Last week, the Commodity Futures Trading Commission voted to appeal a district court decision that temporarily stalled its controversial position limits rule. The CFTC's decision to appeal is a disappointing confirmation of the agency's rash approach to rulemaking under Dodd-Frank.
Although the rule was challenged on multiple grounds, the court's ruling focused on the CFTC's statutory mandate. The court held that the CFTC was wrong to conclude that the Dodd-Frank directive on position limits was clear. The court vacated the rule and remanded it to the CFTC for a fresh look in light of "the fundamental ambiguities in the statute."
The CFTC declined to take a second look. Instead, it chose, over the objection of two commissioners, to appeal the court's ruling. Commissioner Chilton defended the decision to "send a message that the largest speculators on the planet can't litigate regulators to death. We will fight back. Your deep pockets can't protect you from what the law clearly states." His tough stand is characteristically colorful, but, as dissenting Commissioner O'Malia explained, rather than wasting CFTC resources by prolonging litigation, "it would be much more logical for the Commission to go back to the drawing board now to study the markets and to determine whether new position limits are in fact necessary, and only if so then to decide on the most cost-effective way of establishing such limits."
The CFTC's decision to appeal is another lost opportunity for an agency that has consistently rejected calls for deliberate regulation.