Court Opinion

ID: 9911501
Source: CourtListenerOpinion
Date Created: 2023-12-20 01:00:44.886479+00
Date Added: 2024-06-11T12:50:21.609035
License: Public Domain

Case: 23-60255        Document: 00517007837             Page: 1      Date Filed: 12/19/2023

               United States Court of Appeals
                    for the Fifth Circuit                                      United States Court of Appeals
                                                                                        Fifth Circuit
                                    ____________                                      FILED
                                                                              December 19, 2023
                                      No. 23-60255
                                                                                 Lyle W. Cayce
                                    ____________
                                                                                      Clerk

   Chamber of Commerce of the United States of America;
   Longview Chamber of Commerce;
   Texas Association of Business,

                                                                               Petitioners,

                                            versus

   United States Securities and Exchange Commission,

                                                                              Respondent.
                     ______________________________

                          Petition for Review of an Order of
                      the Securities and Exchange Commission
                                 Agency No. 34-97424
                                Agency No. IC-34906
                           Agency No. 88 Fed. Reg. 36002
                     ______________________________

   Before Smith and Southwick, Circuit Judges. *
   Jerry E. Smith, Circuit Judge:
           The petitioners move this court to vacate the final rule. The time to
   respond or oppose has expired. We grant the motion and vacate the rule.

           _____________________
           *
              Judge Higginson, who was a member of the panel, now stands recused. This opin-
   ion is issued by a quorum. See 28 U.S.C. § 46(d).
Case: 23-60255       Document: 00517007837           Page: 2     Date Filed: 12/19/2023

                                      No. 23-60255

            On October 31, 2023, we issued an opinion on petitioners’ challenge
   to the rule of the Securities and Exchange Commission (“SEC”) requiring
   issuers to report day-to-day share repurchase data once a quarter and to dis-
   close the reason why an issuer repurchased shares of its own stock. Chamber
   of Com. of the U.S. v. SEC, 85 F.4th 760 (5th Cir. 2023). We held that the
   SEC had acted arbitrarily and capriciously, in violation of the Administrative
   Procedure Act (“APA”), when it failed to respond to petitioners’ comments
   and failed to conduct a proper cost-benefit analysis. We therefore granted
   the petition for review, issued a “limited remand” directing the SEC “to
   correct the defects in the rule within 30 days,” and “retain[ed] jurisdiction
   to consider the decision . . . made on remand.” Id.
            On November 22, 2023—twenty-two days after the initial opinion
   issued—the SEC filed an opposed motion seeking to extend the thirty-day
   remand period for an indefinite time. In that motion, the agency explained it
   “ha[d] worked diligently to ascertain the steps necessary to comply with the
   Court’s remand order and ha[d] determined that doing so w[ould] require
   additional time.” We denied that motion on November 26, 2023.
            The thirty-day remand period expired on November 30, 2023. One
   day later, at the request of the Clerk of this court, the SEC filed a letter stating
   that “the Commission was not able to ‘correct the defects in the rule’ within
   30 days of the [c]ourt’s opinion.”

                                            I.
            Under the APA, this court must “set aside agency action[] found to
   be arbitrary [or] capricious, contrary to constitutional right, or without obser-
   vance of procedure as required by law.” Id. at 767–68 (citations omitted)
   (cleaned up). Accordingly, “[t]he default rule is that vacatur is the appropri-
   ate remedy.” Data Mktg. P’ship v. Dep’t of Lab., 45 F.4th 846, 859 (5th Cir.
   2022).

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Case: 23-60255         Document: 00517007837              Page: 3       Date Filed: 12/19/2023

                                          No. 23-60255

           Departing from that default rule is justifiable only in “rare cases” 1
   satisfying two conditions: First, there must be a “serious possibility” that
   the agency will be able to correct the rule’s defects on remand. Texas v.
   United States, 50 F.4th 498, 529 (5th Cir. 2022) (citation omitted). Remand
   without vacatur is therefore inappropriate for agency action suffering from
   one or more serious procedural or substantive deficiencies. 2 Second, vacating
   the challenged action would produce “disruptive consequences.” Id. (cita-
   tion omitted).
           In this panel’s earlier opinion, we “recognized that there was at least
   a serious probability that the SEC would be able to substantiate its decision if
   given an opportunity to do so.” 85 F.4th at 780 (citations omitted) (cleaned
   up). We therefore “afford[ed] the agency limited time to remedy the defici-
   encies in the rule” by remanding “with direction . . . to correct the defects in
   the rule.” Id.
           That thirty-day period has come and gone. The SEC claims to have
   “worked diligently to ascertain the steps necessary to comply with the
   Court’s remand order.” Yet the agency has nothing to show for its efforts.
   It returns to this court empty-handed, admitting that it “was not able to
           _____________________
           1
             United Steel, Paper & Forestry, Rubber Mfg., Energy, Allied Indus. & Serv. Workers
   Int’l Union v. Mine Safety & Health Admin., 925 F.3d 1279, 1287 (D.C. Cir. 2019) (citations
   omitted).
           2
              For example, remand without vacatur would not be appropriate for agency action
   (1) plagued with “fundamental substantive defects,” id.; (2) promulgated in violation of
   notice-and-comment requirements, see Nat. Resources Def. Council v. Wheeler, 955 F.3d 68,
   85 (D.C. Cir. 2020); or (3) for which “there is serious doubt over the substantive cor-
   rectness of the agency action at issue,” 33 Charles Alan Wright & Arthur R.
   Miller, Fed. Prac. & Proc. 3d § 8382, 2023 Supp. at 39 (Thomson Reuters); see
   also All. for Hippocratic Med. v. FDA, 78 F.4th 210, 255 (5th Cir. 2023), cert. granted, 2023
   U.S. LEXIS 4917 (U.S. Dec. 13, 2023) (No. 23-235), and cert. granted, 2023 U.S. LEXIS
   4916 (U.S. Dec. 13, 2023) (No. 23-236), and cert. denied, 2023 U.S. LEXIS 4914 (U.S.
   Dec. 13, 2023) (No. 23-395).

                                                3
Case: 23-60255      Document: 00517007837        Page: 4   Date Filed: 12/19/2023

                                  No. 23-60255

   ‘correct the defects in the rule’ within 30 days.” The rule remains no less
   flawed—and no less unlawful—than it was on October 31, 2023.

                                       II.
          The SEC acted arbitrarily and capriciously, in violation of the APA,
   when it failed to respond to petitioners’ comments and failed to conduct a
   proper cost-benefit analysis. The challenged rule is VACATED. The man-
   date shall issue forthwith.

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