On Monday, May 6th the Court of Appeals for the District of Columbia Circuit held oral argument in the case brought by the ICI and the Chamber of Commerce challenging the CFTC’s adoption of rules requiring most funds investing in commodity-related instruments to register with the CFTC. The ICI and the Chamber argued that the rule be vacated because the agency "failed to identify a significant benefit, acknowledged that the rule would impose significant costs, and imposed those costs in a manner that made it impossible to evaluate the full extent of the costs before the rule's adoption."
Although each side had only 15 minutes in which to present arguments to the Court of Appeals panel, the questioning was brisk. The CFTC insisted that requiring funds to register was merely a “prudent and modest measure” to satisfy the agency’s rulemaking obligations under Dodd-Frank. Gene Scalia, who argued on behalf of the ICI and Chamber, was repeatedly challenged by the judges on his contention that the CFTC had not shown a need for the additional regulation before adopting the registration requirement. The panel also showed skepticism that the registration requirement would impose meaningful costs, suggesting that when the CFTC eventually issues its “harmonization” regulations, the ICI and Chamber can seek to challenge those regulations on the basis that the CFTC has conducted an inadequate analysis of the costs.
In December 2012 the U.S. District Court for the District of Columbia rejected the claims of the ICI and the Chamber of Commerce, stating that the CFTC acted consistently with its governing statute, the Commodity Exchange Act, in considering the costs and benefits of its rule. The Forum filed a “friend of the court” brief supporting the ICI and Chamber in both the District Court and the Court of Appeals.
There is no timetable under which the Court must issue its opinion in this matter. Additional information on the case, including court filings, can be found here.