Wall Street's challenge to U.S. regulations limiting speculationin commodities including oil and natural gas should be dismissedbecause Congress required the rules under the Dodd-Frank Act, 35Democratic Senators and Representatives said in briefs submitted toa federal judge.

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The 2010 Dodd-Frank law “was designed and intended to make thoseposition limits mandatory,” 18 Democratic and one Independentsenator said in a friend of the court brief submitted to the court.In a separate brief scheduled to be filed, 17 Democratic Housemembers said the law didn't require an analysis prior tocompletion.

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Trade associations representing companies including JPMorganChase & Co., Goldman Sachs Group Inc. and Morgan Stanley suedto overturn the U.S. Commodity Futures Trading Commissionregulation approved last year that would cap the number ofcontracts a derivatives trader can have.

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The lawsuit is one of the financial industry's highest- profilechallenges to the Dodd-Frank law that bolsters regulation ofderivatives after largely unregulated swaps helped fuel the 2008credit crisis. The International Swaps and Derivatives AssociationInc. and the Securities Industry and Financial Markets Associationargue that the agency used a flawed analysis of Dodd-Frank when itcompleted the rule and didn't adequately consider the costs of therule. A ruling is pending from U.S. District Judge Robert Wilkinsin Washington.

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“Oil supplies are plentiful and demand is down, so high gasprices can't be explained by ordinary market forces of supply anddemand,” Senator Carl Levin, a Michigan Democrat, said in astatement announcing the court filing. “An ongoing contributingfactor is excessive speculation in U.S. commodity markets.”

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The Senate brief was also signed, according to the statement, byDemocratic Senators Mark Begich of Alaska, Richard Blumenthal ofConnecticut, Barbara Boxer of California, Sherrod Brown of Ohio,Maria Cantwell of Washington, Ben Cardin of Maryland, DianneFeinstein of California, Tom Harkin of Iowa, Patrick Leahy ofVermont, Joe Manchin of West Virginia, Claire McCaskill ofMissouri, Robert Menendez of New Jersey, Barbara Mikulski ofMaryland, Bill Nelson of Florida, Jeanne Shaheen of New Hampshire,Sheldon Whitehouse of Rhode Island and Ron Wyden of Oregon.

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Senator Bernie Sanders, a Vermont Independent, also signed thebrief.

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'What Congress Intended'

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“Amicus briefs from the Hill are rare, but when they are used,they are the stuff, they really mean something,” Bart Chilton, aDemocrat on the CFTC and supporter of the limits, said today.“These folks actually wrote the law, making them a key voice inknowing what Congress intended.”

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The 17 Democratic Representatives said position limits havetraditionally been established before a problem is identified inmarkets. “Such limits were required in order to prevent possibleharm, not merely to address harm that has already occurred,” therepresentatives said.

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The brief was signed by Barney Frank of Massachusetts, CollinPeterson of Minnesota, Maxine Waters of California, Leonard Boswellof Iowa, Carolyn Maloney of New York, Henry Waxman of California,Luis Guiterrez of Illinois, Bobby Rush of Illinois, Mel Watt ofNorth Carolina, John Conyers of Michigan, Gregory Meeks of NewYork, Howard Berman of California, Gary Peters of Michigan,Edolphus Towns of New York, Nydia Velazquez of New York, ElijahCummings of Maryland and Heath Shuler of North Carolina.

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The case is International Swaps and Derivatives Association v.U.S. Commodity Futures Trading Commission, 11-02146, U.S. DistrictCourt, District of Columbia (Washington).

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Bloomberg News

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