## Facts

- The Commodity Futures Trading Commission (CFTC) adopted a 2011 “Position Limits for Futures and Swaps” rule setting aggregate position limits across futures, options, and economically equivalent swaps in 28 physical commodity markets.
- The rule imposed spot-month and non-spot-month limits and extended regulation to swaps under amendments to the Commodity Exchange Act (CEA) made by the Dodd–Frank Act.
- Before Dodd–Frank, CEA § 4a authorized the CFTC to set limits “as the Commission finds are necessary” to address excessive speculation, and the agency historically treated that language as requiring a necessity finding.
- In the rulemaking, the CFTC stated it understood Dodd–Frank to require nationwide position limits and proceeded without making an antecedent finding that limits were “necessary.”
- Industry trade associations International Swaps and Derivatives Association, Inc. and Securities Industry and Financial Markets Association filed a facial challenge under the Administrative Procedure Act (APA) and the CEA.
- The case was resolved on cross-motions for summary judgment in the U.S. District Court for the District of Columbia.

## Issues

1. Whether Dodd–Frank amended CEA § 4a to require the CFTC to impose position limits without first finding that limits are “necessary,” or instead preserved a necessity-finding precondition.
2. Whether the CFTC’s statutory interpretation was entitled to deference under Chevron.
3. Whether the rule was arbitrary and capricious, including for alleged deficiencies in economic and cost–benefit analysis (not fully reached given the statutory holding).

## Decision

- The court granted summary judgment to the plaintiffs.
- The court held that amended CEA § 4a was ambiguous on whether position limits were mandatory without a necessity finding.
- The court concluded the CFTC did not adopt a permissible interpretation of the ambiguous statute because it treated the statute as unambiguously mandating the rule and did not exercise discretion to resolve the ambiguity in the rulemaking record.
- The court vacated the Position Limits Rule and remanded the matter to the CFTC for further proceedings consistent with the decision.

## Legal Principles

- Under Chevron, if a statute is ambiguous, an agency receives deference only if it actually exercises delegated interpretive discretion and adopts a reasoned, permissible construction.
- A court will not supply a post hoc rationale where the agency did not confront statutory ambiguity or articulate an interpretation warranting deference in the rulemaking itself.
- When statutory text and structure support multiple plausible readings, an agency must address that ambiguity and explain its construction to sustain a major regulatory action.
- Vacatur is an available remedy where a rule rests on an inadequately justified view of statutory authority and represents a significant change to regulated markets.

## Conclusion

The district court set aside the CFTC’s position-limits rule because the agency proceeded on the premise that Dodd–Frank unambiguously required limits, while the amended CEA was ambiguous and the CFTC failed to adopt and justify a permissible interpretation that could receive Chevron deference; the rule was vacated and remanded for further rulemaking.


Int’l Swaps & Derivatives Ass’n v. CFTC, 887 F. Supp. 2d 259 (D.D.C. 2012)