A judge for the US District Court of the District of Columbia [official website] on Friday remanded [opinion, PDF] a rule [text] that would have limited positions on derivatives for 28 commodities, saying that the US Commodity Futures Trading Commission (CFTC) [official website] must resolve ambiguities to determine if it has authority to make the rule. The rule, promulgated by the CFTC last year pursuant to its claimed authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act [text, PDF], would have capped the number of derivatives contracts traders could have to buy or sell certain commodities during certain time periods. The covered commodities included agricultural products, energy and metals. Several Wall Street groups filed a suit [JURIST report] challenging the rule in December. The court found that there are "fundamental concerns ... about the ambiguities in the statute," and when this happens it is required to remand the rule to the agency to "bring its experience and expertise" and resolve the ambiguities. Once the agency has interpreted the statute, as long as the court finds that its reasoning and interpretation is not "clearly erroneous," the rule will be upheld. The court denied a request from the CFTC to allow the rule to go into effect while it is being remanded, saying that would be more harmful than helpful.
The Dodd-Frank Act was passed in 2010 [JURIST report] as a response to the 2008 economic recession [JURIST news archive]. In 2009 the CFTC announced plans [JURIST report] to take action in curbing excessive speculation in energy commodities markets. CFTC Chairman Gary Gensler [official profile] was confirmed in May of that year after being appointed by President Barack Obama.