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Case 1:11-cv-02146-RLW   Document 69   Filed 09/28/12   Page 1 of 50
UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA 
 
INTERNATIONAL SWAPS AND 
 
DERIVATIVES ASSOCIATION, et al. 
 
 
 
Plaintiffs, 
 
 
Civil Action No. 11-cv-2146 (RLW) 
v. 
 
UNITED STATES COMMODITY 
FUTURES TRADING COMMISSION
 
 
Defendant. 
 
MEMORANDUM OPINION 
Plaintiffs International Swaps and Derivatives Association (“ISDA”) and Securities 
Industry and Financial Markets Association (“SIFMA”) (collectively “Plaintiffs”) challenge a 
recent rulemaking by Defendant United States Commodity Futures Trading Commission 
(“CFTC” or “Commission”) setting position limits on derivatives tied to 28 physical 
commodities.  See Position Limits for Futures and Swaps, 76 Fed. Reg. 71,626 (Nov. 18, 2011) 
(“Position Limits Rule”).  The CFTC promulgated the Position Limits Rule pursuant to the 
Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 
1376 (2010) (“Dodd-Frank”).   
The heart of Plaintiffs’ challenge is that the CFTC misinterpreted its statutory authority 
under the Commodity Exchange Act of 1936 (“CEA”), as amended by Dodd-Frank.  The central 
question for the Court, then, is whether the CFTC promulgated the Position Limits Rule based on 
a correct and permissible interpretation of the statute at issue.  Before the Court are the following 
motions: 1) Plaintiffs’ Motion for Preliminary Injunction (Dkt. No. 14), Plaintiffs’ Motion for 
Summary Judgment (Dkt. No. 31) and Defendant’s Cross Motion for Summary Judgment (Dkt. 
No. 38).  For the reasons set forth below, Plaintiffs’ Motion for Summary Judgment is 

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GRANTED, the CFTC’s Cross-Motion for Summary Judgment is DENIED,  and Plaintiffs’ 
Motion for Preliminary Injunction is DENIED AS MOOT.1   
FACTUAL BACKGROUND 
ISDA is a trade association with more than 825 members that “represents participants in 
the privately negotiated derivatives industry.”  (Compl. ¶ 9).  SIFMA is an “association of 
hundreds of securities firms, banks, and asset managers” whose claimed mission is to “support a 
strong financial industry, investor opportunity, capital formation, job creation, and economic 
growth, while building trust and confidence in the financial markets.”  (Id. ¶ 10).  According to 
Plaintiffs, the commodity derivatives markets are “crucial for helping producers and purchasers 
of commodities manage risk, ensuring sufficient market liquidity for bona fide hedgers, and 
promoting price discovery of the underlying market.”  (Id. ¶ 15).  The CFTC, of course, is an 
agency of the U.S. government with regulatory authority over the commodity derivatives market.   
Relevant Derivatives Contracts 
Three types of commodity derivatives are implicated in this case: futures contracts, 
options contracts and swaps.  (Dkt. No. 31 at 5).  A futures contract is a contract between parties 
to buy or sell a specific quantity of a commodity at a particular date and location in the future.  
(Id. at 3).  An options contract is a contract between parties where the buyer has the right, but not 
the obligation, to buy or sell a specific quantity of a commodity at a point in the future.  (Id.).  
                                                            
1  
The Court finds it appropriate to consolidate consideration of the cross motions for 
summary judgment with Plaintiffs’ Motion for Preliminary Injunction given that: the Position 
Limits Rule has not yet gone into effect; briefing on summary judgment is ripe; the parties have 
had a full and fair opportunity to present their entire cases on the merits and, thus, there is no 
prejudice from consolidation; and the parties have concurred that this case is properly disposed 
of on summary judgment.  See Fed. Civ. P. Rule 65(a)(2); see also 11A Charles Alan Wright, 
Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2950, 239 (2d ed. 1995) 
(stating that consolidation will be considered proper “if it is clear that consolidation did not 
detrimentally affect the litigants as, for example, when the parties in fact presented their entire 
cases . . . .”). 

 

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Futures contracts and options contracts result in either physical delivery or a cash settlement 
between parties.  (Id.).  In a physical delivery contract, the buyer takes physical delivery of the 
commodity when the contract expires.  (Id.).  At the conclusion of a cash-settled contract, a cash 
transfer occurs that is equivalent to the difference between the price set forth in the contract and 
the market price at the time the contract expires.  (Id.).  Swaps involve one or more exchanges of 
payments based on changes in the prices of specified underlying commodities without 
transferring ownership of the underlying commodity.  (Id. at 5).   
A position limit “caps the maximum number of derivatives contracts to purchase (long) 
or sell (short) a commodity that an individual trader or group of traders may own during a given 
period.”  (Compl. ¶ 21).  A position limit may impose a ceiling on either a “spot-month” position 
or a “non-spot-month” position.  (Id. at ¶ 22).  A “spot month” is a specific period of time (which 
varies by commodity under the rules) that immediately precedes the date of delivery of the 
commodity under the derivatives contract.  (Id.).  As Plaintiffs explain, “[a] spot-month position 
limit, therefore, caps the position that a trader may hold or control in contracts approaching their 
expiration.  A non-spot-month position limit caps the position that may be held or controlled in 
contracts that expire in periods further in the future or in all months combined.”  (Id.).   
Commodity Exchange Act of 1936 and the 2010 Dodd-Frank Amendments 
The main issue in this case is whether the Dodd-Frank amendments to Section 4a of the 
CEA (codified at 7 U.S.C. § 6a)2 mandated that the CFTC impose a new position limits regime 
in the commodity derivatives market.  It is undisputed that, prior to Dodd-Frank, the CEA vested 
the Commission with discretion to set position limits on futures and options contracts in 
commodity derivatives markets.  See 7 U.S.C. § 6a (stating that CFTC has authority to proclaim 
and fix position limits “from time to time” “as the Commission finds are necessary to diminish, 
                                                            
2   
This Court will refer to the statute by its United States Code number. 

 

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eliminate, or prevent [excessive speculation].”).  Title VII of the Dodd-Frank Act amended 
Section 6a in several respects.  The full text of Section 6a, with the Dodd-Frank amendments 
reflected in red-lined format, is attached to this Opinion as Appendix A.   
The Position Limits Rule 
Notice of Proposed Rulemaking 
Dodd-Frank went into effect on July 21, 2010.  On January 26, 2011, the CFTC issued a 
Notice of Proposed Rulemaking (“NPRM”), stating that Title VII of Dodd-Frank “requires” the 
Commission “to establish position limits for certain physical commodity derivatives.”  Position 
Limits for Derivatives, 76 Fed. Reg. 4,752 (Jan. 26, 2011).  At an open meeting on January 13, 
2011 prior to the issuance of the NPRM, Commissioner Michael V. Dunn stated that, “to date 
CFTC staff has been unable to find any reliable economic analysis to support either the 
contention that excessive speculation is affecting the market we regulate or that position limits 
will prevent excessive speculation.”  Transcript of Open Meeting on the Ninth Series of 
Proposed Rulemakings Under the Dodd-Frank Act at 9 (Jan. 13, 2011).  Dunn also shared his 
“fear” that “at best position limits are a cure for a disease that does not exist, or at worst it’s a 
placebo for one that does.”  Id.  Commissioners Jill Sommers and Scott D. O’Malia also 
expressed fundamental concerns with the position limits proposal before the agency.  Id. at 12-
15; 18-22.   
In the NPRM, the CFTC proposed to establish position limits for futures contracts, 
options contracts and swaps for 28 physical commodities.  In discussing its statutory authority, 
the CFTC stated its view that it was: 
not required to find that an undue burden on interstate commerce 
resulting from excessive speculation exists or is likely to occur in 
the future in order to impose position limits.  Nor is the 
Commission required to make an affirmative finding that position 
limits are necessary to prevent sudden or unreasonable fluctuations 

 

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or unwarranted changes in prices or otherwise necessary for 
market protection.  Rather the Commission may impose position 
limits prophylactically, based on its reasonable judgment that such 
limits are necessary for the purpose of ‘diminishing, eliminating, 
or preventing’ such burdens on interstate commerce . . . . 
   
76 Fed. Reg. at 4754 (emphasis added).  The CFTC stated that the “basic statutory mandate in 
section [6]a of the Act to establish position limits to prevent ‘undue burdens’ associated with 
‘excessive speculation’ has remained unchanged—and has been reaffirmed by Congress several 
times—over the past seven decades.”  Id.  In discussing the Dodd-Frank amendments to Section 
6a, the   Commission noted that:  
[P]ursuant to the Dodd-Frank Act, Congress significantly 
expanded the Commission’s authority and mandate to establish 
position limits beyond futures and options contracts to include, for 
example, economically equivalent derivatives.  Congress expressly 
directed the Commission to set limits in accordance with the 
standards set forth in sections [6]a(a)(1) and [6]a(a)(3) of the Act, 
thereby reaffirming the Commission’s authority to establish 
position limits as it finds necessary in its discretion to address 
excessive speculation.   
 
Id. at 4755 (emphasis added).  At this stage of the rulemaking, therefore, when discussing the 
“standards set forth in section [6]a(a)(1),” the Commission directly referred to its authority to 
“establish position limits as it finds necessary in its discretion to address excessive speculation.”  
Id.   
The Final Rule 
During an open meeting on October 18, 2011, the CFTC adopted the Position Limits 
Rule by a vote of 3 to 2.  76 Fed. Reg. at 71,699.  Chairman Gary Gensler and Commissioner 
Bart Chilton voted in favor of the Rule, with Commissioner Dunn providing the third vote for the 
majority.  (Dkt. No. 31 at 10-11); 76 Fed. Reg. at 71,699.  Dunn stated that “no one has 
presented this agency any reliable economic analysis to support either the contention that 

 

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excessive speculation is affecting the market we regulate or that position limits will prevent the 
excessive speculation.”  Transcript of Open Meeting on Two Final Rule Proposals Under the 
Dodd-Frank Act (hereinafter “10/18/11 Tr. at __”) at 13 (Oct. 18, 2011).  Dunn expressed his 
opinion that “position limits may harm the very markets we’re intending to protect.”  Id. at 14.  
Despite the fact that his opinion on position limits still “ha[d] not changed,” Dunn voted in favor 
of the Rule because he believed Congress had required the Commission to impose position 
limits:  
Position limits are, in my opinion, a sideshow that has 
unnecessarily diverted human and fiscal resources away from 
actions to prevent another financial crisis.  To be clear, no one has 
proven that the looming specter of excessive speculation in the 
futures market re-regulated even exist, let alone played any role 
whatsoever in the financial crisis of 2008.  Even so, Congress has 
tasked the CFTC with preventing excessive speculation by 
imposing position limits.  This is the law.  The law is clear, and I 
will follow the law.   
 
10/18/11 Tr. at 11, 13 (emphasis added). 
Commissioner Gensler supported Commissioner Dunn’s view, stating that by “the Dodd-
Frank Act, Congress mandated that the CFTC set aggregate position limits for certain physical 
commodity derivatives.”  76 Fed. Reg. at 71,626, 71,699.  The final rule reflected the 
Commission’s view that it was compelled to produce a certain result: “Congress did not give the 
Commission a choice.  Congress directed the Commission to impose position limits and to do so 
expeditiously.”  76 Fed. Reg. at 71,628 (emphasis added).   
Commissioners Sommers and O’Malia voted against the final rule and published written 
dissents.  Sommers claimed that, while she was not philosophically opposed to position limits, 
she did “not believe position limits will control prices or market volatility” in this market.  76 
Fed. Reg. at 71,699.  Sommers claimed that the rule would inflict the greatest harm on bona fide 

 

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hedgers and “ironically” may “result in increased food and energy costs for consumers.”  Id.  
Sommers claimed that, in her view, the Commission had “chosen to go way beyond what is in 
the statute and have created a very complicated regulation that has the potential to irreparably 
harm these vital markets.”  76 Fed. Reg. at 71,700.  By enacting the Rule, she believed that “[the 
CFTC] is setting itself up for an enormous failure.”  76 Fed. Reg. at 71,699.    
Commissioner O’Malia claimed that, although he had a number of serious concerns about 
the Rule, his “principal disagreement is with the Commission’s restrictive interpretation of the 
statutory mandate under Section 4a [7 U.S.C. § 6a] of the [CEA] to establish position limits 
without making a determination that such limits are necessary and effective in relation to the 
identifiable burdens of excessive speculation on interstate commerce.”  Id. at 71,700 (emphasis 
added).  As O’Malia stated, “the Commission ignores the fact that in the context of the Act, such 
discretion is broad enough to permit the Commission to not impose limits if they are not 
appropriate.”  Id. at 71,701.  In O’Malia’s view, the CFTC had “fail[ed] to comply with 
Congressional intent” and “misse[d] an opportunity to determine and define the type and extent 
of speculation that is likely to cause sudden, unreasonable and/or unwarranted commodity price 
movements so that it can respond with rules that are reasonable and appropriate.”  Id. at 71,700.  
O’Malia also faulted the Commission for promulgating the rule without any evidence that the 
position limits would actually benefit the market: 
  “Historically, the Commission has taken a much more disciplined and fact-based 
approach in considering the question of position limits; a process that is lacking 
from the current proposal.”  Id. at 71,700. 
 
  “The Commission voted on this multifaceted rule package without the benefit of 
performing an objective factual analysis based on the necessary data to determine 
whether these particular limits . . . will effectively prevent or deter excessive 
speculation.”  Id. at 71,702. 
 

 

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  “By failing to put forward data evidencing that commodity prices are threatened 
by the negative influence of a defined level of speculation that we can define as 
‘excessive speculation,’ and that today’s measures are appropriate (i.e. necessary 
and effective) in light of such findings, I believe that we have failed under the 
Administrative Procedure Act to provide a meaningful and informed opportunity 
for public comment.”  Id. 
In the Position Limits Rule, the CFTC established spot-month and non-spot-month 
position limits for all “Referenced Contracts” as defined under the Rule.  (Dkt. No. 31 at 13).   A 
Referenced Contract:  
is defined as a Core Referenced Futures Contract or a futures 
contract, options contract, swap or swaption directly or indirectly 
linked to either the price of a Core Referenced Futures Contract or 
to the price of the commodity underlying a Core Referenced 
Futures Contract for delivery at the same location as the 
commodity underlying the relevant Core Referenced Futures 
Contract.   
 
Id. (internal quotation marks omitted).  The Rule identifies 28 Core Referenced Futures 
Contracts that will be subject to its provisions.  Id.  The Rule specifies that spot-month position 
limits shall be based on one-quarter of the estimated spot month deliverable supply as established 
by the Commission, and will apply to both physical delivery and cash-settled contracts 
separately.  Id. at 14.  For non-spot-months, different position limit rules apply for legacy 
Referenced Contracts and non-legacy Referenced Contracts.  Id. at 15.  Legacy Referenced 
Contracts are contracts that were previously subject to position limits by the CFTC.  Id.  These 
contracts will remain subject to the preexisting regulations set forth in 17 C.F.R. § 150, although 
the Rule raised the preexisting limits to higher levels.  Id.   
Non-legacy Referenced Contracts are contracts that were not previously subject to 
position limits.  Id.  The position limits for these contracts are fixed by the Commission based on 
“10 percent of the first 25,000 contracts of average all-months combined aggregated open 
interest with a marginal increase of 2.5 percent thereafter.”  Id.  In addition to these regulations, 

 

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the Rule also established circumstances where a trader must aggregate positions held in multiple 
accounts.  Id. at 16.  Subject to some exceptions, traders must aggregate all counts in which they 
have at least a 10% ownership or equity interest.  Id.   
Claims 
Plaintiffs assert the following claims against the CFTC based on the Position Limits 
Rule: 1) Count One: Violation of the CEA and APA—Failure to Determine the Rule to be 
Necessary and Appropriate under 7 U.S.C. § 6a(a)(1), (a)(2)(A), (a)(5)(A)); 2) Count Two: 
Violation of the CEA—Insufficient Evaluation of Costs and Benefits under 7 U.S.C. § 19(a); 3) 
Count Three: Violation of the APA—Arbitrary and Capricious Agency Action in Promulgating 
the Position Limits Rule; 4) Count Four: Violation of the APA—Arbitrary and Capricious 
Agency Action in Establishing Specific Position Limits and Adopting Related Requirements and 
Restrictions; 5) Count Five: Violation of the APA—Failure to Provide Interested Persons A 
Sufficient Opportunity to Meaningfully Participate in the Rulemaking; and 6) Count Six: Claim 
for Injunctive Relief. 
ANALYSIS 
I. 
Standard of Review 
When ruling on a summary judgment motion in a case involving final review of an 
agency action under the APA, the standards of Federal Rule of Civil Procedure 56(c) do not 
apply because of the limited role of the court in reviewing the administrative record.3    See 
                                                            
3   
Local Rule 7(h)(1) requires that a party moving for summary judgment attach a 
Statement of Undisputed Facts.  In cases where judicial review is based solely on the 
administrative record, however, a Statement of Undisputed Facts is not required.  LCvR 7(h)(2).  
In those cases, “motions for summary judgment and oppositions thereto shall include a statement 
of facts with references to the administrative record.”  Id.  Thus, this Opinion will cite to either 
the statement of facts accompanying parties’ motions which cite to the administrative record or 
to the record itself. 
 

 

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Charter Operators of Alaska v. Blank, 844 F. Supp. 2d 122, 126-27 (D.D.C. 2012).  Summary 
judgment serves as a mechanism for deciding, as a matter of law, whether the administrative 
record supports the agency action and whether the agency action is consistent with the APA 
standard of review.  See Richards v. INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977).  The 
district court must “review the administrative record to determine whether the agency’s decision 
was arbitrary and capricious, and whether its findings were based on substantial evidence.”  
Forsyth Memorial Hosp., Inc. v. Sebelius, 639 F.3d 534, 537 (D.C. Cir. 2011) (citing Troy Corp. 
v. Browner, 120 F.3d 277, 281 (D.C. Cir. 1997)).   
II. 
The Parties’ Arguments Regarding the Interpretation of the Dodd-Frank 
Amendments  
 

This case largely turns on whether the CFTC, in promulgating the Position Limits Rule, 
correctly interpreted Section 6a as amended by Dodd-Frank.  Although both sides forcefully 
argue that the statute is clear and unambiguous, their respective interpretations lead to two very 
different results: one which mandates the Commission to set position limits without regard to 
whether they are necessary or appropriate, and one which requires the Commission to find such 
limits are necessary and appropriate before imposing them.   
Plaintiffs argue that Section 6a is clear and unambiguous, and that the statute required the 
CFTC to make statutorily-required findings of necessity prior to promulgating the Position 
Limits Rule.  (Dkt. No. 31 at 18-19).  Plaintiffs argue that the CFTC misinterpreted the plain text 
of Dodd-Frank to mean that the CFTC must  impose position limits without regard to whether 
such limits were appropriate or necessary.  Plaintiffs argue that the statutory requirement 
included an obligation to determine whether specific position limits and the specific commodities 
to which they were tied were necessary and appropriate.  (Dkt. No. 14 at 19). 
10 
 

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Plaintiffs point out that, under Section 6a(a)(1), the CFTC has the discretion to establish 
position limits from time to time “as the Commission finds are necessary to diminish, eliminate, 
or prevent” the burden on interstate commerce caused by excessive speculation.  (Id.  at 19).  
Under Plaintiffs’ view, that necessity standard applies to any position limits set pursuant to 
Dodd-Frank because the Dodd-Frank amendments expressly incorporate that standard.  See § 
6a(a)(2) (stating that position limits shall be established “[i]n accordance with the standards set 
forth in paragraph (1) of this subsection . . . .”); (Dkt. No. 31 at 20-21).   
Plaintiffs also argue that the CFTC failed to find that it was appropriate to set position 
limits, in violation of the clear language of Sections 6a(a)(2) and (a)(5).  See §§ 6a(a)(2)(A) (“the 
Commission shall by rule, regulation, or order establish limits on the amount of positions, as 
appropriate . . . that may be held by any person . . . .”) (emphasis added); 6a(a)(5) (“the 
Commission shall establish limits on the amount of positions, including aggregate position 
limits, as appropriate, . . .) (emphasis added).  Plaintiffs argue that the “as appropriate” clauses in 
Sections 6a(a)(2) and (a)(5) modify “shall,” thus imposing a requirement on the CFTC that it 
shall only set limits if the Commission finds it “appropriate” to do so.   
Finally, Plaintiffs argue that the CFTC’s interpretation of the statute is internally 
inconsistent.  By imposing position limits for contracts related to only certain (and not all) 
commodities, the Commission “acknowledged that it had the discretion to establish position 
limits for some commodity contracts and not others.”  (Dkt. No. 14 at 23).  As Plaintiffs point 
out, however, the text of Section 6a “nowhere distinguishes between different commodities.”  
(Dkt. No. 14 at 23; Dkt. No. 31 at 22); 76 Fed. Reg. at 71,665.  Plaintiffs argue that “if, as the 
Commission concedes, the statute does not require the Commission to establish position limits 
for all commodities, there is no textual basis to conclude that it is required to regulate any of 
11 
 

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them.” (Dkt. No. 14 at 23).  Because there is no dispute that the CFTC failed to find that the 
imposition of position limits was necessary and appropriate, Plaintiffs ask this Court to vacate 
and remand the Rule to the agency.   
For its part, the Commission also argues that Section 6a is clear and unambiguous.  The 
Commission, however, takes the unwavering position that Congress mandated the agency to set 
position limits and stripped it of all discretion not to impose limits.  The CFTC argues that it was 
not required to find that position limits were necessary or appropriate before imposing them and 
that, by adding Sections 6a(a)(2)-(7), Congress made the imposition of speculative limits 
mandatory.  (Dkt. No. 25 at 20-23).  Specifically, the CFTC points out that Congress stated that 
“with respect to physical commodities . . . the Commission shall by rule, regulation or order 
establish limits on the amounts of positions, as appropriate, . . . that may be held by any person . . 
.”  § 6a(a)(2)(A); (Dkt. No. 25 at 24).     
The Commission also argues that Congress referred to the position limits as “required” 
and imposed time limits on the agency under Sections 6a(a)(2)(B)(i) (“. . . the limits  required 
under subparagraph (A) shall be established within 180 days . . .” and 6a(a)(2)(B)(ii) (“. . . the 
limits required  under subparagraph (A) shall be established within 270 days . . .”), further 
reflecting the fact that the Dodd-Frank amendments were a mandate to set position limits.  The 
CFTC points to other mandatory language to support its view, including Sections 6a(a)(2)(C) 
(“in establishing the limits required under subparagraph (A) . . .”) and 6a(a)(3) (“in establishing 
the limits required in paragraph (2), the Commission, as appropriate, shall  set limits . . . .”).  
According to the CFTC, if Congress intended for the CFTC to establish limits on a case-by-case 
basis, it would not have required that the limits be imposed on such short deadlines.  Moreover, 
12 
 

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the CFTC argues that, under Plaintiffs’ view, the Dodd-Frank amendments to Section 6a would 
be rendered meaningless. 
Finally, the CFTC argues that, under Dodd-Frank, Congress directed the Commission to 
“conduct a study of the effects (if any) of the position limits imposed . . . within 12 months after 
the imposition of the limits.”  Congress further directed that the Commission “shall” submit a 
copy of that report to Congress, and Congress shall conduct a hearing within 30 days.  See 15 
U.S.C. § 8307.  According to the Commission, the reporting requirement is further evidence that 
the Dodd-Frank amendments compelled and mandated the Commission to set limits.   
In sum, although each party believes the statute is clear and unambiguous, their 
respective “plain readings” compel different results.  Ultimately, however, this Court need not 
choose between the competing interpretations.  As explained below, Section 6a is ambiguous as 
to the precise question at issue: whether the CFTC is required to find that position limits are 
necessary and appropriate prior to imposing them.  Because the Position Limits Rule is based on 
the CFTC’s erroneous conclusion that the CEA is unambiguous on this issue, the Court “may 
neither defer to the agency’s construction nor endorse plaintiffs’ construction.”  See Humane 
Soc’y of U.S. v. Kempthorne, 579 F. Supp. 2d 7, 15 (D.D.C. 2008).  Instead, the Court must 
remand this rule to the agency. 
III. 
The CFTC’s Interpretation of Section 6a as Amended by Dodd-Frank 
a.  Chevron Step One 
Because this case involves the CFTC’s interpretation of a statute it is charged with 
implementing, this Court applies the two-part test of Chevron U.S.A. Inc. v. Natural Res. Def. 
Council, Inc., 467 U.S. 837 (1984).  See Peter Pan Bus Lines, Inc. v. Fed. Motor Carrier Safety 
Admin., 471 F.3d 1350, 1353 (D.C. Cir. 2006).  Under step one of the Chevron test, the Court 
13 
 

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first must consider “whether Congress has directly spoken to the precise question at issue.”  Pub. 
Citizen v. Nuclear Regulatory Comm’n, 901 F.2d 147, 154 (D.C. Cir. 1990) (quoting Chevron, 
467 U.S. at 842).  If so, the Court and the agency “must give effect to the unambiguously 
expressed intent of Congress.”  Arizona v. Thompson, 281 F.3d 248, 253 (D.C. Cir. 2002) 
(quoting Chevron, 467 U.S. at 842–43); see also Northeast Hosp. Corp. v. Sebelius, 657 F.3d 1, 
4 (D.C. Cir. 2011) (citing Chevron, 467 U.S. at 842–43). 
Under Chevron Step One, the Court examines the statute de novo, employing traditional 
tools of statutory construction.  Nat’l Ass’n of Clean Air Agencies v. EPA, 489 F.3d 1221, 1228 
(D.C. Cir. 2007).  The Court must assess the statutory text at issue, the statute as a whole, and 
review legislative history where appropriate.  Coal Employment Project v. Dole, 889 F.2d 1127, 
1131 (D.C. Cir. 1989) (citing K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (1988) and Ohio v. 
U.S. Dep’t of the Interior, 880 F.2d 432, 441 (D.C. Cir. 1989)).  “This inquiry using the 
traditional tools of construction may be characterized as a search for the plain meaning of the 
statute.  If this search yields a clear result, then Congress has expressed its intention as to the 
question, and deference [to the agency’s interpretation] is not appropriate.”  Bell Atl. Tel. Co. v. 
FCC, 131 F.3d 1044, 1047 (D.C. Cir. 1997) (citing Hammontree v. NLRB, 894 F.2d 438, 441 
(D.C. Cir. 1990)). 
If, however, the statute is silent or ambiguous, the Court moves on to Chevron Step Two 
and defers to the agency’s interpretation if it is based on a permissible construction of the statute.  
Peter Pan, 471 F.3d at 1353 (internal quotation marks and citations omitted).  “A statute is 
considered ambiguous [under Chevron] if it can be read more than one way.”  Am. Fed’n of 
Labor & Cong. of Indus. Org. v. Fed. Election Comm’n, 333 F.3d 168, 173 (D.C. Cir. 2003) 
(citing United States v. Nofziger, 878 F.2d 442, 446-47 (D.C. Cir. 1989)).  “Because the 
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judiciary functions as the final authority on issues of statutory construction, an agency is given 
no deference at all on the question whether a statute is ambiguous.”  Wells Fargo Bank, N.A. v. 
Fed. Deposit Ins. Corp., 310 F.3d 202, 205-06 (D.C. Cir. 2002) (internal citations and quotation 
marks omitted). 
i.  Section 6a(a)(1) Plainly Requires the CFTC to Find That Position 
Limits are Necessary. 
 

The first question for the Court is whether Section 6a(a)(1) requires the Commission to 
find that position limits are necessary prior to imposing them.  This is important, of course, 
because the so-called “mandate” of Dodd-Frank in Section 6a(a)(2) expressly incorporates the 
“standards” of paragraph (1).  The relevant portion of Section 6a(a)(1) states: 
For the purpose of diminishing, eliminating, or preventing such 
burden, the Commission shall, from time to time, after due notice 
and opportunity for hearing, by rule, regulation, or order, proclaim 
and fix such limits on the amounts of trading which may be done 
or positions which may be held by any person . . . under contracts 
of sale of such commodity for future delivery on or subject to the 
rules of any contract market or derivatives transaction execution 
facility, or swaps traded on or subject to the rules of a designated 
contract market or a swap execution facility, or swaps not traded 
on or subject to the rules of a designated contract market or a swap 
execution facility that performs a significant price discovery 
function with respect to a registered entity, as the Commission 
finds are necessary to diminish, eliminate, or prevent such burden. 
 
§ 6a(a)(1) (emphasis added).    
The Commission does not argue—nor could it—that this section standing alone strips the 
agency of any discretion not to set position limits if it would be unnecessary to do so.  In fact, the 
statute expressly directs the agency to set position limits “from time to time.”  Id.  The precise 
question, therefore, is whether the language of Section 6a(a)(1) clearly and unambiguously 
requires the Commission to make a finding of necessity prior to imposing position limits.  The 
answer is yes.   
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The contested language in Section 6a(a)(1) has remained largely unchanged from the 
initial passage of the CEA to the Dodd-Frank amendments.  Compare  Pub. L. No. 74-675, ch. 
545, 49 Stat. 1491, 1492 (June 15, 1936) (“For the purpose of diminishing, eliminating, or 
preventing such burden, the commission shall, from time to time . . . proclaim and fix such limits 
on the amount of trading . . . which may be done by any person as the commission finds is 
necessary to diminish, eliminate or prevent such burden.”) (emphasis added) with Pub. L. No. 
111-203, Title VII, § 737(a) to (c), 124 Stat. 1722 (July 21, 2010) (“For the purpose of 
diminishing, eliminating, or preventing such burden, the Commission shall, from time to time . . .  
proclaim and fix such limits on the amounts of trading which may be done or positions which 
may be held by any person  . . . as the Commission finds are necessary to diminish, eliminate, or 
prevent such burden.”) (emphasis added).4   
Consistent with this longstanding requirement, the Commission made necessity findings 
in its rulemakings establishing position limits for 45 years after the passage of the CEA.  See In 
the Matter of Limits on Position and Daily Trading in Wheat, Corn, Oats, Barley, Rye and 
Flaxseed for Future Delivery, 3 Fed. Reg. 3145, 3146 (Dec. 24, 1938) (“[T]rading in any one 
grain for future delivery on a contract market, by a person who holds or controls a speculative 
net position of more than 2,000,000 bushels, long or short in any one future or in all futures 
combined in such grain on such contract market, tends to cause sudden and unreasonable 
fluctuations and changes in the price of such grain . . . in order to diminish, eliminate, or prevent 
                                                            
4  
In 1935, Congress provided an unambiguous interpretation of the phrase “as the 
Commission finds are necessary” in an “Explanation of the Bill”: “[Section 4a of the CEA] gives 
the Commodity Exchange Commission the power, after due notice and opportunity for hearing 
and a finding of a burden on interstate commerce caused by such speculation, to fix and proclaim 
limits on futures trading. . . .”  H.R. Rep. 74-421, at 5 (1935) (emphasis added).  This text clearly 
indicates that Congress intended for the CFTC to make a “finding of a burden on interstate 
commerce caused by such speculation” prior to enacting position limits.   
 
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the undue burden of excessive speculation in grain futures which causes unwarranted price 
changes, it is necessary to establish limits on the amount of speculative trading under contracts of 
sale of grain for future delivery on contract markets, which may be done by any one person.”) 
(emphasis added); see also In the Matter of Limits on Position and Daily Trading in Cotton for 
Future Delivery, 5 Fed. Reg. 3,198 (Aug. 28, 1940); Limits on Position and Daily Trading in 
Eggs for Future Delivery, 16 Fed. Reg. 8,106 (Aug. 16, 1951); Limits on Position and Daily 
Trading in Cottonseed Oil for Future Delivery, 18 Fed. Reg. 443 (Jan. 22, 1953); Limits on 
Position and Daily Trading in Soybean Oil for Future Delivery, 18 Fed. Reg. 444 (Jan. 22, 
1953); Limits on Position and Daily Trading in Lard for Future Delivery, 18 Fed. Reg. 445 (Jan. 
22, 1953); Limits on Position and Daily Trading in Onions for Future Delivery, 21 Fed. Reg. 
5,575 (July 25, 1956). 
The CFTC argues that, although it made necessity findings in these prior rulemakings, 
the agency never stated that a finding of necessity was required.  (Dkt. No. 38 at 19, n.12).  This 
argument is without merit.  The plain text of the statute requires that position limits be set “as the 
Commission finds are necessary to diminish, eliminate, or prevent [excessive speculation].”  § 
6a(a)(1).  The text does not state (nor has it ever) that the CFTC may do away with or ignore the 
necessity requirement in its discretion.  There is no ambiguity as to whether the statute requires 
the CFTC to make such findings, and the CFTC has never apparently treated the statute as 
ambiguous on this point.  Accordingly, the Court concludes that § 6a(a)(1) unambiguously 
requires that, prior to imposing position limits, the Commission find that position limits are 
necessary to “diminish, eliminate, or prevent” the burden described in Section 6a(a)(1).  
ii.  The Commission’s Arguments That Section 6a(a)(1) Does Not 
Require a Necessity Finding Are Unavailing. 
 

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For 45 years after the passage of the CEA, the CFTC made necessity findings prior to 
imposing position limits under Section 6a(a).  The CFTC has not cited to any express 
interpretation in which the CFTC took the position that no necessity finding was required.  Nor 
has the CFTC cited to any prior interpretation in which the CFTC took the position that the 
specific language of Section 6a(a) (now Section 6a(a)(1)) was ambiguous on this point.  Fully 
aware that Section 6a(a)(1) is problematic for its current position, the CFTC makes a number of 
arguments in an attempt to get out from underneath the statute’s plain language requiring a 
necessity finding.  Notwithstanding the CFTC’s various—and at times inconsistent—
interpretations, the necessity requirement remains in Section 6a(a)(1).    
“Necessary” Only Modifies the “Amounts of Trading” 
First, in its Opposition to Plaintiffs’ Motion for Preliminary Injunction, the CFTC argued 
that, because “necessary” is more closely preceded by the phrase “proclaim and fix such limits 
on the amounts of trading,” it is “far more plausible” to interpret this provision as requiring the 
Commission only to find that amounts of trading were necessary, not that limits in general are 
necessary.  (Dkt. No. 25 at 24).  The Commission has wisely abandoned this interpretation on 
summary judgment.  The plain language of § 6a(a)(1) and the Commission’s position limits 
rulemakings since 1936 undermine this strained interpretation.   
The Dodd-Frank Amendments “Converted” Section 6a(a)(1) 
At oral argument on Plaintiffs’ Motion for Preliminary Injunction, the Commission 
offered another argument in support of its view that no necessity finding was required.  In 
discussing the Dodd-Frank amendments of Sections 6a(a)(2)-(7), the Commission argued that 
“those amendments basically converted the authorization in 6a(1).”  2/27/12 Tr. at 26.  In other 
words, the Commission stated that its “primary argument is you have to look at that language, 
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the language in the Dodd-Frank amendments, to see how the authorization that was always there 
to the commission to put position limits in place, and which, in the exercise of its judgment, 
became a mandate in 2010.”  Id.  There is nothing in the plain language of the statute, however, 
that supports the Commission’s argument that the discretion in Section 6a(a)(1) was somehow 
“converted” by Dodd-Frank.  If anything, the Dodd-Frank amendments are subject to the 
preexisting standards of Section 6a(a)(1), not the other way around.  See § 6a(a)(2)(A) (“In 
accordance with the standards set forth in paragraph (1) of this subsection. . . . “).    
Section 6a(a)(1) Imposes No Substantive Requirements on the Commission 
Now, on summary judgment, the Commission argues that the “necessary” language 
actually imposes no substantive requirement at all.  (Dkt. No. 38 at 19).  Seemingly inconsistent 
with its earlier position that Section 6a(a)(1) requires the CFTC to find only that the actual 
“amounts of trading” are “necessary,” the Commission argues that the language only means that 
this Court must afford deference to the CFTC to “make a judgment,” and that any action the 
agency takes must be “rationally related to the purpose of the statute or its specific provisions.”  
(Dkt. No. 38 at 19) (relying principally on Mourning v. Family Publications Service, Inc., 411 
U.S. 356 (1973)).  Again, the CFTC’s argument is without merit.  First, the Court must give 
effect to the meaning of each word of the statute, which states that the Commission shall impose 
limits as the agency “finds are necessary.”  § 6a(a)(1).  Moreover, the language of Section 
6a(a)(1) is more limited and tied to a more specific objective than the general empowering 
provision that was at issue in Mourning.  See Mourning, 411 U.S. at 361-62 (stating that Federal 
Reserve Board shall prescribe regulations “as in the judgment of the Board are necessary or 
proper to effectuate the purposes of [the Act]. . . .”); see also AFL-CIO v. Chao, 409 F.3d 377, 
384 (D.C. Cir. 2005).  In any event, Mourning has been interpreted by courts in our Circuit to 
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apply during the Chevron Step Two analysis, and that the Court’s deference to the agency is still 
limited by the particular language of a statute at issue.  See AFL-CIO, 409 F.3d at 384; Colorado 
River Indian Tribes v. Nat’l Indian Gaming Comm’n, 383 F. Supp. 2d 123, 144 (D.D.C. 2005). 
In relying on Mourning, it appears that the Commission is confusing two different issues 
with respect to Section 6a(a)(1).  Section 6a(a)(1) contains a clear statutory requirement that the 
CFTC find that any position limits “are necessary to diminish, eliminate, or prevent” the burden 
on interstate commerce described in the statute.  That point is wholly different from whether any 
particular rule, regulation or order is “necessary to diminish, eliminate or prevent such burden.”  
Whether Section 6a(a)(1) requires such a finding is clear and unambiguous.  Whether any 
particular regulation setting position limits is actually “necessary to diminish, eliminate or 
prevent such burden” is not before this Court because the CFTC has taken the position that it is 
not required to make that finding. 
The distinction between these two questions is illustrated in the D.C. Circuit’s opinion in 
AFL-CIO v. Chao.  In that case, the Circuit considered whether the Secretary of Labor exceeded 
her authority when she promulgated a rule under 29 U.S.C. § 438, which states that: “[t]he 
Secretary shall have authority to issue, amend, and rescind . . . such . . . reasonable rules and 
regulations . . . as [s]he may find necessary to prevent the circumvention or evasion of [Title II’s] 
reporting requirements.”  29 U.S.C. § 438 (emphasis added); AFL-CIO, 409 F.3d at 386.  The 
Circuit asked whether the specific rule at issue “comport[ed] with the statutory requirements that 
the Secretary ‘find [the rule] necessary to prevent’ evasion of reporting requirements.”  AFL-
CIO, 409 F.3d at 386 (quoting 29 U.S.C. § 438) (emphasis added).  Because the Circuit found 
the word “necessary” to be inherently ambiguous, the Circuit proceeded under Chevron Step 
Two to review with deference whether the “Secretary’s interpretation of “what is ‘necessary’” as 
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embodied in the rule was “limited to preventing such circumvention or evasion,” as set forth in 
the governing statute.  Id. at 387.  In so doing, the Circuit referred on numerous instances to the 
fact that the “plain text” of the statute “limits the Secretary’s authority with respect to trust 
reporting.”  Id. at 390.  The Circuit also noted that the statute “required” a “determination” that 
the rule was “necessary to prevent union circumvention or evasion of Title II reporting 
requirements.”  Id. at 389 (emphasis added).  Moreover, although then-Circuit Judge Roberts 
dissented in part to the majority opinion, he nevertheless agreed that the statute required the 
Secretary to make necessity findings:  “. . . the Secretary has not so found, much less made a 
determination that such a report would be necessary to prevent circumvention or evasion of 
union reporting requirements.  Our dissenting colleague acknowledges the Secretary must make 
such findings.”  Id. at 390 (emphasis added).   
Ultimately, the Circuit held that the Secretary had exceeded her authority under the 
statute because the rule “reache[d] information unconnected to the circumvention or evasion of 
union Title II reporting requirements.”  Id.  Thus, although the Secretary was entitled to 
deference under Chevron Step Two as to whether the specific rule promulgated was “necessary” 
to meet the specific purpose of the statute, what was not ambiguous was that there was a 
“statutory requirement” that she must “make such findings.”  Id.  For precisely these reasons, this 
Court is not persuaded by the CFTC’s argument that Section 6a(a)(1) imposes no “substantive” 
requirements on the agency.   
The CFTC’s 1981 Rulemaking Renders the Necessity Finding Unnecessary 
 
Finally, relying on a 1981 rulemaking, the CFTC asks this Court to accept its argument 
that the Commission is no longer required to make a finding that position limits are necessary 
prior to imposing them.  The CFTC attempts to validate its interpretation in two ways.  First, the 
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CFTC argues that its interpretation of Section 6a(a)(1) doing away with a necessity finding is 
entitled to Chevron  deference.  (Dkt. No. 38 at 18, n.10; Dkt. No. 55 at 6, n.4).  Second, the 
Commission argues that Congress ratified its interpretation and, therefore, the Commission is no 
longer required to make a necessity finding as it did numerous times between 1936 and 1981. 
As set forth above, the language of Section 6a(a)(1) is clear and unambiguous regarding 
the Commission’s duty to make a necessity finding.  Accordingly, the CFTC’s interpretation of 
the statute is not entitled to any Chevron deference, particularly where the agency has never 
treated the statute as ambiguous.  See Arizona, 281 F.3d at 253 (quoting Chevron, 467 U.S. at 
842–43 for the proposition that if the language of the statute is clear, the court and agency “must 
give effect to the unambiguously expressed intent of Congress.”).   
Moreover, Congress has not ratified any CFTC interpretation of 6a(a)(1) doing away with 
the necessity finding requirement.  The CFTC argues that, in its 1981 rulemaking, it changed its 
interpretation of Section § 6a(a) to allow for the establishment of position limits without a 
finding of necessity.  (Dkt. No. 38 at 19).  The CFTC relies on the fact that, in that rulemaking, 
the CFTC required exchanges to establish position limits for all futures contracts for which there 
were not already limits.  (Idat 20).  In doing so, the CFTC did not require exchanges to make a 
finding that excessive speculation was a problem or that position limits were the correct solution.  
Id.  The CFTC also cites to the rule’s preamble which states that “Section 4a(1) represents an 
express Congressional finding that excessive speculation is harmful to the market, and a finding 
that speculative limits are an effective prophylactic measure.”  Establishment of Speculative 
Position Limits, 46 Fed. Reg. 50,938, 50,940 (Oct. 16, 1981).  The CFTC argues that Congress 
ratified the CFTC’s interpretation of § 6a(a) when it amended the CEA in 1982 without 
overturning the CFTC’s construction of the statute.  (Dkt. No. 38 at 20-21).   
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The CFTC takes a roundabout route to ratification, and one that this Court declines to 
follow.  The CFTC has not offered any longstanding agency interpretation that abrogated the 
agency’s duty to make necessity findings under § 6a(a)(1).  Nothing that the CFTC relies on in 
the 1981 rulemaking speaks directly to the interpretation of § 6a(a)(1) that CFTC now advances 
in this case.  Moreover, the 1981 interpretation that the CFTC does cite—that the statute allows 
the agency to prophylactically  impose position limits and that the CFTC need not find that 
excessive speculation actually exists beforehand—does not appear to be in dispute in this case.  
This authority is squarely in the plain text of Section 6a.  See § 6a(a)(1) (stating that the CFTC 
has the authority to set position limits “as the Commission finds are necessary to diminish, 
eliminate, or prevent [excessive speculation].”) (emphasis added).  Moreover, Plaintiffs do not 
appear to contest that the CFTC may impose position limits prophylactically, “so long as it 
makes an informed determination that there is a reasonable likelihood that excessive speculation 
will pose a problem in a particular market, and that position limits are likely to curtail it without 
imposing undue costs.”  (Dkt. No. 45 at 2).  As Plaintiffs correctly note, “[w]hat the plain 
language of Section 6a(a)(1) does not permit is the establishment of position limits—whether 
prophylactic or remedial—without any necessity finding at all.”  (Id.).   
The fact that the CFTC did not make a necessity finding in its 1981 rulemaking does not 
constitute an interpretation from which this Court can infer congressional ratification.  See 
Autolog Corp. v. Regan, 731 F.2d 25, 32 (D.C. Cir. 1984) (“When an agency interpretation has 
been officially published and consistently followed, Congress is presumed to be aware of the 
administrative interpretation of a statute and to adopt that interpretation when it re-enacts a 
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statute without change.”) (emphasis added) (internal citations and quotation marks omitted).5  To 
accept the agency’s argument now, this Court would have to find that Congress ratified by 
silence an interpretation of Section 6a(a)(1) that the CFTC made by silence.  The Court simply 
cannot draw such a conclusion on this record.   
iii.  Sections 6a(a)(2), (a)(3) and (a)(5) are ambiguous 
 
Although the CFTC seeks Chevron  deference as to its reading of Section 6a(a)(1), the 
CFTC “is not claiming deference with respect to Congress’ mandate (which comes from the 
Dodd-Frank amendments, sections 6a(a)(2)-(7)).”  (Dkt. No. 55 at 6, n.4).  Upon a review of the 
entire amended Section 6a, the Court cannot hold that the Dodd-Frank amendments in sections 
6a(a)(2), (a)(3) and (a)(5) constitute a clear and unambiguous mandate. 
                                                            

It appears that the Commission has not even consistently followed its purported 1981 
interpretation abrogating the statutory requirement of finding necessity.  In its Cross-Motion for 
Summary Judgment, the CFTC admits that “[f]or a period of time beginning in the 1990s until 
the passage of Dodd-Frank, the Commission took a different approach . . . allowing exchanges to 
substitute trader reporting obligations for fixed limits.”  (Dkt. No. 38 at 7).  By permitting some 
exchanges to set position accountability levels in lieu of position limits the CFTC was making a 
conclusion that position limits were not necessary for those exchanges.  In addition, in 2001, the 
CFTC promulgated a rule providing guidance for boards of trade designated as contract markets 
on how to comply with the Core Principles listed in 7 U.S.C. § 7.  See  A New Regulatory 
Framework for Trading Facilities, Intermediaries and Clearing Organizations,  66 Fed. Reg. 
42,256 (Aug. 10, 2001).  Core Principle 5 provides the following: “To reduce the potential threat 
of market manipulation or congestion (especially during trading in the delivery month), the board 
of trade shall adopt for each contract of the board of trade, as is necessary and appropriate, 
position limitations or position accountability for speculators.”  7 U.S.C. § 7(d)(5)(A).  The 
CFTC, in providing guidance on compliance with Core Principle 5, stated, “In general, position 
limits are not necessary for markets where the threat of excessive speculation or manipulation is 
nonexistent or very low.”  17 C.F.R. § 38 app. B (Core Principle 5) (effective August 10, 2001 
until August 20, 2012); 66 Fed. Reg. at 42,280.  The CFTC has only recently repealed this 
provision in a final rulemaking issued on June 19, 2012.  See  Core Principles and Other 
Requirements for Designated Contract Markets, 77 Fed. Reg. 36,612, 36,718 (June 19, 2012).   
As Plaintiffs point out, the CFTC has offered no meaningful explanation for how either 
of these two rules “could possibly comport with its supposed 1981 view that Congress, in 
Section 6a(a)(1), had already determined that excessive speculation exists in all markets and that 
position limits were always effective to combat it.”  (Dkt. No. 45 at 5).   
 
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1.  “In accordance with the standards set forth in paragraph 
(1)” 
 

First, it is wholly unclear to what extent the CFTC’s authority in Section 6a(a)(2) is 
dependent on the statutory requirement in subsection 6a(a)(1) that the agency find position limits 
“necessary.”  The very first clause of Section 6a(a)(2) begins “[i]n accordance with the standards 
set forth in paragraph (1) of this subsection . . . the Commission shall by rule, regulation, or order 
establish limits on the amount of positions . . . .”  Section § 6a(a)(2) (emphasis added).  It is clear 
that Congress incorporated and directed the agency to set any limits in Section 6a(a)(2) “in 
accordance with the standards” of the CFTC’s existing authority in Section 6a(a)(1).  What is 
unclear, however, is what “standards” Congress meant to govern any limits set pursuant to 
Section 6a(a)(2).   
The CFTC argues that the term “standards” in Section 6a(a)(2) does not refer to the 
“necessary” standard of paragraph (1), but rather the so-called aggregation standards to 
“positions held and trading done by any persons directly or indirectly controlled by such person . 
. . .” § 6a(a)(1); (Dkt. No. 38 at 24).  The CFTC argues that its reading is consistent with the 
“first relevant dictionary definition” of “standard” as “something set up and established by 
authority as a rule for the measure of quantity, weight, extent, value, or quality.”  Id. at 24-25 
(citing Merriam-Webster’s Third Collegiate Dictionary 1216 (11th ed. 2011)).     
The CFTC’s argument is unavailing.  First, the term “standard” or “standards” does not 
appear anywhere in Section 6a(a)(1).  Thus, there is no clear indication of the specific 
“standards” to which Congress referred.  Second, the CFTC’s selective reading of subsection 
(a)(1) renders any language but the supposed aggregation standards mere surplusage.  See 
Humane Soc’y, 579 F. Supp. 2d at 16 (“But this reading of Section 1533(a)(1)—a reading that 
emphasizes one part of the provision and ignores the others—is hardly the only plausible one.”) 
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(citing United States v. Villanueva-Sotelo, 515 F.3d 1234, 1237 (D.C. Cir. 2008)).  It is just as 
plausible that the standards to which Congress referred were those directing the Commission to 
set position limits only “as the Commission finds are necessary to diminish, eliminate, or prevent 
such burden.”  § 6a(a)(1).  This interpretation would be consistent with other equally-applicable 
dictionary definitions of the term “standards.”  See Webster’s Third New International 
Dictionary  2223 (1981) (defining “standard” as “something that is established by authority, 
custom, or general consent as a model or example to be followed.”); see  also Black’s Law 
Dictionary 1535 (9th ed. 2009) (“A model accepted as correct by custom, consent, or authority”).  
In any event, our Circuit has warned against relying solely on dictionary definitions, as the 
CFTC urges, because “citing to dictionaries creates a sort of optical illusion, conveying the 
existence of certainty—or ‘plainness’—when appearance may be all there is.’”  Ctr. For 
Individual Freedom v. Van Hollen, No. 12-5117, slip. op. at 4 (D.C. Cir. Sept. 18, 2012) (per 
curiam) (quoting A. Raymond Randolph, Dictionaries, Plain Meaning, and Context in Statutory 
Interpretation, 17 HARV. J.L. & PUB. POL’Y 71, 72 (1994)). 
Finally, and most importantly, the CFTC’s current position regarding the introductory 
clause of subsection (a)(2) is not based on any reasoned interpretation in which the CFTC 
engaged at the agency level.  The Commission has neither pointed to—nor can this Court locate-
-any interpretation of this clause in the final rule.  There appears to be nothing in the final rule 
giving any effect to or explaining how the position limits set were “in accordance with the 
standards of paragraph (1).”  The only reference that this Court can locate exists in the NPRM.  
That reference, however, suggests that the CFTC (at least initially) interpreted the introductory 
clause of subsection (a)(2) as Plaintiffs currently interpret it: 
Congress expressly directed the Commission to set limits in 
accordance with the standards set forth in sections 4a(a)(1) and 
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4a(a)(3) of the Act, thereby reaffirming the Commission’s 
authority to establish position limits as it finds necessary in its 
discretion to address excessive speculation. 
 
76 Fed. Reg. at 4755 (emphasis added).  Accordingly, at the NPRM stage, the Commission 
apparently viewed the contested language of Section 6a(a)(2) to refer to the CFTC’s authority in 
subsection 6a(a)(1) “to establish position limits as it finds necessary in its discretion . . . .”  Of 
course, the Commission was free to amend its interpretation of the statutory language by the time 
the final rule was adopted.  It appears, however, that because the CFTC believed that Congress 
had compelled a particular result, the agency failed to confront or interpret this language in any 
way.  The agency’s reliance on one of many dictionary definitions of “standards” in this Court in 
the first instance is unpersuasive and entitled to no deference at all.  
This Court is left with no clear indication of Congress’ intent when it directed the 
Commission to set position limits in Section 6a(a)(2) “in accordance with the standards set forth 
in paragraph (1) of this subsection . . . .”  It is unclear whether Congress: 1) intended for the 
CFTC to first find that any position limits promulgated under Dodd-Frank be “necessary to 
diminish, eliminate, or prevent” the burden on interstate commerce; 2) was solely referring to the 
so-called aggregation standards in (a)(1), as the CFTC suggests; 3) was referring to both the 
“necessary” standard and the aggregation standards; or 4) was referring to neither the 
“necessary” standard nor the aggregation standards.  Nor does a review of the other provisions of 
Section 6a(a)(2) elucidate this ambiguity.  As such, paragraph (a)(2) cannot be read as a clear 
and unambiguous mandate to set position limits without regard to any of the necessity or 
discretion-conferring standards of Section 6a(a)(1). 
2.  “As appropriate” 
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The parties also disagree over whether the Dodd-Frank amendments to Section 6a 
required the CFTC to determine that imposing position limits was “appropriate.”  The “as 
appropriate” language appears in three contested sections (emphasis added in each): 
Section 6a(a)(2)(A):  
In accordance with the standards set forth in paragraph (1) of this 
subsection . . . the Commission shall by rule, regulation, or order 
establish limits on the amount of positions, as appropriate, other 
than bona fide hedge positions, that may be held by any person . . . 
 
Section 6a(a)(3): 
  
In establishing the limits required in paragraph (2), the 
Commission, as appropriate, shall set limits – 
 
 
(A) on the number of positions that may be held by any 
person for the spot month, each other month, and the 
aggregate number of positions that may be held by any 
person for all months; and 
 
(B) to the maximum extent practicable, in its discretion . . .    
 
Section 6a(a)(5)(A): 
Notwithstanding any other provision of this section, the 
Commission shall establish limits on the amount of positions, 
including aggregate position limits, as appropriate, other than bona 
fide hedge positions . . . .  
 
Again, each party believes the statute is clear and unambiguous.  Neither party disputes 
that the “as appropriate” language in these sections confers discretion in the agency.  The parties 
part ways, however, when it comes to what exactly that phrase was meant to modify.  The CFTC 
contends that Congress meant “as appropriate” in Sections 6a(a)(2)(A) and 6a(a)(5)(A) to modify 
the actual levels of the limits, whereas Plaintiffs contend that “as appropriate” was meant to 
modify “shall.”  The answer, of course, is material.  If Plaintiffs are correct, then the CFTC had 
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the authority to determine that position limits were not “appropriate” at this particular time and, 
thus, not impose them at all.   
The statute, however, is ambiguous on this point.  The CFTC fails to offer any 
compelling authority for its argument that, because the term “as appropriate” is closer to or 
comes after “establish limits on the amount of positions” in subsections (a)(2) and (a)(5), the 
CFTC was only required to find the “amount of positions” appropriate.  (Dkt. No. 25 at 24; Dkt. 
No. 38 at 25).  In its Opposition to Plaintiffs’ Motion for Preliminary Injunction, the CFTC relied 
on the Rule of Last Antecedent, as described in Sutherland Statutory Construction § 47:33, as 
support for its construction of the “as appropriate” language.  (Dkt. No. 25 at 24).  The CFTC’s 
argument, however, is wrong for at least two reasons.  First, a complete review of the authority 
upon which the CFTC relies reveals that the Rule of the Last Antecedent is not dispositive here: 
Referential and qualifying words and phrases, where no contrary 
intention appears, refer solely to the last antecedent….The rule is 
another aid to discovery of intent or meaning and is not inflexible 
and uniformly binding.  Where the sense of the entire act requires 
that a qualifying word or phrase apply to several preceding or even 
succeeding sections, the word or phrase will not be restricted to its 
immediate antecedent. Evidence that a qualifying phrase is 
supposed to apply to all antecedents instead of only to the 
immediately preceding one may be found in the fact that it is 
separated from the antecedents by a comma. 
 
2A N. Singer & J. Singer, SUTHERLAND  STATUTORY  CONSTRUCTION § 47:33 (7th ed. 2011) 
(hereinafter “Sutherland”) (emphasis added).   
In this case, the “as appropriate” clauses in (a)(2) and (a)(5) are separated from their 
antecedents by a comma on either side.  According to Sutherland, this fact is evidence that the 
phrase was “supposed to apply to all antecedents instead of only to the immediately preceding 
one.”  Id.  If that is the case, “as appropriate” modifies both “shall” in subsections 6a(a)(2) and 
(a)(5) as well as the “amount of positions.”  Moreover, unlike the traditional cases in which the 
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Rule of the Last Antecedent has been found to apply, the clauses in question are not part of a list.  
See United States v. Pritchett, 470 F.2d 455, 456, 458-59 (D.C. Cir. 1972) (holding that, in 
statute providing that “provisions of section 22-3204 shall not apply to marshals, sheriffs, prison 
or jail wardens, or their deputies, policemen or other duly appointed law-enforcement officers, or 
to members of the Army, Navy, or Marine Corps of the United States or of the National Guard or 
Organized Reserves when on duty,” the phrase “on duty” modified only the last antecedent).   
In their amicus brief, members of the House Democratic Conference Committee on H.R. 
4173 point to legislative history of an early iteration of the Act as reflected in House Report 111-
385.  That language stated that “Section 6(a) requires the CFTC to set appropriate position limits 
for all physical commodities other than excluded commodities.”  (Dkt. No. 49 at 3).  According 
to amici, this reflects that the use of the word “appropriate” in the text was intended to describe 
the level of the position limit, not whether the limits themselves were appropriate.  (Id. at 3-4).  
But that is not the final language Congress used.  Congress set the “as appropriate” language 
apart from all other clauses with commas.  It could have merely, as written in the legislative 
history, placed the word “appropriate” before “limits” in subsections (a)(2)(A) and (a)(5).  This 
portion of legislative history, thus, does not conclusively explain how the statute, as written, 
clearly indicates that the phrase “as appropriate” modifies position limits.  Nor does this 
legislative history exclude the interpretation that the CFTC could find it appropriate to set no 
position limits for some commodities.   
Second, the CFTC’s construction of the statute as a mandate is at least partially 
undermined by Congress’ use of the clause “as appropriate” in subsection (a)(3): “In establishing 
the limits required in paragraph (2), the Commission, as appropriate, shall set limits . . . .”  § 
6a(a)(3).  Here, under the CFTC’s logic, “as appropriate” is closest to the verb “shall” and, as 
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such, modifies it.  This would undermine the CFTC’s position that subsection (a)(3) constituted a 
mandate and that the agency had no discretion not to set limits on the positions described in that 
subsection. 
Further lending to the ambiguity is that subsection (a)(5)(A) governing “economically 
equivalent contracts” begins with the phrase “[n]otwithstanding any other provision of this 
section, the Commission shall establish limits on the amount of positions, including aggregate 
position limits, as appropriate, . . . .”  § 6a(a)(5)(A).  Accordingly, it would seem that—unlike 
subsection (a)(2)(A) in which the CFTC is bound to set limits in accordance with the “standards” 
of paragraph (1)—subsection (a)(5)(A) is to apparently operate free of any other provision of 
Section 6a.  If that is the case, this would undermine the CFTC’s argument that subsection 
(a)(2)(A) operates as a standalone mandate, as it is clear from the “notwithstanding” language in 
subsection (a)(5)(A) that Congress knew how to divorce subsections of Section 6a from each 
other.  On the other hand, however, Congress still used the “as appropriate” language conferring 
discretion in subsection (a)(5)(A). 
In short, it is wholly unclear whether Congress meant “as appropriate” in subsections 
(a)(2)(A), (a)(3) and (a)(5)(A) to modify the verb “shall” or other parts of those subsections.  The 
CFTC did not recognize these ambiguities and interpret the statute accordingly in the first 
instance.  The Court cannot conclude that the “as appropriate” clauses clearly modify the verb 
“shall” in each instance, nor can it conclude given traditional tools of statutory construction that 
“as appropriate” was meant only to grant the Commission authority to set the “amount of 
positions” as it saw “appropriate.”   
3.  Section 6a(a)(6) 
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There appears to be no dispute that Section 6a(a)(6) is a mandate upon the Commission 
to set aggregate position limits in at least three circumstances.  See § 6a(a)(6)(A)-(C).  As 
Plaintiffs concede, Section 6a(a)(6) is a provision “that is not at issue in this case and that in any 
event does not use the key phrase ‘as appropriate’ or expressly incorporate the necessity standard 
of Section 6a(a)(1).”  (Dkt. No. 45 at 10). 
The Court declines, however, to reach a determination on whether the aggregation 
standards promulgated in the final rule are arbitrary and capricious under 5 U.S.C. § 706(2)(A) 
or in violation of the cost-benefit analysis requirements of 7 U.S.C. § 19.  Nor is the Court in a 
position to determine whether the Commission’s aggregation policies should stand alone severed 
from the final rule.  The Commission has informed the Court that it has issued a Notice of 
Proposed Rulemaking (“Aggregation Notice”) to revisit “several provisions” of the Position 
Limits Rule governing aggregation of speculative positions.  (Dkt. Nos. 61, 63); see also Dkt. 
No. 63-1 (stating that, through the Aggregation Notice, CFTC is considering proposed changes 
to seven aggregation provisions of final rule).  The CFTC apparently is considering whether to 
modify many of the aggregation provisions with which Plaintiffs take issue in this case.  See 
Aggregation Position Limits for Futures and Swaps, 77 Fed. Reg. 31,767 (May 30, 2012) 
(proposing amendments to, among other provisions, the information sharing exemption and the 
10% ownership standard).  Because the aggregation rules are currently under consideration and 
may be changed after the Position Limits Rule goes into effect, the Commission’s Division of 
Market Oversight also issued a “no action” letter to all market participants excusing them from 
compliance with certain portions of the rule under certain circumstances.  (Dkt. No. 63-1).   
Given that several provisions of the aggregation rules—rules which the Commission 
refers to as a “central feature of any position limits regime”—are under consideration and may 
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be modified, it is not appropriate for this Court to interfere in the rulemaking at this stage.  (Dkt. 
No. 38 at 42).  Indeed, it is wholly unclear whether any challenges to the aggregation rules are 
even ripe at this time.  See Abbott Labs. v. Gardner, 387 U.S. 136, 148-49 (1967) (prudential 
ripeness principles protects “the agencies from judicial interference until an administrative 
decision has been formalized and its effects felt in a concrete way by the challenging parties.”); 
Ohio Forestry Ass’n Inc. v. Sierra Club, 523 U.S. 726, 735 (1998) (administrative claim is not 
ripe where the “possibility that further consideration will actually occur before [implementation] 
is not theoretical, but real.”).  Because the entire rule will be vacated, the Commission can on 
remand, if it so chooses, modify and finalize any aggregation rules as part of any new regime it 
may promulgate. 
4.  Interpretation of Section 6a as a Whole 
The Court is mindful that, in searching for the plain meaning of Section 6a, the Court 
must not take words in isolation, must view them in context, and must attempt to give effect to 
all words in the statute.  Doing so does not, however, elucidate any of the ambiguities of the 
statute. 
There is no question, as the CFTC argues, that Congress used traditionally mandatory 
language throughout the Dodd-Frank amendments to Section 6a.  The CFTC relies on that 
language as support for its view that Congress stripped the CFTC of any discretion not to impose 
position limits even if the agency did not find it “necessary” or “appropriate” to do so.  (Dkt. No. 
25 at 23-24).  For example, the CFTC relies on language stating that the Commission “shall” 
establish limits (subsection 6a(a)(2)(A)); that Congress imposed 180-day and 270-day deadlines 
on the limits “required” under subparagraph 6a(a)(2)(A) (subsection 6a(a)(2)(B)); and that 
Congress referred to the limits “required” under subparagraph (A) in other sections (6a(a)(2)(C); 
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6a(a)(2)(3)).  The CFTC also points to the statute requiring the Commission to conduct a study 
of the “effects (if any) of the position limits imposed” and submit a report to Congress within 12 
months.  (Dkt. No. 38 at 22-23 (citing 15 U.S.C. § 8307)).  Although the CFTC is correct that 
these provisions taken in isolation seemingly create a mandatory regime, the agency and this 
Court is required to attempt to give effect to all parts of the statute, including the ambiguous 
language.  See SUTHERLAND at § 28:12 (stating that “when two provisions of code conflict, if 
reconciliation is possible, effect should be given to both sections”).   
Upon a review of the entire Section 6a as amended by Dodd-Frank, the Court finds that  
there are at least two plausible readings of the statute.  First is the CFTC’s interpretation: that the 
CFTC was mandated to set position limits, that it was stripped of any discretion not to set limits, 
that it was not required to find (either implicitly or explicitly) that the imposition of position 
limits both generally and with respect to certain commodities was necessary, that it was not 
required to determine whether the actual imposition of limits was appropriate both generally and 
with respect to certain commodities, and that it was required to impose those limits 
expeditiously.6   
This interpretation, however, renders other parts of Section 6a mere surplusage.  
Significantly, it fails to give any meaningful effect to the very first clause of Section 6a(a)(2), 
which requires that the CFTC establish position limits “[i]n accordance with the standards set 
forth” in subsection (a)(1).  As one court has held, although the inference the agency “‘draw[s] as 
to the statute’s meaning is not by any means unreasonable, it is also not inevitable and thus not 
                                                            
6  
So rigid is the Commission’s view of the Dodd-Frank “mandate” that, at oral argument, 
agency counsel represented to the Court that the agency intended to eventually set position limits 
on derivatives tied to every non-exempt physical commodity.  2/27/12 Tr. at 31. 
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mandatory.”  See Humane Soc’y, 579 F. Supp. 2d at 19 (citing Air Transp. Ass’n of America v. 
FAA, 169 F.3d 1, 4 (D.C. Cir. 1999)).  
The other plausible interpretation of Section 6a is the one that Plaintiffs offer.  As 
Plaintiffs argue, “[t]he only reasonable reading of the Dodd-Frank amendments to Section 6a is 
that Congress intended the Commission to immediately gather evidence relating to whether 
excessive speculation was harming commodity markets and to impose position limits where 
necessary and appropriate to prevent an undue burden on the economy.”  (Dkt. No. 26 at 9).  In 
other words, Plaintiffs do not seem to contest that the CFTC may be required to impose position 
limits, but that that obligation does not arise until the Commission first makes a finding that such 
position limits are necessary to combat the burden described in 6a(a)(1).   
This Circuit has instructed that when “‘construing a statute we are obliged to give effect, 
if possible, to every word Congress used.’”  Murphy Exploration & Prod. Co. v. U.S. Dep’t of 
Interior, 252 F.3d 473, 481 (D.C. Cir. 2001) (quoting Reiter v. Sonotone Corp., 442 U.S. 330, 
339 (1979)).  Moreover, it is well-settled that a statute is considered ambiguous when it is 
capable of being understood by reasonably well-informed persons in two or more different 
senses.  See Nofziger, 878 F.2d at 446–47 (statute is ambiguous if it can be read in more than 
one way); see also SUTHERLAND at §§ 46:4, 45:2.  Simply because a statute “is susceptible of one 
construction does not render its meaning plain if it is also susceptible of another, plausible 
construction . . . .”  PDK Labs. Inc. v. U.S. DEA, 362 F.3d 786, 796 (D.C. Cir. 2004); see also 
Nat’l Rifle Ass’n of America, Inc. v. Reno, 216 F.3d 122, 131 (D.C. Cir. 2000)  (“Though we 
owe no deference to the Attorney General’s interpretation of statutory language at this stage of 
Chevron analysis, the plausibility  of her view highlights the statute’s ambiguity.”) (citing 
Nofziger, 878 F.2d at 446–47) (emphasis added). 
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In sum, the Dodd-Frank amendments do not constitute a clear and unambiguous mandate 
to set position limits, as the Commission argues.  Nor are those amendments clear and 
unambiguous in Plaintiffs’ favor.  The Court cannot uphold the CFTC’s interpretation of the 
amendments under Chevron Step One.  Nor, as set forth below, is this Court able to review the 
agency’s interpretation under Chevron Step Two.   
b.  Chevron Step Two 
Under Chevron  step two, if a statute is silent or ambiguous on a particular issue, the 
Court must defer to the agency’s interpretation of the statute if it is reasonable and consistent 
with the statutory purpose.  See Pub. Citizen, 901 F.2d at 154 (citing Chevron, 467 U.S. at 844–
45).  The law of this Circuit is clear, however, that “Chevron  step 2 deference is reserved for 
those instances when an agency recognizes that the Congress’s intent is not plain from the 
statute’s face.”  Peter Pan, 471 F.3d at 1354; see also Arizona, 281 F.3d at 254 (stating that 
“[d]eference to an agency’s statutory interpretation is only appropriate when the agency has 
exercised its own judgment, not when it believes that interpretation is compelled by Congress.”) 
(internal quotation marks omitted).   
It is well-settled in this Circuit that “deference to an agency’s interpretation of a statute is 
not appropriate when the agency wrongly believes that interpretation is compelled by Congress.”  
Peter Pan, 471 F.3d at 1352, 1354 (internal quotation marks and citations omitted) (vacating and 
remanding agency decision because agency “premised its construction on the plain language of 
the statute, which it treated as unambiguous, and because we find that the statutory language is in 
fact ambiguous . . . .”); see also Sec’y of Labor, Mine Safety & Health Admin. v. Nat’l Cement 
Co. of California, Inc., 494 F.3d 1066, 1075 (D.C. Cir. 2007) (“Because the Secretary did not 
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recognize the ambiguities inherent in the statutory terms, we do not defer to her plain meaning 
interpretation but instead remand for her to treat the statutory language as ambiguous.”).   
The CFTC correctly concedes that it is not entitled to Chevron deference with regard to 
its interpretation of Sections 6a(a)(2)-(7).  (Dkt. No. 55 at 6, n.4).  It is undisputed that the CFTC 
viewed the statute as clear and unambiguous, and that it viewed the Dodd-Frank amendments as 
compelling a particular result: that the agency was required to set position limits regardless of 
whether the agency thought it necessary and appropriate.  That view was expressed throughout 
the rulemaking.  See 76 Fed. Reg. at 71,626 (“[T]he CEA mandates that the Commission 
establish position limits for futures and options contracts traded on a designated contract market . 
. . .”); id. at 71,627 (“The Commission is required to establish position limits  as Congress 
intentionally used the word, ‘shall,’ to impose the mandatory obligation.’’); id. at 71,628 (“The 
Commission disagrees that it must first determine that position limits are necessary before 
imposing them or that it may set limits only after it has conducted a complete study of the swaps 
market.  Congress did not give the Commission a choice.  Congress directed the Commission to 
impose position limits and to do so expeditiously”); id. at 71,627 (“[T]he Commission construes 
the amended CEA to mandate the Commission to impose position limits at the level it 
determines to be appropriate to diminish, eliminate, or prevent excessive speculation and market 
manipulation.”); id. at 71,629, n.30 (stating that “Congress did not disturb the language under 
which the Commission previously acted to impose position limits, and added new language that 
makes clear that the types of limits described in sections 4a(a)(2), (a)(5), and (a)(6) are 
required”).  Even Commissioner Dunn, who expressed his grave concerns about setting position 
limits in general, provided the third vote in favor of the rule because he believed that “Congress 
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has tasked the CFTC with preventing excessive speculation by imposing position limits.  This is 
the law.  The law is clear, and I will follow the law.”  10/18/11 Tr. at 11.   
The Commission continued to take this position during this litigation.  See Dkt. No. 38 at 
23 (“There is only one plausible reading of the Dodd-Frank amendments: Congress 
unconditionally required the Commission to impose limits and to do so expeditiously”); id. 
(“[N]o other confirmation of the mandate beyond the language and structure of the Dodd-Frank 
amendments is needed”); id. at 1 (“But Plaintiffs ignore that Congress mandated that the 
Commission promulgate the Rule.”). 
As discussed above, the Dodd-Frank amendments to Section 6a are ambiguous and lend 
themselves to more than one plausible interpretation.  When a statute is ambiguous, “it is 
incumbent upon the agency not to rest simply on its parsing of the statutory language.  It must 
bring its experience and expertise to bear in light of competing interests at stake” to resolve the 
ambiguities in the statute.  PDK Labs., 362 F.3d at 794, 797-98 (holding that agency’s 
interpretation of statute was not entitled to deference because agency erroneously believed the 
meaning of the statute was plain and failed to rely on its expertise to discern the meaning of the 
statute); see also Peter Pan, 471 F.3d at 1354; Arizona, 281 F.3d at 254.  Where an agency has 
failed to do so, it “is not for the court ‘to choose between competing meanings.’”   PDK 
Labs., 362 F.3d at 797-98 (quoting Alarm Indus. Commc’ns Comm. v. FCC, 131 F.3d 1066, 
1072 (D.C. Cir. 1997)) (holding that Court must remand to the agency to resolve the ambiguity 
in the statute).    “[I]f we find that an agency’s stated rationale for its decision is erroneous, we 
cannot sustain its action on some other basis the agency did not mention.”  PDK Labs., 362 F.3d 
at 798 (citing SEC v. Chenery Corp., 332 U.S. 194, 200 (1947)).  
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 The law of this Circuit, therefore, requires in this circumstance that the Court remand the 
rule to the agency so that it can fill in the gaps and resolve the ambiguities.7  See PDK Labs., 362 
F.3d at 798; see also  Alarm Indus., 131 F.3d at 1072 (holding that statute did not have a plain 
meaning, as the Commission believed it did, and vacating and remanding the case to the 
Commission to resolve the ambiguity); Humane Soc’y, 579 F. Supp. 2d at 13 (noting that “when 
an agency wrongly concludes that its interpretation is mandated by the statute, a court will not 
impose its own interpretation of the statute.”).   
The Court expresses no opinion on whether the construction of Section 6a the CFTC now 
advances is permissible under Chevron Step Two.  Although the Court does not foreclose the 
possibility that the CFTC could, in the exercise of its discretion, determine that it should impose 
position limits without a finding of necessity and appropriateness, it is not plain and clear that the 
statute requires this result.  See  Arizona, 281 F.3d at 256 (“Although we do not foreclose the 
possibility that HHS could, in the exercise of its discretion, determine that the allocation of 
common costs to TANF is not reasonably calculated to accomplish TANF’s purpose, the statute 
does not require HHS to reach that conclusion.”).  Because the statute is ambiguous and a 
remand to the agency is warranted, the Court need not address Plaintiffs’ other claims that the 
rule and its specific features violated the APA.  
c.  View of Congressional Amici and Legislative History 
The Court received two amicus curiae briefs from members of Congress that were 
involved in the development of the Dodd-Frank Act.  (Dkt. Nos. 48 & 49).   Both groups wrote 
                                                            
7  
As this Circuit has held, it “may be that here, as in other cases, the strict dichotomy 
between clarity and ambiguity is artificial, that what we have is a continuum, a probability of 
meaning.  In precisely those kinds of cases, it is incumbent upon the agency not to rest simply on 
its parsing of the statutory language.”  PDK Labs., 362 F.3d at 797. 
 
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in support of the CFTC.  In one brief, the House Democratic Members of the Conference 
Committee (“House Democratic Members”) on H.R. 4173 assert that the CFTC has historically 
had the power to establish position limits prophylactically.  (Dkt. No. 49 at 2).  The House 
Members state that the “CFTC was not required or even expected to analyze and determine 
whether or not it considered position limits to be efficacious in addressing possible harm from 
speculative trading.”  (Id. at 3).  To support this proposition, they cite to instances in the 
legislative history where Congress made statements referring to the amendments as a “mandate” 
or a “requirement.”  (Id. at 3-5). 
Another amicus brief was filed by 19 current United States Senators, some (but not all) of 
whom were involved in the development of the Dodd-Frank Act.  (Dkt. No. 48 at 1).  The 
Senators similarly state that “Dodd-Frank was designed and intended” to make CFTC position 
limits mandatory.  (Id. at 3).  Engaging in their own exercise of statutory interpretation, the 
Senators make most of the same arguments the CFTC makes and point to much of the same 
“mandatory” language.  The Senators also urge this Court to conclude that the clear language of 
the Dodd-Frank amendments lead to only one result: that “Congress’ drafting choice [] points 
only to the conclusion that Congress believed position limits to be ‘required.’”  (Id. at 5).  The 
Senators also argue that the legislative history shows that the language of the Dodd-Frank 
amendments to Section 6a evolved from permissive to mandatory and, as such, reflect that the 
CFTC has no discretion not to impose position limits.  (Id. at 16-20); (see also id. at 24) (“At 
each step in the legislative process, Congress made the position limits requirement stronger.”).  
The Senators also cite to statements made by members of the House indicating their view that the 
Dodd-Frank amendments mandated the imposition of position limits.  (Id. at 21-23).  
40 
 

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The Court appreciates the efforts of amici to assist in determining the meaning of the 
relevant provisions of the CEA.  The Court has considered amici’s interpretations of both the 
legislative history and statutory text.  Given the fundamental ambiguities in the statute, however, 
the Court is not persuaded by their arguments.  Ultimately, the “judiciary functions as the final 
authority on issues of statutory construction . . . .”  Wells Fargo Bank, 310 F.3d at 205-06.  The 
views of amici do not override the ambiguities of the actual language that appears in the statute, 
which the CFTC failed to interpret in the first instance.  In any event, amici do not point to any 
conclusive reasons to dispel the fundamental concerns that this Court has about the ambiguities 
in the statute.8   
IV. 
Vacatur and Remand 
Plaintiffs request that this Court vacate the Position Limits Rule and remand this matter 
back to the agency.  (Dkt. No. 31 at 18, n.12).  The CFTC contends that, even were this Court to 
find in Plaintiffs’ favor, the Court has discretion to—and should—remand the rule to the CFTC 
without vacatur.  (Dkt. No. 38 at 15, n.9).   
                                                            
8  
For example, no one cites to legislative history that sheds any light on what Congress 
meant when it directed that any position limits under Section 6a(a)(2) must be established “In 
accordance with the standards set forth in paragraph (1) of this subsection . . . .” § 6a(a)(2) 
(emphasis added).  Apparently that language was added after the Introduced Bill but before the 
Engrossed Bill.  Despite mentioning many differences between the Introduced Bill versus the 
Engrossed Bill, the Senators do not provide guidance on the inclusion of “in accordance with the 
standards” in the Engrossed Bill.  (Dkt. 48 at 17-20).  Nor does the CFTC offer any explanation.  
Accordingly, although amici ask this Court to hold that the language of the Act evolved from 
permissive to mandatory and that the Dodd-Frank amendments required the Commission to set 
position limits no matter what, the same evolution reflects that Congress tied any new position 
limits to the “standards” of the Commission’s longstanding discretionary authority in Section 
6a(a)(1).  Thus, even were this Court to give great weight to the legislative history, the Court 
cannot conclude that Congress has “directly spoken” to the issue of whether the Commission was 
stripped of any discretion not to impose position limits.  
 
 
 
41 
 

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The CFTC is correct that the Court has discretion to decide whether to vacate the rule on 
remand.  See Advocates for Highway & Auto Safety v. Fed. Motor Carrier Safety Admin., 429 
F.3d 1136, 1151 (D.C. Cir. 2005) (“While unsupported agency action normally warrants vacatur 
. . . this court is not without discretion.”) (internal quotation marks and citations omitted).  When 
deciding whether to vacate the Court considers two factors: “seriousness of the order’s 
deficiencies” and “the disruptive consequences of an interim change that may itself be changed.”  
Allied-Signal, Inc. v. U.S. Nuclear Regulatory Comm’n, 988 F.2d 146, 150-51 (D.C. Cir. 1993).  
In this case, both factors weigh in favor of vacating the rule on remand. 
 
First, as set forth above, the CFTC’s error in this case was that it fundamentally 
misunderstood and failed to recognize the ambiguities in the statute.  In circumstances such as 
this, our Circuit has found it appropriate to vacate the agency action on remand.  See, e.g., Peter 
Pan, 471 F.3d at 1354-55; Nat’l Cement, 494 F.3d at 1077; PDK Labs., 362 F.3d at 799.  By 
failing to acknowledge the statutory ambiguities in Section 6a, the CFTC instead relied 
exclusively on a “plain meaning” reading of the statute.  The agency failed to bring its expertise 
and experience to bear when interpreting the statute and offered no explanation for how its 
interpretation comported with the policy objectives of the Act.  The Court cannot be sure that the 
agency will interpret the statute in the same way and arrive at the same conclusion after further 
review and cannot be sure whether a similar position limits rule will withstand challenge under 
the APA.  See Humane Soc’y, 579 F. Supp. 2d at 21.  
Second, it would be far more disruptive if the Position Limits Rule were allowed to go 
into effect while on remand.  As Plaintiffs note, remand without vacatur is often warranted once 
a rule has gone into effect and, as such, there is no apparent way to restore the status quo.  (Dkt. 
No. 31 at 18, n.12); Sugar Cane Growers Coop. of Florida v. Veneman, 289 F.3d 89, 97 (D.C. 
42 
 


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Cir. 2002) (holding that remand without vacatur was warranted where the rule had already gone 
into effect and, as such “[t]he egg ha[d] been scrambled and there [was] no apparent way to 
restore the status quo ante.”).  In this case, the Position Limits Rule, which according to both 
parties is a significant and unprecedented change in the operation of the commodity derivatives 
market, has not yet gone into effect.  Moreover, the CFTC itself is reviewing and possibly 
revising its aggregation policies.  (Dkt. Nos. 61, 63).  The Court finds that vacatur of the rule 
would merely maintain the status quo and cause far less disruption than vacating the regime after 
it has gone into effect. 
CONCLUSION 
 
For the foregoing reasons, the Position Limits Rule is vacated and remanded to the 
Commission for further proceedings consistent with this Opinion.  Moreover, Plaintiffs’ Motion 
for Summary Judgment is granted and Defendant’s Motion for Summary Judgment is denied.  
An Order accompanies this Memorandum.   
 
Digitally signed by Judge Robert L. 
Wilkins 
DN: cn=Judge Robert L. Wilkins, 
 
o=U.S. District Court, ou=Chambers 
of Honorable Robert L. Wilkins, 
email=xx@xx.xxxxxxx.xxx, c=US 
Date: September 28, 2012 
 
 
   
      
  
 
    
Date: 2012.09.28 14:38:34 -04'00'
                                         ROBERT 
L. 
WILKINS    
    United 
States 
District 
Judge 
 
 
 
43 
 

Case 1:11-cv-02146-RLW   Document 69   Filed 09/28/12   Page 44 of 50
APPENDIX A 
 
Effective: July 21, 2010 
7 U.S.C.A. § 6a 
 
§ 6a. Excessive speculation 
 (a) Burden on interstate commerce; trading or position limits 
 
(1) In general 
 
Excessive speculation in any commodity under contracts of sale of such commodity for future 
delivery made on or subject to the rules of contract markets or derivatives transaction execution 
facilities, or on electronic trading facilities with respect to swaps that perform or affect a 
significant price discovery contractfunction with respect to registered entities causing sudden or 
unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue 
and unnecessary burden on interstate commerce in such commodity. For the purpose of 
diminishing, eliminating, or preventing such burden, the Commission shall, from time to time, 
after due notice and opportunity for hearing, by rule, regulation, or order, proclaim and fix such 
limits on the amounts of trading which may be done or positions which may be held by any 
person, including any group or class of traders, under contracts of sale of such commodity for 
future delivery on or subject to the rules of any contract market or derivatives transaction 
execution facility, or swaps traded on an electronic tradingor subject to the rules of a designated 
contract market or a swap execution facility with respect to a , or swaps not traded on or subject 
to the rules of a designated contract market or a swap execution facility that performs a 
significant price discovery contractfunction with respect to a registered entity, as the 
Commission finds are necessary to diminish, eliminate, or prevent such burden. In determining 
whether any person has exceeded such limits, the positions held and trading done by any persons 
directly or indirectly controlled by such person shall be included with the positions held and 
trading done by such person; and further, such limits upon positions and trading shall apply to 
positions held by, and trading done by, two or more persons acting pursuant to an expressed or 
implied agreement or understanding, the same as if the positions were held by, or the trading 
were done by, a single person. Nothing in this section shall be construed to prohibit the 
Commission from fixing different trading or position limits for different commodities, markets, 
futures, or delivery months, or for different number of days remaining until the last day of 
trading in a contract, or different trading limits for buying and selling operations, or different 
limits for the purposes of paragraphs (1) and (2) of subsection (b) of this section, or from 
exempting transactions normally known to the trade as “spreads” or “straddles” or “arbitrage” or 
from fixing limits applying to such transactions or positions different from limits fixed for other 
transactions or positions. The word “arbitrage” in domestic markets shall be defined to mean the 
same as “spread” or “straddle”. The Commission is authorized to define the term “international 
arbitrage”. 
 
 
 

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(2) Establishment of limitations 
 
(A) In general 
 
In accordance with the standards set forth in paragraph (1) of this subsection and consistent with 
the good faith exception cited in subsection (b)(2), with respect to physical commodities other 
than excluded commodities as defined by the Commission, the Commission shall by rule, 
regulation, or order establish limits on the amount of positions, as appropriate, other than bona 
fide hedge positions, that may be held by any person with respect to contracts of sale for future 
delivery or with respect to options on the contracts or commodities traded on or subject to the 
rules of a designated contract market. 
 
(B) Timing 
 
(i) Exempt commodities 
 
For exempt commodities, the limits required under subparagraph (A) shall be established within 
180 days after July 21, 2010. 
 
(ii) Agricultural commodities 
 
For agricultural commodities, the limits required under subparagraph (A) shall be established 
within 270 days after July 21, 2010. 
 
(C) Goal 
 
In establishing the limits required under subparagraph (A), the Commission shall strive to ensure 
that trading on foreign boards of trade in the same commodity will be subject to comparable 
limits and that any limits to be imposed by the Commission will not cause price discovery in the 
commodity to shift to trading on the foreign boards of trade. 
 
(3) Specific limitations 
 
In establishing the limits required in paragraph (2), the Commission, as appropriate, shall set 
limits-- 
 
(A) on the number of positions that may be held by any person for the spot month, 
each other month, and the aggregate number of positions that may be held by any person 
for all months; and 
 
 
(B) to the maximum extent practicable, in its discretion-- 
 
(i) to diminish, eliminate, or prevent excessive speculation as described 
under this section; 
 
 
(ii) to deter and prevent market manipulation, squeezes, and corners; 

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(iii)
 to ensure sufficient market liquidity for bona fide hedgers; and 
 
(iv) to ensure that the price discovery function of the underlying market is 
not disrupted. 
 
(4) Significant price discovery function 
 
In making a determination whether a swap performs or affects a significant price discovery 
function with respect to regulated markets, the Commission shall consider, as appropriate: 
 
(A) Price linkage 
 
The extent to which the swap uses or otherwise relies on a daily or final settlement price, or other 
major price parameter, of another contract traded on a regulated market based upon the same 
underlying commodity, to value a position, transfer or convert a position, financially settle a 
position, or close out a position. 
 
(B) Arbitrage 
 
The extent to which the price for the swap is sufficiently related to the price of another contract 
traded on a regulated market based upon the same underlying commodity so as to permit market 
participants to effectively arbitrage between the markets by simultaneously maintaining positions 
or executing trades in the swaps on a frequent and recurring basis. 
 
(C) Material price reference 
 
The extent to which, on a frequent and recurring basis, bids, offers, or transactions in a contract 
traded on a regulated market are directly based on, or are determined by referencing, the price 
generated by the swap. 
 
(D) Material liquidity 
 
The extent to which the volume of swaps being traded in the commodity is sufficient to have a 
material effect on another contract traded on a regulated market. 
 
(E) Other material factors 
 
Such other material factors as the Commission specifies by rule or regulation as relevant to 
determine whether a swap serves a significant price discovery function with respect to a 
regulated market. 
 
(5) Economically equivalent contracts 
 
(A) Notwithstanding any other provision of this section, the Commission shall 
establish limits on the amount of positions, including aggregate position limits, as 

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appropriate, other than bona fide hedge positions, that may be held by any person with 
respect to swaps that are economically equivalent to contracts of sale for future delivery 
or to options on the contracts or commodities traded on or subject to the rules of a 
designated contract market subject to paragraph (2). 
 
(B) in establishing limits pursuant to subparagraph (A), the Commission shall-- 
 
(i) develop the limits concurrently with limits established under paragraph 
(2), and the limits shall have similar requirements as under paragraph 
(3)(B); and 
 
(ii)
 establish the limits simultaneously with limits established under 
paragraph (2). 
 
(6) Aggregate position limits 
 
The Commission shall, by rule or regulation, establish limits (including related hedge exemption 
provisions) on the aggregate number or amount of positions in contracts based upon the same 
underlying commodity (as defined by the Commission) that may be held by any person, 
including any group or class of traders, for each month across-- 
 
(A) contracts listed by designated contract markets; 
 
(B)
 with respect to an agreement contract, or transaction that settles against any 
price (including the daily or final settlement price) of 1 or more contracts listed 
for trading on a registered entity, contracts traded on a foreign board of trade that 
provides members or other participants located in the United States with direct 
access to its electronic trading and order matching system; and 
 
(C)
 swap contracts that perform or affect a significant price discovery function 
with respect to regulated entities. 
 
(7) Exemptions 
 
The Commission, by rule, regulation, or order, may exempt, conditionally or unconditionally, 
any person or class of persons, any swap or class of swaps, any contract of sale of a commodity 
for future delivery or class of such contracts, any option or class of options, or any transaction or 
class of transactions from any requirement it may establish under this section with respect to 
position limits. 
 
(b) Prohibition on trading or positions in excess of limits fixed by Commission 
 
The Commission shall, in such rule, regulation, or order, fix a reasonable time (not to exceed ten 
days) after the promulgation of the rule, regulation, or order; after which, and until such rule, 
regulation, or order is suspended, modified, or revoked, it shall be unlawful for any person-- 
 

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(1) directly or indirectly to buy or sell, or agree to buy or sell, under contracts of sale of 
such commodity for future delivery on or subject to the rules of the contract market or 
markets, or derivatives transactionswap execution facility or facilities or electronic 
trading facility with respect to a significant price discovery contract, to which the rule, 
regulation, or order applies, any amount of such commodity during any one business day 
in excess of any trading limit fixed for one business day by the Commission in such rule, 
regulation, or order for or with respect to such commodity; or 
 
(2) directly or indirectly to hold or control a net long or a net short position in any 
commodity for future delivery on or subject to the rules of any contract market or 
derivatives transactionswap execution facility or electronic trading facility with respect to 
a significant price discovery contract in excess of any position limit fixed by the 
Commission for or with respect to such commodity: Provided, That such position limit 
shall not apply to a position acquired in good faith prior to the effective date of such rule, 
regulation, or order. 
 
(c) Applicability to bona fide hedging transactions or positions 
 
(1) No rule, regulation, or order issued under subsection (a) of this section shall apply to 
transactions or positions which are shown to be bona fide hedging transactions or 
positions as such terms shall be defined by the Commission by rule, regulation, or order 
consistent with the purposes of this chapter. Such terms may be defined to permit 
producers, purchasers, sellers, middlemen, and users of a commodity or a product derived 
therefrom to hedge their legitimate anticipated business needs for that period of time into 
the future for which an appropriate futures contract is open and available on an exchange. 
To determine the adequacy of this chapter and the powers of the Commission acting 
thereunder to prevent unwarranted price pressures by large hedgers, the Commission 
shall monitor and analyze the trading activities of the largest hedgers, as determined by 
the Commission, operating in the cattle, hog, or pork belly markets and shall report its 
findings and recommendations to the Senate Committee on Agriculture, Nutrition, and 
Forestry and the House Committee on Agriculture in its annual reports for at least two 
years following January 11, 1983. 
 
(2)
 For the purposes of implementation of subsection (a)(2) for contracts of sale for future 
delivery or options on the contracts or commodities, the Commission shall define what 
constitutes a bona fide hedging transaction or position as a transaction or position that-- 
 
(A)(i) represents a substitute for transactions made or to be made or positions 
taken or to be taken at a later time in a physical marketing channel; 
 
(ii)
 is economically appropriate to the reduction of risks in the conduct and 
management of a commercial enterprise; and 
 
(iii)
 arises from the potential change in the value of-- 
 

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(I) assets that a person owns, produces, manufactures, processes, or 
merchandises or anticipates owning, producing, manufacturing, 
processing, or merchandising; 
 
(II)
 liabilities that a person owns or anticipates incurring; or 
 
(III)
 services that a person provides, purchases, or anticipates providing or 
purchasing; or 
 
(B) reduces risks attendant to a position resulting from a swap that-- 
 
(i) was executed opposite a counterparty for which the transaction would 
qualify as a bona fide hedging transaction pursuant to subparagraph (A); 
or 
 
(ii)
 meets the requirements of subparagraph (A). 
 
(d) Persons subject to regulation; applicability to transactions made by or on behalf of United 
States 
 
This section shall apply to a person that is registered as a futures commission merchant, an 
introducing broker, or a floor broker under authority of this chapter only to the extent that 
transactions made by such person are made on behalf of or for the account or benefit of such 
person. This section shall not apply to transactions made by, or on behalf of, or at the direction 
of, the United States, or a duly authorized agency thereof. 
 
(e) Rulemaking power and penalties for violation 
 
Nothing in this section shall prohibit or impair the adoption by any contract market, derivatives 
transaction execution facility, or by any other board of trade licensed, designated, or registered 
by the Commission or by any electronic trading facility of any bylaw, rule, regulation, or 
resolution fixing limits on the amount of trading which may be done or positions which may be 
held by any person under contracts of sale of any commodity for future delivery traded on or 
subject to the rules of such contract market or derivatives transaction execution facility or on an 
electronic trading facility, or under options on such contracts or commodities traded on or 
subject to the rules of such contract market, derivatives transaction execution facility, or 
electronic trading facility or such board of trade: Provided, That if the Commission shall have 
fixed limits under this section for any contract or under section 6c of this title for any commodity 
option, then the limits fixed by the bylaws, rules, regulations, and resolutions adopted by such 
contract market, derivatives transaction execution facility, or electronic trading facility or such 
board of trade shall not be higher than the limits fixed by the Commission. It shall be a violation 
of this chapter for any person to violate any bylaw, rule, regulation, or resolution of any contract 
market, derivatives transaction execution facility, or other board of trade licensed, designated, or 
registered by the Commission or electronic trading facility with respect to a significant price 
discovery contract fixing limits on the amount of trading which may be done or positions which 
may be held by any person under contracts of sale of any commodity for future delivery or under 

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options on such contracts or commodities, if such bylaw, rule, regulation, or resolution has been 
approved by the Commission or certified by a registered entity pursuant to section 7a-2(c)(1) of 
this title: Provided, That the provisions of section 13(a)(5) of this title shall apply only to those 
who knowingly violate such limits.