Selectively Parsing Words
As may be evident, the case revolves around the ways that lawyers parse statutory language. In plain English, the plaintiffs argue that the statues do not authorize the CFTC to "fix" something that may not necessarily be broken. The CFTC argues that the law directs the agency to prevent problems that may occur in the future.
More specifically, two Wall Street groups, the International Swap and Derivatives Association and and the Securities Industry and Financial Markets Association, argue that the CFTC must first make a specific finding on the "necessity" of any position limit. That is, the CFTC must first make a threshold finding that, in the absence of new position limits, speculation is "excessive." Only after going through formal proceedings to arrive at such a determination, may the agency then proceed, after extended hearings and review, to consider what position limits may be set.
The CFTC argued that the statutory language did not require formal proceedings to determine whether positions limits were "necessary." Rather, the a Commission argued, the word "necessary" in the following phrase as the Commission finds are necessary to diminish, eliminate, or prevent such burden.
Judge Wilkins ruled that the CFTC's effort was illegitimate and therefore void. The CFTC must first go through a brand new process to establish the "necessity" of any new position limits, and only after such a process can it then move to the second step, and repeat the process it went through in order to establish the size of those position limits.
[See the relevant statutes at the end of Wilkins' decision.]
Judge Wilkins' Highly Selective, Logically Incoherent, Legislative History
Again, for Wilkins the critical words are:
[T]he Commission shall" 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.
He then wrote:
Section 6a [the statue mandating position limits] 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.
After declaring that the language was ambiguous, Wilkins reversed himself a few paragraphs later, when he wrote:
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.
Notice the rhetorical sleight of hand. He says the language itself is unambiguous, not that the language, when considered in the context of other information, indicates Congress's intent. Taken at face value, Wilkins' words sound logically incoherent. In fact, he ascertains the "unambiguous" nature of the language based on an "Explanation of the Bill," i.e. the 1936 Act, which was drafted in 1935. He also refers to some marginally relevant actions taken by the Commodity Exchange Authority taken in the 1930s.
But any suggestion that he consider legislative action taken after the 1930s is, according to Wilkins, an argument "without merit." He ignores the protestations of the Senators and Congressmen who drafted Dodd-Frank and insisted that the CFTC was enforcing the law exactly as Congress intended. His reason: The language was ambiguous. He wrote:
The Court has considered [the senators' and representatives'] 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.
Wilkins' contempt for the written word, and for legislative history, is breathtaking.
What About Statutes That Redefined "Commission," "Commodity," and "Necessity"?
Let's quickly go through the changed definitions that nullify Wilkins' bogus analysis:
Redefining Commission: As noted already the 1974 Act changed the definition of Commission to mean the newly created, Commodity Futures Trading Commission. Here's how one law review article characterized the difference between the Commodity Exchange Authority (CEA) and the CFTC:
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