Court Rules That The SEC Unlawfully Withheld Action Mandated By Congress

Last fall, I wrote about Oxfam America’s second lawsuit to force the Securities and Exchange Commission to adopt a resource extraction disclosure rule under Section 1504 of the Dodd-Frank Act.  Readers may recall that Congress ordered the SEC to adopt rules by April 17, 2011.  The SEC, however, missed that deadline by over a year and then in 2013 the U.S. District Court for the District of Columbia vacated the rule and sent it back to the SEC.  American Petroleum Institute v. SEC, 953 F. Supp. 2d 5 (D. D.C. 2013).  When the SEC failed for over a year to adopt a new rule, Oxfam America sued the SEC again.  In January, Oxfam America moved for summary judgment and late last month the SEC filed its brief in support of its Cross-Motion for Summary Judgment and Opposition to Oxfam America’s motion.  In this ruling issued yesterday, U.S. District Court Judge Denise J. Casper granted Oxfam's motion for summary judgment and ordered the SEC to file within 30 days an expedited schedule for promulgating the rule.

I was particularly pleased with Judge Casper's rejection of the SEC's argument that it had not "unlawfully withheld" agency action.  The SEC argued that its failed attempt to promulgate a rule should count.  Judge Casper, however, reached the common sense conclusion that if she were to agree with the SEC, "an agency could take inadequate action to promulgate a rule and forever relieve itself of the obligations mandated by Congress."  She also found that even if the vacation of the prior rule reset the clock, the SEC is now more than a year past the reset deadline.

The case also considered the meaning of "shall", a subject that I covered in When Shall/Will/Must/May We Meet Again?  The Administrative Procedure Act provides that the reviewing court "shall . . . compel agency action unlawfully withheld or unreasonably delayed . . .".  5 U.S.C. § 706(1).  Agreeing with the Tenth Circuit Court of Appeal's reasoning in Forest Guardians v. Babbitt, 174 F.3d 1178 (10th Cir. 1999), Judge Casper found that the APA requires that she compel the SEC to act, but she retains discretion to order an appropriate and reasonable remedy.

The Meaning of "Within"

In this post, Ken Adams of Adams on Contract Drafting picks up and elaborates on my recent post on the meaning of "within".