KEVIN CLARKE; TREVOR BOECKMANN; HARRY CRANE; CORWIN SMIDT; ARISTOTLE INTERNATIONAL, INCORPORATED; PREDICT IT, INCORPORATED; MICHAEL BEELER; MARK BORGHI; RICHARD HANANIA; JAMES D. MILLER; JOSIAH NEELEY; GRANT SCHNEIDER; WES SHEPHERD v. COMMODITY FUTURES TRADING COMMISSION
No. 22-51124
United States Court of Appeals for the Fifth Circuit
July 21, 2023
Lyle W. Cayce, Clerk
USDC No. 1:22-CV-909
Before GRAVES, HO, and DUNCAN, Circuit Judges.
STUART KYLE DUNCAN, Circuit Judge:
The PredictIt Market is an online marketplace that lets people trade on the predicted outcomes of political events. Essentially, it is a futures market for politics. In 2014, a division within the Commodity Futures Trading Commission (“CFTC“) issued PredictIt a “no-action letter,” effectively allowing it to operate without registering under federal law. But, in 2022, the division rescinded the no-action letter, accusing PredictIt of
Various parties who participate in PredictIt (collectively, “Appellants“) challenged the no-action letter‘s rescission in federal district court and moved for a preliminary injunction. The district court has not ruled on that motion, though, despite PredictIt‘s looming shutdown. Appellants now seek our review, treating the district court‘s inaction as effectively denying a preliminary injunction. We granted Appellants an injunction pending our consideration of their appeal.
The CFTC has since raised a host of objections to our even hearing the appeal, arguing that it is moot, that there has been no final agency action, that revoking the no-action letter was within the agency‘s discretion, and that Appellants lack standing. These threshold objections are all meritless.
We now conclude that a preliminary injunction was warranted because the CFTC‘s rescission of the no-action letter was likely arbitrary and capricious. So, we remand for the district court to enter a preliminary injunction while it considers Appellants’ chаllenge to the CFTC‘s actions.
I. BACKGROUND
Launched in 2014 by the Victoria University of Wellington in New Zealand, PredictIt was conceived as a data-gathering tool for academic researchers. It allows people to make small investments based on predicting political events, like future elections or the passage of federal legislation.
For instance, in recent markets predicting the 2024 presidential nominees, Donald Trump “shares” were trading at $0.56, while Ron DeSantis “shares” were trading at $0.22 (on 47.5 million shares traded). Joe Biden was outpacing Gavin Newsom by $0.66 to $0.21 (16.4 million shares). And in trading on whether Alexandria Ocasio-Cortez would run for president
Offering these sorts of “event contracts” typically rеquires registering as “a designated contract market or swap execution facility” under the Commodity Exchange Act (“CEA“) and CFTC regulations. See
In 2014, seeking to operate PredictIt without registering under the CEA, Victoria University sought a no-action letter. The university proposed a small-scale, not-for-profit market that would serve as a valuable academic tool for researchers. This market, the university explained, would abide by certain limits, such as capping trader investment at $850 and restricting each event contract to 5,000 total traders.
Nearly eight years later, in August 2022, the DMO rescinded the no-action letter. The revocation stated that “[t]he University has not operated its market in compliance with the terms of [the no-action letter]” and that, therefore, the no-action letter was “hereby withdrawn.” The DMO provided no explanation about which terms of the letter had been violated. Instead, the revocation directed that “remaining listed contracts and positions comprising all associated open interest in such market should be closed out and/or liquidated no later than 11:59 p.m. eastern on February 15, 2023.”
In September 2022, various parties affiliаted with PredictIt (“Appellants“) sued the CFTC in federal court.3 They claimed the no-action letter‘s rescission was arbitrary and capricious because it failed to explain the agency‘s decision. See
Given this inaction, Appellants appealed what they deemed the effective denial of a preliminary injunction. The CFTC moved to dismiss the appeal for lack of jurisdiction. A motions panel of our court denied that motion, citing Carson v. Am. Brands, Inc., 450 U.S. 79 (1981). Under Carson, a court of appeals may review a district court‘s order that, while not explicitly denying a preliminary injunction, “nonetheless ha[s] the practical effect of doing so” and might cause irreparable harm absent immediate appeal. Id. at 83; see also, e.g., Thomas ex rel. D.M.T. v. Sch. Bd. of St. Martin Par., 756 F.3d 380, 384 & n.7 (5th Cir. 2014);
Less than a month later, in March 2023, the CFTC withdrew its August 2022 rescission of the no-action letter. Notwithstanding the injunction pending appeal, the agency substituted a new letter that “determined as a preliminary matter that [the no-action letter] is void and should be withdrawn.” This new letter gave some explanation for rescinding the no-action letter and gave Victoria University a chance to respond. Given these developments, the CFTC moved to dismiss this appeal as moot. Appellants opposed and cross-moved for sanctions, arguing the CFTC had violated our earlier injunction. On May 1, 2023, we denied both motions. At the same time, we clarified that CFTC “is ENJOINED from closing the
II. THRESHOLD ISSUES
Before addressing whether a preliminary injunction is warranted, we consider several threshold issues raised by the CFTC. Those are: (1) whether the appeal is moot; (2) whether withdrawal of the no-action letter is “final agency action“; (3) whether that withdrawal is unreviewable prosecutоrial discretion; and (4) whether Appellants have standing.
A. Mootness
The CFTC contends this appeal is moot because the August 2022 rescission of PredictIt‘s no-action letter is no longer in effect, having been replaced by the March 2023 letter. And that new letter, the CFTC argues, gives Appellants “the full extent of post-remand relief available to [them],” by providing an explanation for the rescission and a chance for Victoria University to be heard. Moreover, because the March 2023 letter expresses only a “preliminary” determination, the CFTC argues there is “nothing before this Court to review.” In opposition, Appellants invoke the doctrine of voluntary cessation and also argue that the March 2023 letter remains procedurally deficient.
The appeal is not moot. Post-filing events do not moot a case “[a]s lоng as the parties have a concrete interest, however small, in the outcome of the litigation.” Knox v. Serv. Emps. Int‘l Union, Loc. 1000, 567 U.S. 298, 307 (2012) (citation omitted) (alteration in original). That is true here. The parties continue to spar over whether PredictIt can operate outside the CEA‘s strictures. Although the DMO has now taken down its August 2022 rescission of the no-action letter, its March 2023 replacement continues to say the letter “is void and should be withdrawn.” It makes no difference that the DMO calls this new action “preliminary” and allows Victoria University
Nor is it the true that the March 2023 letter gives Appellants all they ask for. That letter actually gives nothing to Appellants—it lets Victoria University object to the no-action letter‘s withdrawal but says nothing about Appellants. And, in any event, Appellants continue to assert that the March 2023 letter, despite giving some explanation for the rescission, falls short of what the APA requires when an agency changes course. See, e.g., Wages & White Lion Invs., LLC v. FDA, 16 F.4th 1130, 1139 (5th Cir. 2021) (“When an agency changes course, . . . it must be cognizant that longstanding policies may have engendered serious reliance interests that must be taken into account.” (citation omitted)).
B. Final Agency Action
The CFTC also argues that withdrawal of the no-action letter is unreviewable because it is neither “agency action” nor “final.” See
First, agency action. “Under the APA, ‘agency action’ is a defined term, limited to an ‘agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act.‘” Indep. Equip. Dealers Ass‘n v. EPA, 372 F.3d 420, 428 (D.C. Cir. 2004) (quoting
The no-action letter qualifies as agency action under the APA. “Agency action” has a broad sweep: the term “is meant to cover comprehensively every manner in which an agency may exercise its power.” Whitman v. Am. Trucking Ass‘ns, 531 U.S. 457, 478 (2001).5 Here, the whole point of Victoria University‘s requesting the no-action letter was to obtain permission to operate an unregistered event futures market, and to get that green light before plunging significant resources into it.
The no-action letter itself characterizes the university as seeking “no-action relief that would allow Victoria University ... to operate” the
Courts have previously found that such grants of permission to avoid compliance with administrative requirements constitute agency action. See, e.g., Atl. Richfield Co. v. United States, 774 F.2d 1193, 1200 (D.C. Cir. 1985) (discussing one such “temporary license“); Gallagher & Ascher Co. v. Simon, 687 F.2d 1067, 1072–76 (7th Cir. 1982) (reviewing withdrawal of a special permit exempting customs brokers from ordinary requirements). Therefore, because the no-action letter here is a “license” within the meaning of the APA, its withdrawal constitutes agency action. Cf.
Next, finality. Agency action is final when it meets two requirements: “(A) the action must mark the consummation of the agency‘s decisionmaking process—it must not be of a merely tentative or interlocutory nature;” and “(B) the action must be one by which rights or obligations have been determined, or from which legal consequences will flow.” Data Mktg. P‘ship v. U.S. Dep‘t of Lab., 45 F.4th 846, 853 (5th Cir. 2022) (citations and internal quotation marks omitted); see generally Bennett v. Spear, 520 U.S. 154, 177-78 (1997). “This is generally a ‘pragmatic’ inquiry.” Data Mktg., 45 F.4th at 853 (quoting U.S. Army Corps of Eng‘rs v. Hawkes Co., 578 U.S. 590, 599 (2016)). And it is a pragmatic inquiry colored by the APA‘s embodiment of the “basic presumption of judicial review.” Abbott Lab‘ys, 387 U.S. at 140.
The CFTC argues that neither finality prong is met. Granting or revoking no-action relief, it claims, does not “consummate” the agency‘s decisional process because it is interlocutory—meaning, it pertains only to
As to the “consummation” prong, the key question is whether withdrawal of the no-action letter is “subject to further agency review.” Data Mktg., 45 F.4th at 854 (quoting Sackett v. EPA, 566 U.S. 120, 127 (2012)); see also Louisiana v. U.S. Army Corps of Eng‘rs, 834 F.3d 574, 581 (5th Cir. 2016) (same). It is not: the DMO‘s decision to issue or withdraw the letter is unappealable. So, it does not matter that the letter pertains only to the staff‘s recommendation to the agency. Once the staff decide to issue or withdraw the letter, there is no further appeal within the agency. Illustrating that reality, CFTC regulations state that a beneficiary “may rely” on the DMO‘s issuing a no-action letter.
As to the “legal consequences” prong, once more our recent decision in Data Marketing is instructive. As we explained, it is “well-estаblished that ‘where agency action withdraws an entity‘s previously held discretion, that action alters the legal regime, binds the entity, and thus qualifies as final agency action.‘” Data Mktg., 45 F.4th at 854 (quoting Texas v. EEOC, 933 F.3d 433, 442 (5th Cir. 2019)). That condition was satisfied in Data Marketing because the relevant regulation stated that requestors may “rely” on an advisory opinion. Ibid. This reliance “bound the Department to some degree and withdrew its previously held discretion.” Ibid. The same can be said about PredictIt‘s no-action letter: it withdrew some of the CFTC‘s discretion because regulations state a beneficiary “may rely” on it.
None of this is changed by the fact that the DMO has now issued its March 2023 letter. Like the August 2022 letter it supersedes, the March 2023 letter cancels PredictIt‘s no-action relief. It states: “As a result of the University‘s non-compliance with the terms of [no-action letter], DMO has determined as a preliminary matter that [no-action letter] is void and should be withdrawn.” True, the letter purports to make that decision “as a preliminary matter,” and it “invite[s] the University to submit any objections it may have” by March 20, 2023. But the letter does not promise to reconsider its decision that the no-action letter “is void and should be withdrawn.”
But, again, the possibility that the DMO may reconsider is irrelevant to our inquiry. “[T]he mere fact that the agency could—or actually does—reverse course in the future does not change” an action‘s finality. Data Mktg., 45 F.4th at 854 (citing Biden v. Texas, 142 S. Ct. 2528, 2545 (2022)). The March 2023 letter does not say the DMO is merely considering withdrawing no-action relief; it accuses the university of violating the no-action letter‘s term in numerous ways and declares the letter “void.” This forces Appellants “either to alter [their] conduct, or to expose [themselves]
For these reasons, the DMO‘s withdrawal of no-action relief constitutes final agency action.
C. Committed to Agency Discretion
The CFTC briefly argues that withdrawing no-action relief is unreviewable as “committed to agency discretion by law.” See
This case does not challenge an agency‘s discretionary decision to enforce (or not enforce) the law. What is challenged, rather, is the withdrawal of a regulatory instrument (the no-action letter) that ensured the DMO would not recommend that the agency enforce the CEA against PredictIt. And, as we have pointed out, the agency‘s own regulations allow beneficiaries to rely on such letters. See
D. Standing
The CFTC also argues that Victoria University‘s absence spoils Appellants’ standing. “An individual has standing to sue if his injury is traceable to the defendant and a ruling would likely redress it.” Tex. State LULAC v. Elfant, 52 F.4th 248, 253 (5th Cir. 2022) (citations omitted). In other words: (1) injury, (2) traceability, and (3) redressability. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992);
Appellants—market operators, traders, and academics claiming to be impacted by the no-action letter‘s rescission—easily satisfy the standing requirements. At this stage, they have shown numerous injuries stemming from the letter‘s withdrawal and the resulting impact on the PredictIt Market. Academics will lose a research tool that was PredictIt‘s raison d‘être. Traders will lose value in compromised contracts. And PredictIt‘s service providers will incur costs from having to prematurely shut down operations. Indeed, Appellants have shown that financial harm was already ongoing before this court issued a stay pending appeal, with “the CFTC‘s prohibition on new markets and the impending shutdown order” causing market distortions and “a significant withdrawal of funds.”
These injuries, moreover, are directly traceable to the no-action letter‘s withdrawal. Operation of the PredictIt market depended on the 2014 no-action relief; withdrawing it would obviously imperil the market, resulting in harms to Appellants. Finally, a favorable ruling would redress these injuries by allowing trading to continue on the same terms as before while the district court adjudicates Appellants’ challenge to the CFTC‘s action.
These counterarguments miss the mark. Whatever CFTC regulations might say, the APA permits suit by anyone “adversely affected or aggrieved by agency action.”
In sum, Appellants have standing.
III. PRELIMINARY INJUNCTION
We now turn to whether the district court abused its discretion by denying a preliminary injunction. See Moore v. Brown, 868 F.3d 398, 402 (5th Cir. 2017) (per curiam). To obtain a preliminary injunction, Appellants must show: (1) a substantial likelihood of success on the merits, (2) a substantial threat of irreparable harm if the injunction does not issue, (3) that the threatened injury outweighs any harm that will result if the injunction is granted, and (4) that granting the injunction is in the public interest. Id. at 402-03.
A. Substantial Likelihood of Success
We first ask whether Appellants are substantially likely to show that the no-action letter‘s revocation was arbitrary and capricious. “The APA‘s arbitrary-and-capricious standard requires that agency action be reasonable and reasonably explained.” Data Mktg., 45 F.4th at 855 (quoting FCC v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021)). The court can only consider the reasoning “articulated by the agency itself,” and cannot consider ”post hoc rationalizations for agency action.” Motor Vehicle Mfrs. Ass‘n of U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 50 (1983). “[W]e must set aside any action premised on reasoning that fails to account for ‘relevant factors’ or evinces ‘a clear error of judgment.‘” Data Mktg., 45 F.4th at 855 (quoting Univ. of Tex. M.D. Anderson Cancer Ctr. v. HHS, 985 F.3d 472, 475 (5th Cir. 2021)).
The August 2022 revocation fails thеse standards for the obvious reason that it gives no explanation whatsoever. Instead of “reasonably
Less than a month after oral argument, the agency tried to fix these glaring defects by issuing the March 2023 letter. As nоted, this letter purports to “supersede” the August 2022 rescission while reaffirming the agency‘s decision that the no-action letter “is void and should be withdrawn.” It also provides some explanation for withdrawing the no-action letter, such as the charge that Victoria University violated the letter‘s terms by allowing a for-profit company (Aristotle, Inc.) to operate PredictIt. We have already explained why the March 2023 letter does not moot this appeal. See supra II(A).
The March 2023 letter should also have no bearing on whether the withdrawal of the no-action letter is arbitrary and capricious. That is because the letter violates the injunction pending appeal our panel previously entered. Appellants had asked us to “enjoin the enforcement of the Commission‘s February 15, 2023, liquidation mandate and allow the PredictIt Market event contracts that were offered as of the date of the agency‘s decision . . . to continue trading pending resolution of this appeal.” We granted that requested injunction on January 26, 2023.
But even if we were to consider the March 2023 letter, we would still find serious problems with its reasons for voiding the no-actiоn letter. To begin with, we have concluded that the no-action letter qualifies as a “license” under the APA. See supra II(B). The March 2023 letter, however, does not purport to follow the procedural requirements for withdrawing a license. See
Aside from that defect, there are other evident flaws in the March 2023 letter‘s substance. For instance, the letter does not meaningfully explain why the DMO rejected alternatives like allowing currently existing markets to expire оn their own terms. It says only that such alternatives would not “be appropriate,” given the likelihood of recurrence due to past violations. But the letter does not explain why past violations suggest a likelihood of recurrence in the future. This is hardly the “reasoned decisionmaking” required of administrative agencies. Michigan v. EPA, 576 U.S. 743, 750 (2015) (quoting Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359, 374 (1988)).
Finally, the letter engages in obvious post hoc rationalization. It tries to partially justify the agency‘s charge that Victoria University “ceded operational control” of PredictIt to a for-profit company by referring to remarks made by the company‘s counsel at oral argument. That is verboten. What counsel said at argument cannot justify actions the agency took months if not years before. See DHS v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1907 (2020) (“It is a ‘foundational principle of administrative law’ that judicial review of agency action is limited to ‘the grounds that the agency invoked when it took the action.‘” (quoting Michigan, 576 U.S. at 758)); see also SEC v. Chenery Corp., 318 U.S. 80, 95 (1943) (“[A]n administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained.“).
In sum, we conclude that the revocation of the no-action letter was likely arbitrary and capricious becausе the agency gave no reasons for it. And the agency‘s attempts to retroactively justify the revocation after oral argument—and in the face of our injunction—only underscore why Appellants are likely to prevail.
We now turn to irreparable injury. Appellants have alleged a number of harms they will suffer absent a preliminary injunction. First, investors and traders will not be able to see their contracts through and realize any gains from having predicted events correctly. Even if they wanted to cash out now, the prices for those contracts would be distorted due to the market disruptions that the no-action letter‘s rescission engendered. Second, as traders have attempted to salvage their investments due to a looming and impending shutdown order, academics have had their research compromised by the trading irregularities that corrupted the integrity of their data. Finally, PredictIt‘s operators have been saddled with heavy compliance costs given the market‘s closure.
As it did in the standing context, the CFTC claims that all of these harms are inherently speculative. It asserts that any possible injuries could be undone through monetary remedies. And, although the United States would enjoy sovereign immunity, Appellants could sue the market operators. See Dennis Melancon, Inc. v. City of New Orleans, 703 F.3d 262, 279 (5th Cir. 2012) (“The possibility that adequate compensatory or other corrective relief will be available at a later date... [weighs] heavily against a claim of irreparable harm” (quoting Morgan v. Fletcher, 518 F.3d 236, 240 (5th Cir. 1975))).
We disagree and conclude that Appellants are likely to suffer irreparable harm. As noted, Appellants have shown they were already undergoing harm before we issued the stay pending appeal. Some of these harms, such as the academic value of accurate data, would be difficult to restore with monetary damages. And to the extent some of these harms are economic, the United States cannot be sued due to its sovereign immunity. See Wages & White Lion Invs., 16 F.4th at 1142 (“[C]omplying with an agency order later held invalid almost always produces the irreparable harm of
We therefore cоnclude that Appellants have established a substantial likelihood of suffering irreparable harm absent a preliminary injunction.
C. Balance of the Equities and the Public Interest
Finally, we consider the remaining preliminary injunction factors: the balance of the equities and the public interest. These factors “merge when the Government is the opposing party.” Nken v. Holder, 556 U.S. 418, 435 (2009). When addressing these factors, “courts ‘must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.‘” Winter v. NRDC, 555 U.S. 7, 24 (2008) (quoting Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 542 (1987)).
These factors weigh in favor of granting an injunction. On Appellants’ side, the harms include all those just discussed: investor losses, corrupted academic data due to market distortions, and heavy compliance costs on market operators. Moreover, “[t]he public interest is served when administrative agencies comply with their obligations under the APA.” Northern Mariana Islands v. United States, 686 F. Supp. 2d. 7, 21 (D.D.C. 2009).
As for the other side of the ledger, the CFTC points to the systemic harms that would arise by permitting litigation on informal no-action letters. It argues that requiring full-dress APA litigation on these sorts of informal letters would discourage the practice of giving them in the first place, and result in “a net loss of far greater proportions to the average citizen than any possible gain which would accrue.” Taylor-Callahan-Coleman Cntys. Dist.Adult Prob. Dep‘t v. Dole, 948 F.2d 953, 959 (5th Cir. 1991) (citation omitted). While mindful of that possibility, that sort of a high-level, systemic consideration cuts both ways: agency decisionmaking is legitimated in part by the agency‘s providing adequate reasons. Especially where, as here, longstanding policies have engendered serious reliance interests, agencies must take those considerations into account before abruptly changing course. See Encino Motorcars, 579 U.S. at 221–22.
Acсordingly, we conclude that the balance of the equities and the public interest weigh in favor of granting a preliminary injunction
IV. CONCLUSION
We REVERSE the district court‘s effective denial of a preliminary injunction and REMAND with instructions that the district court enter a preliminary injunction pending its consideration of Appellants’ claims.
Plaintiffs’ theory of final agency action admittedly conflicts with the precedents of our sister circuits. To my knowledge, no circuit has held that a no-action letter or its withdrawal is sufficient to constitute “final agency action” under the Administrative Procedure Act. And some have held the opposite. See, e.g., New York City Employees’ Retirement System v. SEC, 45 F.3d 7, 12 (2nd Cir. 1995) (“No-action letters . . . do not impose or fix a legal relationship upon any of the parties.“); Trinity Wall Street v. Wal-Mart Stores, Inc., 792 F.3d 323, 331 (3rd Cir. 2015) (“[N]o-action letters are not binding—they reflect only informal views of the staff and are not decisions on the mеrits.“); Bd. of Trade of City of Chicago v. SEC, 883 F.2d 525, 531 (7th Cir. 1989) (“The petition for review of the no-action letter . . . is dismissed for want of a reviewable order.“). Cf. Paul v. Petroleum Equipment Tools Co., 708 F.2d 168, 174 n.5 (5th Cir. 1983) (“[T]his ‘no action’ position is not equivalent to an exemption.“).
That said, we need not reach a definitive conclusion on this issue at this time. As detailed in the majority opinion, the issues presented in this case are sufficiently close that Plaintiffs have demonstrated a substantial likelihood of success, and satisfied the remaining elements required for a preliminary injunction as well.
“The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held.” Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981). “[F]indings of fact and conclusions of law made by a court granting a preliminary injunction are not binding at trial on the merits.” Id. See also Feds for Medical Freedom v. Biden, 63 F.4th 366, 389 (5th Cir. 2023) (“We hasten to emphasize that this case only involves a preliminary injunction.“).
Accordingly, I concur.
Although I agree that this case is not moot, I would not issue a preliminary injunction in this case. As reiterated by this court on numerous occasions, the issuance of a preliminary injunction is an exceptional remedy that should be granted only when the moving party has clearly shown that they can meet all four requirements. See, e.g., Guy Carpenter & Co. v. Provenzale, 334 F.3d 459, 464 (5th Cir. 2003) (“A preliminary injunction is an extraordinary remedy which courts grant only if the movant has clearly carried the burden as to all four elements.“); Allied Marketing Group., Inc. v. CDL Marketing, Inc., 878 F.2d 806, 809 (5th Cir. 1989) (stating that preliminary injunctive relief “is an extraordinary remedy and should be granted only if the movant has clearly carried the burden of persuasion with respect to all four factors“). We do not grant such relief unless we find: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury; (3) the threatened injury to the movant outweighs the threatened harm to the party sought to be enjoined; and (4) granting the injunctive relief will not disserve the public interest. City of Dallas v. Delta Air Lines, Inc., 847 F.3d 279, 285 (5th Cir. 2017).
I am not convinced that Appellants have satisfied this high burden. In my view, Appellants have failed to demonstrate a substantial likelihood that they will prevail on the merits, as there is no final agency action in this case. For agency action to be “final,” two conditions must be met: (1) “the action must mark the ‘consummation’ of the agency‘s decisionmaking process“; and (2) “the action must be one by which ‘rights or obligations have been determined,’ or from which ‘legal consequences will flow.‘” Bennett v. Spear, 520 U.S. 154, 177–78 (1997) (citations omitted). CFTC‘s no-action letters fail to satisfy either condition: they neither mark the consummation of the agency‘s decisionmaking process nor determine Appellants’ legal rights or obligations.
Despite this, the majority concludes that the 2014 no-action letter effectively constituted a “license.” See ante at 9. Under the APA, a “license” is defined as “an agency permit, certificate, approval, registration, charter, membership, statutory exemption or other form of permission.”
What happened here is in stark contrast to the concept of explicit consent. On its face, the no-action letter does not grant Appellants the right to do anything. Instead, the letter simply expresses DMO‘s intention to “not recommend that the Commission take any enforcement action in connection with the operation of [the] proposed market.” The DMO‘s decision was contingent upon information furnished by Appellants and was subject to certain conditions. The letter explicitly states that any alterations, omissions, or discrepancies in the facts or circumstances may render the granted no-action relief null and void. Thus, to maintain that the absence of a recommendation to prosecute equates to formal consent stretches the bounds of credulity. See Paul v. Petroleum Equip. Tools Co., 708 F.2d 168, 174 n.5 (5th Cir. 1983) (observing that a “no-action” letter “is not equivalent to an exemption“) (Higginbotham, J.).
I have not come across any instance where a court has ruled that a “no-action letter” constitutes a final action taken by the agency. Tellingly, the majority cites no such case. Contrarily, no-action letters have been regularly found to be non-binding and devoid of legal authority, precluding their review. See, e.g., Trinity Wall St. v. Wal-Mart Stores, Inc., 792 F.3d 323, 331 (3d Cir. 2015) (recognizing that “no-action letters are not binding—they reflect only informal views of the staff and are not decisions on the merits“); Board of Trade of City of Chicago v. SEC, 883 F.2d 525, 530 (7th Cir. 1989)