K. Conaway

Mr. CONAWAY

Mr. CONAWAY. Mr. Chairman, I yield myself the balance of the time. It should come as no surprise that those who are being regulated have a difference of opinion with the folks proposing regulations. In this instance, the roles are actually reversed. Tim Massad is a good guy, a good friend of mine, and an individual I look forward to working with. He doesn't want to change the deal he has got. Well, if you look back at all the testimony that has been delivered throughout all of our hearings, most of the folks on the regulated side, the end users, the banks, the brokers, the SEFs, everybody else, they didn't like what the CFTC was doing to them. So the CFTC was able to power through the objections, and I would like for us to do the same thing, because what we have asked the CFTC to do is rational, straightforward stuff with respect to the changes at the operations of the Committee itself. Over the past 4 years, the Committee on Agriculture has heard dozens of witnesses testify about the upheaval end users have been facing while trying to use derivatives markets in the wake of the postcrisis financial reforms. While this Congress took affirmative steps in Dodd- Frank to protect end users from harm, today it is clear there is still work to be done. It isn't enough to simply raise these issues and hope that the CFTC will take care of them for us. For one, sometimes they cannot. There are numerous small oversights in the statute that have huge implications for end users that we correct in this legislation. The CEA prevents many end users from claiming their exemption because they conduct their hedging activity out of an affiliate specifically created to manage risks throughout the entire corporate enterprise. The Commission can't fix this req. The CEA requires foreign regulators to indemnify the CFTC, even though that is a legal concept that does not exist in many foreign legal jurisdictions. The Commission can't fix it. Currently, the CEA defines some utility companies as financial entities, stripping them of their status as end users. The Commission can't fix that. The core principles of SEFs were lifted almost word for word from the core principles for future exchanges, even though SEFs and future exchanges operate completely differently and SEFs cannot perform many of the functions of a futures exchange. The Commission can't fix this. Certainly, the Commission can and has tried to paper over these problems by issuing staff letters explaining how it would deal with incongruities of the law, but this isn't good enough. We know the problems, and we should fix them. Sometimes, though, the problem isn't the statute. There are a number of end users that we have heard testimony about which the CFTC will not fix because the Commission simply disagrees with Congress about how to apply the law. We know these problems, too. The Commission has promulgated a rule that reduces the transaction threshold, which triggers the requirement to register as a swap dealer from $8 billion to $3 billion, a 60 percent decline, while they are still studying the matter. We require that the CFTC complete the study and have a public vote on the matter before that automatic decrease occurs. The Commission has proposed a new and significantly narrower method of granting bona fide hedge exemptions, upending longstanding hedging conventions for market participants. This proposal is also dramatically more labor intensive for the Commission to implement than the current process. We should insist that historic hedging practices be protected. The Commission has dramatically expanded the recordkeeping requirements, requiring businesses to trade only for themselves and have no fiduciary obligations to customers to retain any record that would lead to a trade. This requirement demands that end users retain emails, texts, phone messages, and other records in which a potential trade or hedge was simply contemplated or discussed. We should clearly spell out that end users need only retain written records for actual transactions. The challenges facing businesses that hedge their risks in derivative markets are real, and we have an opportunity today to fix some of those problems. Every dollar that a business can save by better managing risks is a dollar available to grow its business, to pay higher wages, to protect investors, or to lower the costs to consumers. Over the past week, over 40 organizations representing thousands of American businesses have voiced their support for the important reforms of the Commodity End-User Relief Act. Businesses from agriculture producers, to major manufacturers, to public utilities need every tool available to manage their businesses and reduce the uncertainties they face each and every day. I urge my colleagues to support the Commodity End-User Relief Act to protect these companies and to ensure that they have the tools they need to compete in a global economy. I urge my colleagues to support H.R. 2289. I yield back the balance of my time.

Mr. CONAWAY. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and include extraneous material on the bill, H.R. 2289.

Mr. CONAWAY. Mr. Chairman, I yield myself such time as I may consume. I rise today in support of H.R. 2289, the Commodity End-User Relief Act. I want to start by thanking Chairman Austin Scott and Ranking Member David Scott of the Commodity Exchanges, Energy, and Credit Subcommittee. They have done a tremendous job over the past few months working on these issues. They have held three hearings on reauthorization, listening to testimony from end users, financial intermediaries, and even the commissioners themselves. Without their work, we would not have been able to move this bill today. H.R. 2289, the Commodity End-User Relief Act, does exactly what the name suggests: it provides relief from unnecessary red tape for the businesses that ``make things'' in our country. End users are the businesses that provide Americans with food, clothing, transportation, electricity, heat, and much, much more. Companies that produce, consume, and transport the commodities that make modern life possible use futures and swaps markets to reduce the uncertainties that their businesses face. Farmers hedge their crops in the spring so that they know what price they will get paid in the fall. Utilities hedge the price of energy so they can charge customers at a steady rate. Manufacturers hedge the cost of steel, energy, and other inputs to lock in prices as they work to fill their orders. The fact is, no end user played any part in the financial crisis of 2008, and no end user poses a systemic risk to U.S. derivatives markets. Yet, as the Agriculture Committee heard in countless hours of testimony, it is now more difficult and more expensive for farmers, ranchers, processors, manufacturers, merchandisers, and other end users to manage their risks than it was 5 years ago. To address their concerns, H.R. 2289 makes targeted reforms to the Commodity Exchange Act that fall into three broad categories: consumer protections, commission reforms, and end-user relief. Title I of the bill protects customers and the margin funds they deposit at their FCMs by codifying critical changes made in the wake of the collapse and bankruptcy of both MF Global and Peregrine Financial. Title II makes meaningful reforms to the operations of the Commission to improve the agency's deliberative process. In doing so, it also requires the Commission to conduct more robust cost-benefit analysis to help get future rulemakings right the first time and to avoid the endless cycle of re-proposing and delaying unworkable rules. Finally, title III fixes numerous problems faced directly by end users who rely on derivatives markets. From unnecessary recordkeeping burdens, to improperly categorizing physical transactions as swaps, to narrowing the bona fide hedge definition, CFTC rules have discouraged exactly the kind of prudent risk management activities Congress intended to protect with the end-users exemptions in the Dodd-Frank bill. These regulatory burdens present challenges to American businesses and will cost them significant capital to comply with, unless Congress acts to provide the relief. Title VII of Dodd-Frank sought to require that most swaps, one, be executed on an electronic exchange to ensure price transparency; two, be subject to initial and variation margin and central clearing through the lifetime of the transaction, to ensure performance on the obligation for counterparties; and, last, to be reported to a central repository to ensure that regulators have an accurate picture of the entire marketplace at any one point in time. H.R. 2289 does not roll back a single core tenet of title VII. It does not change the execution, clearing, margining, and reporting framework set up by the act. In fact, not a single witness who appeared before the House Committee on Agriculture ever asked us to upend these principles. But what they did ask for were fixes to portions of the statute that didn't work as intended, to provide more flexibility in complying with the rules when they impaired end users' ability to hedge, and to bring more certainty to the Commission and how it operates. That is exactly what H.R. 2289 provides. Similar to the CFTC reauthorization bill passed by the House with overwhelming bipartisan support last Congress, the Commodity End-User Relief Act makes narrowly targeted changes to the Commodity Exchange Act. This legislation offers meaningful improvements for market participants without undermining the basic tenets of title VII. I am proud that the committee has again put together a bill that has earned the bipartisan support of our members because it provides the right relief to the right people. Mr. Chairman, I urge support of the Commodity End-User Relief Act. I reserve the balance of my time. June 8, 2015. Dear Member of the House of Representatives: The undersigned organizations represent a very broad cross- section of U.S. production agriculture and agribusiness. We urge you to cast an affirmative vote on H.R. 2289, the ``Commodity End-User Relief Act,'' when it moves to the floor for consideration. This legislation contains a number of important provisions for agricultural and agribusiness hedgers who use futures and swaps to manage their business and production risks. Some, but certainly not all, of the bill's important provisions include: Sections 101-103--Codify important customer protections to help prevent another MF Global situation. Section 104--Provides a permanent solution to the residual interest problem that would have put more customer funds at risk--and potentially driven farmers, ranchers and small hedgers out of futures markets--by forcing pre-margining of their hedge accounts. Section 308--Relief from burdensome and technologically infeasible recordkeeping requirements in commodity markets. Section 310--Requires the CFTC to conduct a study and issue a rule before reducing the de minimis threshold for swap dealer registration in order to make sure that doing so would not harm market liquidity and end-user access to markets. Section 313--Confirms the intent of Dodd-Frank that anticipatory hedging is considered bona fide hedging activity. Thank you in advance for your support of this bill that is so important to U.S. farmers, ranchers, hedgers and futures customers. Sincerely, Agribusiness Association of Iowa; Agribusiness Council of Indiana/Indiana Grain and Feed Association; American Cotton Shippers Association; American Farm Bureau Federation; American Feed Industry Association; American Soybean Association; Commodity Markets Council; Grain and Feed Association of Illinois; Kansas Grain and Feed Association; Michigan Agri-Business Association; Michigan Bean Shippers Association; Minnesota Grain and Feed Association; Missouri Agribusiness Association; National Cattlemen's Beef Association; National Corn Growers Association; National Cotton Council; National Council of Farmer Cooperatives; National Grain and Feed Association; National Pork Producers Council; Nebraska Grain and Feed Association; North American Export Grain Association; North Dakota Grain Dealers Association; Northeast Agribusiness and Feed Alliance; Ohio AgriBusiness Association; Oklahoma Grain and Feed Association; Pacific Northwest Grain and Feed Association; Rocky Mountain Agribusiness Association; Southeast Minnesota Grain and Feed Dealers Association; South Dakota Grain and Feed Association; Tennessee Feed and Grain Association; Texas Grain and Feed Association; USA Rice Federation; Wisconsin Agri- Business Association.

Mr. CONAWAY. Mr. Chairman, I yield myself 1 minute. I remind my colleagues that the cost-benefit analysis provisions that are in this bill are remarkably similar to the bill last year, which garnered overwhelming support, including support out of the Agriculture Committee itself. Cost-benefit analysis is an important tool for any regulatory agency to have at its disposal to be able to use. This agency did not use the cost-benefit analysis rule that was in place because it was so weak and toothless that they just basically gave lip service to it, according to their own IG. The cost-benefit analysis in this bill mirrors in most instances President Obama's executive order from January 2011 that required all nonindependent agencies to conduct cost-benefit analysis in a transparent manner to get to better rules in that regard. Mr. Chairman, I yield 2 minutes to the gentleman from California (Mr. LaMalfa).

Mr. CONAWAY. Mr. Chairman, I yield myself such time as I may consume. I would like to remind or at least acknowledge to the committee that CFTC's funding is up 49 percent since 2010 when the Dodd-Frank bill was presented, 49 percent increase in funding. Mr. Chairman, I yield 3 minutes to the gentleman from Virginia (Mr. Goodlatte), the former chairman of the House Agriculture Committee and the current chairman of the House Judiciary Committee.

Mr. CONAWAY. Mr. Chairman, may I inquire as to how much time is left on both sides?

Mr. CONAWAY. Mr. Chairman, I yield the gentleman an additional 3 minutes.

Mr. CONAWAY. Mr. Chairman, I yield myself such time as I may consume. I enter into the Record a statement from the Chamber of Commerce and would like to read a couple of paragraphs from that. ``This bill also takes a practical approach to address one of the most problematic areas of regulatory implementation in the global derivatives market: cross-border harmonization. Many end users operate internationally and are struggling to meet the changing demands of multiple, conflicting, and sometimes duplicative regulatory regimes. H.R. 2289 would require the CFTC to move quickly to make substituted compliance determinations that would significantly reduce needless complexity and uncertainty for U.S. businesses, without reducing market transparency. The Chamber also supports provisions in this bill intended to promote transparency and accountability in the CFTC's rulemaking process, including a requirement to conduct a cost-benefit analysis for new rules, and the establishment of an Office of the Chief Economist to support such analysis. Cost-benefit analysis has been a fundamental tool of effective government for more than three decades, and these requirements would help protect Main Street businesses, investors, and consumers from some of the unintended consequences of regulation.'' Chamber of Commerce of the United States of America, Washington, DC, June 8, 2015. To The Members of The U.S. House of Representatives: The U.S. Chamber of Commerce, the world's largest business federation representing the interests of more than three million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations, and dedicated to promoting, protecting, and defending America's free enterprise system, strongly supports H.R. 2289, the ``Commodity End-User Relief Act,'' a bipartisan bill that would reauthorize the Commodity Futures Trading Commission (CFTC). This bill also includes a number of important reforms designed to promote smart regulation, enhance accountability at the CFTC, and protect Main Street businesses from onerous and unintended derivatives regulation. The Chamber is particularly supportive of provisions in H.R. 2289 that would help preserve the ability of commercial end users to manage their financial risks by using derivatives. This bill includes a critical fix that would ensure non-financial companies would be protected from burdensome and unnecessary regulations, consistent with Congress's clear intent under the Dodd-Frank Act almost five years ago. Non-financial companies that use centralized treasury units to manage their enterprise-wide risk should not be penalized for adopting this risk reducing structure, and H.R. 2289 acknowledges and would address this issue. This bill also takes a practical approach to address one of the most problematic areas of regulatory implementation in the global derivatives market: cross-border harmonization. Many end users operate internationally and are struggling to meet the changing demands of multiple, conflicting, and sometimes duplicative regulatory regimes. H.R. 2289 would require the CFTC to move quickly to make substituted compliance determinations that would significantly reduce needless complexity and uncertainty for U.S. businesses, without reducing market transparency. The Chamber also supports provisions in this bill intended to promote transparency and accountability in the CFTC's rulemaking process, including a requirement to conduct a cost-benefit analysis for new rules, and the establishment of an Office of the Chief Economist to support such analysis. Cost-benefit analysis has been a fundamental tool of effective government for more than three decades, and these requirements would help protect Main Street businesses, investors, and consumers from some of the unintended consequences of regulation. Additionally, H.R. 2289 contains a number of sensible provisions that would promote principles of good governance, including providing market participants with better Commission oversight regarding ``no action'' letters issued by the CFTC staff, and a requirement that the CFTC develop internal risk control mechanisms in order to protect sensitive market data. These are common sense measures that would help make the CFTC a more effective and accountable regulator, and the Chamber appreciates their inclusion in this bill. The Chamber strongly urges you to support H.R. 2289 and may consider including votes on, or in relation to, this bill in our annual How They Voted scorecard. Sincerely, R. Bruce Josten.

Mr. CONAWAY. Mr. Chairman, I yield 2 minutes to the gentleman from Illinois (Mr. Rodney Davis).

Mr. CONAWAY. I reserve the balance of my time.

Mr. CONAWAY. Mr. Chair, I move that the Committee do now rise.

Mr. CONAWAY. Mr. Chairman, I have an amendment at the desk.

Mr. CONAWAY. Mr. Chairman, this amendment corrects the technical errors found by legislative counsel in the process of preparing the Ramseyer for the reported bill, including section, subsection, and paragraph references, punctuation, and pluralization. I urge my colleagues to support this amendment. I yield back the balance of my time.

Mr. CONAWAY. Mr. Chair, I don't oppose the amendment. It does improve the bill. We appreciate that. I am looking forward to supporting the amendment. I would also expect support on the underlying bill itself. We have had a good discussion on why this bill is the right answer, bringing the right relief to the right people at the right time and does not do the things that have been spoken of in terms of rolling back Dodd-Frank. This is a very light touch on Dodd-Frank, and it improves a bill that I don't think anybody would argue is perfect, but maybe they do argue that Dodd-Frank is perfect. I don't think it is perfect, and it does need these light touches.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and include extraneous material on the bill under consideration.

Mr. CONAWAY. Mr. Speaker, I yield myself as much time as I may consume, and rise today in support of H.R. 2088, the United States Grain Standards Act Reauthorization Act of 2015. Mr. Speaker, for nearly 100 years, the United States Grain Standards Act has been the cornerstone of the vibrant grain trade, both domestically and internationally. This law is relied upon not only by exporters and domestic shippers but the entire U.S. agricultural sector. The law establishes official marketing standards and procedures for the inspection and weighing of grains and oilseeds, and I would like to underscore the importance this law has played in establishing value and price-discovery in the grain and oilseed marketplace. Many of the provisions in this current law are set to expire on September 30 of this year. A lapse in authorization would disrupt export weighing and grading services, imposing heavy burdens on farmers, merchants, traders, inspectors and, ultimately, consumers. We should not delay in passing this reauthorization. I cannot emphasize enough: it is imperative that these inspections and weighing services are provided in a reliable, uninterrupted, consistent, and cost-effective manner. To ensure that we fulfill this obligation, we must provide a safeguard to ensure we avoid disruptions in service like the one that took place last year in Washington State. The Washington State Department of Agriculture currently provides inspection and weighing services for grain intended for export at the Port of Vancouver. USDA's Federal Grain Inspection Service has delegated this responsibility to the Washington State Department of Agriculture. In the event that the Washington State Department of Agriculture cannot provide services for any reason, then the Federal Government, through FGIS inspectors, are statutorily required to step in and resume inspection and weighing services. That is not what happened last summer. Amid an ongoing labor dispute, WSDA discontinued services. In statements issued at the time, WSDA, the State-based program, acknowledged they withheld inspection services because of their belief that ``the continued provision of inspection services appears to be unhelpful in leading to a foreseeable resolution'' of the labor dispute. Instead of fulfilling their statutory obligation, the leadership of the USDA politicized this situation when the agency also declined to fulfill its statutory responsibility to resume inspection and grain and weighing services. Services were eventually restored, but not before significant costs accrued to all parties involved. We have worked hard to gain access to overseas markets. We are shooting ourselves in the foot when we cannot ship our products to these markets because State and Federal agencies are unable or unwilling to comply with their obligations. The inability to ship our grain because there are no inspectors at a facility does a disservice to our farmers, and it harms our economy. To address this situation, we could have been punitive. In fact, there were some who would have preferred that we do just that. But that is not what we have done and had no interest in doing. We simply want a safeguard mechanism to avoid this situation being repeated. To do that, we worked with the State of Washington delegation, the Washington State Department of Agriculture, labor unions, the grain trade industry, and USDA. What we developed was a bipartisan consensus on a workable safeguard provision. I am pleased with this work product, and I appreciate the help and support of Ranking Member Peterson, Subcommittee Chairman Crawford, and Subcommittee Ranking Member Walz, as well as Representatives from Washington State, both on and off the committee, for their advice and counsel as we developed this legislation. H.R. 2088 provides a certainty to American agriculture, and I would urge my colleagues to vote ``yes'' on this bill. Mr. Speaker, I reserve the balance of my time.

Mr. CONAWAY. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2088) to amend the United States Grain Standards Act to improve inspection services performed at export elevators at export port locations, to reauthorize certain authorities of the Secretary of Agriculture under such Act, and for other purposes, as amended.

Mr. CONAWAY. Mr. Speaker, I yield 3 minutes to the gentleman from Arkansas (Mr. Crawford), the subcommittee chairman.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2051) to amend the Agricultural Marketing Act of 1946 to extend the livestock mandatory price reporting requirements, and for other purposes, as amended.

Mr. CONAWAY. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on the bill under consideration

Mr. CONAWAY. Mr. Speaker, I yield myself such time as I may consume, and I rise in support of H.R. 2051, the Mandatory Price Reporting Act of 2015. I want to begin by thanking my colleagues on the Agriculture Committee, Ranking Member Peterson and Congressman Rouzer, for joining me in introducing this legislation. I am especially appreciative of Mr. Rouzer's work as subcommittee chairman in holding a hearing to foster discussions that led to this important legislation. Mr. Speaker, H.R. 2051 is a bill to reauthorize the Livestock Mandatory Reporting Act of 1999. This bill, like the underlying act and each subsequent reauthorization, has been the result of dialogue and consensus between livestock producers and other industry participants. I would like to extend my gratitude to our Nation's livestock producers, capably represented by their trade associations--the National Cattlemen's Beef Association, the National Pork Producers Council, and the American Sheep Industry Association--for their hard work and dedication on this effort. We fully understand that government mandates, like price reporting, can be onerous, and that not all industry participants may fully embrace this program. That said, it is apparent that over the preceding 16 years, mandatory reporting has become an essential tool that allows for greater transparency and price discovery within the livestock industry, especially as the industry continues to evolve. This reauthorization contains a number of industry-specific modifications proposed by the pork producers and sheep producers. We, likewise, include a provision that responds generally to industry concern regarding USDA's arbitrary decision to shut this mandatory program down for several days during the lapse in appropriations that occurred in 2013, while other mandatory programs were deemed essential. Following extensive negotiations, the cattlemen have opted to support a simple reauthorization without any statutory modifications. I appreciate their hard work and look forward to continuing to work with them on future improvements that they may choose to pursue. Mr. Speaker, this is a simple, bipartisan reauthorization that represents consensus among industry participants. I urge Members to support this bill, and I reserve the balance of my time.

Mr. CONAWAY. Mr. Speaker, I yield 3 minutes to the gentleman from North Carolina (Mr. Rouzer), chairman of the Subcommittee on Livestock and Foreign Agriculture.

Mr. CONAWAY. Mr. Speaker, I yield myself the remainder of the time. Mr. Speaker, I too want to thank my colleagues across the aisle as well as colleagues on the committee with me, but I also was remiss earlier in not thanking the dedicated staff of the Ag Committee that worked on the grain standards bill and the group that has worked on this one as well. We are blessed. Our country is blessed to have dedicated professionals on both sides of the aisle and the committee staff who do a great job working together, trying to avoid the kind of partisanship that sometimes permeates this body. Again, I rise in support of this mandatory price reporting reauthorization. I will remind my colleagues that this does not expire until September 30 of this year. We are actually ahead of the curve and would commend this process to the House on other important issues like that. I ask my colleagues to support the bill. I yield back the balance of my time.

Mr. CONAWAY

Mr. CONAWAY. Mr. Chairman, I claim the time in opposition, but I am not opposed to the amendment.

Mr. CONAWAY. Mr. Chairman, I am not opposed to the amendment, as I said. The CFTC in fact does have an office of diversity and inclusion and has three people employed there to work at this very important issue. I would like to put in the Record a statement from Chairman Massad. He says: Our greatest resource is our employees, and each of us plays a role in ensuring that we recognize the benefits of the differences and the diversity that we bring to our environment. The protections provided by the Equal Opportunity Act extend to everything we do at the agency, be it recruitment, hiring, appraisal systems, promotions, training and career development programs, or any other actions . . . All persons should be afforded equal employment opportunities at the Commission in an environment in which they can do their best. I urge support of the amendment, and I yield back the balance of my time.