Opinion ID: 186021
Heading Depth: 2
Heading Rank: 1

Heading: Decrementation

Text: 19 We need not examine the specifics of Domestic's challenge to SuperMontage's decrementation feature because its challenge is not timely. As explained above, the SEC approved the SuperMontage trade execution rules, including decrementation, in its January 19, 2001 SuperMontage Approval Order. Section 25(a)(1) of the Securities Exchange Act provides that a party aggrieved by a final order of the Commission may obtain judicial review by filing a petition for review within sixty days after the entry of the order. 15 U.S.C. § 78y(a)(1). Failure to file a timely petition for review deprives this Court of subject matter jurisdiction. See Jordan v. Fed. Election Comm'n, 68 F.3d 518, 518-19 (D.C.Cir.1995); Newell v. SEC, 812 F.2d 1259, 1260 (9th Cir.1987). Domestic did not file the instant petition for review until October 7, 2002, far outside the statutory sixty-day time limit. Nonetheless, Domestic contends we have jurisdiction over its challenge to SuperMontage's decrementation feature for two reasons. 20 First, Domestic contends that its petition for review of the decrementation feature is timely because the SuperMontage Approval Order was not a final order within the meaning of 15 U.S.C. § 78y(a)(1). Because the SEC conditioned implementation of SuperMontage on the approval of an ADF, Domestic reasons that the SuperMontage Approval Order did not become final until the Implementation Order of August 29, 2002. We disagree. 21 The Supreme Court applies a two-part test for determining the finality of agency action. A final action: (1) mark[s] the consummation of the agency's decisionmaking process — it must not be of a merely tentative or interlocutory nature; 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, 117 S.Ct. 1154, 1168, 137 L.Ed.2d 281 (1997) (citations and quotations omitted); see also Fox Television Stations, Inc. v. FCC, 280 F.3d 1027, 1037 (D.C.Cir.2002). The SuperMontage Approval Order meets both prongs of the Bennett test. The order plainly mark[ed] the consummation of the agency's decisionmaking process concerning the SuperMontage rules. Bennett, 520 U.S. at 178, 117 S.Ct. at 1168. After more than one year of considering the rules and three sets of amendments and republications for comment, the SuperMontage Approval Order mandated that the SuperMontage proposal ... be and hereby is approved. 66 Fed.Reg. at 8057. Nothing in the order suggested that the SEC's approval of the rules was tentative or interlocutory. Bennett, 520 U.S. at 178, 117 S.Ct. at 1168. The SEC did not reconsider or revise the SuperMontage rules in its later orders concerning the ADF. Moreover, the rules finally determined the rights and obligations of Nasdaq and of each market participant who trades on SuperMontage. Id. 22 Domestic contends that the SuperMontage Approval Order was non-final because SuperMontage could not be implemented until the ADF was approved. Furthermore, Domestic argues that the ADF approval proceedings reopened the consideration of SuperMontage's rules. By the latter argument, Domestic seeks to invoke our reopener doctrine, which allows judicial review where an agency has-either explicitly or implicitly-undertaken to reexamine its former choice. Nat'l Min. Ass'n v. United States Dep't of Interior, 70 F.3d 1345, 1351 (D.C.Cir.1995) (quotations omitted). To be sure, the SEC did condition the implementation of SuperMontage on the approval of an adequate ADF. The existence of this condition to SuperMontage's implementation, however, does not affect the finality of the SuperMontage Approval Order because the condition was unrelated to the substance of the SuperMontage rules. In the ADF approval proceedings, the SEC considered the adequacy of the ADF, an entity wholly distinct from SuperMontage. It did not explicitly or implicitly reconsider the substance of the SuperMontage trade execution rules, nor did the SEC's consideration of the ADF's adequacy have any bearing on the SuperMontage rules. Thus, contrary to Domestic's contention, our reopener doctrine is inapplicable here. In short, the only issue regarding the SuperMontage rules remaining after the SuperMontage Approval Order was the timing of SuperMontage's implementation. There was no question that the substance of SuperMontage's trade execution rules, including the decrementation feature, would remain the same and would ultimately be implemented. Consequently, we conclude that the SuperMontage Approval Order was a final order and that Domestic's petition for review, insofar as it raises the decrementation issue, falls outside the applicable sixty-day statutory time limit. 23 In the alternative, Domestic points to Raton Gas Transmission Co. v. FERC, 852 F.2d 612 (D.C.Cir.1988), in which we noted exceptional situations in which an objection to an agency regulation is considered timely even after the statutory review period has ended, such as when the agency's action did not reasonably put aggrieved parties on notice of the rule's content or clearly remained unripe for judicial review throughout the statutory review period. Id. at 615 (quotation omitted). See also JEM Broad. Co. v. FCC, 22 F.3d 320, 326 (D.C.Cir.1994). Domestic contends that nothing in the SuperMontage Approval Order gave adequate notice that decrementation would occur when ECNs decline orders because of unpaid access fees. Domestic asserts that it only learned of this aspect of decrementation when SuperMontage was field-tested in the summer of 2002. Consequently, Domestic reasons that it is excused from failing to file a timely petition for review of the SuperMontage Approval Order. We disagree. 24 In the SuperMontage Approval Order, the SEC explained the operation of decrementation in depth: 25 If an order delivery ECN ... declines or partially fills an order, or fails to respond in any manner within thirty seconds of order delivery, Nasdaq will immediately reroute the order (or unexecuted portion thereof) to the next Nasdaq Quoting Market Participant or UTP Exchange in the queue. In addition, in the case of an order delivery ECN that has declined or partially filled an order without immediately transmitting a revised quote/order or that has failed to respond within 30 seconds, Nasdaq will zero out the ECN's quotes/orders at that price level on that side of the market. 26 66 Fed.Reg. at 8027 (emphasis added). 27 This straightforward discussion leaves Domestic with no excuse for failing to raise its concern about decrementation. As an order delivery ECN familiar with ECNs' ability to decline trades, Domestic was reasonably placed on notice that an ECN's quote would be decremented when an ECN declines a trade for any reason. While the SEC did not list all the possible reasons an ECN might decline a trade (and thus have its quote decremented), it fairly notified ECNs that an ECN's quote would be decremented whenever it declines a trade, regardless of the motivation for the declination. This was more than enough to place Domestic on notice that if it declined to execute an order from a dealer that left its ECN access fees unpaid, the ECN's quote would be decremented to zero. Our conclusion that the SuperMontage Approval Order gave Domestic adequate notice of the Order's effect on order delivery ECNs is strengthened by the fact that the SEC included a similar discussion of decrementation in the initial publication of the proposed rules and in each subsequent republication of the rules. See 64 Fed.Reg. at 68,132; 65 Fed.Reg. at 16,986; 65 Fed.Reg. at 49,847; 65 Fed.Reg. at 69,090. Moreover, the SuperMontage Approval Order explained that decrementation is necessary, in the SEC's view, to avoid locked or crossed markets. 66 Fed.Reg. at 8046-47. This rationale supports decrementation regardless of the reason an ECN declines an order, including when declinations occur because of unpaid access fees. Thus, contrary to Domestic's assertion, the challenged aspect of decrementation was not hidden or embedded in an algorithm. It was a necessary inference from the explicit text of the SuperMontage Approval Order. For these reasons, RCA Global Communications, Inc. v. FCC, 758 F.2d 722 (D.C.Cir.1985), relied on by Domestic, is inapplicable here. In RCA Global, we held that a fair reading of the earlier order did not permit[] the conclusion that [petitioner] did know or should have known that the Commission had confronted, much less resolved the issue RCA now petitions us to review. Id. at 730-31. Here, by contrast, a reasonable reader of the SuperMontage Approval Order could discern — without the aid of telepathy, id. at 731 — that the Commission resolved the issue of decrementation for order delivery ECNs that decline trades because of unpaid access fees. We conclude, therefore, that Domestic was not excused from failing to file a timely petition for review of the SuperMontage Approval Order. 28 Accordingly, we dismiss Domestic's petition for lack of jurisdiction insofar as it challenges the decrementation aspect of SuperMontage.