Oxfam Am., Inc. v. U.S. Sec. & Exch. Comm'n

• Decision Date: 02 September 2015
• Docket Number: Civil Action No. 14-13648-DJC
• Citation: 126 F.Supp.3d 168
• Parties: Oxfam America, Inc., Plaintiff, v. United States Securities and Exchange Commission, Defendant.
• Court: U.S. District Court — District of Massachusetts

126 F.Supp.3d 168

Oxfam America, Inc., Plaintiff,

v.United States Securities and Exchange Commission, Defendant.

Civil Action No. 14-13648-DJC

United States District Court, D. Massachusetts.

Filed September 2, 2015

Jonathan Kaufman, Michelle Harrison, Richard Herz, Earthrights International, Washington, DC, Derek B. Domian, Richard J. Rosensweig, Goulston & Storrs, PC, Boston, MA, Howard M. Crystal, Meyer Glitzenstein & Crystal, Washington, DC, for Plaintiff.

Thomas J. Karr, Office of General Counsel, Sarah E. Hancur, U.S. Securities and Exchange Commission, Richard M. Humes, Washington, DC, for Defendant.

MEMORANDUM AND ORDER

CASPER, J.

I. Introduction

Plaintiff Oxfam America, Inc. ("Oxfam") brings this action under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(1), against Defendant United States Securities and Exchange Commission ("SEC"), to compel the SEC to promulgate a final extraction payments disclosure rule ("final disclosure rule") implementing Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, 2220-22 ("Section 1504" and "Dodd-Frank"). D. 1. The parties have filed cross motions for summary judgment. D. 17; D. 23. For the reasons stated below, the Court ALLOWS Oxfam's motion, D. 17, and DENIES the SEC's motion, D. 23.

II. Standard of Review

The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). "A fact is material if it carries with it the potential to affect the outcome of the suit under the applicable law." Santiago–Ramos v. Centennial P.R. Wireless Corp. , 217 F.3d 46, 52 (1st Cir.2000) (quoting S a nchez v. Alvarado , 101 F.3d 223, 227 (1st Cir.1996) ). The movant bears the burden of demonstrating the absence of a genuine issue of material fact. Carmona v. Toledo , 215 F.3d 124, 132 (1st Cir.2000) ; see Celotex v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant meets its burden, the non-moving party may not rest on the allegations or denials in her pleadings, Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), but "must, with respect to each issue on which she would bear the burden of proof at trial, demonstrate that a trier of fact could reasonably resolve that issue in her favor." Borges ex rel. S.M.B.W. v. Serrano–Isern , 605 F.3d 1, 5 (1st Cir.2010). "As a general rule, that requires the production of evidence that is ‘significant[ly] probative.’ " Id. (quoting Anderson , 477 U.S. at 249, 106 S.Ct. 2505 ) (alteration in original). The Court "view[s] the record in the light most favorable to the nonmovant, drawing reasonable inferences in his favor." Noonan v. Staples, Inc. , 556 F.3d 20, 25 (1st Cir.2009).

III. Factual Background

The facts are as represented in the parties' statements of material facts, D. 18 at 4-6; D. 25, to the extent they are not disputed.

Dodd-Frank became law on July 21, 2010. D. 25 ¶ 1. Section 1504 of Dodd-Frank amends the Securities Exchange Act of 1934 to require "publicly traded oil, gas, and mining companies," or "resource extraction issuers," to disclose payments made to foreign governments or the federal government for the commercial development of oil, natural gas or minerals. D. 18 at 4. Under Dodd-Frank, these disclosures must be made in annual reports to the SEC. Id. Section 1504 requires the SEC to issue a rule implementing the new disclosure requirements. Id. Specifically, Section 1504 provides that:

Not later than 270 days after the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Commission shall issue final rules that require each resource extraction issuer to include in an annual report of the resource extraction issuer information relating to any payment made by the resource extraction issuer, a subsidiary of the resource extraction issuer, or an entity under the control of the resource extraction issuer to a foreign government or the Federal Government for the purpose of the commercial development of oil, natural gas, or minerals ....

Id. (quoting 15 U.S.C. § 78m(q)(2)(A) ) (emphasis omitted). As such, the SEC's statutory deadline for promulgating a final disclosure rule was April 17, 2011. Id. at 5.

Between November 2010 and August 2012, the SEC posted projected dates on its website for promulgating the final rule; however, these dates were pushed back at least twice. Id. On December 15, 2010, the SEC proposed amendments to implement Section 1504, but between December 17, 2010 and August 21, 2012 the SEC received a substantial number of comments and, as a result, conducted numerous meetings with commentators regarding the proposed final disclosure rule, delaying promulgation. D. 25 ¶ 3-5.

On May 11, 2012, Oxfam filed suit under the APA against the SEC alleging that the SEC had unlawfully withheld and unreasonably delayed promulgation of the final disclosure rule. Id. ¶ 6. On July 2, 2012, the SEC announced that it would issue a final rule on August 22, 2012 and, thereafter, promulgated Rule 13q-1, 17 C.F.R. § 240.13q-1, implementing the public disclosure requirement. Id. ¶¶ 7, 8. The final disclosure rule was published in the Federal Register on September 12, 2012 and the SEC and Oxfam subsequently stipulated to dismissal of the prior action. Id. ¶¶ 9, 10.

On October 10, 2012, the American Petroleum Institute ("API") filed suit against the SEC in the District of Columbia requesting that the district court vacate the final disclosure rule. Id. ¶ 11. Oxfam intervened in the action to defend the rule. Id. ¶ 12. On July 2, 2013, the court vacated the final disclosure rule and remanded the matter to the SEC for further proceedings. Id. ¶ 14 (citing API, et al. v. SEC , 953 F.Supp.2d 5, 25 (D.D.C.2013) ). The court concluded that the SEC had misread Dodd-Frank to require full public disclosure of the actual annual reports submitted to the SEC and that the SEC's denial of exemptions in situations where the payment disclosure was prohibited by the foreign government was arbitrary and capricious. Id. ; see API , 953 F.Supp.2d at 11–23. The court remanded to the SEC to reformulate the disclosure rule with an adequate justification for the agency's choices. D. 18 at 5. Given the court's conclusion, the court did not reach the other challenges to the rule, including that "the SEC failed to adequately consider the economic implications of the rule, and that Section 13(q) and the rule violated the [ ] First Amendment [ ] by compelling issuers to publicly disclose [ ] payment information." D. 25 ¶ 15.

After remand, the SEC announced a projected proposed rule date of March 2015, however, that date has been pushed back and the SEC now plans "to consider a revised proposed rule" by October 2015.¹

Id. ¶ 17. Currently, the SEC had not announced a projected timeline for promulgating a new final disclosure rule. D. 18 at 6.

IV. Procedural History

Oxfam instituted this action on September 18, 2014. D. 1. The parties subsequently filed cross motions for summary judgment, D. 17; D. 23. The Court heard the parties on the pending motions and took these matters under advisement. D. 32.

V. Discussion

A. SEC's Failure to Promulgate a Final Disclosure Rule Constitutes Agency Action "Unlawfully Withheld"

As a threshold matter, the parties dispute whether the SEC's delay in promulgating the final extraction payments disclosure rule can be considered "unlawfully withheld" under the APA since the SEC had promulgated a rule that was later vacated. D. 27 at 4; see 5 U.S.C. § 706 (1) (noting that a "reviewing court shall ... compel agency action unlawfully withheld or unreasonably delayed"). As noted above, Congress specified that the SEC had no more than 270 days after the date of enactment of Dodd-Frank to issue a final extraction payment disclosure rule. 15 U.S.C. § 78m(q)(2)(A). Under Section 1504, then, the SEC's statutory deadline for promulgating a final disclosure rule was April 17, 2011. D. 18 at 5. Nearly seventeen months after this deadline, on September 12, 2012, the SEC did adopt a final rule implementing Section 1504. Id. at 5. This rule was vacated, however, and the SEC is now more than four years past the deadline set by Congress for the promulgation of the final disclosure rule. Id. at 5–6.

The SEC argues that because it "has already promulgated a rule under Section 1504" that it "has not in fact ‘unlawfully withheld’ action here." D. 24 at 16. The Court agrees with Oxfam, however, that the district court's decision to vacate the final disclosure rule simply returned matters to where they stood before and that, in general, remand orders only serve to "restore the status quo ante ...." D. 18 at 7 (citation and internal quotation marks omitted); see Independent U.S. Tanker Owners Comm. v. Dole , 809 F.2d 847, 854–55 (D.C.Cir.1987) (noting that vacatur of an agency rule returns conditions to the status quo ante); Sierra Club v. Johnson , 374 F.Supp.2d 30, 33 (D.D.C.2005) (noting that after an order vacating agency action the agency's "duty to act is still (or again) unfulfilled" because the order merely "operated to restore the status quo ante"); Envtl. Def. v. Leavitt , 329 F.Supp.2d 55, 64 (D.D.C.2004) (noting that vacatur of agency promulgations "restored the status quo," which "presented a situation wherein [the agency] had failed to promulgate regulations in accordance with [an] express deadline ... despite its nondiscretionary, statutory obligation to do so"). Were the rule otherwise, an agency could take inadequate action to promulgate a rule and forever relieve itself of the obligations mandated by Congress. The Court concludes, therefore, that the SEC's delay in promulgating the final extraction payments disclosure rule can be considered "unlawfully withheld" as the duty to promulgate a final extraction payments disclosure rule remains...