II 

110TH CONGRESS 

2D SESSION S. 3183 

To amend the Commodity Exchange Act to provide oil and gas price relief 

by requiring the Commodity Futures Trading Commission to take action 

to end excessive speculation, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 24 (legislative day, JUNE 23), 2008 

Mr. DORGAN (for himself, Mr. NELSON of Florida, and Mr. CARPER) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry 

A BILL 

To amend the Commodity Exchange Act to provide oil and 

gas price relief by requiring the Commodity Futures 

Trading Commission to take action to end excessive speculation, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘End Oil Speculation 

5 Act of 2008’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 


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1 (1) skyrocketing energy prices in oil and gas 

2 are damaging families of the United States, as well 

3 as the economy, foreign policy, and national security 

4 of the United States; 

5 (2) while there are a number of reasons for in6 creasing energy costs, a large part of the problem 

7 appears to be from excessive speculation in petro8 leum in the futures markets; 

9 (3) oil and gas prices result from the prices es10 tablished in the petroleum futures markets; 

11 (4) in the early 20th century, speculators were 

12 trading commodities to make money at the expense 

13 of farmers and families of the United States; 

14 (5) Congress stopped that action by enacting 

15 the Commodities Exchange Act (7 U.S.C. 1 et seq.), 

16 which was reinforced later when Congress estab17 lished the Commodity Futures Trading Commission 

18 (referred to in this section as the ‘‘Commission’’), 

19 both of which were designed to ensure that the fu20 tures markets worked free of fraud, manipulation, 

21 and excessive speculation; 

22 (6) the Commission accomplished this (directly 

23 or through delegated authority) primarily by promul24 gating rules and regulations that required the discloVerDate Aug 31 2005 04:48 Jun 25, 2008 Jkt 069200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3183.IS S3183

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1 sure of trading information and that limited specula2 tive trading; 

3 (7) Congress made it clear in the Commodities 

4 Exchange Act and in the establishment of the Com5 mission that the petroleum futures markets exist for 

6 legitimate hedging of actual, physical commercial 

7 products that are bought and sold today, but are to 

8 be delivered in the future; 

9 (8) for a long time after enactment and en10 forcement of that Act (including rules and regula11 tions), the prices generated in the petroleum futures 

12 markets were based largely on fundamental factors 

13 relating to supply and demand for oil and gas in the 

14 United States and world markets; 

15 (9) those prices no longer appear to be based 

16 on those factors, as excessive speculation appears to 

17 have, once again, hijacked the petroleum futures 

18 markets and sent oil and gas prices soaring; 

19 (10) some experts have concluded that as much 

20 as 30 to 50 percent of the recent increase in the 

21 price of oil may be due to manipulation or excessive 

22 speculation in the petroleum futures markets; 

23 (11) some experts have estimated that as much 

24 as 70 percent of the trading in the petroleum fu25 tures markets is by speculators rather than commerVerDate Aug 31 2005 04:48 Jun 25, 2008 Jkt 069200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3183.IS S3183

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1 cial parties seeking to hedge the risk of the future 

2 delivery of an actual physical product and their 

3 counterparties; 

4 (12) the excessive speculation appears to have 

5 resulted, in part, from a variety of actions by the 

6 Commission (including the issuance of exemptions, 

7 exclusions, and no action letters), technology 

8 changes, and threats by market participants to take 

9 their business outside the regulated United States 

10 markets to overseas unregulated markets in which 

11 the participants may not have to disclose their trad12 ing activities and will be subject to less regulation 

13 designed to protect markets and consumers; 

14 (13) the petroleum futures markets must be re15 stored to their original intent and purpose, which is 

16 legitimate hedge trading directly involving commer17 cial parties and in which manipulation and excessive 

18 speculation are eliminated; 

19 (14) the Commission is the primary regulator 

20 of the petroleum futures markets and has ample ex21 isting investigative and regulatory authority to end 

22 manipulation and excessive speculation and to do so 

23 quickly; 

24 (15) Congress acknowledges that the Commis25 sion announced on May 29, 2008, that the CommisVerDate Aug 31 2005 04:48 Jun 25, 2008 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3183.IS S3183

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1 sion was conducting a broad and far-reaching inves2 tigation into the national and international crude 

3 markets (including into oil trading on regulated and 

4 unregulated exchanges, over the counter trading, 

5 cash trades, and storage, pipeline operations, ship6 ping, and transportation generally) to determine if 

7 there was or is any improper manipulation or exces8 sive speculation; and 

9 (16) the announced investigation by the Com10 mission is a good start, but it is only a start and 

11 much more needs to be done quickly. 

12 SEC. 3. ELIMINATION OF MANIPULATION AND EXCESSIVE 

13 SPECULATION AS CAUSE OF HIGH OIL AND 

14 GAS PRICES. 

15 Section 4a of the Commodity Exchange Act (7 U.S.C. 

16 6a) is amended by adding at the end the following: 

17 ‘‘(f) ELIMINATION OF MANIPULATION AND EXCES18 SIVE SPECULATION AS CAUSE OF HIGH OIL AND GAS

19 PRICES.— 

20 ‘‘(1) DUTY OF COMMISSION.— 

21 ‘‘(A) IN GENERAL.—In accordance with 

22 subparagraph (B), the Commission shall use 

23 the authority provided under this Act to restore 

24 the petroleum futures markets to the original 

25 purpose and intent of the markets by elimiVerDate Aug 31 2005 04:48 Jun 25, 2008 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3183.IS S3183

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1 nating manipulation and excessive speculation 

2 by investigation, regulation, and rulemaking. 

3 ‘‘(B) CONSIDERATION OF FINDINGS.—In 

4 carrying out subparagraph (A), the Commission 

5 shall take into account each finding described 

6 in section 2 of the End Oil Speculation Act of 

7 2008 (including paragraphs 2, 4 through 7, and 

8 10 through 14 of section 2 of that Act). 

9 ‘‘(2) LEGITIMATE HEDGE TRADING.— 

10 ‘‘(A) IN GENERAL.—In carrying out this 

11 Act, the Commission shall distinguish be12 tween— 

13 ‘‘(i) trading involving transactions by 

14 commercial producers and purchasers in15 volving actual physical petroleum products 

16 for future delivery (referred to in this sub17 section as ‘legitimate hedge trading’); and 

18 ‘‘(ii) all other trading; 

19 ‘‘(B) INCLUSION.—For purposes of this 

20 subsection, legitimate hedge trading shall in21 clude counterparties to a transaction by com22 mercial producers and purchasers involving ac23 tual physical petroleum products for future de24 livery regardless of whether the counterparties 


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1 are commercial producers or purchasers of the 

2 physical products. 

3 ‘‘(3) TYPE OF TRADING.—Notwithstanding any 

4 other provision of this Act, the Commission shall 

5 modify (or delegate any appropriate entity to mod6 ify) such definitions, classifications, and data collec7 tion under this Act as is necessary to ensure that all 

8 direct and indirect parties and counterparties to all 

9 trades in the petroleum futures market are dis10 tinctly, clearly, and correctly identified for all pur11 poses as engaging in— 

12 ‘‘(A) legitimate hedge trading; or 

13 ‘‘(B) any other type of trading. 

14 ‘‘(4) ELIMINATION OF EXCESSIVE SPECULA15 TION.— 

16 ‘‘(A) IN GENERAL.—Notwithstanding any 

17 other provision of this Act, the Commission 

18 shall review all regulations, rules, exemptions, 

19 exclusions, guidance, no action letters, orders, 

20 and other actions taken by or on behalf of the 

21 Commission (including any action or inaction 

22 taken pursuant to delegated authority by an ex23 change, self-regulatory organization, or any 

24 other entity) regarding all petroleum futures 

25 market participants or market activity (referred 


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1 to in this subsection individually as a ‘prior ac2 tion’) to ensure that only legitimate hedge trad3 ing occurs and that excessive speculation is 

4 eliminated. 

5 ‘‘(B) PRIOR ACTION.— 

6 ‘‘(i) IN GENERAL.—The Commission 

7 shall revoke or modify the application after 

8 the date of enactment of this subsection of 

9 any prior action taken by the Commission 

10 (including any prior action taken pursuant 

11 to delegated authority by any other entity) 

12 with respect to any trade on any market, 

13 exchange, foreign board of trade, swap or 

14 swap transaction, index or index market 

15 participant or trade, hedge fund, pension 

16 fund, and any other transaction, trade, 

17 trader, or petroleum futures market activ18 ity that is not a legitimate hedge trade. 

19 ‘‘(ii) REVOCATION.—In carrying out 

20 this subparagraph, the Commission shall 

21 consider revoking the results of each prior 

22 action that, in whole or in part, has the di23 rect or indirect affect of limiting, reducing, 

24 or eliminating— 


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1 ‘‘(I) the full applicability of posi2 tion limits on any trading that is not 

3 legitimate hedge trading; or 

4 ‘‘(II) the filing of any report or 

5 data regarding any direct or indirect 

6 trade or trader, including the filing of 

7 large trader reports. 

8 ‘‘(C) DIFFERENT RULES OR REGULA9 TIONS.— 

10 ‘‘(i) IN GENERAL.—The Commission 

11 shall apply different rules and regulations 

12 to legitimate hedge trading and any other 

13 transactions, trades, traders, or petroleum 

14 futures market activity in a manner that 

15 accomplishes the purposes of this sub16 section. 

17 ‘‘(ii) MARGIN REQUIREMENTS.—In 

18 carrying out this subparagraph, the Com19 mission shall modify the purpose of margin 

20 requirements from credit protection only to 

21 include discouraging excessive speculation 

22 by setting margin requirements of at least 

23 25 percent for any trading that is not le24 gitimate hedge trading. 


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1 ‘‘(5) REGULATION.—Notwithstanding any other 

2 provision of law (including regulations), the Commis3 sion shall subject, to the maximum extent prac4 ticable, any person engaging, directly or indirectly, 

5 in a petroleum futures market trade, transaction, or 

6 other petroleum futures market activity in any loca7 tion to regulation by the Commission unless and 

8 until the trade or transaction occurs in a market or 

9 exchange that has regulations that are substantially 

10 identical to the regulations of the Commission and 

11 that are fully and effectively enforced in each such 

12 market or on each such exchange. 

13 ‘‘(6) DISCLOSURE TO COMMISSION.—Notwith14 standing any other provision of law (including regu15 lations), the Commission shall ensure, to the max16 imum extent practicable, that the activity of each 

17 participant in the petroleum futures markets, and all 

18 trades, trading, traders, and direct and indirect par19 ties to the trades, trading, and traders, are fully, 

20 clearly, and accurately disclosed to the Commission 

21 so that the Commission and Congress can effectively 

22 regulate and monitor all such activity. 

23 ‘‘(7) WORKING GROUP OF INTERNATIONAL REG24 ULATORS.—The Commission shall convene a work25 ing group of international regulators to develop uniVerDate Aug 31 2005 04:48 Jun 25, 2008 Jkt 069200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3183.IS S3183

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1 form international reporting and regulatory stand2 ards to ensure the protection of the petroleum fu3 tures markets from excessive speculation, manipula4 tion, location shopping, and lowest common denomi5 nator regulation, which pose systemic risks to all pe6 troleum futures markets, countries, and consumers. 

7 ‘‘(8) REPORTS.— 

8 ‘‘(A) IN GENERAL.—The Commission shall 

9 submit to Congress— 

10 ‘‘(i) not later than 60 days after the 

11 date of enactment of this subsection, a re12 port that describes in detail the actions the 

13 Commission has taken, is taking, and in14 tends to take to carry out this subsection, 

15 including any recommended legislative 

16 changes that are necessary to carry out 

17 this subsection; and 

18 ‘‘(ii) every 45 days thereafter, an up19 date of the report required under clause 

20 (i). 

21 ‘‘(B) ADDITIONAL EMPLOYEES OR RE22 SOURCES.—Not later than 60 days after the 

23 date of enactment of this subsection, the Com24 mission shall submit to Congress a report that 

25 describes the number of additional employees 


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1 and resources that the Commission determines 

2 are necessary to carry out this subsection (in3 cluding the specific duty of each additional em4 ployee). 

5 ‘‘(9) EXPEDITED PROCEDURES.— 

6 ‘‘(A) IN GENERAL.—Subject to subpara7 graph (B), the Commission shall use emergency 

8 and expedited procedures to carry out this sub9 section. 

10 ‘‘(B) REPORT.—If the Commission decides 

11 not to use the procedures described in subpara12 graph (A) in a specific instance, not later than 

13 30 days after the date of the decision, the Com14 mission shall submit to Congress a detailed re15 port that describes in each instance the reasons 

16 for not using the procedures.’’. 

17 SEC. 4. EFFECTIVE DATE. 

18 (a) IN GENERAL.—This Act and the amendments 

19 made by this Act take effect on June 24, 2008. 

20 (b) APPLICATION.—Section 4a(f) of the Commodity 

21 Exchange Act (7 U.S.C. 6a(f)) (as amended by section 

22 3) applies to any action taken by the Commodity Futures 

23 Trading Commission or any person or entity on or after 

24 June 24, 2008. 


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1 (c) IMPLEMENTATION.—The Commodity Futures 

2 Trading Commission shall implement section 4a(f) of the 

3 Commodity Exchange Act (7 U.S.C. 6a(f)) (as amended 

4 by section 3) not later than December 31, 2008. 

Æ 


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