AMERICAN PETROLEUM INSTITUTE, et al., Petitioners, v. SECURITIES AND EXCHANGE COMMISSION, Respondent. Oxfam America, Intervenor.
No. 12-1398.
United States Court of Appeals, District of Columbia Circuit.
Argued March 22, 2013. Decided April 26, 2013.
1329
For the foregoing rеasons, we affirm the district court‘s denial of UWAG‘s motion to intervene and dismiss the appeal in all other respects.
So ordered.
William K. Shirey, Senior Litigation Counsel, Securities and Exchange Commission, argued the cause for respondent. With him on the brief were Michael A. Conley, Deputy General Counsel, and Theodore J. Weiman, Attorney. Mark Pennington, Assistant General Counsel, entered an appearance.
Jonathan G. Kaufman, Marco Simons, and Howard M. Crystal were on the brief for intervenor Oxfam America, Inc. in support of respondent.
Dennis M. Kelleher and Stephen W. Hall were on the brief for amicus curiae Better Markets, Inc. in support of respondent.
Lauren Carasik and Eric L. Lewis were on the brief for amici curiae United States Senators Benjamin Cardin, et al. in support of respondent.
Jeffrey W. Mikoni was on the brief for amici curiae Representatives Edward J. Markey, et al. in support of respondent.
Before: TATEL and BROWN, Circuit Judges, and SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge:
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act,
I.
At issue in this case is a provision of the Dodd-Frank Act, now codified at section 13(q) of the Exchange Act,
Believing that “[t]ransparency empowers citizens, investors, regulators, and other watchdogs” to hold governments accountable, 156 Cong. Rec. S3816 (May 17, 2010) (statement of Sen. Lugar), Congress, through section 13(q), directed the Commission to promulgate a rule requiring “resource extraction issuer[s]“—defined as companies that are listed on a U.S. stock exchange and “engage[] in the commercial development of oil, natural gas, or minerals,”
Section 13(q) requires resource extraction issuers to submit an “annual report” to the Commission detailing their payments.
In September 2012, the Commission promulgated a final rule fleshing out the statute‘s requirements. See Disclosure of Payments by Resource Extraction Issuers, 77 Fed. Reg. 56,365 (Sept. 12, 2012). In its cost-benefit analysis, the Commission сalculated that the “total initial compliance costs for all [resource ex-
Petitioners, the American Petroleum Institute, the Chamber of Commerce, the Independent Petroleum Association, and the National Foreign Trade Council, challenge section 13(q)‘s and the regulation‘s disclosure requirements on First Amendment grounds. They also challenge both the regulation and the cost-benefit analysis on statutory grounds.
Although believing that original jurisdiction lies in this court, petitioners, acting “out of an abundance of caution,” Petitioners’ Br. iii, also filed suit in the United States District Court for the District of Columbia. See American Petroleum Institute v. SEC, No. 12-1668 (D.D.C. Oct. 10, 2012); see also National Automobile Dealers Association v. FTC, 670 F.3d 268, 272 (D.C.Cir.2012) (describing this litigation strategy as “appropriate[]” when there is a question about whether the district court or circuit court has original jurisdiction). Although the Commission agrees with petitioners that we have jurisdiction to hear this petition for review, intervenor Oxfam America does not, arguing that petitioners must first sue in the district court. We begin and end with jurisdiction. See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94-95 (1998) (“The requirement that jurisdiction be established as a threshold mаtter springs from the nature and limits of the judicial power of the United States and is inflexible and without exception.” (internal quotation marks and alteration omitted)).
II.
“Congress is free to ‘choose the court in which judicial review of agency decisions may occur.‘” Watts v. SEC, 482 F.3d 501, 505 (D.C.Cir.2007) (quoting Five Flags Pipe Line Co. v. Department of Transportation, 854 F.2d 1438, 1439 (D.C.Cir.1988)). “In this circuit, the normal default rule is that persons seeking review of agency action go first to district court rather than to a court of appeals.” National Automobile Dealers Association, 670 F.3d at 270 (internal quotation marks omitted). “Initial review occurs at the apрellate level only when a direct-review statute specifically gives the court of appeals subject-matter jurisdiction to directly review agency action.” Watts, 482 F.3d at 505; see also Preseault v. ICC, 853 F.2d 145, 148 (2d Cir.1988) (“A party seeking judicial review of administrative action may, ordinarily, ‘draw in question the constitutionality’ of the statute under which the agency acted.” (quoting Flemming v. Nestor, 363 U.S. 603, 607 (1960))).
Here, Exchange Act section 25 establishes the framework for initial appellate review of Commission actions. Section 25(a) provides that a “person aggrieved by a final order of the Commission entered pursuant to this chapter may obtain review of the order in the United States Court of Appeals ... for the District of Columbia Circuit.”
Looking only at section 25‘s language, we think it apparent that this court lacks jurisdiction. Section 25(a) gives us jurisdiction over challenges to all final orders issued by the Commission under the Exchange Act whereas section 25(b) gives us jurisdiction only over challenges to rules promulgated pursuant to enumerated sections of the Act. Here, because petitioners challenge a rule, the oрerative provision is section 25(b). And because the Commission relied on none of the sections listed in section 25(b) when it published the resource extraction rule, see 77 Fed. Reg. at 56,417 (relying on Exchange Act sections 3(b), 12, 13, 15, 23(a), and 36), that should end the matter.
Petitioners argue that we nonetheless have jurisdiction under section 25(b) because it authorizes initial appellate review of rules promulgated under subsections 15(c)(5) and (6) and because the resource extraction rule invoked section 15 generally as one source of authority. But as the Commission has subsequently made clear, it relied not on subsections 15(c)(5) or (6) but rather on subsection 15(d). See SEC Jurisdiction Br. 2. This explanation makes perfect sense. Subsections 15(c)(5) and (6) regulate brokers and dealers,
Alternatively, petitioners contend that we have jurisdiction under section 25(a). In support, they rely on Investment Company Institute v. Board of Governors of the Federal Reserve System, 551 F.2d 1270 (D.C.Cir.1977), in which we interpreted a jurisdictional statute‘s use of the term “order” to mean “any agency action capable of review on the basis of the administrative record.” Id. at 1278; see also id. at 1277 (commenting that “[i]t is the availability of a record for review ... [that] is now the jurisdictional touchstone” (quоting Deutsche Lufthansa Aktiengesellschaft v. Civil Aeronautics Board, 479 F.2d 912, 916 (D.C.Cir.1973))). We explained that because the typical Administrative Procedure Act case can be resolved on the administrative record, “a factual hearing in the district court is unnecessary.” Id. at 1276. Indeed, “requiring petitioners challenging regulations to go first to the district court results in unnecessary delay and expense.” Id.
According to petitioners, the same is true here. Pointing out that their challenge to the regulation can be resolved on “the basis of the administrative record,” id. at 1278, petitioners argue that we must interpret the word “order” in section 25(a) to mean “orders” and “rules.” We disagree.
Investment Company Institute involved a very different jurisdictional statute than the one we confront here. There, the statute authorized initial appellate review only of agency “orders.” Here, by contrast, section 25(b) not only expressly authorizes appellate review of agency rules, but it limits that review to rules issued pursuant to specific provisions of the Exchange Act, leaving all others to be challenged in the district court. Indeed, as Oxfam points out, applying Investment Company Institute to section 25 would render section 25(b) superfluous since all Commission
Petitioners insist that applying Investment Company Institute would not render section 25(b) superfluous because, they say, it would retain independent vitality under a narrow set of circumstances. Citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971), which holds that courts may go beyond the administrative record “when there has been a strong showing of bad faith or improper behavior or when the record is so bare that it prevents effective judicial review,” Theodore Roosevelt Conservation Partnership v. Salazar, 616 F.3d 497, 514 (D.C.Cir.2010) (internal quotation marks omitted), petitioners argue in a footnote that “the Investment Company Institute definition of ‘orders’ would not apply where a rule-making challenge required fact-finding by the district court.” Petitioners’ Br. 29 n.4. In other words, when Overton Park applies, the underlying premise of Investment Company Institute no longer controls and a Cоmmission “rule” is no longer an “order” under section 25(a). Thus, petitioners conclude, when a party alleges bad faith or claims that an administrative record is insufficient to facilitate judicial review, original jurisdiction lies in the district court except for challenges to rules promulgated pursuant to the provisions specifically enumerated in section 25(b).
Again, we disagree. As an initial matter, reliance on extra-record evidence “is the exception, not the rule.” Theodore Roosevelt Conservation Partnership, 616 F.3d at 514. More importantly, petitioners have pointed to no evidence that Congress intended section 25(b) to serve this function.
Petitioners’ interpretation of section 25(a) would also eviscerate Congress‘s carefully constructed jurisdictional scheme—a scheme that becomes even more apparent when one delves into the history of section 25. As originally enacted in 1934, the Exchange Act contained only section 25(a)‘s grant of original appellate jurisdiction to review Commission final orders. See
In 1975, Congress for the first time created original appellate jurisdiction over challenges to certain Commission rules. Recognizing that “[a]t the present time
Fast forward to 1990. In that year, Congress passed the Market Reform Act, which added a new provision to the Exchange Act—section 9(h)(2)—that prohibited practices adversely affecting market volatility. In order to ensure initial appellate review of regulations issued pursuant to the newly enacted section, Congress simultaneously added it to the list of provisions in section 25(b)—thus reiterating that initial appellate review of Commission rules hinges on section 25(b). See
By contrast, and critically for our purposes, when Congress enacted section 13(q) and directed the Commission to issue implementing regulations, it did not add section 13(q) to the list of provisions contained in section 25(b). Given the statutory history, this suggests quite clearly that Congress, for whatever reason, intended challenges to section 13(q) regulations to be brought first in the district court.
Petitioners take a different lesson from this history. As they see it, Congress knows about Investment Company Institute—which overturned decades of precedent holding that “order” meant “order,” not “rules“—and “has acquiesced in this interpretation for 35 yeаrs.” Petitioners’ Br. 29. Because Congress has amended the Exchange Act several times and “at no point ... modified the provision for judicial review of ‘orders,‘” Petitioners’ Br. 29, petitioners urge us to “interpret ‘order’ in the Exchange Act in its modern sense.” Petitioners’ Reply Br. 4.
It is true that we may assume that Congress knows our case law, see Cannon v. University of Chicago, 441 U.S. 677, 696-97 (1979), and petitioners’ argument might well have some force if, following the addition of section 25(b) to the Exchange Act in 1975, courts had interpreted “order” in section 25(a) to include regulations. But as indicated above, Investment Company Institute involved a different statute, and petitioners have pointed to no post-1975 decision by this court, nor have we found one, expressly holding that “order” in sec-
Petitioners next rely on Florida Power & Light Co. v. Lorion, 470 U.S. 729 (1985). There, as here, the question presented was whether a challenge to an agency action should be heard initially in the court of appeals. Citing our decision in Investment Company Institute, the Supreme Court emphasized the advantages of initial appellate review when the “factfinding capacity of the district court is ... unnecessary to judicial review of agency decisionmaking.” Id. at 744. Accordingly, “[a]bsent a firm indication that Congress intended to locate initial APA review of agency action in the district courts, we will not presume that Congress intended to depart from the sound policy of placing initial APA review in the courts of appeals.” Id. at 745. That said, “[w]hether initial subject-matter jurisdiction lies initially in the court of appeals must of course be governed by the intent of Congress and not by any views we may have about sound policy.” Id. at 746. Applying these principles to the statutes before it, the Court held that the challenge at issue should proceed in the court of appeals, especially given the legislative history indicating that Congress favored initial appellate review. See id. at 737-41, 746.
Petitioners interpret Lorion as requiring us to resolve any ambiguity in section 25 in favor of initial appellate review. But petitioners have pointed to no ambiguity. See American Portland Cement Alliance v. EPA, 101 F.3d 772, 779 (D.C.Cir.1996) (declining to apply Lorion when the jurisdictional statute was unambiguous). Although it is true that the legislative history of Dodd-Frank tells us nothing about what Congress intended with respect to section 13(q), we do know that since 1975 Congress has made clear that fоr the courts of appeals to have original jurisdiction over a challenged regulation, the authorizing provision of the statute must appear in section 25(b). And as noted above, Congress not only enacted section 25(b) knowing that district court review would be less efficient, but it then reinforced this approach in 1990, just five years after Lorion. In other words, unlike in Lorion, where the indicators of congressional intent favored initial appellate review, all indicators here call for applying the statutе‘s basic rule of decision: if the substantive provision is not listed in section 25(b), courts of appeals lack original jurisdiction.
But there is a potential glitch. When Congress enacted Dodd-Frank, it re-numbered section 9(h)(2)—the market volatility provision added in 1990—as section 9(i)(2), but failed to make a corresponding amendment to section 25(b)‘s cross-reference to section 9(h)(2). See
In the end, section 9(h)(2)‘s re-numbering does not change our analysis. Congress‘s failure to update section 25(b) was far more likely the result of a scrivener‘s error. The Dodd-Frank Act is an enor-
Finally, echoing the reasoning in Investment Company Institute and Lorion, petitioners complain that forcing this suit to proceed first in district court would be inefficient because it requires no fact-finding and would simply delay the ultimate resolution of the case. But as we indicated above, see supra at 1334-35, when Congress passed section 25(b), it knew it would be sending some cases to the district court that require no fact-finding. Indeed, under the Administrative Procedure Act, many challenges to agency regulations are heard first in the district court and then reviewed de novo by this court. To be sure, this may not be the most efficient way to resolve such cases, and we certainly understand petitioners’ desire to have these important issues addressed expeditiously. But it is Congress‘s job, not ours, to determine “‘the court in which judicial review of agency decisions may occur.‘” Watts, 482 F.3d at 505 (quoting Five Flags Pipe Line Co., 854 F.2d at 1439).
III.
For the foregoing reasons, we dismiss the petition for review for lack of jurisdiction. Because petitioners have “simultaneously filed a complaint in the district court, we need not consider transferring the petition to that court.” National Automobile Dealers Association, 670 F.3d at 272; see also
So ordered.