Institution v. Sec. & Exch. Comm'n, 12–1398.

• Decision Date: 26 April 2013
• Docket Number: No. 12–1398.,12–1398.
• Citation: 714 F.3d 1329
• Parties: AMERICAN PETROLEUM INSTITUTE, et al., Petitioners, v. SECURITIES AND EXCHANGE COMMISSION, Respondent. Oxfam America, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

714 F.3d 1329

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.

On Petition for Review of a Regulation of the Securities and Exchange Commission.

Eugene Scalia argued the cause for petitioners. With him on the briefs were Thomas M. Johnson, Jr., Robin S. Conrad, Rachel Brand, Harry M. Ng, and Peter C. Tolsdorf.

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, Pub. L. No. 111–203, 124 Stat. 1376 (2010), the Securities and Exchange Commission promulgated a rule requiring certain companies to disclose payments made to foreign governments relating to the commercial development of oil, natural gas, or minerals. Petitioners challenge the statute and the regulation, raising both constitutional and statutory claims. “[O]ut of an abundance of caution,” petitioners also filed suit in United States District Court. Their caution proved prescient. For the reasons given below, we hold that we lack authority to hear this suit in the first instance and dismiss the petition for lack of jurisdiction.

I.

At issue in this case is a provision of the Dodd–Frank Act, now codified at section 13(q) of the Exchange Act, 15 U.S.C. § 78m(q), that addresses the “resource curse”—described by co-sponsor Senator Richard Lugar as a phenomenon whereby “oil, gas reserves, and minerals ... can be a bane, not a blessing, for poor countries, leading to corruption, wasteful spending, military adventurism, and instability.” 156 Cong. Rec. S3816 (May 17, 2010) (statement of Sen. Lugar). According to a report commissioned by Senator Lugar, the resource curse is attributable, among other things, to “revenue inflows from a dominant export commodity [that] cause [a country's] exchange rate to appreciate, making imports cheap, and undermine domestic production and economic growth by decreasing relative competitiveness.” Minority Staff of S. Comm. on Foreign Relations, 110th Cong., The Petroleum and Poverty Paradox: Assessing U.S. and International Community Efforts to Fight the Resource Curse, at 10 (Oct. 2008). On the political front, the resource curse allows “[g]overnments with authoritarian tendencies [to] be insulated from domestic and international pressure by the steady stream of extractive revenues, sometimes leading to worse governance over time.” Id. at 2.

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,” 15 U.S.C. § 78m(q)(1)(D)—to disclose any “payment” to a foreign government or the United States government that is “made to further the commercial development of oil, natural gas, or minerals,” id. § 78m(q)(1)(C)(i). Section 13(q)'s disclosure requirement covers taxes, royalties, fees, production entitlements, bonuses, and “other material benefits” that the Commission determines are part of the “commonly recognized revenue stream” for extractive industries. Id. § 78m(q)(1)(C)(ii).

Section 13(q) requires resource extraction issuers to submit an “annual report” to the Commission detailing their payments. Id. § 78m(q)(2)(A). In this report, companies must disclose: (1) “the type and total amount of ... payments made for each project of the resource extraction issuer”; and (2) “the type and total amount of such payments made to each government.” Id. § 78m(q)(2)(A)(i)-(ii). The annual report must be “submitted in an interactive data format,” id. § 78m(q)(2)(C), that includes “electronic tags” identifying, among other things, “the total amounts of the payments,” “the currency used to make the payments,” and “the government that received the payments,” id. § 78m(q)(2)(D)(ii). Section 13(q)(3)(A) requires that “[t]o the extent practicable, the Commission shall make available online, to the public, a compilation of the information required to be submitted under the rules” implementing the annual reporting requirement. Id. § 78m(q)(3)(A).

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 calculated that the “total initial compliance costs for all [resource extraction]issuers are likely to be ... approximately $1 billion.” Id. at 56,410. The Commission further predicted that “the ongoing compliance costs are likely to be between $200 million and $400 million.” Id. at 56,411. Finally, assuming that four countries—Angola, Cameroon, China, and Qatar—prohibit the disclosure of payment information, the Commission estimated that resource extraction issuers operating in those countries could lose over $12.5 billion if forced to sell their assets. See id. at 56,412.

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, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (“The requirement that jurisdiction be established as a threshold matter 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 appellate 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, 80 S.Ct. 1367, 4 L.Ed.2d 1435 (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.” 15 U.S.C. § 78y(a)(1) (emphasis added). Section 25(b) provides that a “person adversely affected by a rule of the Commission promulgated pursuant to [Exchange Act] section [6, 9(h)(2), 11, 11A, 15(c)(5) or (6), 15A, 17, 17A, or 19] may obtain review of this rule in the United States Court of Appeals ... for the District of Columbia Circuit.” Id. § 78y(b)(1) (emphasis added). Thus, absent a grant of original appellate jurisdiction under section 25, a party must first proceed by filing suit in district court pursuant to 28 U.S.C. § 1331 and the Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

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...