase the costs to their customers. This unintended consequence of 
Dodd-Frank is negatively impacting utilities in many congressional 
districts across the U.S. The impact of this limitation means fewer 
sources of energy for publicly owned utilities, which translates into 
higher costs for millions of American ratepayers.
  H.R. 4413 will bring relief to commodity end users, utility 
ratepayers, and the greater agriculture community, a vital asset to our 
Nation. Let's keep this country and our ag community growing and doing 
business by passing this commonsense piece of legislation.
  Mr. PETERSON. Mr. Chairman, I yield 30 seconds to the gentleman from 
Georgia (Mr. David Scott).
  Mr. DAVID SCOTT of Georgia. Mr. Chairman, I just wanted to clarify 
one point made by the gentlelady from New York, and I just pointed out 
to her, she was clear in her statement, and I am reading from the 
actual bill here where it says that:

       Or other foreign jurisdiction as jointly determined by the 
     Commission, shall be exempt from the United States swaps 
     requirements in accordance with the schedule unless the 
     Commission jointly determines that the regulatory 
     requirements of the country or administrative region or other 
     foreign jurisdiction are not broadly equivalent to the United 
     States.

  I just wanted to clear that up.
  Mr. LUCAS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Illinois (Mr. Rodney Davis), who has a major component in this overall 
legislation.

[[Page 10668]]


  Mr. RODNEY DAVIS of Illinois. Mr. Chairman, I rise today in support 
of H.R. 4413, and I would like to thank my colleagues, especially 
Chairman Lucas, for his leadership on this very important issue; 
Ranking Member Peterson for his leadership; and also the subcommittee 
chairman, Mr. Conaway.
  I am supportive of this bill because it provides relief to consumers, 
especially to our farmers and manufacturers. This bill also includes 
language that I developed that addresses regulations that could 
directly increase prices for consumers back home in Illinois and 
throughout this great country.
  In crafting rules to implement Dodd-Frank, the CFTC imposed a real-
time reporting requirement on all swaps markets. This has had a 
negative and unintended consequence on end users. This real-time 
reporting requirement has made it easier for market participants in 
certain sparsely traded markets to be exposed. And when these 
participants are exposed, it allows for others to take advantage of 
their positions and increase their costs of doing business for future 
trades.
  These rarely traded swaps are used by only a handful of companies 
with excellent credit ratings to provide long-term protection against 
price fluctuations for commodities such as oil and jet fuel. The CFTC 
has long recognized the danger of disclosing counterparty identities in 
thinly traded markets. This bipartisan, commonsense language is needed 
to help reinforce that long-standing policy.
  As a member of the Agriculture Committee, I am pleased that we are 
reauthorizing this bill because it will provide relief to end users 
like farmers and manufacturers, and keep costs low for anyone wanting 
to travel by air, and all consumers. I support this legislation.
  Mr. PETERSON. Mr. Chairman, I am pleased to yield 2 minutes to the 
gentleman from Maryland (Mr. Sarbanes).
  Mr. SARBANES. Mr. Chairman, I thank the ranking member for yielding.
  Mr. Chairman, I wanted to come down and rise in opposition to this 
bill, and I wanted to get on the Record because I predict that there 
will come a time when there will be another financial crisis, and 
people will look back and they will say: Where were you when the CFTC 
reauthorization came up?
  Six years ago, our economy and the lives of millions of Americans was 
thrown into a tailspin by a devastating financial crisis, spurred in 
large part by reckless behavior on Wall Street and a lack of 
transparency of and oversight over the global financial systems' 
derivatives market.
  So we acted. Congress acted. We took steps. We passed Dodd-Frank. We 
strengthen the rules of the road. We brought derivatives markets out of 
the shadows, allowing regulators to better assess and reduce systemic 
risk, all working towards the goal of decreasing the chances of another 
financial crisis.
  The problem is the opponents of reform did not give up. Over the past 
several years, the fight for meaningful financial reform has in large 
part now migrated to the regulatory agencies overseeing the 
implementation of Dodd-Frank, and now we return to the legislative 
arena with H.R. 4413, which represents in my view a dangerous attack on 
the authority and efficacy of the Commodity Futures Trading Commission.

                              {time}  2000

  It erects an assortment of redundant hoops for regulators to jump 
through, empowers courts to unilaterally undercut the CFTC oversight, 
and dramatically reduces CFTC's ability to regulate overseas 
derivatives.
  The forces opposing strong oversight of our financial markets have 
the luxury of existing in a political system that too often gives 
voices to the wealthy at the expense of the rest of America.
  The only way we would pass this legislation is if we were suffering 
from collective amnesia, if we had completely forgotten what happened 
in 2008 and 2009 and were sleepwalking through our oversight 
responsibilities. We need to wake up and protect the American people 
from another financial crisis. I urge opposition to the bill.
  I yield back the balance of my time.
  Mr. LUCAS. Mr. Chairman, might I inquire how much time remains for 
both sides?
  The CHAIR. The gentleman from Oklahoma (Mr. Lucas) has 11 minutes 
remaining. The gentleman from Minnesota (Mr. Peterson) has 5 minutes 
remaining.
  Mr. LUCAS. Mr. Chairman, I would note to my colleague, I have no 
additional speakers and would reserve the balance of my time to close.
  Mr. PETERSON. Mr. Chairman, we have no other speakers on our side 
either.
  In closing, I want to thank the chairman, Mr. Lucas, and Congressman 
Conaway and Congressman Scott for their work on this bill, along with 
Members on both sides of the aisle for their work and their support.
  I also want to thank the Agriculture Committee staff, especially 
Clark Ogilvie, who did all our work on Dodd-Frank and did the work on 
this bill. He has been working on these issues for a long time and I 
think is seen as one of the most knowledgeable--if not the most 
knowledgeable--staffers around. I want everybody to give him a round of 
applause and also announce that tomorrow he is leaving to become the 
chief of staff at the CFTC, so it is pretty good timing. We would like 
to thank Mr. Ogilvie for his work.
  With that, I urge support of H.R. 4413 and yield back the balance of 
my time.
  Mr. LUCAS. Mr. Chairman, I yield myself what time I might consume.
  Mr. Chairman, I would like to remind all of my colleagues that once 
again the House Agriculture Committee, in the tradition of the House 
Agriculture Committee, has worked very diligently to address issues 
that are of great impact on rural America and on our national economy. 
In that tradition of bipartisanship--call it nonpartisanship if you 
want--Mr. Peterson and I, Mr. Conaway, Mr. Scott have worked in full 
committee and subcommittee together to craft what is a reasonable, 
logical set of proposals to address some real issues out there.
  Any of you who have observed this process know that the committee is 
not timid in trying to do the right thing; and we have a track record 
of however long it takes, however hard it is, to do the right thing.
  Now, some will say this piece of legislation may or may not have an 
impact on the decisionmaking process in some other body. I would just 
note to you, we have identified, through all of the hearings and all 
the testimony and all the input from within government and without 
government, that there are some things that need to be done. With this 
piece of legislation, we will encourage progress on those issues.
  I urge all of my colleagues, vote for H.R. 4413. Move the process 
along; help us get ultimately to a product that will address these 
problems. This is a rather substantial impact on the national economy. 
If we don't do the things that we are proposing in the Agriculture 
Committee that we do, harm will be done, job creation will be impacted, 
every consumer and every working person will feel the effects 
negatively. So pass the bill. Pass the bill.
  With that, Mr. Chairman, I yield back the balance of my time.
  Mr. VAN HOLLEN. Mr. Chair, I support reauthorizing the Commodity 
Futures Trading Commission, CFTC, and believe a properly resourced CFTC 
has a critical role to play in promoting fair and transparent markets 
that effectively serve end users and consumers without putting 
taxpayers or our financial system at risk. Unfortunately, H.R. 4413 
departs from this vital objective in several important ways.
  First, Title II of H.R. 4413 imposes onerous new administrative 
burdens on the CFTC whose practical effect will be to delay the 
Commission's ongoing Dodd-Frank rulemaking and encourage costly 
litigation. We need more certainty--not less certainty--when it comes 
to regulating our derivatives markets, and H.R. 4413 would take us in 
precisely the opposite direction.
  Second, Title III of H.R. 4413 would make it much more difficult for 
the CFTC to regulate cross-border derivatives transactions that pose a 
risk to the U.S. economy. The legislation creates this vulnerability by 
substituting foreign derivatives rules for U.S. law unless the CFTC and 
the Securities and Exchange Commission,

[[Page 10669]]

SEC, jointly determine that a foreign country's regulatory regime is 
not broadly equivalent to our own. While I support international 
efforts to harmonize effective rules of the road for derivatives 
transactions, I do not support presuming an equivalency in this area 
that does not currently exist. Six years after unregulated derivatives 
transactions contributed to the sharpest downturn in our economy since 
the Great Depression, we simply cannot afford to outsource the 
protection of our financial system to foreign regulators.
  Third, neither this legislation--nor the FY 2015 House Agriculture-
FDA Appropriations bill, which proposes to slash the CFTC's budget by 
22 percent below the President's request--does anything to provide the 
CFTC with the resources it needs to police fraud and excessive 
speculation in our derivatives markets on behalf of end users and 
consumers.
  For these reasons, I urge a ``no'' vote on H.R. 4413.
  Mr. HUDSON. Mr. Chair, I submit the following exchange of letters:

                                         Coalition for Derivatives


                                                    End-Users,

                                                    June 17, 2014.
     Re End-User Support for Adding Derivatives End-User Bills to 
         the Commodity Futures Trading Commission Reauthorization 
         Bill.

     Hon. Frank D. Lucas,
     Chairman, House Committee on Agriculture, House of 
         Representatives, Washington, DC.
     Hon. Collin C. Peterson,
     Ranking Member, House Committee on Agriculture, House of 
         Representatives, Washington, DC.
       Dear Chairman Lucas and Ranking Member Peterson: The 
     Coalition for Derivatives End-Users is writing to thank you 
     and the other members of the Committee on Agriculture for 
     incorporating language into H.R. 4413 that would protect 
     derivatives end-users from harmful and unnecessary margin and 
     clearing requirements. H.R. 4413, the Customer Protection and 
     End-User Relief Act, reauthorizes the Commodity Futures 
     Trading Commission (``CFTC'') and was approved in your 
     Committee by voice vote on April 9, 2014. The Coalition 
     strongly supports your bill and hopes that it will pass the 
     House on a bipartisan basis.
       Your bill incorporates H.R. 634, the Business Risk 
     Mitigation and Price Stabilization Act of 2013, which would 
     ensure that non-financial derivatives end-users are not 
     subject to unnecessary margin requirements. This bill passed 
     the House of Representatives last year 411-12. Your bill also 
     incorporates key provisions of H.R. 677, the Inter-Affiliate 
     Swap Clarification Act, which was reported favorably out of 
     both the House Financial Services and House Agriculture 
     Committees last year. These provisions would exempt certain 
     swaps with centralized treasury units (``CTUs'') of non-
     financial end-users from clearing requirements.
       A recent Coalition survey of chief financial officers and 
     corporate treasurers, released on March 26, 2014, underscores 
     the urgent need for the end-user provisions contained in your 
     reauthorization bill. The survey found that 86 percent of 
     respondents indicated that fully collateralizing over-the-
     counter derivatives would adversely impact business 
     investment, acquisitions, research & development and job 
     creation.
       Nearly half of our survey respondents use CTUs to execute 
     OTC derivatives. The CFTC has issued no-action relief so that 
     some end-users that employ CTUs may avail themselves of the 
     clearing exception. However, our survey found that, of those 
     respondents that utilize a CTU structure, 69 percent do not 
     qualify for the CFTC's no-action relief or are unsure about 
     whether they could rely on the relief.
       We thank you for your efforts to address the concerns of 
     derivatives end-users. Throughout the legislative process, 
     the Coalition has supported efforts to increase transparency 
     in the derivatives markets and enhance financial stability 
     for the U.S. economy through thoughtful new regulation while 
     avoiding needless costs. Your bill would help end-users to 
     focus their efforts and capital less on needless regulation 
     and more on innovation, growth and job creation.
           Sincerely,
     Agricultural Retailers Association.
     Business Roundtable.
     Financial Executives International.
     National Association of Corporate Treasurers.
     National Association of Manufacturers.
     U.S. Chamber of Commerce.
                                  ____
                                  
                                        Chamber of Commerce of the


                                     United States of America,

                                                    June 19, 2014.
       To the Members of the U.S. House of Representatives: The 
     U.S. Chamber of Commerce, the world's largest business 
     federation representing the interests of more than three 
     million businesses of all sizes, sectors, and regions, as 
     well as state and local chambers and industry associations, 
     and dedicated to promoting, protecting, and defending 
     America's free enterprise system, strongly supports H.R. 
     4413, the ``Customer Protection and End-User Relief Act,'' a 
     bipartisan bill that would reauthorize the Commodity Futures 
     Trading Commission (CFTC), and make a number of important 
     reforms designed to promote smart regulation, enhance 
     accountability at the CFTC, and protect Main Street 
     businesses from onerous and unintended derivatives 
     regulation.
       The Chamber is particularly supportive of provisions in 
     H.R. 4413 that would help preserve the ability of commercial 
     end users to manage their financial risks by using 
     derivatives. Congress clearly intended to shield non-
     financial companies from certain regulatory requirements 
     contained in the Dodd-Frank Act--a mandate that unfortunately 
     has not been carried out fully by regulatory agencies--and 
     last year the House voted 411-12 to pass legislation to 
     exempt end users from margin requirements. H.R. 4413 includes 
     that critical exemption and a number of other fixes that 
     would ensure non-financial companies would be protected from 
     burdensome and unnecessary regulations, consistent with 
     Congress's clear intent almost four years ago.
       The Chamber also supports provisions in this bill intended 
     to promote transparency and accountability in the CFTC's 
     rulemaking process, including a requirement to conduct a 
     cost-benefit analysis for new rules, and the creation of an 
     Office of the Chief Economist to support such analysis. Cost-
     benefit analysis has been a fundamental tool of effective 
     government for more than three decades, and these 
     requirements would help protect Main Street businesses, 
     investors, and consumers from some of the unintended 
     consequences of regulation.
       Additionally, H.R. 4413 contains a number of sensible 
     provisions that would promote principles of good governance, 
     including providing market participants with more certainty 
     regarding ``no action'' letters issued by the CFTC staff, and 
     a requirement that the CFTC develop internal risk control 
     mechanisms in order to protect sensitive market data. These 
     are common sense measures that would help make the CFTC a 
     more effective and accountable regulator, and the Chamber 
     appreciates their inclusion in this bill.
       The Chamber strongly urges you to vote in favor of H.R. 
     4413 and may consider including votes on, or in relation to, 
     this bill in our annual How They Voted scorecard.
           Sincerely,
     R. Bruce Josten.
                                  ____



                                          Business Roundtable,

                                    Washington, DC, June 16, 2014.
     Hon. John Boehner,
     Speaker, House of Representatives,
     Washington, DC.
     Hon. Frank Lucas,
     Chairman, Committee on Agriculture, House of Representatives, 
         Washington, DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives, Washington, DC.
     Hon. Collin Peterson,
     Ranking Member, Committee on Agriculture, House of 
         Representatives, Washington, DC.
       Dear Speaker Boehner, Minority Leader Pelosi, Chairman 
     Lucas, and Ranking Member Peterson: On behalf of the more 
     than 200 member CEOs who lead major American companies 
     operating in every sector of the U.S. economy, I wish to 
     convey Business Roundtable's strong endorsement of H.R. 4413, 
     the Customer Protection and End-User Relief Act, as reported 
     by the House Committee on Agriculture, which would 
     reauthorize the U.S. Commodity Futures Trading Commission 
     (CFTC).
       In particular, Business Roundtable strongly supports 
     important provisions included in H.R. 4413 that will reform 
     derivatives regulation to focus more effectively on 
     addressing potential systemic economic risk.
       H.R. 4413 incorporates H.R. 634, the Business Risk 
     Mitigation and Price Stabilization Act of 2013, which would 
     ensure that non-financial derivatives end-users, who pose no 
     systemic risk to the U.S. economy, are not subject to 
     unnecessary margin requirements. This bill passed the House 
     of Representatives last year by a strong bipartisan vote of 
     411-12 and is needed more than ever due to the uncertainty 
     associated with differing margin proposals from the financial 
     regulators.
       H.R. 4413 also incorporates key provisions of H.R. 677, the 
     Inter-Affiliate Swap Clarification Act, which was reported 
     favorably out of both the House Financial Services and House 
     Agriculture Committees last year. The language in H.R. 4413 
     would ensure that end-users are not subject to clearing 
     requirements applicable to banks simply because they trade 
     through efficient, cost-effective centralized treasury units 
     (CTUs).
       A recent survey conducted by the Coalition for Derivatives 
     End-Users of chief financial officers and corporate 
     treasurers underscores the urgent need for the end-user 
     provisions in H.R. 4413. Eighty-six percent of respondents 
     indicated that fully collateralizing over-the-counter (OTC) 
     derivatives would adversely impact business investment, 
     acquisitions, research and development, and job creation, and 
     more than nine in ten end-users indicated that a margin 
     requirement would cause them to alter their hedging strategy.

[[Page 10670]]

       Nearly half of the survey respondents use CTUs to execute 
     OTC derivatives. The CFTC has issued no-action relief so that 
     some end-users that employ CTUs may avail themselves of the 
     clearing exception. However, the survey found that of those 
     respondents that utilize a CTU structure, 69 percent do not 
     qualify for the CFTC's no-action relief or are unsure about 
     whether they could rely on the relief. Thus, a legislative 
     solution is essential.
       Business Roundtable supports efforts to increase 
     transparency in the derivatives markets and enhance financial 
     stability for the U.S. economy through thoughtful new 
     regulation while avoiding needless costs. We appreciate you 
     moving this legislation forward and urge the House of 
     Representatives to pass this vital, bipartisan legislation to 
     ensure that derivatives regulation addresses real economic 
     risks without adversely affecting non-financial end-users who 
     utilize derivatives to reduce risk.
           Sincerely,
     Alexander M. Cutler,
       Chairman and Chief Executive Officer, Eaton; Chair, 
     Corporate Governance Committee, Business Roundtable.
  Mr. CONAWAY. Mr. Chair, I submit the following exchange of letters:

                            American Public Power Association,

                                    Washington, DC, June 16, 2014.
     Hon. Frank D. Lucas,
     Hon. Collin C. Peterson,
     Committee on Agriculture, House of Representatives, 
         Washington, DC.
       Dear Chairman Lucas and Ranking Member Peterson: On behalf 
     of the American Public Power Association (APPA), I am writing 
     in support of House passage of H.R. 4413, the Customer 
     Protection and End-User Relief Act. The legislation includes 
     important relief for public power utilities and other end-
     users seeking to use swaps to hedge commercial-operations 
     risks. APPA is the national service organization representing 
     the interests of more than 2,000 not-for-profit, locally-
     owned electric utilities in the United States. These public 
     power utilities are in every state in the nation (except 
     Hawaii) and provide power to more than 47 million Americans.
       In particular, the legislation incorporates the provisions 
     of H.R. 1038, the Public Power Risk Management Act (PPRMA). 
     As you know, PPRMA was approved on a 423-0 vote in the House 
     on June 12, 2013, and has since been introduced on a 
     bipartisan basis in the Senate. The legislation is needed to 
     address Commodity Futures Trading Commission rules which 
     resulted in public power utilities losing--on average--half 
     the available counterparties to swaps needed to hedge their 
     commercial operations risks. The legislation will allow 
     public power utilities to hedge commercial-operations risks 
     on an even playing field with other end users in the power 
     and natural gas utility sector. This means continued reliable 
     power at affordable--and predictable--prices to customers.
       H.R. 4413 would take other important steps to improve 
     protections for consumers and commercial end users. By 
     addressing issues related to margin requirements for non-
     financial end-users, the definition of ``bona fide hedging,'' 
     swap reporting in illiquid markets, and forward contracts 
     with volumetric optionality, the bill improves the CEA to 
     better reflect the needs of end users.
       Finally, we praise the clarity provided as to the intent of 
     the legislation in the accompanying committee report and the 
     changes made to the bill in response to legitimate concerns 
     raised by other stakeholder groups. We understand that 
     concerns remain and hope that you will continue to work 
     toward consensus. We stand ready to assist if we can.
       Thank for your continued efforts.
           Sincerely,
                                                   Susan N. Kelly,
                                                  President & CEO.
                                  ____
                                  


                                     American Gas Association,

                                   Washington, DC, March 26, 2014.
     Hon. Frank D. Lucas,
     Chairman, House Committee on Agriculture,
     Washington, DC.
     Hon. Collin C. Peterson,
     Ranking Member, House Committee on Agriculture, Washington, 
         DC.
       Dear Chairman Lucas and Ranking Member Peterson: The 
     American Gas Association appreciates the opportunity to 
     support the Committee in its efforts to review the Commodity 
     Exchange Act (CEA) and reauthorize the Commodity Futures 
     Trading Commission (CFTC). AGA supports H.R. 4267, a bill to 
     amend the CEA to provide relief for end-users that use 
     physical contracts with volumetric optionality, as providing 
     necessary regulatory clarity to energy end-users. In 
     particular, AGA believes H.R. 4267 will protect natural gas 
     utilities' ability to mitigate commercial risk and restore 
     the contractual innovation and liquidity in physical natural 
     gas markets that gas utilities rely on to deliver affordable, 
     reliable natural gas to America's energy consumers.
       The American Gas Association (AGA), founded in 1918, 
     represents more than 200 local energy companies that deliver 
     clean natural gas throughout the United States. There are 
     more than 71 million residential, commercial and industrial 
     natural gas customers in the U.S., of which 94 percent--over 
     68 million customers--receive their gas from AGA members. AGA 
     is an advocate for natural gas utility companies and their 
     customers and provides a broad range of programs and services 
     for member natural gas pipelines, marketers, gatherers, 
     international natural gas companies and industry associates. 
     Today, natural gas meets more than one-fourth of the United 
     States energy needs.
       AGA members are regulated energy utilities that have an 
     obligation to serve their customers. They must stand ready to 
     meet their customers' needs at all times, under just and 
     reasonable rates, under terms and conditions set by state 
     regulatory authorities. To meet these physical delivery 
     obligations, AGA members use non-financial, physical 
     commodity contracts with volumetric optionality to secure 
     reliable gas supplies at the lowest reasonable cost to 
     customers, while managing commercial and operational 
     conditions that may cause unexpected constraints on their 
     delivery systems. AGA members require regulatory certainty to 
     incorporate compliance into their contractual planning, 
     including certainty as to the rules implementing the Dodd-
     Frank Wall Street Reform and Consumer Protection Act (Dodd-
     Frank Act).
       In implementing the Dodd-Frank Act, the CFTC has defined 
     ``swap'' and ``commodity option'' broadly, such that 
     significant physical natural gas contracts that contain 
     flexible delivery terms or ``optionality'' are being viewed 
     as subject to CFTC regulation as ``swaps.'' AGA and other gas 
     industry participants have asked the CFTC to clarify that 
     physical natural gas contracts containing delivery 
     flexibility do not constitute ``swaps,'' however, these 
     requests remain pending.
       The resulting regulatory uncertainty is creating tremendous 
     confusion and disagreement in the natural gas industry and 
     disrupting contracting practices, reducing liquidity in the 
     physical natural gas commodity markets, and drying up the 
     innovative contracting practices which have supported 
     affordable prices for American natural gas consumers. AGA 
     members are seeing a decrease in the kinds of offerings 
     commercial counterparties are willing to make because 
     counterparties are concerned that their offerings will be 
     less competitive and desirable if they contain provisions for 
     ``optional'' delivery that might trigger compliance with CFTC 
     requirements. AGA members are also experiencing a decrease in 
     the number of commercial counterparties willing to enter into 
     flexible gas supply arrangements.
       Given these trends, AGA is very concerned that the 
     implementation of the Dodd-Frank Act is having the unintended 
     consequence of reducing physical commodity market liquidity 
     with fewer opportunities to take advantage of the flexible 
     and reliable services that are available under physical 
     contracts with volumetric optionality. In turn, these market 
     constraints can lead to increased natural gas procurement 
     costs, particularly in periods of unexpected customer demand, 
     severe weather or unexpected operational constraints. As gas 
     utilities are regulated entities that pass through commodity 
     costs in customer rates, increased gas costs borne by 
     utilities will also lead to higher natural gas prices paid by 
     American energy consumers.
       AGA therefore supports H.R. 4267, to clarify that CEA 
     Section 1(a)(47)(B)(ii) excludes from the definition of 
     ``swap'' normal commercial merchandizing transactions used to 
     buy and sell energy for ultimate delivery to end-users, 
     including transactions that contain stand-alone or embedded 
     options, so long as the transaction is intended to be 
     physically settled. By passing this legislation, Congress can 
     resolve significant natural gas market confusion and restore 
     regulatory certainty as to the treatment of ordinary physical 
     merchandizing transactions.
       AGA believes that Congress did not intend the Dodd-Frank 
     Act to constrain the physical commodity markets, create 
     business-changing impacts on regulated natural gas utilities, 
     or ultimately increase the costs of reliable service for 
     natural gas consumers. As such, AGA supports the passage of 
     H.R. 4267 to clarify Congressional intent, and to require 
     that the CFTC redirect its resources to comprehensive 
     regulation of financial entities, oversight of financial 
     commodity markets, and protection of end-users' ability to 
     hedge and mitigate commercial risk in these markets. H.R. 
     4267 provides natural gas utilities the regulatory confidence 
     they need to continue procuring natural gas supplies at 
     lowest reasonable costs for the benefit of American energy 
     consumers.
           Sincerely,
     Dave McCurdy.
                                  ____

                                                    June 18, 2014.
     House of Representatives.
       Dear Representative: The National Association of 
     Manufacturers (NAM)--the nation's largest industrial trade 
     association--supports provisions in the Customer Protection 
     and End User Relief Act (H.R. 4413), to clarify that non-
     financial companies, like manufacturers, that use derivatives 
     to manage business risk, will not be subject to onerous and 
     harmful margin and clearing requirements.

[[Page 10671]]

       Manufacturers use derivatives to manage and mitigate 
     against fluctuations in commodity prices and currency and 
     interest rates. The NAM worked to include provisions in the 
     Dodd-Frank Wall Street Reform and Consumer Protection Act 
     (P.L. 111-203) to protect manufacturers' use of over-the-
     counter derivatives. We continue to work to ensure that, as 
     Dodd-Frank is implemented, end-users do not face undue 
     burdens. Imposing unnecessary regulation on end-users would 
     limit their ability to use these important risk management 
     tools, increasing costs and negatively impacting business 
     investment, U.S. competitiveness and job growth.
       Provisions included in H.R. 4413 would ensure that 
     regulators do not impose margin requirements on non-financial 
     end-users and that end-users trading through a centralized 
     treasury unit (``CTU'') are covered by the end-user clearing 
     exemption. These two issues also are addressed in legislation 
     (H.R. 634 and H.R. 677) approved by the House Agriculture and 
     Financial Services Committees with bipartisan support. Based 
     on a survey by the Coalition for Derivatives End-Users, 
     absent clarification on margin requirements, manufacturers 
     and other end-users that use derivatives to manage risk may 
     be forced to sideline a median of $125 million away from 
     business investment, R&D and job creation. Similarly, without 
     the clarification on CTUs, non-financial end-users may be 
     swept into costly clearing requirements meant for financial 
     entities, simply because they use a CTU to manage internal 
     and external trading to mitigate risk within a corporate 
     entity--an industry ``best practice''.
       The CFTC reauthorization also includes an NAM-supported 
     provision from H.R. 3814 that requires the CFTC to take an 
     affirmative action before lowering the swap dealer de minimis 
     threshold. Without this provision, the de minimis level of 
     swap dealing automatically drops from the $8 billion to $3 
     billion in a few years.
       Almost four years after the enactment of Dodd-Frank, 
     implementation of the Act is well underway and deadlines for 
     compliance with various regulations are looming. End-users 
     remain extremely concerned about final regulations on margin, 
     the lack of clarity on the CTU issue, and the automatic drop 
     in the de minimis threshold for swap dealing. Thank you in 
     advance for supporting provisions in H.R. 4413 to ensure that 
     derivatives regulation is focused on needed areas and not on 
     imposing unnecessary regulatory burdens on manufacturers.
           Sincerely,

                                              Dorothy Coleman,

                                           Vice President--Tax and
     Domestic Economic Policy.
                                  ____

                                                    April 8, 2014.
     Hon. Frank Lucas,
     Chairman, House Committee on Agriculture, Washington, DC.
     Hon. Collin Peterson,
     Ranking Member, House Committee on Agriculture, Washington, 
         DC.
       Dear Chairman Frank Lucas and Ranking Member Collin 
     Peterson: The National Rural Electric Cooperative Association 
     (NRECA) supports H.R. 4413, the Customer Protection and End-
     User Relief Act, legislation to reauthorize the Commodity 
     Futures Trading Commission (CFTC) to be considered by the 
     House Committee on Agriculture on April 9, 2014.
       NRECA is the national service organization for more than 
     nine hundred rural electric utilities and public power 
     districts that provide electric energy to approximately 
     forty-two million consumers in forty-seven states or twelve 
     percent of the nation's population. Kilowatt-hour sales by 
     rural electric cooperatives account for approximately eleven 
     percent of all electric energy sold in the United States. 
     Cooperatives operate on a not-for-profit basis and all the 
     costs of the cooperative are directly borne by their 
     consumer-members.
       Importantly, H.R. 4413 includes language that protects the 
     National Rural Utilities Cooperative Finance Corporation 
     (CFC), a non-profit cooperative lender owned by the rural 
     electric cooperatives, from the potentially significant costs 
     of margin requirements under the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act of 2010.
       The CFTC reauthorization legislation also amends the 
     Commodity Exchange Act (CEA) in a very narrow but important 
     way: to clarify Congressional intent that CFTC shall not 
     regulate as ``swaps,'' contracts relating to nonfinancial 
     commodities, where the parties intend physical settlement of 
     their contract obligations. These nonfinancial, physical 
     commodity contracts with optionality are necessary for 
     electric cooperatives to secure adequate power supplies and 
     hedge their fuel risks.
       On behalf of rural electric cooperatives across the 
     country, NRECA would like to thank the leaders of the House 
     Agriculture Committee for seeking to clarify in statute that 
     not-for-profit cooperatives do not pose risk to our financial 
     system, and need not be regulated in the same way as a Wall 
     Street bank.
       We would like to urge all members of the House Committee on 
     Agriculture to vote in support of H.R. 4413.
           Sincerely,
                                                   Jo Ann Emerson,
                                                       CEO, NRECA.
  Mr. LUCAS. Mr. Chair, I submit the following exchange of letters:

                                                        sifma,

                                                    June 19, 2014.
     Hon. John Boehner,
     Speaker, House of Representatives,
     Washington, DC.
     Hon. Nancy Pelosi,
     Democratic Leader, House of Representatives,
     Washington, DC.
       Dear Speaker Boehner and Leader Pelosi: SIFMA and its 
     member firms strongly support H.R. 4413, the Consumer 
     Protection and End User Relief Act, bipartisan legislation 
     that seeks to reauthorize the Commodity Futures Trading 
     Commission (CFTC) to better protect futures customers, 
     provide market certainty for end-users, and make basic 
     reforms to improve the functioning of the CFTC.
       One provision in this bill seeks to create harmonization of 
     cross-border swaps regulation by requiring the CFTC and SEC 
     to jointly promulgate rules in full compliance with the 
     Administrative Procedures Act and within 270 days. This is 
     necessary as the two agencies share jurisdiction over the 
     swaps markets and currently have inconsistent approaches to 
     the extraterritorial application of rules under Title VII of 
     the Dodd-Frank Act. This provision is largely similar to H.R. 
     1256, Swap Jurisdiction Certainty Act, which passed the House 
     by vote of 301-124.
       Another provision in the bill would prevent costly margin 
     requirements from being imposed on non-financial end-users 
     for their derivatives activity used to hedge commercial 
     risks. This provision is largely similar to H.R. 634, 
     Business Risk Mitigation and Price Stabilization Act of 2013, 
     which passed the House by vote of 411-12.
       SIFMA strongly urges you to vote for H.R. 4413. Thank you 
     for your consideration of our views.
           Sincerely,
                                                     Andy Blocker,
     EVP, Public Policy and Advocacy, SIFMA.
                                  ____



                                    Edison Electric Institute,

                                    Washington, DC, June 18, 2014.
     Hon. Frank Lucas,
     Chairman, House Agriculture Committee,
     Washington, DC.
     Hon. Collin Peterson,
     Ranking Member, House Agriculture Committee, Washington, DC.
       Dear Chairman Lucas and Ranking Member Peterson: On behalf 
     of EEI's member companies, I am writing to express our strong 
     support for H.R. 4413, the Customer Protection and End-User 
     Relief Act. The legislation provides additional certainty and 
     clarifies congressional intent on a number of issues of 
     significant importance to EEI members.
       EEI is the association of all the U.S. investor-owned 
     utilities, international affiliates and industry associates 
     worldwide. Our members provide electricity for 220 million 
     Americans, directly employ more than a half-million workers, 
     and operate in all 50 states. With more than $85 billion in 
     annual capital expenditures, the electric utility industry is 
     responsible for providing reliable, affordable, and 
     sustainable electricity that powers the economy and enhances 
     the lives of all Americans.
       EEI members are non-financial entities that primarily 
     participate in the physical commodity market and rely on 
     swaps and futures contracts mainly to hedge and mitigate 
     their commercial risk. The goal of our member companies is to 
     provide their customers with reliable electric service at 
     affordable and stable rates, which has a direct and 
     significant impact on literally every area of the U.S. 
     economy. Since wholesale electricity and natural gas 
     historically have been two of the most volatile commodity 
     groups, our member companies place a strong emphasis on 
     managing the price volatility inherent in these wholesale 
     commodity markets to the benefit of their customers. The 
     derivatives market has proven to be an extremely effective 
     tool in insulating our customers from this risk and price 
     volatility. In sum, our members are the quintessential 
     commercial end-users of swaps.
       As such, regulations that make effective risk management 
     options more costly for end-users of swaps will likely result 
     in higher and more volatile energy prices for retail, 
     commercial, and industrial customers. H.R. 4413 goes a long 
     way in providing much needed regulatory relief and an even 
     greater clarity to the compliance landscape facing EEI and 
     the entire end-user community going forward.
       Thank you for your leadership on these important issues.
           Sincerely,
     Thomas R. Kuhn.
                                  ____

                                                    June 17, 2014.
       Dear Member of the House of Representatives: The 
     undersigned organizations represent a very broad cross-
     section of U.S. production agriculture and agribusiness. We 
     urge you to cast an affirmative vote on H.R. 4413, the 
     ``Customer Protection and End-User Relief Act,'' when it 
     moves to the floor for consideration.
       This legislation, unanimously approved on a bipartisan 
     basis by the Committee on Agriculture, provides important 
     protections for futures customers:

[[Page 10672]]

       Enhanced reporting, transparency and accountability in 
     futures markets. These much-needed improvements will help 
     prevent another MF Global.
       The ability for customers to ``claw back'' assets from a 
     parent firm in the event of a shortfall of customer funds in 
     FCM insolvencies--something that wasn't possible with MF 
     Global.
       A clear roadmap for meaningful cost-benefit analysis to be 
     performed by the Commodity Futures Trading Commission before 
     proposing major rules.
       A solution to the very troubling ``residual interest'' rule 
     approved last fall by CFTC that would force customers to pre-
     margin hedge accounts, thereby putting perhaps twice as much 
     customer money at risk, dramatically increasing hedging 
     costs, and likely driving farmers, ranchers and small hedgers 
     out of the futures market.
       Relief from technologically infeasible recordkeeping 
     requirements in the cash commodity markets.
       Thank you in advance for your support of this bill that is 
     so important to U.S. farmers, ranchers, hedgers and futures 
     customers.
           Sincerely,
       Agribusiness Association of Iowa, Agribusiness Council of 
     Indiana, Amcot, American Cotton Shippers Association, 
     American Feed Industry Association, American Soybean 
     Association, Commodity Markets Council, Grain and Feed 
     Association of Illinois, Indiana Grain and Feed Association, 
     Iowa Institute for Cooperatives, Kansas Cooperative Council, 
     Kansas Grain and Feed Association, Michigan Agri-Business 
     Association, Michigan Bean Shippers, Minnesota Grain and Feed 
     Association, Montana Grain Elevators Association, National 
     Association of Wheat Growers, National Cattlemen's Beef 
     Association.
       National Corn Growers Association, National Cotton Council, 
     National Council of Farmer Cooperatives, National Grain and 
     Feed Association, National Milk Producers Federation, 
     National Pork Producers Council, North American Export Grain 
     Association, North Dakota Grain Dealers Association, Ohio 
     Agribusiness Association, Oklahoma Agricultural Cooperative 
     Council, Oklahoma Grain and Feed Association, South Dakota 
     Association of Cooperatives, South Dakota Grain & Feed 
     Association, Texas Agricultural Cooperative Council, United 
     Egg Producers, USA Rice Federation.

  The CHAIR. All time for general debate has expired.
  Pursuant to the rule, the bill shall be considered for amendment 
under the 5-minute rule.
  It shall be in order to consider as an original bill for the purpose 
of amendment under the 5-minute rule an amendment in the nature of a 
substitute consisting of the text of Rules Committee Print 113-47. That 
amendment in the nature of a substitute shall be considered as read.
  The text of the amendment in the nature of a substitute is as 
follows:

                               H.R. 4413

       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 ``Customer Protection and End-
     User Relief Act''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

                     TITLE I--CUSTOMER PROTECTIONS

Sec. 101. Short title.
Sec. 102. Enhanced protections for futures customers.
Sec. 103. Electronic confirmation of customer funds.
Sec. 104. Notice and certifications providing additional customer 
              protections.
Sec. 105. Futures commission merchant compliance.
Sec. 106. Certainty for futures customers and market participants.
Sec. 107. Study on high-frequency trading.

         TITLE II--COMMODITY FUTURES TRADING COMMISSION REFORMS

Sec. 201. Short title.
Sec. 202. Extension of operations.
Sec. 203. Consideration by the Commodity Futures Trading Commission of 
              the costs and benefits of its regulations and orders.
Sec. 204. Division directors.
Sec. 205. Office of the Chief Economist.
Sec. 206. Procedures governing actions taken without a commission vote.
Sec. 207. Strategic technology plan.
Sec. 208. Internal risk controls.
Sec. 209. Subpoena duration and renewal.
Sec. 210. Implementation plan for Commission rulemakings.
Sec. 211. Applicability of notice and comment requirements of the 
              Administrative Procedure Act to guidance voted on by the 
              Commission.
Sec. 212. Judicial review of Commission rules.
Sec. 213. GAO study on adequacy of CFTC resources.
Sec. 214. Disclosure of required data of other registered entities.

                       TITLE III--END-USER RELIEF

Sec. 301. Short title.

        Subtitle A--End-User Exemption From Margin Requirements

Sec. 311. End-user margin requirements.
Sec. 312. Implementation.

                   Subtitle B--Inter-Affiliate Swaps

Sec. 321. Treatment of affiliate transactions.

     Subtitle C--Indemnification Requirements Related to Swap Data 
                              Repositories

Sec. 331. Indemnification requirements.

               Subtitle D--Relief for Municipal Utilities

Sec. 341. Transactions with utility special entities.
Sec. 342. Utility special entity defined.
Sec. 343. Utility operations-related swap.

                 Subtitle E--End-User Regulatory Relief

Sec. 351. End-users not treated as financial entities.
Sec. 352. Reporting of illiquid swaps so as to not disadvantage certain 
              non-financial end-users.
Sec. 353. Relief for grain elevator operators, farmers, agricultural 
              counterparties, and commercial market participants.
Sec. 354. Relief for end-users who use physical contracts with 
              volumetric optionality.
Sec. 355. Commission vote required before automatic change of swap 
              dealer de minimis level.
Sec. 356. Capital requirements for non-bank swap dealers.
Sec. 357. Harmonization with the Jumpstart Our Business Startups Act.
Sec. 358. Bona fide hedge defined to protect end-user risk management 
              needs.
Sec. 359. Cross-border regulation of derivatives transactions.
Sec. 360. Report on foreign boards of trade.

                       Subtitle F--Effective Date

Sec. 371. Effective date.

                     TITLE I--CUSTOMER PROTECTIONS

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``Futures Customer 
     Protection Act''.

     SEC. 102. ENHANCED PROTECTIONS FOR FUTURES CUSTOMERS.

       Section 17 of the Commodity Exchange Act (7 U.S.C. 21) is 
     amended by adding at the end the following:
       ``(s) A registered futures association shall--
       ``(1) require each member of the association that is a 
     futures commission merchant to maintain written policies and 
     procedures regarding the maintenance of--
       ``(A) the residual interest of the member, as described in 
     section 1.23 of title 17, Code of Federal Regulations, in any 
     customer segregated funds account of the member, as 
     identified in section 1.20 of such title, and in any foreign 
     futures and foreign options customer secured amount funds 
     account of the member, as identified in section 30.7 of such 
     title; and
       ``(B) the residual interest of the member, as described in 
     section 22.2(e)(4) of such title, in any cleared swaps 
     customer collateral account of the member, as identified in 
     section 22.2 of such title; and
       ``(2) establish rules to govern the withdrawal, transfer or 
     disbursement by any member of the association, that is a 
     futures commission merchant, of the member's residual 
     interest in customer segregated funds as provided in such 
     section 1.20, in foreign futures and foreign options customer 
     secured amount funds, identified as provided in such section 
     30.7, and from a cleared swaps customer collateral, 
     identified as provided in such section 22.2.''.

     SEC. 103. ELECTRONIC CONFIRMATION OF CUSTOMER FUNDS.

       Section 17 of the Commodity Exchange Act (7 U.S.C. 21), as 
     amended by section 102 of this Act, is amended by adding at 
     the end the following:
       ``(t) A registered futures association shall require any 
     member of the association that is a futures commission 
     merchant to--
       ``(1) use an electronic system or systems to report 
     financial and operational information to the association, 
     including information related to customer segregated funds, 
     foreign futures and foreign options customer secured amount 
     funds accounts, and cleared swaps customer collateral, in 
     accordance with such terms, conditions, documentation 
     standards, and regular time intervals as are established by 
     the association;
       ``(2) instruct each depository, including any bank, trust 
     company, derivatives clearing organization, or futures 
     commission merchant, holding customer segregated funds under 
     section 1.20 of title 17, Code of Federal Regulations, 
     foreign futures and foreign options customer secured amount 
     funds under section 30.7 of such title, or cleared swap 
     customer funds under section 22.2 of such title, to report 
     balances in the futures commission merchant's section 1.20 
     customer segregated funds, section 30.7 foreign futures and 
     foreign options customer secured amount funds, and section 
     22.2 cleared swap customer funds, to the registered futures 
     association or another party designated by the registered 
     futures association, in the form, manner, and interval 
     prescribed by the registered futures association; and
       ``(3) hold section 1.20 customer segregated funds, section 
     30.7 foreign futures and foreign options customer secured 
     amount funds and section 22.2 cleared swaps customer funds in 
     a depository that reports the balances in these accounts of 
     the futures commission merchant held at the depository to the 
     registered futures association or another party designated by 
     the registered futures association in the form, manner,

[[Page 10673]]

     and interval prescribed by the registered futures 
     association.''.

     SEC. 104. NOTICE AND CERTIFICATIONS PROVIDING ADDITIONAL 
                   CUSTOMER PROTECTIONS.

       Section 17 of the Commodity Exchange Act (7 U.S.C. 21), as 
     amended by sections 102 and 103 of this Act, is amended by 
     adding at the end the following:
       ``(u) A futures commission merchant that has adjusted net 
     capital in an amount less than the amount required by 
     regulations established by the Commission or a self-
     regulatory organization of which the futures commission 
     merchant is a member shall immediately notify the Commission 
     and the self-regulatory organization of this occurrence.
       ``(v) A futures commission merchant that does not hold a 
     sufficient amount of funds in segregated accounts for futures 
     customers under section 1.20 of title 17, Code of Federal 
     Regulations, in foreign futures and foreign options secured 
     amount accounts for foreign futures and foreign options 
     secured amount customers under section 30.7 of such title, or 
     in segregated accounts for cleared swap customers under 
     section 22.2 of such title, as required by regulations 
     established by the Commission or a self-regulatory 
     organization of which the futures commission merchant is a 
     member, shall immediately notify the Commission and the self-
     regulatory organization of this occurrence.
       ``(w) Within such time period established by the Commission 
     after the end of each fiscal year, a futures commission 
     merchant shall file with the Commission a report from the 
     chief compliance officer of the futures commission merchant 
     containing an assessment of the internal compliance programs 
     of the futures commission merchant.''.

     SEC. 105. FUTURES COMMISSION MERCHANT COMPLIANCE.

       (a) In General.--Section 4d(a) of the Commodity Exchange 
     Act (7 U.S.C. 6d(a)) is amended--
       (1) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B);
       (2) by inserting ``(1)'' before ``It shall be unlawful''; 
     and
       (3) by adding at the end the following new paragraph:
       ``(2) Any rules or regulations requiring a futures 
     commission merchant to maintain a residual interest in 
     accounts held for the benefit of customers in amounts at 
     least sufficient to exceed the sum of all uncollected margin 
     deficits of such customers shall provide that a futures 
     commission merchant shall meet its residual interest 
     requirement as of the end of each business day calculated as 
     of the close of business on the previous business day.''.
       (b) Conforming Amendment.--Section 4d(h) of the Commodity 
     Exchange Act (7 U.S.C. 6d(h)) is amended by striking 
     ``Notwithstanding subsection (a)(2)'' and inserting 
     ``Notwithstanding subsection (a)(1)(B)''.

     SEC. 106. CERTAINTY FOR FUTURES CUSTOMERS AND MARKET 
                   PARTICIPANTS.

       Section 20(a) of the Commodity Exchange Act (7 U.S.C. 
     24(a)) is amended--
       (1) by striking ``and'' at the end of paragraph (4);
       (2) by striking the period at the end of paragraph (5) and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(6) that cash, securities, or other property of the 
     estate of a commodity broker, including the trading or 
     operating accounts of the commodity broker and commodities 
     held in inventory by the commodity broker, shall be included 
     in customer property, subject to any otherwise unavoidable 
     security interest, or otherwise unavoidable contractual 
     offset or netting rights of creditors (including rights set 
     forth in a rule or bylaw of a derivatives clearing 
     organization or a clearing agency) in respect of such 
     property, but only to the extent that the property that is 
     otherwise customer property is insufficient to satisfy the 
     net equity claims of public customers (as such term may be 
     defined by the Commission by rule or regulation) of the 
     commodity broker.''.

     SEC. 107. STUDY ON HIGH-FREQUENCY TRADING.

       (a) In General.--Not later than one year after the date of 
     the enactment of this Act, the Commodity Futures Trading 
     Commission shall submit to the Committee on Agriculture of 
     the House of Representatives and the Committee on 
     Agriculture, Nutrition, and Forestry of the Senate a report 
     examining the effect of the practice commonly referred to as 
     high-frequency trading on markets under its jurisdiction.
       (b) Specific Areas Examined in Report.--In preparing the 
     report submitted under subsection (a), the Commission shall 
     particularly examine each of the following areas:
       (1) The technology, personnel, or other resources the 
     Commission may require for purposes of monitoring the effect 
     of high-frequency trading.
       (2) The role such trading plays in providing market 
     liquidity.
       (3) Whether the technology creates discrepancies in the 
     marketplace between market participants.
       (4) Whether the existing authority of the Commission with 
     respect to such trading is sufficient to meet the 
     Commission's mission to--
       (A) protect market participants and the public from fraud, 
     manipulation, abusive practices, and systemic risk related to 
     derivatives; and
       (B) foster transparent, open, competitive, and financially 
     sound markets.

         TITLE II--COMMODITY FUTURES TRADING COMMISSION REFORMS

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Commodity Futures Trading 
     Commission Reform Act''.

     SEC. 202. EXTENSION OF OPERATIONS.

       Section 12(d) of the Commodity Exchange Act (7 U.S.C. 
     16(d)) is amended by striking ``2013'' and inserting 
     ``2018''.

     SEC. 203. CONSIDERATION BY THE COMMODITY FUTURES TRADING 
                   COMMISSION OF THE COSTS AND BENEFITS OF ITS 
                   REGULATIONS AND ORDERS.

       Section 15(a) of the Commodity Exchange Act (7 U.S.C. 
     19(a)) is amended by striking paragraphs (1) and (2) and 
     inserting the following:
       ``(1) In general.--Before promulgating a regulation under 
     this Act or issuing an order (except as provided in paragraph 
     (3)), the Commission, through the Office of the Chief 
     Economist, shall assess and publish in the regulation or 
     order the costs and benefits, both qualitative and 
     quantitative, of the proposed regulation or order, and the 
     proposed regulation or order shall state its statutory 
     justification.
       ``(2) Considerations.--In making a reasoned determination 
     of the costs and the benefits, the Commission shall 
     evaluate--
       ``(A) considerations of protection of market participants 
     and the public;
       ``(B) considerations of the efficiency, competitiveness, 
     and financial integrity of futures and swaps markets;
       ``(C) considerations of the impact on market liquidity in 
     the futures and swaps markets;
       ``(D) considerations of price discovery;
       ``(E) considerations of sound risk management practices;
       ``(F) available alternatives to direct regulation;
       ``(G) the degree and nature of the risks posed by various 
     activities within the scope of its jurisdiction;
       ``(H) the costs of complying with the proposed regulation 
     or order by all regulated entities, including a methodology 
     for quantifying the costs (recognizing that some costs are 
     difficult to quantify);
       ``(I) whether the proposed regulation or order is 
     inconsistent, incompatible, or duplicative of other Federal 
     regulations or orders;
       ``(J) whether, in choosing among alternative regulatory 
     approaches, those approaches maximize net benefits (including 
     potential economic and other benefits, distributive impacts, 
     and equity); and
       ``(K) other public interest considerations.''.

     SEC. 204. DIVISION DIRECTORS.

       Section 2(a)(6)(C) of the Commodity Exchange Act (7 U.S.C. 
     2(a)(6)(C)) is amended by inserting ``, and the heads of the 
     units shall serve at the pleasure of the Commission, report 
     directly to the Commission, and perform such functions and 
     duties as the Commission may prescribe'' before the period.

     SEC. 205. OFFICE OF THE CHIEF ECONOMIST.

       (a) In General.--Section 2(a) of the Commodity Exchange Act 
     (7 U.S.C. 2(a)) is amended by adding at the end the 
     following:
       ``(17) Office of the chief economist.--
       ``(A) Establishment.--There is established in the 
     Commission the Office of the Chief Economist.
       ``(B) Head.--The Office of the Chief Economist shall be 
     headed by the Chief Economist, who shall be appointed by the 
     Commission and serve at the pleasure of the Commission.
       ``(C) Functions.--The Chief Economist shall report directly 
     to the Commission and perform such functions and duties as 
     the Commission may prescribe.
       ``(D) Professional staff.--The Commission shall appoint 
     such other economists as may be necessary to assist the Chief 
     Economist in performing such economic analysis, regulatory 
     cost-benefit analysis, or research as the Commission may 
     direct.''.
       (b) Conforming Amendment.--Section 2(a)(6)(A) of such Act 
     (7 U.S.C. 2(a)(6)(A)) is amended by striking ``(4) and (5)'' 
     and inserting ``(4), (5), and (17)''.

     SEC. 206. PROCEDURES GOVERNING ACTIONS TAKEN WITHOUT A 
                   COMMISSION VOTE.

       Section 2(a)(12) of the Commodity Exchange Act (7 U.S.C. 
     2(a)(12)) is amended--
       (1) by striking ``(12) The'' and inserting the following:
       ``(12) Rules and regulations.--
       ``(A) In general.--Subject to the other provisions of this 
     paragraph, the''; and
       (2) by adding after and below the end the following new 
     subparagraph:
       ``(B) Notice to commission.--The Commission shall develop 
     and publish internal procedures governing the issuance by any 
     division or office of the Commission of any response to a 
     formal, written request or petition from any member of the 
     public for an exemptive, a no-action, or an interpretive 
     letter and such procedures shall provide that the Commission 
     be provided with the final version of the matter to be issued 
     with sufficient notice to thoroughly review the matter prior 
     to its issuance.''.

     SEC. 207. STRATEGIC TECHNOLOGY PLAN.

       Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)), 
     as amended by section 204(a) of this Act, is amended by 
     adding at the end the following:
       ``(18) Strategic technology plan.--
       ``(A) In general.--Every 5 years, the Commission shall 
     develop and submit to the Committee on Agriculture of the 
     House of Representatives and the Committee on Agriculture, 
     Nutrition, and Forestry of the Senate a detailed plan focused 
     on the acquisition and use of technology by the Commission.
       ``(B) Contents.--The plan shall--
       ``(i) include for each related division or office a 
     detailed technology strategy focused on market surveillance 
     and risk detection, market data

[[Page 10674]]

     collection, aggregation, interpretation, standardization, 
     harmonization, normalization, validation, streamlining or 
     other data analytic processes, and internal management and 
     protection of data collected by the Commission, including a 
     detailed accounting of how the funds provided for technology 
     will be used and the priorities that will apply in the use of 
     the funds; and
       ``(ii) set forth annual goals to be accomplished and annual 
     budgets needed to accomplish the goals.''.

     SEC. 208. INTERNAL RISK CONTROLS.

       (a) In General.--Section 2(a)(12) of the Commodity Exchange 
     Act (7 U.S.C. 2(a)(12)), as amended by section 206 of this 
     Act, is amended by adding at the end the following:
       ``(C) Internal risk controls.--The Commission, in 
     consultation with the Chief Economist, shall develop 
     comprehensive internal risk control mechanisms to safeguard 
     and govern the storage of all market data by the Commission, 
     all market data sharing agreements of the Commission, and all 
     academic research performed at the Commission using market 
     data.''.
       (b) Reports to the Congress.--
       (1) Content.--The Commission shall submit to the Committee 
     on Agriculture of the House of Representatives and the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate 2 reports on the progress made in implementing the 
     internal risk controls provided for in section 2(a)(12)(C) of 
     the Commodity Exchange Act.
       (2) Timing.--The Commission shall submit the 1st report 
     required by paragraph (1) within 60 days after the date of 
     the enactment of this Act, and the 2nd such report within 120 
     days after such date of enactment.

     SEC. 209. SUBPOENA DURATION AND RENEWAL.

       Section 6(c)(5) of the Commodity Exchange Act (7 U.S.C. 
     9(5)) is amended--
       (1) by striking ``(5) Subpoena.--For'' and inserting the 
     following:
       ``(5) Subpoena.--
       ``(A) In general.--For''; and
       (2) by adding after and below the end the following:
       ``(B) Content of order.--An order of the Commission 
     authorizing the issuance of a subpoena in an investigation 
     shall state in good faith--
       ``(i) the legitimate purpose of the investigation; and
       ``(ii) the information sought by any subpoena order that 
     will be reasonably relevant to that purpose.
       ``(C) Duration and renewal.--An order issued under this 
     paragraph shall not be for an indefinite duration and may be 
     renewed only by Commission action.''.

     SEC. 210. IMPLEMENTATION PLAN FOR COMMISSION RULEMAKINGS.

       Section 2(a)(12) of the Commodity Exchange Act (7 U.S.C. 
     2(a)(12)), as amended by sections 206 and 208(a) of this Act, 
     is amended by adding at the end the following:
       ``(D) Requirement to publish implementation plan for 
     commission rules.--The Commission shall direct its staff to 
     develop and publish in any proposed rule a plan for--
       ``(i) when and for how long the proposed rule will be 
     subject to public comment; and
       ``(ii) by when compliance with the final rule will be 
     required.''.

     SEC. 211. APPLICABILITY OF NOTICE AND COMMENT REQUIREMENTS OF 
                   THE ADMINISTRATIVE PROCEDURE ACT TO GUIDANCE 
                   VOTED ON BY THE COMMISSION.

       Section 2(a)(12) of the Commodity Exchange Act (7 U.S.C. 
     2(a)(12)), as amended by sections 206, 208(a), and 210 of 
     this Act, is amended by adding at the end the following:
       ``(E) Applicability of notice and comment rules to guidance 
     voted on by the commission.--The notice and comment 
     requirements of chapter 5 of title 5, United States Code, 
     shall also apply with respect to any guidance issued by the 
     Commission.''.

     SEC. 212. JUDICIAL REVIEW OF COMMISSION RULES.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by adding at the end the following:

     ``SEC. 24. JUDICIAL REVIEW OF COMMISSION RULES.

       ``(a) A person adversely affected by a rule of the 
     Commission promulgated under this Act may obtain review of 
     the rule in the United States Court of Appeals for the 
     District of Columbia Circuit or the United States Court of 
     Appeals for the circuit where the party resides or has the 
     principal place of business, by filing in the court, within 
     60 days after publication in the Federal Register of the 
     entry of the rule, a written petition requesting that the 
     rule be set aside.
       ``(b) A copy of the petition shall be transmitted forthwith 
     by the clerk of the court to an officer designated by the 
     Commission for that purpose. Thereupon the Commission shall 
     file in the court the record on which the rule complained of 
     is entered, as provided in section 2112 of title 28, United 
     States Code, and the Federal Rules of Appellate Procedure.
       ``(c) On the filing of the petition, the court has 
     jurisdiction, which becomes exclusive on the filing of the 
     record, to affirm and enforce or to set aside the rule.
       ``(d) The court shall affirm and enforce the rule unless 
     the Commission's action in promulgating the rule is found to 
     be arbitrary, capricious, an abuse of discretion, or 
     otherwise not in accordance with law; contrary to 
     constitutional right, power, privilege, or immunity; in 
     excess of statutory jurisdiction, authority, or limitations, 
     or short of statutory right; or without observance of 
     procedure required by law.''.

     SEC. 213. GAO STUDY ON ADEQUACY OF CFTC RESOURCES.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study of the resources of the Commodity 
     Futures Trading Commission that--
       (1) assesses whether the resources of the Commission are 
     sufficient to enable the Commission to effectively carry out 
     the duties of the Commission; and
       (2) examines the prior expenditures of the Commission on 
     hardware, software, and analytical processes designed to 
     protect customers in the areas of--
       (A) market surveillance and risk detection; and
       (B) market data collection, aggregation, interpretation, 
     standardization, harmonization, normalization, validation, 
     and streamlining or other data analytic processes.
       (b) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Comptroller General of the United 
     States shall submit to the Committee on Agriculture of the 
     House of Representatives and the Committee on Agriculture, 
     Nutrition, and Forestry of the Senate a report that contains 
     the results of the study.

     SEC. 214. DISCLOSURE OF REQUIRED DATA OF OTHER REGISTERED 
                   ENTITIES.

       Section 8 of the Commodity Exchange Act (7 U.S.C. 12) is 
     amended by adding at the end the following:
       ``(j) Disclosure of Required Data of Other Registered 
     Entities.--
       ``(1) Except as provided in this subsection, the Commission 
     may not be compelled to disclose any proprietary information 
     provided to the Commission, except that nothing in this 
     subsection--
       ``(A) authorizes the Commission to withhold information 
     from Congress, upon an agreement of confidentiality; or
       ``(B) prevents the Commission from--
       ``(i) complying with a request for information from any 
     other Federal department or agency, any State or political 
     subdivision thereof, or any foreign government or any 
     department, agency, or political subdivision thereof 
     requesting the report or information for purposes within the 
     scope of its jurisdiction, upon an agreement of 
     confidentiality to protect the information in a manner 
     consistent with this paragraph and subsection (e); or
       ``(ii) a disclosure made pursuant to a court order in 
     connection with an administrative or judicial proceeding 
     brought under this Act, in any receivership proceeding 
     involving a receiver appointed in a judicial proceeding 
     brought under this Act, or in any bankruptcy proceeding in 
     which the Commission has intervened or in which the 
     Commission has the right to appear and be heard under title 
     11 of the United States Code.
       ``(2) Any proprietary information of a commodity trading 
     advisor or commodity pool operator ascertained by the 
     Commission in connection with Form CPO-PQR, Form CTA-PR, and 
     any successor forms thereto, shall be subject to the same 
     limitations on public disclosure, as any facts ascertained 
     during an investigation, as provided by subsection (a); 
     provided, however, that the Commission shall not be precluded 
     from publishing aggregate information compiled from such 
     forms, to the extent such aggregate information does not 
     identify any individual person or firm, or such person's 
     proprietary information.
       ``(3) For purposes of section 552 of title 5, United States 
     Code, this subsection, and the information contemplated 
     herein, shall be considered a statute described in subsection 
     (b)(3)(B) of such section 552.
       ``(4) For purposes of the definition of proprietary 
     information in paragraph (5), the records and reports of any 
     client account or commodity pool to which a commodity trading 
     advisor or commodity pool operator registered under this 
     title provides services that are filed with the Commission on 
     Form CPO-PQR, CTA-PR, and any successor forms thereto, shall 
     be deemed to be the records and reports of the commodity 
     trading advisor or commodity pool operator, respectively.
       ``(5) For purposes of this section, proprietary information 
     of a commodity trading advisor or commodity pool operator 
     includes sensitive, non-public information regarding--
       ``(A) the commodity trading advisor, commodity pool 
     operator or the trading strategies of the commodity trading 
     advisor or commodity pool operator;
       ``(B) analytical or research methodologies of a commodity 
     trading advisor or commodity pool operator;
       ``(C) trading data of a commodity trading advisor or 
     commodity pool operator; and
       ``(D) computer hardware or software containing intellectual 
     property of a commodity trading advisor or commodity pool 
     operator;''.

                       TITLE III--END-USER RELIEF

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``End-User Relief and Market 
     Certainty Act''.

        Subtitle A--End-User Exemption From Margin Requirements

     SEC. 311. END-USER MARGIN REQUIREMENTS.

       (a) Commodity Exchange Act Amendment.--Section 4s(e) of the 
     Commodity Exchange Act (7 U.S.C. 6s(e)) 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

[[Page 10675]]

     (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 of 1934 Amendment.--Section 
     15F(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
     10(e)) 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. 312. IMPLEMENTATION.

       The amendment made to the Commodity Exchange Act by this 
     subtitle 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;
       (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 the 
     amendment.

                   Subtitle B--Inter-Affiliate Swaps

     SEC. 321. TREATMENT OF AFFILIATE TRANSACTIONS.

       (a) In General.--
       (1) Commodity exchange act amendment.--Section 
     2(h)(7)(D)(i) of the Commodity Exchange Act (7 U.S.C. 
     2(h)(7)(D)(i)) is amended to read as follows:
       ``(i) In general.--An affiliate of a person that qualifies 
     for an exception under subparagraph (A) (including affiliate 
     entities predominantly engaged in providing financing for the 
     purchase of the merchandise or manufactured goods of the 
     person) may qualify for the exception only if the affiliate 
     enters into the swap to hedge or mitigate the commercial risk 
     of the person or other affiliate of the person that is not a 
     financial entity, provided that if the transfer of commercial 
     risk is addressed by entering into a swap with a swap dealer 
     or major swap participant, an appropriate credit support 
     measure or other mechanism is utilized.''.
       (2) Securities exchange act of 1934 amendment.--Section 
     3C(g)(4)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c-3(g)(4)(A)) is amended to read as follows:
       ``(A) In general.--An affiliate of a person that qualifies 
     for an exception under paragraph (1) (including affiliate 
     entities predominantly engaged in providing financing for the 
     purchase of the merchandise or manufactured goods of the 
     person) may qualify for the exception only if the affiliate 
     enters into the security-based swap to hedge or mitigate the 
     commercial risk of the person or other affiliate of the 
     person that is not a financial entity, provided that if the 
     transfer of commercial risk is addressed by entering into a 
     security-based swap with a security-based swap dealer or 
     major security-based swap participant, an appropriate credit 
     support measure or other mechanism is utilized.''.
       (b) Applicability of Credit Support Measure Requirement.--
     Notwithstanding section 371 of this Act, the requirements in 
     section 2(h)(7)(D)(i) of the Commodity Exchange Act and 
     section 3C(g)(4)(A) of the Securities Exchange Act of 1934, 
     as amended by subsection (a), requiring that a credit support 
     measure or other mechanism be utilized if the transfer of 
     commercial risk referred to in such sections is addressed by 
     entering into a swap with a swap dealer or major swap 
     participant or a security-based swap with a security-based 
     swap dealer or major security-based swap participant, as 
     appropriate, shall not apply with respect to swaps or 
     security-based swaps, as appropriate, entered into before the 
     date of the enactment of this Act.

     Subtitle C--Indemnification Requirements Related to Swap Data 
                              Repositories

     SEC. 331. INDEMNIFICATION REQUIREMENTS.

       (a) Derivatives Clearing Organizations.--Section 5b(k)(5) 
     of the Commodity Exchange Act (7 U.S.C. 7a-1(k)(5)) is 
     amended to read as follows:
       ``(5) Confidentiality agreement.--Before the Commission may 
     share information with any entity described in paragraph (4), 
     the Commission shall receive a written agreement from each 
     entity stating that the entity shall abide by the 
     confidentiality requirements described in section 8 relating 
     to the information on swap transactions that is provided.''.
       (b) Swap Data Repositories.--Section 21(d) of such Act (7 
     U.S.C. 24a(d)) is amended to read as follows:
       ``(d) Confidentiality Agreement.--Before the swap data 
     repository may share information with any entity described in 
     subsection (c)(7), the swap data repository shall receive a 
     written agreement from each entity stating that the entity 
     shall abide by the confidentiality requirements described in 
     section 8 relating to the information on swap transactions 
     that is provided.''.
       (c) Security-Based Swap Data Repositories.--Section 
     13(n)(5)(H) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78m(n)(5)(H)) is amended to read as follows:
       ``(H) Confidentiality agreement.--Before the security-based 
     swap data repository may share information with any entity 
     described in subparagraph (G), the security-based swap data 
     repository shall receive a written agreement from each entity 
     stating that the entity shall abide by the confidentiality 
     requirements described in section 24 relating to the 
     information on security-based swap transactions that is 
     provided.''.

               Subtitle D--Relief for Municipal Utilities

     SEC. 341. TRANSACTIONS WITH UTILITY SPECIAL ENTITIES.

       Section 1a(49) of the Commodity Exchange Act (7 U.S.C. 
     1a(49)) is amended by adding at the end the following:
       ``(E) Certain transactions with a utility special entity.--
       ``(i) Transactions in utility operations-related swaps 
     shall be reported pursuant to section 4r.
       ``(ii) In making a determination to exempt pursuant to 
     subparagraph (D), the Commission shall treat a utility 
     operations-related swap entered into with a utility special 
     entity, as defined in section 4s(h)(2)(D), as if it were 
     entered into with an entity that is not a special entity, as 
     defined in section 4s(h)(2)(C).''.

     SEC. 342. UTILITY SPECIAL ENTITY DEFINED.

       Section 4s(h)(2) of the Commodity Exchange Act (7 U.S.C. 
     6s(h)(2)) is amended by adding at the end the following:
       ``(D) Utility special entity.--For purposes of this Act, 
     the term `utility special entity' means a special entity, or 
     any instrumentality, department, or corporation of or 
     established by a State or political subdivision of a State, 
     that--
       ``(i) owns or operates an electric or natural gas facility 
     or an electric or natural gas operation;
       ``(ii) supplies natural gas and or electric energy to 
     another utility special entity;
       ``(iii) has public service obligations under Federal, 
     State, or local law or regulation to deliver electric energy 
     or natural gas service to customers; or
       ``(iv) is a Federal power marketing agency, as defined in 
     section 3 of the Federal Power Act.''.

     SEC. 343. UTILITY OPERATIONS-RELATED SWAP.

       (a) Swap Further Defined.--Section 1a(47)(A)(iii) of the 
     Commodity Exchange Act (7 U.S.C. 1a(47)(A)(iii)) is amended--
       (1) by striking ``and'' at the end of subclause (XXI);
       (2) by adding ``and'' at the end of subclause (XXII); and
       (3) by adding at the end the following:

       ``(XXIII) a utility operations-related swap;''.

       (b) Utility Operations-related Swap Defined.--Section 1a of 
     such Act (7 U.S.C. 1a) is amended by adding at the end the 
     following:
       ``(52) Utility operations-related swap.--The term `utility 
     operations-related swap' means a swap that--
       ``(A) is entered into to hedge or mitigate a commercial 
     risk;
       ``(B) is not a contract, agreement, or transaction based 
     on, derived on, or referencing--
       ``(i) an interest rate, credit, equity, or currency asset 
     class; or
       ``(ii) a metal, agricultural commodity, or crude oil or 
     gasoline commodity of any grade, except as used as fuel for 
     electric energy generation; and
       ``(C) is associated with--
       ``(i) the generation, production, purchase, or sale of 
     natural gas or electric energy, the supply of natural gas or 
     electric energy to a utility, or the delivery of natural gas 
     or electric energy service to utility customers;
       ``(ii) all fuel supply for the facilities or operations of 
     a utility;
       ``(iii) compliance with an electric system reliability 
     obligation;
       ``(iv) compliance with an energy, energy efficiency, 
     conservation, or renewable energy or environmental statute, 
     regulation, or government order applicable to a utility; or
       ``(v) any other electric energy or natural gas swap to 
     which a utility is a party.''.

                 Subtitle E--End-User Regulatory Relief

     SEC. 351. END-USERS NOT TREATED AS FINANCIAL ENTITIES.

       (a) In General.--Section 2(h)(7)(C)(iii) of the Commodity 
     Exchange Act (7 U.S.C. 2(h)(7)(C)(iii)) is amended to read as 
     follows:
       ``(iii) Limitation.--Such definition shall not include an 
     entity--

       ``(I) whose primary business is providing financing, and 
     who uses derivatives for the purpose of hedging underlying 
     commercial risks related to interest rate and foreign 
     currency exposures, 90 percent or more of which arise from 
     financing that facilitates the purchase or lease of products, 
     90 percent or more of which are manufactured by the parent 
     company or another subsidiary of the parent company; or
       ``(II) who is not supervised by a prudential regulator, and 
     is not described in any of subclauses (I) through (VII) of 
     clause (i), and--

       ``(aa) is a commercial market participant and is considered 
     a financial entity under clause (i)(VIII) because the entity 
     predominantly engages in physical delivery contracts; or
       ``(bb) enters into swaps, contracts for future delivery, 
     and other derivatives on behalf of, or to hedge or mitigate 
     the commercial risk of, whether directly or in the aggregate, 
     affiliates that are not so supervised or described.''.
       (b) Commercial Market Participant Defined.--
       (1) In general.--Section 1a of such Act (7 U.S.C. 1a), as 
     amended by section 343(b) of this Act, is amended by 
     redesignating paragraphs (8) through (52) as paragraphs (9) 
     through (53), respectively, and by inserting after paragraph 
     (6) the following:
       ``(7) Commercial market participant.--The term `commercial 
     market participant' means any producer, processor, merchant, 
     or commercial

[[Page 10676]]

     user of an exempt or agricultural commodity, or the products 
     or byproducts of such a commodity.''.
       (2) Conforming amendments.--
       (A) Section 1a of such Act (7 U.S.C. 1a) is amended--
       (i) in subparagraph (A) of paragraph (18) (as so 
     redesignated by paragraph (1) of this subsection), in the 
     matter preceding clause (i), by striking ``(18)(A)'' and 
     inserting ``(19)(A)''; and
       (ii) in subparagraph (A)(vii) of paragraph (19) (as so 
     redesignated by paragraph (1) of this subsection), in the 
     matter following subclause (III), by striking ``(17)(A)'' and 
     inserting ``(18)(A)''.
       (B) Section 4(c)(1)(A)(i)(I) of such Act (7 U.S.C. 
     6(c)(1)(A)(i)(I)) is amended by striking ``(7), paragraph 
     (18)(A)(vii)(III), paragraphs (23), (24), (31), (32), (38), 
     (39), (41), (42), (46), (47), (48), and (49)'' and inserting 
     ``(8), paragraph (19)(A)(vii)(III), paragraphs (24), (25), 
     (32), (33), (39), (40), (42), (43), (47), (48), (49), and 
     (50)''.
       (C) Section 4q(a)(1) of such Act (7 U.S.C. 6o-1(a)(1)) is 
     amended by striking ``1a(9)'' and inserting ``1a(10)''.
       (D) Section 4s(f)(1)(D) of such Act (7 U.S.C. 6s(f)(1)(D)) 
     is amended by striking ``1a(47)(A)(v)'' and inserting 
     ``1a(48)(A)(v)''.
       (E) Section 4s(h)(5)(A)(i) of such Act (7 U.S.C. 
     6s(h)(5)(A)(i)) is amended by striking ``1a(18)'' and 
     inserting ``1a(19)''.
       (F) Section 4t(b)(1)(C) of such Act (7 U.S.C. 6t(b)(1)(C)) 
     is amended by striking ``1a(47)(A)(v)'' and inserting 
     ``1a(48)(A)(v)''.
       (G) Section 5(d)(23) of such Act (7 U.S.C. 7(d)(23)) is 
     amended by striking ``1a(47)(A)(v)'' and inserting 
     ``1a(48)(A)(v)''.
       (H) Section 5(e)(1) of such Act (7 U.S.C. 7(e)(1)) is 
     amended by striking ``1a(9)'' and inserting ``1a(10)''.
       (I) Section 5b(k)(3)(A) of such Act (7 U.S.C. 7a-
     1(k)(3)(A)) is amended by striking ``1a(47)(A)(v)'' and 
     inserting ``1a(48)(A)(v)''.
       (J) Section 5c(c)(4)(B) of such Act (7 U.S.C. 7a-
     2(c)(4)(B)) is amended by striking ``1a(10)'' and inserting 
     ``1a(11)''.
       (K) Section 5h(f)(10)(A)(iii) of such Act (7 U.S.C. 7b-
     3(f)(10)(A)(iii)) is amended by striking ``1a(47)(A)(v)'' and 
     inserting ``1a(48)(A)(v)''.
       (L) Section 21(f)(4)(C) of such Act (7 U.S.C. 24a(f)(4)(C)) 
     is amended by striking ``1a(48)'' and inserting ``1a(49)''.

     SEC. 352. REPORTING OF ILLIQUID SWAPS SO AS TO NOT 
                   DISADVANTAGE CERTAIN NON-FINANCIAL END-USERS.

       Section 2(a)(13) of the Commodity Exchange Act (7 U.S.C. 
     2(a)(13)) is amended--
       (1) in subparagraph (C), by striking ``The Commission'' and 
     inserting ``Except as provided in subparagraph (D), the 
     Commission''; and
       (2) by redesignating subparagraphs (D) through (G) as 
     subparagraphs (E) through (H), respectively, and inserting 
     after subparagraph (C) the following:
       ``(D) Requirements for swap transactions in illiquid 
     markets.--Notwithstanding subparagraph (C):
       ``(i) The Commission shall provide by rule for the public 
     reporting of swap transactions, including price and volume 
     data, in illiquid markets that are not cleared and entered 
     into by a non-financial entity that is hedging or mitigating 
     commercial risk in accordance with subsection (h)(7)(A).
       ``(ii) The Commission shall ensure that the swap 
     transaction information referred to in clause (i) of this 
     subparagraph is available to the public no sooner than 30 
     days after the swap transaction has been executed or at such 
     later date as the Commission determines appropriate to 
     protect the identity of participants and positions in 
     illiquid markets and to prevent the elimination or reduction 
     of market liquidity.
       ``(iii) In this subparagraph, the term `illiquid markets' 
     means any market in which the volume and frequency of trading 
     in swaps is at such a level as to allow identification of 
     individual market participants.''.

     SEC. 353. RELIEF FOR GRAIN ELEVATOR OPERATORS, FARMERS, 
                   AGRICULTURAL COUNTERPARTIES, AND COMMERCIAL 
                   MARKET PARTICIPANTS.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 4t the following:

     ``SEC. 4U. RECORDKEEPING REQUIREMENTS APPLICABLE TO NON-
                   REGISTERED MEMBERS OF CERTAIN REGISTERED 
                   ENTITIES.

       ``Except as provided in section 4(a)(3), a member of a 
     designated contract market or a swap execution facility that 
     is not registered with the Commission and not required to be 
     registered with the Commission in any capacity shall satisfy 
     the recordkeeping requirements of this Act and any 
     recordkeeping rule, order, or regulation under this Act by 
     maintaining a written record of each transaction in a 
     contract for future delivery, option on a future, swap, 
     swaption, trade option, or related cash or forward 
     transaction. The written record shall be sufficient if it 
     includes the final agreement between the parties and the 
     material economic terms of the transaction and is 
     identifiable and searchable by transaction.''.

     SEC. 354. RELIEF FOR END-USERS WHO USE PHYSICAL CONTRACTS 
                   WITH VOLUMETRIC OPTIONALITY.

       Section 1a(47)(B)(ii) of the Commodity Exchange Act (7 
     U.S.C. 1a(47)(B)(ii)) is amended to read as follows:
       ``(ii) any purchase or sale of a nonfinancial commodity or 
     security for deferred shipment or delivery, so long as the 
     transaction is intended to be physically settled, including 
     any stand-alone or embedded option--

       ``(I) for which exercise results in a physical delivery 
     obligation;
       ``(II) that cannot be severed or marketed separately from 
     the overall transaction for the purpose of financial 
     settlement; and
       ``(III) for which both parties are commercial market 
     participants;''.

     SEC. 355. COMMISSION VOTE REQUIRED BEFORE AUTOMATIC CHANGE OF 
                   SWAP DEALER DE MINIMIS LEVEL.

       Section 1a(49)(D) of the Commodity Exchange Act (7 U.S.C. 
     1a(49)(D)) is amended--
       (1) by striking all that precedes ``shall exempt'' and 
     inserting the following:
       ``(D) De minimis exception.--
       ``(i) In general.--The Commission''; and
       (2) by adding after and below the end the following new 
     clause:
       ``(ii) Special rule.--The de minimis quantity of swap 
     dealing as described in clause (i) that is currently set at a 
     quantity of $8,000,000,000 shall only be amended or reduced 
     through a new affirmative action of the Commission undertaken 
     by rule or regulation.''.

     SEC. 356. CAPITAL REQUIREMENTS FOR NON-BANK SWAP DEALERS.

       (a) Commodity Exchange Act.--Section 4s(e) of the Commodity 
     Exchange Act (7 U.S.C. 6s(e)) is amended--
       (1) in paragraph (2)(B), by striking ``shall'' and 
     inserting the following: ``and the Securities and Exchange 
     Commission, in consultation with the prudential regulators, 
     shall jointly''; and
       (2) in paragraph (3)(D)--
       (A) in clause (ii), by striking ``shall, to the maximum 
     extent practicable,'' and inserting ``shall''; and
       (B) by adding at the end the following:
       ``(iii) Financial models.--To the extent that swap dealers 
     and major swap participants that are banks are permitted to 
     use financial models approved by the prudential regulators or 
     the Securities and Exchange Commission to calculate minimum 
     capital requirements and minimum initial and variation margin 
     requirements, including the use of non-cash collateral, the 
     Commission shall, in consultation with the prudential 
     regulators and the Securities and Exchange Commission, permit 
     the use of comparable financial models by swap dealers and 
     major swap participants that are not banks.''.
       (b) Securities Exchange Act of 1934.--Section 15F(e) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o-10(e)) is 
     amended--
       (1) in paragraph (2)(B), by striking ``shall'' and 
     inserting the following: ``and the Commodity Futures Trading 
     Commission, in consultation with the prudential regulators, 
     shall jointly''; and
       (2) in paragraph (3)(D)--
       (A) in clause (ii), by striking ``shall, to the maximum 
     extent practicable,'' and inserting ``shall''; and
       (B) by adding at the end the following:
       ``(iii) Financial models.--To the extent that security-
     based swap dealers and major security-based swap participants 
     that are banks are permitted to use financial models approved 
     by the prudential regulators or the Commodity Futures Trading 
     Commission to calculate minimum capital requirements and 
     minimum initial and variation margin requirements, including 
     the use of non-cash collateral, the Commission shall, in 
     consultation with the Commodity Futures Trading Commission, 
     permit the use of comparable financial models by security-
     based swap dealers and major security-based swap participants 
     that are not banks.''.

     SEC. 357. HARMONIZATION WITH THE JUMPSTART OUR BUSINESS 
                   STARTUPS ACT.

       Within 90 days after the date of the enactment of this Act, 
     the Commodity Futures Trading Commission shall--
       (1) revise section 4.7(b) of title 17, Code of Federal 
     Regulations, in the matter preceding paragraph (1), to read 
     as follows:
       ``(b) Relief available to commodity pool operators. Upon 
     filing the notice required by paragraph (d) of this section, 
     and subject to compliance with the conditions specified in 
     paragraph (d) of this section, any registered commodity pool 
     operator who sells participations in a pool solely to 
     qualified eligible persons in an offering which qualifies for 
     exemption from the registration requirements of the 
     Securities Act pursuant to section 4(2) of that Act or 
     pursuant to Regulation S, 17 CFR 230.901 et seq., and any 
     bank registered as a commodity pool operator in connection 
     with a pool that is a collective trust fund whose securities 
     are exempt from registration under the Securities Act 
     pursuant to section 3(a)(2) of that Act and are sold solely 
     to qualified eligible persons, may claim any or all of the 
     following relief with respect to such pool:''; and
       (2) revise section 4.13(a)(3)(i) of such title to read as 
     follows:
       ``(i) Interests in the pool are exempt from registration 
     under the Securities Act of 1933, and such interests are 
     offered and sold pursuant to section 4 of the Securities Act 
     of 1933 and the regulations thereunder;''.

     SEC. 358. BONA FIDE HEDGE DEFINED TO PROTECT END-USER RISK 
                   MANAGEMENT NEEDS.

       Section 4a(c) of the Commodity Exchange Act (7 U.S.C. 
     6a(c)) is amended--
       (1) in paragraph (1)--
       (A) by striking ``may'' and inserting ``shall''; and
       (B) by striking ``future for which'' and inserting 
     ``future, to be determined by the Commission, for which 
     either an appropriate swap is available or'';
       (2) in paragraph (2)--
       (A) in the matter preceding subparagraph (A), by striking 
     ``subsection (a)(2)'' and all that follows through ``position 
     as'' and inserting

[[Page 10677]]

     ``paragraphs (2) and (5) of subsection (a) for swaps, 
     contracts of sale for future delivery, or options on the 
     contracts or commodities, a bona fide hedging transaction or 
     position is''; and
       (B) in subparagraph (A)(ii), by striking ``of risks'' and 
     inserting ``or management of current or anticipated risks''; 
     and
       (3) by adding at the end the following:
       ``(3) The Commission may further define, by rule or 
     regulation, what constitutes a bona fide hedging transaction, 
     provided that the rule or regulation is consistent with the 
     requirements of subparagraphs (A) and (B) of paragraph 
     (2).''.

     SEC. 359. CROSS-BORDER REGULATION OF DERIVATIVES 
                   TRANSACTIONS.

       (a) Joint Rulemaking Required.--
       (1) In general.--Not later than 270 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     and the Commodity Futures Trading Commission shall jointly 
     issue rules setting forth the application of United States 
     swaps requirements of the Securities Exchange Act of 1934 and 
     the Commodity Exchange Act relating to cross-border swaps and 
     security-based swaps transactions involving U.S. persons or 
     non-U.S. persons.
       (2) Construction.--The rules required under paragraph (1) 
     shall be identical, notwithstanding any difference in the 
     authorities granted the Commissions in section 30(c) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78dd(c)) and 
     section 2(i) of the Commodity Exchange Act (7 U.S.C. 2(i)), 
     respectively, except to the extent necessary to accommodate 
     differences in other underlying statutory requirements under 
     such Acts, and the rules thereunder.
       (b) Considerations.--The Commissions shall jointly issue 
     rules that address--
       (1) the nature of the connections to the United States that 
     require a non-U.S. person to register as a swap dealer, major 
     swap participant, security-based swap dealer, or major 
     security-based swap participant under each Commission's 
     respective Acts and the regulations issued under such Acts;
       (2) which of the United States swaps requirements shall 
     apply to the swap and security-based swap activities of non-
     U.S. persons, U.S. persons, and their branches, agencies, 
     subsidiaries, and affiliates outside of the United States and 
     the extent to which such requirements shall apply; and
       (3) the circumstances under which a non-U.S. person in 
     compliance with the regulatory requirements of a foreign 
     jurisdiction shall be exempt from United States swaps 
     requirements.
       (c) Rule in Accordance With APA Required.--No guidance, 
     memorandum of understanding, or any such other agreement may 
     satisfy the requirement to issue a joint rule from the 
     Commissions in accordance with section 553 of title 5, United 
     States Code.
       (d) General Application to Countries or Administrative 
     Regions Having Nine Largest Markets.--
       (1) General application.--In issuing rules under this 
     section, the Commissions shall provide that a non-U.S. person 
     in compliance with the swaps regulatory requirements of a 
     country or administrative region that has one of the nine 
     largest combined swap and security-based swap markets by 
     notional amount in the calendar year preceding issuance of 
     such rules, or other foreign jurisdiction as jointly 
     determined by the Commissions, shall be exempt from United 
     States swaps requirements in accordance with the schedule set 
     forth in paragraph (2), unless the Commissions jointly 
     determine that the regulatory requirements of such country or 
     administrative region or other foreign jurisdiction are not 
     broadly equivalent to United States swaps requirements.
       (2) Effective date schedule.--The exemption described in 
     paragraph (1) and set forth under the rules required by this 
     section shall apply to persons or transactions relating to or 
     involving--
       (A) countries or administrative regions described in such 
     paragraph, or any other foreign jurisdiction as jointly 
     determined by the Commissions, accounting for the five 
     largest combined swap and security-based swap markets by 
     notional amount in the calendar year preceding issuance of 
     such rules, on the date on which final rules are issued under 
     this section; and
       (B) the remaining countries or administrative regions 
     described in such paragraph, and any other foreign 
     jurisdiction as jointly determined by the Commissions, 1 year 
     after the date on which such rules are issued.
       (3) Criteria.--In such rules, the Commissions shall jointly 
     establish criteria for determining that one or more 
     categories of regulatory requirements of a country or 
     administrative region described in paragraph (1) or other 
     foreign jurisdiction is not broadly equivalent to United 
     States swaps requirements and shall jointly determine the 
     appropriate application of certain United States swap 
     requirements to persons or transactions relating to or 
     involving such country or administrative region or other 
     foreign jurisdiction. Such criteria shall include the scope 
     and objectives of the regulatory requirements of a country or 
     administrative region described in paragraph (1) or other 
     foreign jurisdiction as well as the effectiveness of the 
     supervisory compliance program administered, and the 
     enforcement authority exercised, by such country or 
     administrative region or other foreign jurisdiction, and such 
     other factors as the Commissions, by rule, jointly determine 
     to be necessary or appropriate in the public interest.
       (4) Required assessment.--Beginning on the date on which 
     final rules are issued under this section, the Commissions 
     shall begin to jointly assess the regulatory requirements of 
     countries or administrative regions described in paragraph 
     (1), as the Commissions jointly determine appropriate, in 
     accordance with the criteria established pursuant to this 
     subsection, to determine if one or more categories of 
     regulatory requirements of such a country or administrative 
     region or other foreign jurisdiction is not broadly 
     equivalent to United States swaps requirements.
       (e) Report to Congress.--If the Commissions make the joint 
     determination described in subsection (d)(1) that the 
     regulatory requirements of a country or administrative region 
     described in such subsection or other foreign jurisdiction 
     are not broadly equivalent to United States swaps 
     requirements, the Commissions shall articulate the basis for 
     such a determination in a written report transmitted to the 
     Committee on Financial Services and the Committee on 
     Agriculture of the House of Representatives and the Committee 
     on Banking, Housing, and Urban Affairs and the Committee on 
     Agriculture, Nutrition, and Forestry of the Senate within 30 
     days of the determination. The determination shall not be 
     effective until the transmission of such report.
       (f) Definitions.--As used in this Act and for purposes of 
     the rules issued pursuant to this Act, the following 
     definitions apply:
       (1) The term ``U.S. person''--
       (A) means--
       (i) any natural person resident in the United States;
       (ii) any partnership, corporation, trust, or other legal 
     person organized or incorporated under the laws of the United 
     States or having its principal place of business in the 
     United States;
       (iii) any account (whether discretionary or non-
     discretionary) of a U.S. person; and
       (iv) any other person as the Commissions may further 
     jointly define to more effectively carry out the purposes of 
     this Act; and
       (B) does not include the International Monetary Fund, the 
     International Bank for Reconstruction and Development, the 
     Inter-American Development Bank, the Asian Development Bank, 
     the African Development Bank, the United Nations, their 
     agencies and pension plans, and any other similar 
     international organizations and their agencies and pension 
     plans.
        (2) The term ``United States swaps requirements'' means 
     the provisions relating to swaps and security-based swaps 
     contained in the Commodity Exchange Act (7 U.S.C. 1a et seq.) 
     and the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
     seq.) that were added by title VII of the Dodd-Frank Wall 
     Street Reform and Consumer Protection Act (15 U.S.C. 8301 et 
     seq.) and any rules or regulations prescribed by the 
     Securities and Exchange Commission and the Commodity Futures 
     Trading Commission pursuant to such provisions.
       (g) Conforming Amendments.--
       (1) Securities exchange act of 1934.--Section 36(c) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78mm(c)) is 
     amended by inserting ``or except as necessary to effectuate 
     the purposes of the Customer Protection and End-User Relief 
     Act,'' after ``to grant exemptions,''.
       (2) Commodity exchange act.--Section 4(c)(1)(A) of the 
     Commodity Exchange Act (7 U.S.C. 6(c)(1)(A)) is amended by 
     inserting ``or except as necessary to effectuate the purposes 
     of the Customer Protection and End-User Relief Act,'' after 
     ``to grant exemptions,''.

     SEC. 360. REPORT ON FOREIGN BOARDS OF TRADE.

       Within 1 year after the date of the enactment of this Act, 
     the Commodity Futures Trading Commission shall prepare and 
     submit to the Committee on Agriculture of the House of 
     Representatives and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate a written report reviewing the 
     standards and rules of foreign boards of trade related to the 
     physical delivery of base metals, including warehousing 
     facilities, as compared to the standards and rules for 
     domestic designated contract markets and related warehouses 
     for base metals.

                       Subtitle F--Effective Date

     SEC. 371. EFFECTIVE DATE.

       Except as otherwise provided in this title, the amendments 
     made by this title shall take effect as if enacted on July 
     21, 2010.

  The CHAIR. No amendment to that amendment in the nature of a 
substitute shall be in order except those printed in House Report 113-
476. Each such amendment may be offered only in the order printed in 
the report, by a Member designated in the report, shall be considered 
read, shall be debatable for the time specified in the report equally 
divided and controlled by the proponent and an opponent, shall not be 
subject to amendment, and shall not be subject to a demand for division 
of the question.


                 Amendment No. 1 Offered by Mr. DeFazio

  The CHAIR. It is now in order to consider amendment No. 1 printed in 
House Report 113-476.
  Mr. DeFAZIO. Mr. Chair, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 10, after line 12, insert the following:
       (5) Whether such trading increases market volatility, 
     including short term market swings.


[[Page 10678]]


  The CHAIR. Pursuant to House Resolution 629, the gentleman from 
Oregon (Mr. DeFazio) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Oregon.
  Mr. DeFAZIO. Mr. Chair, the ranking member mentioned earlier that 
there is a section in the bill of merit which would require four 
studies: whether the technology and personnel needed to monitor the 
effect of high-frequency trading are accurate; the role it plays in 
providing liquidity; whether it creates discrepancies between market 
participants--I would recommend people read ``Flash Boys'' if they want 
the answer to that question--and whether the CFTC's existing authority 
is sufficient with regard to high-frequency trading.
  Those all have great merit. We should have the answers, but I have 
one additional request, which would be to examine whether high-
frequency trading increases market volatility. CFTC already did one 
study. They found that there were 27,000 contracts traded during a 14-
second period during the flash crash, but they came to no conclusion 
regarding how or what role they may have played in the flash crash. I 
think that we should further investigate this.
  With that, I yield back the balance of my time.
  Mr. LUCAS. Mr. Chairman, I claim the time in opposition to the 
gentleman's amendment.
  The CHAIR. The gentleman from Oklahoma is recognized for 5 minutes.
  Mr. LUCAS. Mr. Chairman, I yield myself such time as I might consume.
  Although it is my understanding that the substance of the gentleman 
from Oregon's amendment would be broadly addressed within the existing 
language of section 107, I certainly see no problem with ensuring that 
his concerns are addressed more specifically. Therefore, I will suggest 
to my colleague from Oregon, let's accept your amendment.
  With that, Mr. Chairman, I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the gentleman 
from Oregon (Mr. DeFazio).
  The amendment was agreed to.


               Amendment No. 2 Offered by Ms. Jackson Lee

  The CHAIR. It is now in order to consider amendment No. 2 printed in 
House Report 113-476.
  Ms. JACKSON LEE. Mr. Chair, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 10, after line 12, insert the following:

     SEC. ___. REPORT ON ENTITIES REGULATED BY THE CFTC.

       Not later than 2 years after the date of the enactment of 
     this Act, the Commodity Futures Trading Commission shall 
     submit to the Committees on Agriculture, Financial Services, 
     and the Judiciary of the House of Representatives and the 
     Committees on Agriculture, Nutrition, and Forestry, Banking, 
     Housing, and Urban Affairs, and the Judiciary of the Senate a 
     report examining the number of entities regulated by the 
     Commodity Futures Trading Commission, and with respect to 
     those entities, their size, practice models, and assets under 
     management, and those rendered defunct via bankruptcy or 
     obsolescence.

  The CHAIR. Pursuant to House Resolution 629, the gentlewoman from 
Texas (Ms. Jackson Lee) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from Texas.
  Ms. JACKSON LEE. Mr. Chair, I thank the chairman very much. I thank 
the chairman and the ranking member of the committee and knowing how 
hard they have worked. I hope that this discussion today will emphasize 
a commitment to transparency and a commitment to consumers and a 
commitment to making the legislation responsive to consumers. So I 
thank you for the opportunity.
  This legislation is to reauthorize and improve the operations of the 
Commodity Futures Trading Commission as well as address concerns from 
customers from another failure such as the MF Global and Peregrine 
Financial. It is a product of a multiyear process that included 
hearings and perspectives from market participants, end users, futures 
customers, and the CFTC.
  The Jackson Lee amendment only seeks to improve this bill. If passed, 
it would require a study that will provide very basic information about 
firms regulated by the Commodity Futures Trading Commission. The 
amendment simply requires the CFTC to do a report examining the number 
of entities regulated by them, the entity's size, practice models, and 
assets under management.
  We must be quick to acknowledge that the dramatic failures of not 
just MF Global but several other venerated firms, such as Bear Stearns, 
speak loudly to requiring more information for the consumer.
  This amendment would also provide more insight as to how the industry 
works. My amendment gives 2 years for the agency to complete the first 
study. That is a very long time. Again, the report provides more 
information for the very consumers that we are trying to protect. That 
is more than enough time for the staff of the CFTC to comply with the 
amendment.
  In that span of 2 years, a lot of things can change, but the gist of 
the amendment is to provide more transparency for the investors, as 
many on this floor have already spoken of. It is critical that 
investors know what is going on, particularly small investors who are 
not privy to the information that many of the larger entities are made 
aware.
  My amendment, again, basic information via an agency study, much of 
which the Commission already has, and I am merely seeking to have it.
  Let me just share just one aspect of this and then conclude. More 
importantly, in my conclusion, many of the residents of the 18th 
Congressional District have invested in homes, stocks, and education, 
to see it all flittered away because someone on Wall Street--France or 
Houston, even--pushed the wrong button generating a contra-trade when 
they meant to bid in the other direction. This is not what Americans 
want to see. This is a regulated entity. Transparency is viable.
  Let me show you a letter that was sent from the trustee of MF Global 
to some poor person who, after 5 years, got their few dollars after 
this major bankruptcy.

       Enclosed with this mailing is a check from the trustee in 
     payment of your allowed customer claim.

  They got it 5 years later.

       With this check the full net equity value, as established 
     in the Bankruptcy Court, of your segregated property, the 
     amount related to your trading on domestic exchanges or 
     ``4(d) Property,'' will have been distributed to you. Your 
     former account number at MF Global appears on the check.
       Please cash this check as soon as possible.

  That is another frightening thing. You better hurry up and get the 
$25 or $40 that came.

       To ensure proper and prompt processing.

  I will include the letter for the Record here.

                                Epiq Bankruptcy Solutions, LLC

                        FDR Station, New York, NY, April 28, 2014.
     Re In re MF Global Inc., Case No. (MG) SIPA.

       Dear Claimant: Enclosed with this mailing is a check from 
     James W. Giddens, Trustee for the SIPA liquidation of MF 
     Global Inc., in payment of your allowed customer claim in the 
     SIPA proceeding. With this check the full net equity value, 
     as established in the Bankruptcy Court, of your segregated 
     property (i.e., the amount related to your trading on 
     domestic exchanges or ``4d Property''), will have been 
     distributed to you. Your former account number at MF Global 
     Inc. appears on the check.
       Please cash this check as promptly as possible. To ensure 
     proper and prompt processing, please be sure to properly 
     endorse the check by signing your name and/or account number 
     in the appropriate location on the reverse side of the check. 
     If you have any questions, please feel free to contact one of 
     my representatives at 1-888-236-0808 (inside the United 
     States) or 1-503-597-5173 (outside the United States).
           Very truly yours,

                                             James W. Giddens,

                                              Trustee for the SIPA
                                     Liquidation of MF Global Inc.

  Ms. JACKSON LEE. Mr. Chairman, and to my colleagues I believe that 
this is an important asset or aspect of helping to have more 
information for our consumers.
  I reserve the balance of my time.
  Mr. Chair, I thank you for this opportunity to briefly explain my 
amendment. It is simple and makes a significant improvement to the 
bill.

[[Page 10679]]

  This bipartisan legislation to reauthorize and improve the operations 
of the Commodity Futures Trading Commission (CFTC), as well as address 
concerns relating to protecting customers from another failure such as 
MF Global and Peregrine Financial.
  It is the product of a multi-year process that included hearing 
perspectives from market participants, end-users, futures customers, 
and the CFTC.
  The Jackson Lee amendment only seeks to improve this bill. If passed 
it would require a study that will provide very basic information about 
firms regulated by the Commodity Futures Trading Commission.
  The amendment simply requires the CFTC to do a report examining the 
number of entities regulated by them, the entity's size, practice 
models, and assets under management.
  We must be quick to acknowledge the dramatic failures of not just MF 
Global and Peregrine but several other venerated firms such as Bear 
Stearns.
  This amendment would also provide more insight as to how industry 
works.
  The language of the Jackson Lee amendment gives two years for the 
agency to complete the first one.
  That is more than enough time for the staff at the CFTC to comply 
with this amendment.
  In that span of two years a lot of things could change but the gist 
of the amendment is to provide more transparency for investors.
  It also asks that those firms rendered defunct like MF Global be 
included in the report.
  It is critical that investors know what is going on--particularly 
smaller investors who are not privy to the information that many of the 
larger entities are made aware.
  The MF Global bankruptcy hurt investors and potential investors. It 
is critical that firms increase their transparency and disclose 
information which consumers may use to make informed investment 
decisions.
  The Jackson Lee amendment asks very basic information of these firms 
via an agency study--much of which the Commission may already keep 
account of--and I am merely seeking to have it in a report.
  Again, the amendment simply requires the CFTC to do a report 
examining the number of entities regulated by them, the entity's size, 
practice models, and assets under management. It also asks that those 
firms rendered defunct like MF Global be included in the report.
  And more importantly, many of the residents of the 18th District of 
Texas have invested in homes, stocks, and education--and to see it all 
flittered away because someone on Wall Street, France, or Houston even, 
pushed the wrong button, generating a contra-trade when they meant to 
bet in the other direction--is not what Americans want to see.
  I urge my colleagues to vote for transparency, fairness and openness 
by supporting the Jackson Lee Amendment.
  Mr. LUCAS. Mr. Chair, I claim the time in opposition to the 
amendment.
  The CHAIR. The gentleman from Oklahoma is recognized for 5 minutes.
  Mr. LUCAS. Mr. Chair, in a time of economic uncertainty, tight fiscal 
budgets, I advise against the use of valuable Commission time and 
resources on a study with some ambiguous terms and no clear practical 
use.
  H.R. 4413 already includes carefully crafted requirements for studies 
on the pertinent issues of agency funding and on the effects of high-
frequency trading. So I respectfully urge my colleagues to join me in 
opposing this amendment.
  With that, I reserve the balance of my time.
  Ms. JACKSON LEE. Mr. Chairman, I thank the gentleman, and I certainly 
thank the chairman for his comments.
  Right now the Veterans' Affairs Committee is meeting to find out more 
information on the dastardly knowledge of so many veterans who may have 
died on a secret list. I would imagine that they would have wanted, 
some years back, to have investigated, studied, and gotten more 
information about how veterans are treated in the veterans hospital.
  I respectfully disagree with my friend and colleague. I do not think 
that this is a waste of the energy of this agency and I don't think we 
have enough information. Anytime I can stand on this floor and err on 
the side of the customer, the consumer, and stand up here and show a 
letter that is the ultimate result of a bankruptcy because the 
consumers didn't have all the information that they needed--and all we 
are asking is over a 2-year period give us the number of entities, the 
size, practice models, and the assets under the management--I don't 
believe that that is too much.
  Investigating precise issues is not giving the consumer a portfolio 
of knowledge. I disagree with my good friend, and I ask my colleagues 
to support the Jackson Lee amendment.
  The CHAIR. The time of the gentlewoman has expired.
  Mr. LUCAS. Mr. Chairman, I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the 
gentlewoman from Texas (Ms. Jackson Lee).
  The question was taken; and the Chair announced that the noes 
appeared to have it.
  Ms. JACKSON LEE. Mr. Chair, I demand a recorded vote.
  The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on 
the amendment offered by the gentlewoman from Texas will be postponed.


                 Amendment No. 3 Offered by Ms. DelBene

  The CHAIR. It is now in order to consider amendment No. 3 printed in 
House Report 113-476.
  Ms. DelBENE. Mr. Chair, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 11, strike lines 5 through 7 and insert the following:
       Section 15(a) of the Commodity Exchange Act (7 U.S.C. 
     19(a)) is amended--
       (1) by striking paragraphs (1) and (2) and inserting the 
     following:
       Page 12, line 22, strike the last period and insert ``; 
     and''.
       Page 12, after line 22, insert the following:
       (2) by adding at the end the following:
       ``(4) Judicial review.--Notwithstanding section 24(d), a 
     court shall affirm a Commission assessment of costs and 
     benefits under this subsection, unless the court finds the 
     assessment to be an abuse of discretion.''.

  The CHAIR. Pursuant to House Resolution 629, the gentlewoman from 
Washington (Ms. DelBene) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from Washington.

                              {time}  2015

  Ms. DelBENE. Mr. Chair, I would like to thank Chairman Lucas and 
Ranking Member Peterson, as well as Subcommittee Chairman Conaway and 
Ranking Member Scott, for their work on this very important bill.
  I would also like to thank Congressmen Gibson and Vargas for 
cosponsoring this amendment. This amendment is the only bipartisan 
amendment we are considering today. It is straightforward and will 
provide needed clarity.
  This amendment simply states that a court shall affirm the CFTC's 
assessment of the costs and benefits of a rule. This would have the 
practical impact of limiting the ability of individuals and firms to 
challenge the CFTC in court, in an attempt to stop a rule from being 
implemented based on the cost-benefit analysis.
  The amendment also provides for an exception in the case of an abuse 
of discretion by the Commission. If no such abuse occurs, a court must 
uphold the CFTC's assessment.
  At a time when the CFTC is still implementing a litany of rules, 
including a number of crucial rules required by the passage of Dodd-
Frank, we should not be inhibiting the CFTC's progress and adding to 
their workload, especially when the agency is already struggling with 
insufficient resources for the task at hand.
  To be clear, the CFTC is already required to consider the costs and 
benefits of its actions and regulations. It just does not provide a 
formal analysis of the costs and benefits.
  If we are going to mandate that the CFTC provide a formal cost-
benefit analysis when developing regulations, which can be time 
consuming, we should trust their analysis and not let the rules get 
tied up in costly and time-consuming litigation.
  Why go through such a rigorous process, like a cost-benefit analysis, 
and expend all of the time and energy that goes with it, if the end 
result can be easily derailed by a lawsuit filed at the eleventh hour.
  I firmly believe that this amendment improves this bill to 
reauthorize a critical Federal regulator, and I urge my

[[Page 10680]]

colleagues to support this bipartisan amendment.
  I reserve the balance of my time.
  Mr. LUCAS. Mr. Chairman, I rise in opposition to the amendment.
  The CHAIR. The gentleman from Oklahoma is recognized for 5 minutes.
  Mr. LUCAS. Mr. Chairman, this amendment sponsored by the gentlewoman 
from Washington and her cosponsors, the gentlemen from New York and 
California--all valued Members of the House Agriculture Committee--
builds on the enhancements of the cost-benefit analysis required in 
this bill by preserving the court's ability to review the Commission 
rules or orders.
  I congratulate the sponsors of this amendment. Once again, the House 
Ag Committee proves that working in a bipartisan manner is possible and 
productive. This is the type of cooperation I think our friends back 
home would want to see and demand.
  With that, I urge its adoption, and I yield back the balance of my 
time.
  Ms. DelBENE. Mr. Chair, I yield as much time as he may consume to the 
gentleman from Georgia (Mr. David Scott), the subcommittee ranking 
member.
  Mr. DAVID SCOTT of Georgia. Mr. Chair, I thank Ms. DelBene.
  Ms. DelBene, Mr. Gibson, and Mr. Vargas are all hardworking members, 
Democrats and Republicans, on the Ag Committee. I think this shows you 
how wonderful the legislative process can be. I certainly want to 
recognize our ranking member who brought this concern in her opening 
remarks.
  This helps to tighten and, I think, make a better bill. What it will 
do is that it will address the concerns that Ms. Waters raised, and 
that would be that improved cost-benefits provision would lead to 
unnecessary litigation.
  What Ms. DelBene, Mr. Vargas, and Mr. Gibson have done with their 
language is it definitely narrows the potential avenues for litigation 
on the CFTC's cost-benefit analysis, but still allows the consideration 
of the points of analysis to take place.
  I want to commend Ms. DelBene, Mr. Gibson, and Mr. Vargas for a very 
good amendment.
  Ms. DelBENE. I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the 
gentlewoman from Washington (Ms. DelBene).
  The amendment was agreed to.


                 Amendment No. 4 Offered by Ms. Waters

  The CHAIR. It is now in order to consider amendment No. 4 printed in 
House Report 113-476.
  Ms. WATERS. Mr. Chair, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 11, strike lines 5 through 7 and insert the following:
       Section 15(a) of the Commodity Exchange Act (7 U.S.C. 
     19(a)) is amended--
       (1) by striking paragraphs (1) and (2) and inserting the 
     following:
       Page 12, line 22, strike the last period and insert ``; 
     and''.
       Page 12, after line 22, insert the following:
       (2) by adding at the end the following:
       ``(4) Judicial review.--This subsection is intended only to 
     improve the internal management of the Commission and any 
     estimate, analysis, statement, description or report prepared 
     under this subsection, and any compliance or noncompliance 
     with the provisions of this subsection, and any determination 
     concerning the applicability of the provisions of this 
     subsection shall not be subject to judicial review. No 
     provision of this subsection shall be construed to create any 
     right or benefit, substantive or procedural, enforceable at 
     law by a party against the United States, its agencies, its 
     officers, or any person.''.

  The CHAIR. Pursuant to House Resolution 629, the gentlewoman from 
California (Ms. Waters) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from California.
  Ms. WATERS. Mr. Chairman, I urge support for this amendment to ensure 
that the Commodities Futures Trading Commission can adequately regulate 
our financial markets and address some of the very practices that so 
seriously harmed our economy just a few years ago.
  This amendment modestly improves the onerous cost-benefit 
considerations included in this bill, a provision that would open the 
Commission up to expensive legal challenges.
  It does so by adding in language from the President's executive order 
on cost-benefit analysis that prohibits judicial review. The bill's 
sponsors cite this order as the model of good analysis and incorporate 
many provisions of that order in this legislation.
  However, the measure before us today inconsistently omits the order's 
prohibition on judicial review, thereby subjecting the CFTC's most 
cost-benefit considerations to increase litigation risk--risk that no 
other agency complying with the executive order has faced.
  My amendment would correct this oversight and prevent special 
interest groups from using the cost-benefit provision as a club to 
delay, weaken, or kill financial reform.
  My colleagues--Representative DelBene, Representative Gibson, and 
Representative Vargas--share my concerns and have proposed an amendment 
that would establish a heightened standard of judicial review.
  While I support this amendment, it does not go far enough, in my 
view, to fix the problem. I believe that judicial review with regard to 
the heightened cost-benefit provisions in the underlying bill should be 
prohibited entirely.
  Make no mistake, even if the amendment offered previously by my 
colleagues on judicial review--or, for that matter, my amendment--is 
adopted, the bill would still impose heavy administrative hurdles on 
the CFTC.
  The Commission is already required to consider the costs and benefits 
when promulgating rules and issuing orders pursuant to the Paperwork 
Reduction Act, the Congressional Review Act, and the Regulatory 
Flexibility Act, as other agencies do.
  Unlike any other financial regulator, the CFTC is also already bound 
by the Commodity Exchange Act to consider the impact of their rules on 
the full range of market stakeholders.
  The courts have weighed in as well, finding that the CFTC has 
fulfilled its duty to consider the costs and benefits, as in the rule 
related to commodity pool operators.
  The CFTC will still have to expand resources to comply with this 
provision that Republicans are unwilling to provide. Instead, the CFTC 
will have to take funds from examinations and enforcement to pay for 
redundant economic analysis.
  Mr. Chairman, this is a commonsense amendment that will simply 
prevent our Nation's top directives cop from spending excessive time 
and resources fighting off superfluous legal challenges and would make 
the underlying bill consistent with the President's executive order.
  I urge my colleagues to support this amendment, and I reserve the 
balance of my time.
  Mr. CONAWAY. Mr. Chairman, I rise in opposition to the amendment.
  The CHAIR. The gentleman from Texas is recognized for 5 minutes.
  Mr. CONAWAY. Mr. Chairman, I think it is very dangerous to require 
the regulated community to follow rules or regulations that have not 
been properly considered.
  A cost-benefit analysis is an essential requirement for any rule or 
order. Only after a regulator considers the costs of imposing a rule 
and then compares that cost to the anticipated benefits can a rule be 
properly analyzed.
  Far too often, regulators at the CFTC ignore cost or important cost 
factors, so that their regulatory agenda can be implemented unimpeded.
  The ability of the regulated committee to ask a court to review the 
cost-benefit analysis of a rule or order is an essential deterrent to 
such a practice.
  The threat of litigation forces regulators to make sure they properly 
consider costs and attest that the regulation achieves the goal set out 
in the law passed by Congress in the most cost-efficient manner.
  Striking the ability of a court to review the cost-benefit analysis 
of a CFTC regulation would vitiate the carefully negotiated bipartisan 
compromise just offered by Ms. DelBene.
  It seems odd on the logic that you would support the DelBene 
amendment, which improves judicial review

[[Page 10681]]

and narrows its scope, and then categorically oppose judicial review.
  I think her amendment, allowing courts to determine if a cost-benefit 
analysis of a CFTC-promulgated rule or regulation is an abuse of the 
Commission's discretion, is a measured approach that will lead to a 
sound and effective policy.
  We have also got an indication from the IG, the inspector general, 
that throughout the entire Dodd-Frank regulatory process, which the 
CFTC put in place some 60 rules, that generally speaking--according to 
the IG, generally speaking, it appears that CFTC employees did not 
consider quantifying costs when conducting cost-benefit analysis for 
the definitions as indicated. It took a very cavalier approach to the 
process.
  We think that, based on the testimony we have heard from many of the 
regulated, the CFTC did a very poor job on the front end of estimating 
the cost of what all of these rules that they were putting in place 
with respect to Dodd-Frank would be and, therefore, did not consider 
them properly, and the benefits were far less than the cost imposed.
  With that, I respectfully urge my colleagues to defeat this 
amendment, and I reserve the balance of my time.
  Ms. WATERS. May I inquire as to how much time I have remaining on 
this amendment?
  The CHAIR. The gentlewoman from California has 1\1/2\ minutes 
remaining.
  Ms. WATERS. Thank you very much, Mr. Chairman.
  I just want to make clear my opposition to anything other than 
preventing judicial review on cost-benefit analysis.
  Again, I am very appreciative to my colleagues who also share my 
concerns and, again, have proposed an amendment that would establish a 
heightened standard of judicial review, and I support that amendment.
  I do not want anyone to be confused that I believe that that 
amendment would solve the problem. I still think that, if that 
amendment is adopted, the bill would still impose heavy administrative 
hurdles on the CFTC.
  This is not about simply reauthorization at any cost with anything in 
the bill. This is about having a CFTC that really works, that is not 
burdened with the kind of cost-benefit analysis that we have seen 
burdening other of our agencies that have tried to do their job, 
including the SEC.
  I would ask my friends who are listening to differentiate between 
that amendment of my colleagues, who are addressing this concern in 
their way, and my amendment that would prevent judicial review 
altogether.
  I yield back the balance of my time.
  Mr. CONAWAY. Mr. Chair, I, too, agree with the gentlewoman that we 
all want a very effective CFTC.
  Reauthorizing the agency ought to be a part of looking at its 
operations. Given the work that it did and didn't do during the Dodd-
Frank regulatory scheme that put in place 60 new rules, we don't 
believe that the cost-benefit rules that were in place under section 
15(a) were properly used and did not generate the benefits that the 
impact of a properly vetted cost-benefit analysis would have on each 
and every rule.
  With that, I urge my colleagues to vote against the amendment, and I 
yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the 
gentlewoman from California (Ms. Waters).
  The question was taken; and the Chair announced that the noes 
appeared to have it.
  Ms. WATERS. Mr. Chair, I demand a recorded vote.
  The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on 
the amendment offered by the gentlewoman from California will be 
postponed.


                  Amendment No. 5 Offered by Ms. Moore

  The CHAIR. It is now in order to consider amendment No. 5 printed in 
House Report 113-476.
  Ms. MOORE. Mr. Chair, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 11, strike line 1 and all that follows through page 
     12, line 22, and insert the following:

     SEC. ___. SENSE OF THE CONGRESS.

       It is the sense of the Congress that the Commodity Futures 
     Trading Commission is required by law to consider the costs 
     and benefits when promulgating rules and issuing orders, and 
     is held accountable to this requirement by our courts. 
     Current law requires the Commission to conduct economic 
     analyses pursuant to the Paperwork Reduction Act, the 
     Congressional Review Act, and the Regulatory Flexibility Act, 
     as other agencies do. Unlike any other financial regulator, 
     the Commission is also bound by the Commodity Exchange Act to 
     consider the protection of market participants and the 
     public; the efficiency, competitiveness, and financial 
     integrity of futures markets; price discovery; sound risk 
     management practices; and other public interest 
     considerations. Notably, the Federal courts hold the 
     Commission accountable and vacate rulemaking that does not 
     meet statutory requirements, as demonstrated by the ruling by 
     a United States district court on the Commission's rule on 
     commodity position limits.

  The CHAIR. Pursuant to House Resolution 629, the gentlewoman from 
Wisconsin (Ms. Moore) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentlewoman from Wisconsin.
  Ms. MOORE. Mr. Chair, my amendment is really rather straightforward. 
It preserves the ability of the Commodities Futures Trading Commission 
to regulate derivatives markets, while maintaining the reasonable cost-
benefit provisions that are already in the law.
  Just to give you a little history, Mr. Chair, as we know, unregulated 
derivatives transactions precipitated the 2008 financial crisis, which 
this country is still struggling to recover.
  Section 203 is not something, as I have heard earlier in this debate, 
that will just make it more facile for manufacturers or for end users 
or farmers.
  It is a Trojan horse designed to deregulate derivatives markets by 
providing Wall Street favorable terms and means to sue to overturn laws 
and regulations, not on substance, not even on congressional intent, 
but by challenging economic studies in court.

                              {time}  2030

  Regulatory gaps in derivatives regulation will put taxpayers back on 
the hook for Wall Street excesses.
  Mr. Chairman, I will enter into the Record an analysis that I did. It 
was posted in The Huffington Post: ``GOP `Cost-Benefit' Bill Benefits 
Wall Street and Costs Americans.''

               [From the Huffpost Politics, May 17, 2013]

    GOP `Cost-Benefit' Bill Benefits Wall Street and Costs Americans

                          (By Rep. Gwen Moore)

       Republicans again have it all wrong on the substance and 
     politics as they bring to the House floor the SEC Regulatory 
     Accountability Act, or the so-called SEC ``cost-benefit'' 
     bill. Despite the innocuous name of the bill, Americans 
     should not be fooled. The bill seeks to not only undo Dodd-
     Frank, but all financial market regulation past, present, and 
     future. It is a bad bill for American taxpayers and for free 
     market capitalism.
       By requiring an overly stringent and arbitrary accounting 
     of ``costs'' to industry, the bill makes it impossible to 
     properly regulate markets. It seeks to eviscerate the mission 
     of the Securities and Exchange Commission (SEC) to protect 
     investors and would functionally subordinate all government 
     oversight and regulation, including by the elected Congress, 
     to industry interests. The bill functions as a one-way 
     ratchet to make deregulation an irresistible gravity, while 
     making regulation of even the worst industry practices a 
     nearly impossible hurdle.
       The circumstances of the financial crisis have utterly 
     discredited the Ayn Rand-inspired deregulatory zeal that the 
     proponents of this bill insist on advancing. It is a model 
     that does not work and that led to economic calamity and 
     pain. Instead, the supporters of this bill are hoping that 
     rhetoric can mask reality.
       Securities law already directs the SEC ``to consider'' the 
     cost-benefit of rulemakings. President Obama also directs the 
     SEC to conduct cost-benefit analysis of rulemakings. I 
     support the cost-benefit analysis mandates already contained 
     in federal securities law and President Obama's executive 
     order. So what does the SEC Regulatory Accountability Act 
     add? As former SEC Chairman Arthur Levitt explains in the New 
     York Times, the bill subjects the SEC to an impossibly 
     subjective review of all regulations. This bill was 
     transparently designed to allow each regulation to be 
     challenged in court by industry, but not by consumer 
     advocates.

[[Page 10682]]

       The primary mission of the SEC is investor protection. The 
     bill undermines that mission by permitting industry to sue 
     the government in order to overturn regulations. Even when 
     Congress passes laws to protect investors, like Dodd-Frank, 
     the SEC would be constrained in issuing rules under this bill 
     by the mandate to prioritize even tertiary costs to industry 
     over investor protection, or any other priority Congress 
     sets, such as constraints on systemic risks. In other words, 
     it creates a government for industry over the People.
       The bill is clearly bad for consumer protection and 
     taxpayers as it ushers in a new world where Wall Street 
     functionally decides the rules, and it is caveat emptor for 
     financial services end-users. However, it is not even good 
     for industry in the broader sense. It would mean that 
     rulemakings would take even longer, as the SEC struggled to 
     meet the impossibly subjective economic cost-benefit standard 
     to stave off the coming court battle over competing economic 
     impact projections. The ink would not be dry on a SEC rule 
     before the race to the courthouse door to challenge the 
     regulations would begin. Presumably, the most powerful 
     industry participants would challenge the rules in the way 
     that achieves their narrow interest, which may be to the 
     detriment of investors or other less-affluent market 
     participants. In this way, the most powerful industry 
     interests would be able to not only use the courts to undo 
     consumer protections, but to also seek competitive advantage 
     over competitors.
       In Congress, I hear a lot from the financial industry about 
     ``uncertainty.'' There would never be certainty in securities 
     markets if this bill were to ever become law. However, my 
     primary concern is not for industry. It is for the People. 
     The bill would eventually degrade consumer protection in 
     financial markets until no investor could have faith in U.S. 
     financial markets. The bill would allow firms and markets to 
     operate unchecked. The industry with the best lawyers would 
     reign, regardless of business model, practices, or any other 
     market consideration. Congress would be powerless to help. 
     This legislation rejects the lessons of the financial crisis 
     and statutorily mandates the mistakes that led to it, with 
     the taxpayers on the hook.
                                  ____

       Page 19, beginning on line 15, strike ``United States Court 
     of Appeals for the District of Columbia Circuit or the United 
     States Court of Appeals for the circuit'' and insert ``United 
     States District Court for the District of Columbia or the 
     United States District Court for the district''.

  Ms. MOORE. I can tell you that among the requirements of this new 
section 203 is a mandate for regulators to consider ``available 
alternatives to direct regulation.''
  Alternatives to regulation? What are we talking about here?
  As a Member of Congress--and all of us who are accountable to 
voters--we should not be comfortable passing laws only to have 
regulators not implement them because Wall Street hedge funds or swap 
dealers object to a cost study issued with the regulation.
  The Wolf of Wall Street should not get a veto over regulations 
because he can produce a self-serving study that a regulation may 
burden him in some way.
  Mr. Chairman, how much time do I have remaining?
  The CHAIR. The gentlewoman from Wisconsin has 2\1/2\ minutes 
remaining.
  Ms. MOORE. Mr. Chairman, I reserve the balance of my time.
  Mr. CONAWAY. Mr. Chairman, I rise in opposition to the amendment.
  The CHAIR. The gentleman from Texas is recognized for 5 minutes.
  Mr. CONAWAY. Mr. Chairman, we have already talked at length about the 
benefits of cost-benefit analysis, and section 203 would bring the 
discipline necessary to the agency for them to consider the costs and 
benefits when prescribing a new rule or regulation.
  The gentlelady's remarks would be much more in line if she were 
strictly asking to strike the section, but she is asking for a sense of 
Congress. Why would we need a sense of Congress based on her arguments 
that CFTC doesn't need this issue at all? I would understand her 
arguments a lot better if she would have simply asked for a strike.
  I am going to oppose the gentlewoman's amendment because her 
amendment is a stalking horse, because it would simply replace the 
bipartisan, well-crafted consideration for the new cost-benefit 
analysis for the CFTC with a sense of Congress. That, in my view, would 
gut and negate the value of having the agency actually go through, as 
they propose a rule, to determine what will be the cost and what will 
be the benefits.
  We are always going to have regulations. God started us off with 10. 
We are going to have regulations, but they ought to make sense, they 
ought to regulate the minimum amount needed to regulate, and when the 
usefulness goes away, they should expire as well.
  So as an agency conducts that process, taking into consideration the 
cost and benefits is an appropriate step as they put together 
regulations. It doesn't mean that the cost-benefit analysis will 
control in every instance, but it does allow for a better sense that 
those who are being regulated here have their voices heard during the 
process. And then if the agency has done a proper cost-benefit 
analysis, those who are regulated will stand a better chance of 
voluntarily complying with those new rules, we will have less acrimony 
during the process, and perhaps even less litigation if the agency 
would use a proper cost-benefit analysis and reflect the impact of that 
analysis in the rules.
  With that, I will oppose the amendment, and I reserve the balance of 
my time.
  Ms. MOORE. Mr. Chairman, those bipartisan groups who do not learn 
from history are doomed to repeat it. We, on a bipartisan basis, didn't 
regulate these derivatives, and we will, unfortunately, learn our 
lesson.
  I yield such time as she may consume to the gentlewoman from 
California (Ms. Waters), ranking member of the Financial Services 
Committee.
  Ms. WATERS. Thank you very much for yielding additional time to me to 
talk about cost-benefit analysis.
  I think the gentlelady has made a real case for what we are dealing 
with here.
  First of all, we know--and I guess we all agree--that prior to the 
meltdown that we had that caused the recession in this country, we did 
not have the kind of oversight that we needed on derivatives.
  We worked very hard to bring about transparency. We worked very hard 
to get a handle on the role that derivatives played in this meltdown we 
had that caused us almost to go into a depression. And here we are 
trying to implement the reforms, trying very hard to protect the 
American public and those ends users that have been talked about so 
much today.
  Cost-benefit analysis is just another way that has been injected into 
this whole attempt to regulate that would place unreasonable burdens on 
the CFTC and basically prohibit them from doing their job.
  In offering this amendment, the gentlelady has made it very clear, 
and she has added additional support to what we have been talking about 
today relative to cost-benefit analysis. And so I hope that not only 
the information we have presented, but the information that she has 
presented is enough to have people understand what we need to do in 
order to protect the CFTC's ability to do its job and to carry out its 
mission.
  Ms. MOORE. Section 203 takes us back to the day before AIG melted 
down. We are moving backwards in time and not forward with 
strengthening our economy.
  With that, I yield back the balance of my time.
  Mr. CONAWAY. Mr. Chairman, throughout the debate on this bill--in 
committee, in subcommittee--we have made the point over and over that 
this is simply a prospective change to the rules for the Commission. It 
has absolutely nothing to do with the rules that are already in place. 
The 60-some odd rules that are in place to protect under Dodd-Frank are 
unaffected by this change to the CFTC's rules and cost-benefit 
analysis.
  In the future, if Congress decides on a massive law change, as they 
did with Dodd-Frank--one side of the House decided that--and the CFTC 
has to go through this, at that point in time these rules come into 
effect. But title VII to Dodd-Frank and all the changes that were made 
at the CFTC are in place.
  So this is not going backwards. It is not looking backwards. This is 
simply a prospective change to the way the

[[Page 10683]]

CFTC should operate going forward. They should have been operating 
under this rule anyway, but they weren't. The rules were antiquated. 
There were not enough teeth in them. So Chairman Gensler and others 
took advantage of it.
  This will close that loophole and future chairmen will have to abide 
by a rational cost-benefit analysis program that will improve the 
regulations.
  With that, Mr. Chairman, I urge my colleagues to oppose the 
amendment, and I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the 
gentlewoman from Wisconsin (Ms. Moore).
  The question was taken; and the Chair announced that the noes 
appeared to have it.
  Ms. MOORE. Mr. Chairman, I demand a recorded vote.
  The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on 
the amendment offered by the gentlewoman from Wisconsin will be 
postponed.


               Amendment No. 6 Offered by Ms. Jackson Lee

  The CHAIR. It is now in order to consider amendment No. 6 printed in 
House Report 113-476.
  Ms. JACKSON LEE. Mr. Chairman, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 19, beginning on line 15, strike ``United States Court 
     of Appeals for the District of Columbia Circuit or the United 
     States Court of Appeals for the circuit'' and insert ``United 
     States District Court for the District of Columbia or the 
     United States District Court for the district''.

  The CHAIR. Pursuant to House Resolution 629, the gentlewoman from 
Texas (Ms. Jackson Lee) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from Texas.
  Ms. JACKSON LEE. Mr. Chairman, again, I thank the chairman and 
ranking member of the Financial Services Committee.
  My amendment is simple. It would preserve existing law where a legal 
challenge to a CFTC regulation is reviewed first by the district court. 
And then, following an opinion by a district court judge, an appeal, if 
any, is taken to the court of appeals.
  Let me, first of all, refer my colleagues to the joint report by the 
Agriculture Committee where specifically it says that the general 
review provisions of the APA would apply, requiring parties seeking to 
challenge CFTC rules to file a claim before a U.S. district court.
  And it goes on to give those particular details. Then it goes on to 
indicate that to follow the review provisions of the APA--this going 
into a district court--the CFTC's general counsel indicated that he 
would not object to a change.
  I would make the argument that it is not the general counsel but it 
is the individual consumer who should have the opportunity in a 
district court--either in their district or in the District of 
Columbia--to be able to make a record and to ensure that all of the 
facts of the issue dealing with the rule are fully vetted. And that 
will happen if you have the opportunity to go first to the district 
court.
  Preserving existing law where a legal challenge to a CFTC regulation 
is reviewed first by the district court and then followed by an opinion 
by a district court judge gives the opportunity for a full briefing--a 
robust record that can be developed along the legal issue and fact 
issues, and also it reduces the ability of the industry to undermine 
important Dodd-Frank derivatives.
  In my earlier statement on the floor, I indicated that many of the 
little guys are in the commodities. Dealing with that, they need the 
opportunities to have, in essence, the double-check on rules that may 
impact their business.
  With respect to Dodd-Frank and this authorizing legislation, let us 
not throw the baby out with the bath water.
  We all remember the dark days of September and October of 2008. The 
financial markets needed to be bailed out. I do not want to see that 
repeated.
  So, again, the amendment is simple. It goes back to existing law. I 
cannot imagine that the general counsel would oppose existing law. The 
statement says he didn't mind. But, again, didn't mind closing down 
further opportunities for consumers to have a record made on something 
that they may be opposing?
  So I would ask my colleagues to support the Jackson Lee amendment, 
and I reserve the balance of my time.
  Mr. Chair, I wish to thank the Chair and Ranking Member for their 
work on this bill. We all know that the Agriculture Committee is one of 
the hardest working--and also has one of the most diverse missions in 
Congress. I thank you for this opportunity to briefly explain my 
amendment. It is simple and makes a significant improvement to the 
bill.
  My amendment modifies Section 212 on judicial review that on page 19, 
lines 15 through 17 strikes ``United States Court of Appeals for the 
District of Columbia Circuit or the United States Court of Appeals for 
the circuit,'' and replaces with ``United States District Court for the 
District of Columbia or the United States Court for the district.
  Doing so would preserve existing law, where a legal challenge to a 
CFTC regulation is reviewed first by the district court, and then 
following an opinion by a district court judge, an appeal, if any, is 
taken in the court of appeals.
  This process provides for a more robust development of legal issues 
and a broader record in any appeal, reducing the ease of industry to 
undermine important Dodd-Frank derivatives rulemakings.
  With respect to Dodd-Frank and this authorizing legislation, Mr. 
Chairman, let us not throw out the baby with the bath water. We all 
remember the dark days of September and October 2008 when the financial 
markets needed to be bailed out. I do not want to repeat that.
  And more importantly, many of the residents of the 18th District of 
Texas have invested in homes, stocks, and education--and to see it all 
flittered away because someone on Wall Street, France, or Houston even, 
pushed the wrong button, generating a contra-trade when they meant to 
bet in the other direction--is not what Americans want to see.
  I urge my colleagues to vote for fairness and judicial economy, and 
preserve existing law by supporting the Jackson Lee Amendment.
  Mr. LUCAS. Mr. Chairman, I claim the time in opposition to the 
amendment.
  The CHAIR. The gentleman from Oklahoma is recognized for 5 minutes.
  Mr. LUCAS. Mr. Chairman, I yield myself such time as I may consume.
  In crafting the Consumer Protection and End User Relief Act, I worked 
closely with Ranking Member Peterson to ensure that judicial review of 
CFTC rules would be on the same footing as a review of security laws 
from the SEC, the Securities and Exchange Commission.
  The current disparity between security laws and the Commodity 
Exchange Act has resulted in confusion in the past, as aggrieved 
parties were unsure of where to go to seek review of CFTC rules.
  Quite simply, I urge my colleagues to vote against what I fear is a 
regressive amendment.
  With that, I reserve the balance of my time.
  Ms. JACKSON LEE. Mr. Chairman, how much time do I have remaining?
  The CHAIR. The gentlewoman from Texas has 2 minutes remaining.
  Ms. JACKSON LEE. I appreciate the chairman's commentary about the 
SEC. I am well aware that the SEC has driven itself to utilizing the 
Court of Appeals.
  I would make the argument that there is a smaller investor that tends 
to engage in commodities, and, therefore, transparency and the 
opportunity to create a record is far more important in commodities.
  I would also make the point that my amendment is supported by the 
Commodity Markets Oversight Coalition, which is asking for us to 
continue with existing law.
  They, of course, include Airlines for America, American Baker's 
Association, California Black Farmers, California Independent Oil 
Marketers Association, Colorado Petroleum Marketers Association, 
Florida Petroleum Market Marketers Association, Maine Energy Marketers 
Association, the National

[[Page 10684]]

Association of Oil and Energy Service Professionals, National Family 
Farm Coalition, among others, which I will include in the Record.
  National Grange, New Jersey Citizen Action Oil Group, New Mexico 
Petroleum Marketers Association, North Dakota Petroleum Marketers 
Association, Oil Heat Council of New Hampshire, Petroleum Marketers and 
Convenience Stores of Iowa, Public Citizen, Ranchers-Cattlemen Action 
Legal Fund, Wyoming Petroleum Marketers Association, to name just a 
few, who clearly just ask for a simple request: when there is a need to 
challenge the rules, allow a full record to be made at the district 
court level. Commodities is not in the same vain as the SEC.
  I would argue that there is need for greater highlight in 
information, and that the Jackson Lee amendment should be accepted for 
that kind of transparency and treating small investors fairly and 
giving them the opportunity to fully pursue their position when it 
comes to a particular rule.
  I would ask my colleagues to support the amendment, and I yield back 
the balance of my time.


                 commodity marketer overnight coalition

       Supporting organizations: Airlines for America; American 
     Baker's Association; American Feed Industry Association; 
     American Public Power Association; American Trucking 
     Associations; California Black Farmers & Agriculturalists 
     Association; California Independent Oil Marketers 
     Association; California Service Station and Automotive Repair 
     Association; Colorado Petroleum Marketers Association; 
     Connecticut Energy Marketers Association; Consumer Federation 
     of America; Florida Petroleum Marketers Association; Fuel 
     Merchants Association of New Jersey; Gasoline & Automotive 
     Service Dealers of America; Institute for Agriculture and 
     Trade Policy; Louisiana Oil Marketers & Convenience Store 
     Association; Maine Energy Marketers Association; Montana 
     Petroleum Marketers & Convenience Store Association; NAFA 
     Fleet Management Association; National Association of Oil & 
     Energy Service Professionals.
       National Association of Shell Marketers; National Family 
     Farm Coalition; National Farmers Union; National Grange; 
     National Latino Farmers & Ranchers Trade Association; New 
     England Fuel Institute; New Jersey Citizen Action Oil Group; 
     New Mexico Petroleum Marketers Association; New York Oil 
     Heating Association; North Dakota Petroleum Marketers 
     Association; North Dakota Retail Association; Ohio Petroleum 
     Marketers & Convenience Store Association; Oil Heat Council 
     of New Hampshire.
       Oil Heat Institute of Long Island; Oil Heat Institute of 
     Rhode Island; Organization for Competitive Markets; Petroleum 
     Marketers & Convenience Store Association Kansas; Petroleum 
     Marketers & Convenience Stores of Iowa; Petroleum Marketers 
     Association of America; Public Citizen; Ranchers-Cattlemen 
     Action Legal Fund (R-CALF) USA; Utah Petroleum Marketers and 
     Retailers Association; Vermont Fuel Dealers Association; West 
     Virginia Oil Marketers and Grocers Association; Wyoming 
     Petroleum Marketers Association.

                              {time}  2045

  Mr. LUCAS. Mr. Chairman, I yield myself whatever time I might 
consume.
  Once again, I respectfully ask my colleagues to vote against what I 
am concerned is a regressive amendment.
  With that, I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the 
gentlewoman from Texas (Ms. Jackson Lee).
  The question was taken; and the Chair announced that the noes 
appeared to have it.
  Ms. JACKSON LEE. Mr. Chairman, I demand a recorded vote.
  The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on 
the amendment offered by the gentlewoman from Texas will be postponed.


                 Amendment No. 7 Offered by Mr. Fincher

  The CHAIR. It is now in order to consider amendment No. 7 printed in 
House Report 113-476.
  Mr. FINCHER. Mr. Chairman, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 24, after line 21, insert the following:

     SEC. ___. GAO STUDY ON COMMISSION LEASES.

       (a) The Comptroller General of the United States shall, in 
     consultation with the Commodity Futures Trading Commission 
     Inspector General, conduct a study and publish a report 
     regarding achieving efficiencies in leasing and rental costs 
     at the Commodity Futures Trading Commission.
       (b) The report shall be published within 90 days after the 
     date of the enactment of this Act regarding achieving 
     efficiencies in leasing and rental costs of buildings 
     occupied by the Commodity Futures Trading Commission, and 
     shall include recommendations to the Chairman of the 
     Commodity Futures Trading Commission and the congressional 
     committees of jurisdiction regarding the following:
       (1) Average occupancy rates and leasing costs of buildings 
     across the Federal Government compared to those currently in 
     effect with respect to buildings and locations occupied by 
     the Commodity Futures Trading Commission;
       (2) Changes to leasing authority that could achieve 
     efficiencies, including the revocation of independent leasing 
     authority and transfer of authority to the Administrator of 
     General Services;
       (3) The recommendations and responses contained in the 
     report by the Commodity Futures Trading Commission Inspector 
     General, dated June 4, 2014.
       (4) Other related recommendations that would achieve 
     efficiencies in leasing and rental costs of buildings 
     currently occupied by the Commodity Futures Trading 
     Commission.
       (5) Is the Commodity Futures Trading Commission violating 
     any laws, including the Anti-Deficiency Act, by entering into 
     these leases, particularly those with more than 5-year terms, 
     and if so, how they can avoid violating Federal law in the 
     future.
       (c) The Chairman of the Commodity Futures Trading 
     Commission shall report to the congressional committees of 
     jurisdiction within 60 days after receipt of the report as to 
     whether the Chairman accepts or rejects each of the 
     recommendations of the Comptroller General, and an 
     explanation for each decision.

  The CHAIR. Pursuant to House Resolution 629, the gentleman from 
Tennessee (Mr. Fincher) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Tennessee.
  Mr. FINCHER. Mr. Chairman, my amendment to H.R. 4413 simply requires 
the Comptroller General of the United States to conduct a study of the 
efficiencies in leasing and rental costs at the Commodity Futures 
Trading Commission.
  The study would determine if the CFTC is violating any laws, 
including the Antideficiency Act, by entering into these leases, 
particularly those with more than 5-year terms and, if so, how it can 
avoid violating Federal law in the future.
  In a recent report from the inspector general of the Commodity 
Futures Trading Commission, we found that the CFTC is currently using 
just one-third of its Kansas City regional office.
  The CFTC is paying approximately $44,000 per month, meaning that, 
over the 10-year life of the lease, the CFTC will pay $5.3 million, 
with $3.6 million dedicated to vacant office space.
  However, in this letter from the inspector general, we found that 
this is not limited to just the Kansas City office. In fact, over the 
life of the CFTC's current leases, more than $200 million will be spent 
with approximately $64 million dedicated to vacant office spaces.
  This is simply outrageous, and it is the latest example of government 
waste of taxpayer money. In fact, the CFTC management, in its May 14 
response to the inspector general, agreed that there is excess vacant 
space.
  However, the CFTC argued the lease of so many vacant offices was a 
justifiable expense because future funding increases are within the 
``realm of possibility.''
  Mr. Chairman, Congress has appropriated approximately 66 percent of 
the CFTC's budget request. Let's just look over the last few years. In 
fiscal year 2012 and in fiscal year 2013, the CFTC requested $308 
million and received $205 million. In fiscal year 2014, the CFTC 
requested $315 million and received $215 million.
  I agree with the inspector general that the realm of possibility is 
not the standard taxpayers expect when the government deals with their 
money.
  Mr. Chairman, is it really too much to ask agencies that are spending 
millions on rent to actually need and use this space?
  The inspector general hit the nail on the head when he stated that:

       The CFTC and the public are better served by the risk of a 
     temporary shortage of space

[[Page 10685]]

     than a 100 percent certainty of spending substantial taxpayer 
     dollars on the leases of vacant spaces.

  It is just common sense that, if you can't afford it, you don't buy 
it. For these reasons, I urge my colleagues to vote for this amendment 
and ensure that the CFTC stops relying on the realm of possibility as 
justification for wasting taxpayer dollars on empty office spaces.
  With that, I reserve the balance of my time.
  Mr. PETERSON. Mr. Chairman, I claim the time in opposition.
  The CHAIR. The gentleman from Minnesota is recognized for 5 minutes.
  Mr. PETERSON. In opposition, I want to say that I have no opposition 
to this amendment.
  Mr. Chairman, I yield back the balance of my time.
  Mr. FINCHER. Mr. Chairman, I urge the support of the amendment, and I 
yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the gentleman 
from Tennessee (Mr. Fincher).
  The amendment was agreed to.


                 Amendment No. 8 Offered by Mr. Garrett

  The CHAIR. It is now in order to consider amendment No. 8 printed in 
House Report 113-476.
  Mr. GARRETT. Mr. Chairman, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 55, after line 2, insert the following:

     SEC. ___. TREATMENT OF CERTAIN FUNDS.

       (a) Amendment to the Definition of Commodity Pool 
     Operator.--Section 1a(11) of the Commodity Exchange Act (7 
     U.S.C. 1a(11)) is amended by adding at the end the following:
       ``(C)(i) The term `commodity pool operator' does not 
     include a person who serves as an investment adviser to an 
     investment company registered pursuant to section 8 of the 
     Investment Company Act of 1940 or a subsidiary of such a 
     company, if the investment company or subsidiary invests, 
     reinvests, owns, holds, or trades in commodity interests 
     limited to only financial commodity interests.
       ``(ii) For purposes of this subparagraph only, the term 
     `financial commodity interest' means a futures contract, an 
     option on a futures contract, or a swap, involving a 
     commodity that is not an exempt commodity or an agricultural 
     commodity, including any index of financial commodity 
     interests, whether cash settled or involving physical 
     delivery.
       ``(iii) For purposes of this subparagraph only, the term 
     `commodity' does not include a security issued by a real 
     estate investment trust, business development company, or 
     issuer of asset-backed securities, including any index of 
     such securities.''.
       (b) Amendment to the Definition of Commodity Trading 
     Advisor.--Section 1a(12) of such Act (7 U.S.C. 1a(12)) is 
     amended by adding at the end the following:
       ``(E) The term `commodity trading advisor' does not include 
     a person who serves as an investment adviser to an investment 
     company registered pursuant to section 8 of the Investment 
     Company Act of 1940 or a subsidiary of such a company, if the 
     commodity trading advice relates only to a financial 
     commodity interest, as defined in paragraph (11)(C)(ii) of 
     this section. For purposes of this subparagraph only, the 
     term `commodity' does not include a security issued by a real 
     estate investment trust, business development company, or 
     issuer of asset-backed securities, including any index of 
     such securities.''.

  The CHAIR. Pursuant to House Resolution 629, the gentleman from New 
Jersey (Mr. Garrett) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from New Jersey.
  Mr. GARRETT. Mr. Chairman, I rise today to offer an amendment to H.R. 
4413, the Customer Protection and End User Relief Act.
  This amendment seeks to address duplicative and overburdensome 
regulatory and registration requirements being faced by pensioners, 
savers, retirees, endowments, municipalities, and many other investors.
  Registered investment companies, RICs, play a critical role in the 
U.S. financial savings and retirement landscape. Millions of retirees, 
pensioners, and other savers across the country seek access to RICs to 
invest their hard-earned money and savings to invest for retirement, 
college tuition, or a first home.
  Currently, all RICs are registered with and are primarily regulated 
by the SEC and have to comply with an extensive set of rules and 
requirements, including the oversight of their derivatives holdings.
  Back in 2012, the Commodity Futures Trading Commission, the CFTC, 
acting on its own initiative and without any direction from Congress, 
significantly narrowed a longstanding exclusion from the commodity pool 
operator, CPO, registration for ``otherwise regulated entities,'' but 
only for RICs, which are comprehensively regulated by SEC and typically 
do not resemble traditional commodity pools.
  Because all RICs are currently registered with and are regulated by 
the SEC, the CFTC's rules change needlessly forces fund companies that 
manage literally thousands of funds, representing literally millions of 
U.S. pensioners, savers, and retirees to do what? To pay for costly and 
duplicative registration requirements.
  You see, even without registration, the CFTC still has enforcement 
authority over all commodity contracts. This amendment would not, in 
any way, change the extent to which all commodity transactions are 
subject to the transaction level requirements of regulation, such as 
reporting, such as clearing, such as trading, and even margin. This 
amendment simply eliminates the duplicative regulatory and registration 
costs faced by these funds.
  Also, by more appropriately tailoring the CFTC's regulatory reach, 
this amendment has the added benefit of ensuring that the CFTC has 
actually even more funds and resources available to do what? To 
implement Dodd-Frank and enforce the new swaps regulatory regime.
  This will help the agency prioritize, even better, their current 
workload and even reduce the need for a significant increase in the 
agency's budget during these challenging fiscal times.
  Mr. Chairman, at a time when millions of American households are 
approaching retirement and their investment returns are significantly 
reduced because of the Federal Reserve's low interest rate policies, it 
is very important that government public policy minimize the regulatory 
costs of investment for our retirees, for our pensioners, and for our 
savers.
  We must strike the right balance between ensuring investors have the 
ability to earn adequate returns on their investments with the 
appropriate regulatory oversight of our financial markets.
  Please help restore this balance and protect investors by voting 
``yes'' for the Garrett amendment to H.R. 4413.
  I reserve the balance of my time.
  Mr. PETERSON. Mr. Chairman, I claim the time in opposition.
  The CHAIR. The gentleman from Minnesota is recognized for 5 minutes.
  Mr. PETERSON. Mr. Chairman, as one great American said: now, we are 
going to hear the rest of the story.
  This is a situation where industry lost in court, and now, they are 
coming to Congress to try to accomplish what they couldn't do through 
the court system, so I rise in opposition.
  From President Reagan's time to President Clinton's, the CFTC has--on 
its own accord--exempted registered investment companies, RICs, from 
having to register as commodity pool operators or as commodity trade 
advisers with the CFTC, provided they meet two conditions: one, that 
the commodity futures activity occurring in the funds they managed was 
below a set threshold; and, two, that they did not market to retail 
customers as a commodity pool or investment vehicle for commodity 
futures or commodity options.
  During the first term of the second Bush administration, the CFTC 
eliminated both the threshold and the retail marketing restriction. 
These steps allowed investment companies unlimited access to commodity 
futures markets without any CFTC oversight and were opposed by the 
National Futures Association, the frontline regulator for the CFTC.
  In 2010, the National Futures Association petitioned the CFTC to 
reconsider the broad exemption for registration given for RICs. From 
that request and following the passage of the Dodd-Frank Act, giving 
the Commission new jurisdiction over swaps, the CFTC reconsidered its 
exemption for RICs and

[[Page 10686]]

reinstituted the thresholds for trading activity and retail marketing 
conditions that would trigger registration with the CFTC.
  Not surprisingly, the Investment Company Institute, which represents 
these funds and the Chamber of Commerce, then sued the CFTC. The 
Federal district court ruled in favor of the CFTC, and the court ruled 
for the agency in summary judgment.
  The funds appealed, and the U.S. Court of Appeals upheld the ruling 
in favor of the CFTC. After the CFTC won its case, the Commission set 
up a harmonization regime versus SEC rules for the registered trading 
advisers who were involved in this. If the CFTC and SEC rules conflict, 
the RIC can defer to the SEC rules.
  Despite that accommodation by the Commission, its having lost both 
the regulation and the litigation, the financial community is here now 
with this legislation.
  The Garrett amendment attempts to accomplish what the financial 
industry could not achieve in the courts. The amendment would 
permanently remove the CFTC's jurisdiction over RICs registered with 
the SEC, regardless of how big they play in the futures or swaps market 
and regardless of their reach to retail customers.
  The amendment's supporters will say that this only applies to 
investments in futures, options on futures, and swaps in financial 
commodities, as opposed to agriculture or energy commodities; but I 
would remind the Members that it was financial swaps, like credit 
default swaps, that contributed to the financial collapse in 2008. It 
wasn't energy or agriculture swaps.
  The SEC failed in its oversight in 2008. I don't want to have to rely 
on them to keep an eye on financial instruments, and I don't want to 
have a repeat of the Bernie Madoff scandal, but, this time, in futures.
  The CFTC has gone out of its way to accommodate industry concerns 
over duplicative oversight through its substituted compliance regime. 
Given their past bad behavior, I don't think we should rely on one 
agency to keep an eye on these guys, so I urge you to defeat this 
amendment.
  Mr. GARRETT. Will the gentleman yield?
  Mr. PETERSON. I yield to the gentleman from New Jersey.
  Mr. GARRETT. Your last sentence was that you do not wish to rely on 
just one entity--presumably the SEC--in the enforcement of these 
contracts and so on and so forth.
  Mr. PETERSON. It is only in certain circumstances.
  Mr. GARRETT. Right, but we do nothing in this amendment to take away 
from the CFTC their enforcement authority. They retain that.
  All that has changed is the registration requirement. The CFTC and 
the SEC retain both their mutual and harmonious, if you will, 
enforcement authorities under all of the contracts that are respective 
to these provisions. That is not taken away.
  We just say: Why duplicate the effort as far as registration 
requirements? I just wanted to clarify that point.
  Mr. PETERSON. I think there is more to it than that.
  Mr. GARRETT. No.
  Mr. PETERSON. They wouldn't go through all of this to try to get the 
CFTC to do what they wanted, then go through the courts, and then come 
here with legislation, if this were just some minor registration issue, 
no.
  Mr. GARRETT. Actually, yes, they would.
  The CHAIR. The gentleman from Minnesota controls the time, and his 
time has expired.
  The gentleman from New Jersey has 1\1/2\ minutes remaining.
  Mr. GARRETT. Great. I would like to hear from our chairman.
  Before that, Mr. Chairman, I yield 1 minute to the gentleman from 
Georgia (Mr. David Scott).
  Mr. DAVID SCOTT of Georgia. This is a very interesting debate in 
listening to it, but I think the simple point here, Mr. Chairman, is 
that, number one, this just deals with the registration. Prior to 2012, 
the SEC handled all of the RICs.

                              {time}  2100

  Now, we have caught up in the middle of this millions and millions of 
pensioners, retirees, people who are getting into the golden years of 
their lives.
  My hope is that we can pass this amendment. It only deals with 
registration. The ranking member has brought up some interesting 
points. That is why we do have the courts to settle those.
  I think here, tonight, we need to think of what this simple amendment 
does is stop duplicative areas within registration and gives a better 
hand for our retirees today.
  Mr. GARRETT. I thank the gentleman from Georgia for his support for 
this legislation and for the amendment.
  I yield now the remainder of my time to the chairman of the 
committee, and congratulate him for his great work on the underlying 
legislation before us today.
  Mr. LUCAS. Mr. Chairman, I thank the gentleman from New Jersey.
  I would simply note: let's cut to the point here. The CFTC, when 
finalizing the rules for registered investment companies, deferred 
almost entirely to the SEC to regulate them, so this amendment is in 
line with what the CFTC has already done.
  I urge my colleagues to support the commonsense amendment. Let's just 
do what is reflected here, and I thank the gentleman for his input.
  Mr. GARRETT. Mr. Chairman, I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the gentleman 
from New Jersey (Mr. Garrett).
  The question was taken; and the Chair announced that the ayes 
appeared to have it.
  Mr. PETERSON. Mr. Chairman, I demand a recorded vote.
  The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on 
the amendment offered by the gentleman from New Jersey will be 
postponed.
  Mr. LUCAS. Mr. Chairman, I move that the Committee do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Conaway) having assumed the chair, Mr. Bishop of Utah, Chair of the 
Committee of the Whole House on the state of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 4413) to 
reauthorize the Commodity Futures Trading Commission, to better protect 
futures customers, to provide end users with market certainty, to make 
basic reforms to ensure transparency and accountability at the 
Commission, to help farmers, ranchers, and end users manage risks to 
help keep consumer costs low, and for other purposes, had come to no 
resolution thereon.

                          ____________________