I 

112TH CONGRESS 

1ST SESSION H. R. 2328 

To require the Chairman of the Commodity Futures Trading Commission 

to impose unilaterally position limits and margin requirements to eliminate excessive oil speculation, and to take other actions to ensure that 

the price of crude oil, gasoline, diesel fuel, jet fuel, and heating oil 

accurately reflects the fundamentals of supply and demand, to remain 

in effect until the date on which the Commission establishes position 

limits to diminish, eliminate, or prevent excessive speculation as required 

by title VII of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 23, 2011 

Mr. HINCHEY (for himself, Mr. WELCH, Mr. DEFAZIO, Mr. GRIJALVA, Mr. 

OLVER, and Mr. STARK) introduced the following bill; which was referred 

to the Committee on Agriculture 

A BILL 

To require the Chairman of the Commodity Futures Trading 

Commission to impose unilaterally position limits and 

margin requirements to eliminate excessive oil speculation, and to take other actions to ensure that the price 

of crude oil, gasoline, diesel fuel, jet fuel, and heating 

oil accurately reflects the fundamentals of supply and 

demand, to remain in effect until the date on which 

the Commission establishes position limits to diminish, 

eliminate, or prevent excessive speculation as required 

by title VII of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act, and for other purposes. 


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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 Excessive Oil 

5 Speculation Now Act of 2011’’. 

6 SEC. 2. ELIMINATION OF EXCESSIVE OIL SPECULATION. 

7 (a) FINDINGS.—Congress finds that— 

8 (1) the national average retail price for a gallon 

9 of gasoline was $3.75 on June 8, 2011; 

10 (2) increased gasoline prices are causing severe 

11 economic pain to the American people; 

12 (3) Congress has a responsibility— 

13 (A) to ensure that gasoline prices at the 

14 pump reflect the fundamentals of supply and 

15 demand; and 

16 (B) to bring needed relief to consumers 

17 and businesses of the United States at the gas 

18 pump; 

19 (4) there is mounting evidence that the spike in 

20 gasoline prices has— 

21 (A) little to do with the fundamentals of 

22 supply and demand; and 

23 (B) more to do with Wall Street specu24 lators increasing oil and gas prices in the en25 ergy futures and swaps markets; 


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1 (5) as of May 27, 2011— 

2 (A) the supply of gasoline in the United 

3 States was higher than it was 2 years ago; and 

4 (B) the demand for gasoline was lower 

5 than it was 2 years ago when the national aver6 age for a gallon of regular unleaded gasoline 

7 was $2.44 a gallon; 

8 (6) on May 12, 2011, Exxon Mobil Chairman 

9 and Chief Executive Officer, Rex Tillerson, told the 

10 Committee on Finance of the Senate that oil should 

11 cost between $60 and $70 per barrel, if the price of 

12 oil was based on supply and demand fundamentals; 

13 (7) on March 21, 2011, Goldman Sachs warned 

14 clients that speculators were boosting crude oil 

15 prices by as much as $27 a barrel; 

16 (8) on March 25, 2011, Delta Airlines General 

17 Counsel, Ben Hirst, said that the marginal cost of 

18 oil production is between $60 to $70 a barrel; 

19 (9) in the summer of 2008, when gas prices 

20 rose to over $4 a gallon, Saudi Arabian government 

21 officials told the Federal Government that specu22 lators were responsible for increasing oil prices by 

23 about $40 a barrel; 

24 (10) the Commodity Futures Trading Commis25 sion has the authority to ensure that the price disVerDate Mar 15 2010 04:13 Jun 29, 2011 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2328.IH H2328

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1 covery for oil and gasoline is based on the fun2 damentals of supply and demand, rather than exces3 sive speculation; 

4 (11) title VII of the Dodd-Frank Wall Street 

5 Reform and Consumer Protection Act (15 U.S.C. 

6 8301 et seq.) (and amendments made by that Act) 

7 requires the Commission to establish position limits 

8 ‘‘to diminish, eliminate, or prevent excessive specula9 tion’’ for trading in crude oil, gasoline, heating oil 

10 and other physical commodity derivatives; 

11 (12) as of the date of introduction of this Act, 

12 the Commission has failed to impose position limits 

13 to diminish, eliminate, or prevent excessive oil and 

14 gasoline speculation as required by law; and 

15 (13) the proposed position limits for derivatives 

16 that the Commission included in the notice of pro17 posed rulemaking entitled ‘‘Position Limits for De18 rivatives’’ (76 Fed. Reg. 4752 (January 26, 2011)) 

19 are not scheduled to go into effect until the first 

20 quarter of 2012, which would— 

21 (A) occur on a date that is later than the 

22 statutory deadline for the regulations; and 

23 (B) fail to diminish, eliminate, or prevent 

24 excessive speculation as required by the Dodd25 Frank Wall Street Reform and Consumer ProVerDate Mar 15 2010 04:13 Jun 29, 2011 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2328.IH H2328

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1 tection Act (Public Law 111–203; 124 Stat. 

2 1376). 

3 (b) ELIMINATION OF EXCESSIVE OIL SPECULA4 TION.— 

5 (1) DEFINITIONS.—In this Act: 

6 (A) BONA-FIDE HEDGE TRADING; BONA7 FIDE HEDGE TRANSACTION.—The terms ‘‘bona8 fide hedge trading’’ and ‘‘bona-fide hedge trans9 action’’ means a transaction or position that— 

10 (i)(I) represents a substitute for a 

11 transaction made or to be made, or a posi12 tion taken or to be taken, at a later time 

13 in a physical marketing channel; 

14 (II) is economically appropriate for 

15 the reduction of risks in the conduct and 

16 management of a commercial enterprise; 

17 and 

18 (III) arises from the potential change 

19 in the value of— 

20 (aa) assets that a person owns, 

21 produces, manufactures, processes, or 

22 merchandises or anticipates owning, 

23 producing, manufacturing, processing, 

24 or merchandising; 


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1 (bb) liabilities that a person has 

2 incurred or anticipates incurring; or 

3 (cc) services that a person pro4 vides, purchases, or anticipates pro5 viding or purchasing; or 

6 (ii) reduces risks attendant to a posi7 tion resulting from a swap that— 

8 (I) was executed opposite a 

9 counterparty for which the transaction 

10 would qualify as a bona-fide hedging 

11 transaction; or 

12 (II) meets the requirements of 

13 clause (i). 

14 (B) COMMISSION.—The term ‘‘Commis15 sion’’ means the Commodity Futures Trading 

16 Commission. 

17 (2) DUTY OF CHAIRMAN OF THE COMMIS18 SION.—Notwithstanding section 2 of the Commodity 

19 Exchange Act (7 U.S.C. 2) or any other provision of 

20 law (including regulations), not later than 14 days 

21 after the date of enactment of this Act, the Chair22 man of the Commission shall unilaterally— 

23 (A) establish 1 or more speculative position 

24 limits in any registered entity on or through 

25 which crude oil, gasoline, diesel fuel, jet fuel, or 


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1 heating oil futures or swaps are traded that are 

2 equal to the position accountability levels or po3 sition limits, as appropriate, established by the 

4 New York Mercantile Exchange; 

5 (B) establish 1 or more speculative posi6 tion limits that are equal to the position ac7 countability levels or position limits, as appro8 priate, established by the New York Mercantile 

9 Exchange on the aggregate number or amount 

10 of positions in contracts based upon the same 

11 underlying commodity that may be held by any 

12 person, including any group or class of traders, 

13 for each month across— 

14 (i) contracts listed by designated con15 tract markets; 

16 (ii) with respect to an agreement, con17 tract, or transaction that settles against 

18 any price (including the daily or final set19 tlement price) of 1 or more contracts listed 

20 for trading on a registered entity, con21 tracts traded on a foreign board of trade 

22 that provides members or other partici23 pants located in the United States with di24 rect access to the electronic trading and 


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1 order matching system of the foreign board 

2 of trade; and 

3 (iii) swap contracts that perform or 

4 affect a significant price discovery function 

5 with respect to regulated entities; 

6 (C) establish margin requirements of 12 

7 percent for speculative swaps and futures trad8 ing in crude oil, gasoline, diesel fuel, jet fuel, 

9 and heating oil; 

10 (D) require that each bank holding com11 pany, investment bank, hedge fund, or swaps 

12 dealer engaged in the trading of energy futures 

13 or swaps for the benefit of the bank holding 

14 company, investment bank, hedge fund, or 

15 swaps dealer or on the behalf of, or as 

16 counterparty to, an index fund, exchange traded 

17 fund, or other noncommercial participant— 

18 (i) register with the Commission as a 

19 noncommercial participant; and 

20 (ii) be subject to each position limit 

21 and margin requirement under this sub22 section for each position in a manner by 

23 which the position is considered to be a 

24 speculative, proprietary position of the 


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1 bank holding company, investment bank, 

2 hedge fund, or swaps dealer; 

3 (E) take any other action that the Chair4 man of the Commission determines to be nec5 essary to eliminate excessive speculation in the 

6 aggregate to ensure that the price of crude oil, 

7 gasoline, diesel fuel, jet fuel, and heating oil ac8 curately reflects the fundamentals of supply and 

9 demand; and 

10 (F) ensure that each bank holding com11 pany, hedge fund, investment bank, and swaps 

12 dealer that is engaged in the trading of energy 

13 futures or swaps for the benefit of the bank 

14 holding company, hedge fund, investment bank, 

15 and swaps dealer, or on the behalf of, or as 

16 counterparty to, 1 or more noncommercial par17 ticipants, abides by each position limit and mar18 gin requirement under this subsection. 

19 (3) APPLICABILITY.—Each position limit and 

20 margin requirement under this subsection shall not 

21 apply to bona-fide hedge trading. 

22 (4) ADJUSTMENTS.—Notwithstanding section 2 

23 of the Commodity Exchange Act (7 U.S.C. 2) or any 

24 other provision of law (including regulations), the 

25 Chairman of the Commission may adjust any posiVerDate Mar 15 2010 04:13 Jun 29, 2011 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2328.IH H2328

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1 tion limit under this subsection to the extent that 

2 the position of all noncommercial participants or 

3 speculators (in the aggregate and measured on an 

4 annual basis) shall not equal an amount greater 

5 than 35 percent of the annual, aggregate position of 

6 all traders in such futures and swaps market or 

7 markets for crude oil, gasoline, diesel fuel, jet fuel, 

8 and heating oil trading. 

9 (5) SUNSET.— 

10 (A) IN GENERAL.—This Act, and the au11 thority provided under this Act, shall terminate 

12 on the date on which the Commission imposes 

13 position limits to diminish, eliminate, or prevent 

14 excessive speculation as required by, and in15 creased margin requirements as authorized in, 

16 title VII of the Dodd-Frank Wall Street Reform 

17 and Consumer Protection Act (15 U.S.C. 8301 

18 et seq.) (and amendments made by that Act). 

19 (B) SENSE OF CONGRESS.—It is the sense 

20 of Congress that, if finalized, the proposed posi21 tion limits for derivatives that the Commission 

22 included in the notice of proposed rulemaking 

23 entitled ‘‘Position Limits for Derivatives’’ (76 

24 Fed. Reg. 4752 (January 26, 2011)) are not 

25 sufficient to fulfill the statutory requirements of 


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1 title VII of the Dodd-Frank Wall Street Reform 

2 and Consumer Protection Act (15 U.S.C. 8301 

3 et seq.) (and amendments made by that Act) to 

4 diminish, eliminate, or prevent excessive specu5 lation. 

Æ 


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