In a letter to House Agriculture Committee Chairman Mike Conaway (R-TX), CFTC Chairman Timothy Massad criticized the “Commodity End-User Relief Act” (H.R. 2289) (the “Bill”) which would reauthorize the CFTC agency for five years, saying many of the provisions outlining the CFTC’s regulatory powers are unneeded or unduly restrictive, and “would make it harder to fulfill our mission.”
The Bill is similar to legislation passed by the House during the last Congress. The Bill would codify and clarify Congressional intent where certain customer protections are concerned, reform the CFTC’s operations, amend certain end-user provisions of the Dodd-Frank Act, and make technical corrections to the Commodity Exchange Act.
In particular, Chair Massad expressed concerns regarding the Bill’s provisions that are designed to enhance the CFTC’s cost-benefit analysis, require compliance with certain administrative procedural requirements, achieve greater global harmonization with foreign regulators over swap rules, and codify into law relief provided to end-users. In the letter, Chair Massad pleaded with the Committee “to keep in mind the principle challenges facing the Commission include resource constraints and bolstering our enforcement and surveillance programs.”
Lofchie Comment: The cost-benefit requirements of the Bill are in Section 202, on page 10. Substantively, it is fairly hard to argue with the list of items that the CFTC would be required to consider before adopting a rule. Further, given that the SEC and numerous other regulators are required to consider the costs and benefits of the rules that they adopt, it is not obvious why the CFTC should be exempted from this requirement. Accordingly, rather than simply opposing the requirement as inconvenient, we think that Chair Massad should make the case as to why: (i) the CFTC should be exempted from performing cost-benefit analyses that other similar government agencies are required to perform or (ii) the list of factors that the CFTC would be required to consider is not appropriate (and if that is the case, which factors would be appropriate).