Opinion ID: 692264
Heading Depth: 3
Heading Rank: 3

Heading: Does any other law limit the SEC's discretion?

Text: 27 Having failed to point to anything in the 1940 Act limiting the Commission's discretion not to enforce Sec. 2(a)(19) in a particular case, the petitioners direct our attention elsewhere. First, the petitioners claim that the Commission has limited its own discretion through the adoption of Commission Rule 0.5, 17 C.F.R. 270.0-5, which provides that: 28 The procedure herein below set forth will be followed with respect to any proceeding initiated by the filing of an application, or upon the Commission's own motion, pursuant to any section of the Act or any rule or regulation thereunder, unless in the particular case a different procedure is provided: ... (c) The Commission will order a hearing on the matter, if it appears that a hearing is necessary or appropriate in the public interest or for the protection of investors, (1) upon the request of an interested person or (2) upon its own motion.... 29 17 C.F.R. 270.0-5. The petitioners argue that in this regulation the Commission committed itself to ordering a hearing whenever (1) it is necessary or appropriate in the public interest or for the protection of investors, and (2) an interested person has submitted a request. By its own terms, however, Rule 0.5 applies only with respect to any proceeding initiated by the filing of an application ... pursuant to any section of the Act.... See, e.g., Matter of College Retirement Equities Fund and Teacher Insurance and Annuity Association of America, 53 Fed.Reg. 2336, 2337 (S.E.C. January 27, 1988). Because, as we have seen, Sec. 2(a)(19) is not a section pursuant to which one may institute a proceeding by filing an application, Rule 0.5 is of no relevance to the present case. 30 Finally, the petitioners claim that the court may review the Commission's decision pursuant to Sec. 555(b) of the Administrative Procedure Act: 31 So far as the orderly conduct of public business permits, an interested person may appear before an agency or its responsible employees for the presentation, adjustment, or determination of an issue, request or controversy in a proceeding, whether interlocutory, summary or otherwise, or in connection with an agency function. With due regard for the convenience and necessity of the parties or their representatives and within a reasonable time, each agency shall proceed to conclude a matter presented to it. 32 5 U.S.C. Sec. 555(b). The petitioners argue that under Sec. 555(b) any interested person (as that phrase is used in the APA) may compel the Commission to determine whether an investment company is complying with the interested person provisions of the Investment Company Act. 33 No court or agency has ever suggested that Sec. 555(b) grants any interested person a right to compel agency action. Rather, Sec. 555(b) is universally understood to establish the right of an interested person to participate in an on-going agency proceeding. See, e.g., Nichols v. Board of Trustees, 835 F.2d 881, 896-99 (D.C.Cir.1987) (interested person may intervene in on-going administrative process unless agency has valid reason to deny intervention). The petitioners point out, however, that the statute also confers upon any interested person a right to appear before an agency ... in connection with an agency function. They interpret this to mean that the statute unquestionably provides [them] with the right to a Commission determination as to whether an investment company is complying with the 'interested person' provision of the [1940] Act. 34 Whatever the meaning of a right to appear, that it means the right to a determination seems to us quite questionable.  Indeed, in this context, that interpretation seems quite wrong, for otherwise no refusal to act--with respect to enforcement or anything else--would be reserved to agency discretion, and Sec. 701(a)(2) of the same APA (and Chaney ) would be rendered meaningless. Therefore, we conclude that the petitioners' argument is without merit.