The Securities and Exchange Commission, no matter how overstuffed its regulatory agenda may be, cannot rearrange Congressional deadlines to its liking, specifically when it comes to a Dodd-Frank Act requirement that oil, gas, and mining companies disclose payments made to governments for the extraction of natural resources, Oxfam America says.
As waged in a volley of legal briefs, Oxfam and the SEC have been embroiled in a war of words over that delayed rule, an impasse that prompted the advocacy group to sue and demand a final version by November. Earlier this month, the SEC argued that the desired deadline is “unachievable” in a brief filed in U.S. District Court for the District of Massachusetts. With its latest, likely final, brief in the lawsuit Oxfam derided that concern.
When Congress enacted the Dodd-Frank Act in 2010, it gave the SEC a 270-day deadline to issue the extractive payments rule. It did so in August 2012, well past that deadline, but it was challenged by the American Petroleum Institute and vacated by the U.S. District Court. Although the rule was sent back to the Commission to be redrafted, it has yet to do so. Arguing that it has “unreasonably delayed” the rulemaking, Oxfam’s lawsuit asks the court to require that a revised proposed rule be released by Aug. 1, 2015 and, after a 45-day period for public notice and comment, a final rule be issued no later than Nov. 1, 2015.
The SEC countered that, given its workload (including other remaining Dodd-Frank Act rulemaking), the timeline is unrealistic. The counter offer is to “report on its progress in promulgating the proposed rule no later than Oct. 31, 2015, the time by which it expects to consider a revised proposed rule.”
Oxfam rejected that alternative. “The opposition boils down to the following proposition: an agency’s vacated effort to comply with a Congressional deadline frees it from that deadline in favor of its own agenda priorities,” Oxfam and its attorneys wrote “But the SEC provides no authority for its assertion, nor does it address the authority against it. Simply put, Congress enjoys the prerogative to set policy priorities; the SEC does not enjoy the discretion to reorder them.”
Oxfam argues, citing legal precedent, that when Congress requires rulemaking by a stated deadline, the failure to meet that deadline violates the Administrative Procedures Act.
“The SEC is not being asked to promulgate a rule from scratch,” Oxfam argues. “Indeed, the issues raised by the rulemaking are not particularly complex. Yet the SEC offers only that it ‘expects’ to ‘consider’ a revised ‘proposed’ rule by Oct. 31, more than 4.5 years after the deadline set by Congress…That the SEC can only offer this empty gesture demonstrates the need for an injunction to enforce Congress’s command and to compel the SEC to finish its nearly-completed job.”
Taking issue with the Commission’s argument that the rule was not unlawfully withheld because it did issue a rule, albeit one that was vacated, Oxfam wrote: “The SEC implies that it should receive a free pass for a valiant failure, but it cites no authority for why this should be so.”
The SEC is working “on over 50 rules at various stages in the rulemaking process,” only “some of which also have statutory deadlines,” the plaintiffs added. “It also claims to be working on rules ‘without deadlines mandated by Congress,’ but, in its own view, are nonetheless ‘critical to the SEC’s oversight of the financial markets.’ The SEC, of course, enjoys some latitude in prioritizing discretionary agency initiatives. But it is not free to subordinate a rule that Congress ordered it to promulgate years ago to initiatives that have no temporal mandate at all.”