New York Stock Exchange LLC v. SEC

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 11, 2021 Decided June 29, 2021

No. 20-1242

NEW YORK STOCK EXCHANGE LLC, ET AL.,
PETITIONERS

v.

SECURITIES AND EXCHANGE COMMISSION,
RESPONDENT

Consolidated with 20-1243, 20-1244

On Petitions for Review of Orders
of the Securities and Exchange Commission

Paul S. Mishkin argued the cause for petitioners. With him
on the briefs were Amir C. Tayrani, Joshua M. Wesneski,
Matthew A. Kelly, Paul E. Greenwalt III, and Michael K.
Molzberger.

Martin Totaro, Senior Counsel, Securities and Exchange
Commission, argued the cause for respondent. With him on
the brief were Michael A. Conley, Acting General Counsel, and
Tracey A. Hardin, Assistant General Counsel.
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Before: HENDERSON and ROGERS, Circuit Judges, and
SENTELLE, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Thirteen
nationally registered stock exchanges (“Petitioners”) seek
review of four orders issued by the Securities and Exchange
Commission (“Commission”). Under the Securities Exchange
Act (“Act”), a final order of the Commission must be
challenged “within sixty days after the entry of the order.” 15
U.S.C. § 78y(a)(1). The Petitioners filed their challenges 65
days after the orders were entered. Attempting to evade the
obvious, they argue that the challenged orders are not in fact
orders but rather rules, which are subject to a different filing
deadline. See id. § 78y(b)(1). We disagree. Under the Act, a
petition challenging an order designated as such is subject to
the deadline imposed by § 78y(a)(1). Accordingly, we dismiss
the petitions as untimely.

I.

The Securities Act Amendments of 1975 give the
Commission the authority “to facilitate the establishment of a
national market system for securities.” 15 U.S.C. § 78k-
1(a)(2). The National Market System (NMS) is effectively the
communication and data processing infrastructure of the stock
market. Its purpose is to “foster efficiency, enhance
competition, increase the information available to brokers,
dealers, and investors, facilitate the offsetting of investors’
orders, and contribute to best execution” of orders for qualified
securities. Id. § 78k-1(a)(1)(D).

National stock exchanges, like the Petitioners, work with
the Commission to administer the NMS. The Petitioners are
referred to as “self-regulatory organizations” (SROs). See id.
 3
§ 78c(a)(26). Together with the Commission, SROs are
responsible for planning, operating and regulating the NMS.
See id. § 78k-1(a)(3)(B); see also 17 C.F.R. § 242.603(b). The
NMS is comprised of numerous NMS Plans covering a variety
of topics. Any two or more SROs can develop a Plan, subject
to the approval of the Commission. 17 C.F.R.
§§ 242.608(a)(1), (b)(2).

This case involves three Plans, called Equity Data Plans,
that govern the collection, processing and distribution of stock
quotation and transaction information. In 2019, the Petitioners
proposed to amend the Plans by creating new confidentiality
and conflict-of-interest disclosure requirements for the SROs.
On January 14, 2020, the Commission published notice of the
proposed amendments and solicited public comment. It also
invited comment on several dozen questions it posed regarding
the scope and efficacy of the proposed amendments.

Commission Rule 608 governs the initiation and
modification of NMS Plans. It provides:

The Commission shall approve a national market
system plan or proposed amendment to an effective
national market system plan, with such changes or
subject to such conditions as the Commission may
deem necessary or appropriate, if it finds that such
plan or amendment is necessary or appropriate in the
public interest, for the protection of investors and the
maintenance of fair and orderly markets, to remove
impediments to, and perfect the mechanisms of, a
national market system, or otherwise in furtherance of
the purposes of the Act. . . . Approval or disapproval
of a national market system plan, or an amendment to
an effective national market system plan (other than
an amendment initiated by the Commission), shall be
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by order. Promulgation of an amendment to an
effective national market system plan initiated by the
Commission shall be by rule.

Id. § 242.608(b)(2) (emphases added). Exercising this
authority, the Commission made several changes to the SRO-
proposed amendments and, on May 6, 2020, entered them in
four documents labeled “Order” (collectively,
“Amendments”). The Amendments were published in the
Federal Register on May 12, 2020.

The Commission-approved Amendments differ from
those proposed by the SROs. For example, the Amendments
impose certain disclosure obligations on third parties that
interact with an SRO. They also require certain SRO
employees to recuse themselves from certain Plan management
duties if their compensation is tied to a proprietary data product
offered by the SRO. According to the SROs, the Commission-
approved Amendments go “well beyond” their proposals.

The Petitioners sought review in this Court on July 10,
2020—that is, 65 days after the Commission entered the four
May 6 Amendments. The petitions asked the Court “to hold
the Amendments unlawful under the Exchange Act and
Administrative Procedure Act, to vacate the Amendments,
[and] to issue a permanent injunction prohibiting the
Commission from implementing and enforcing the
requirements of the Amendments.”

The Commission moved to dismiss the petitions as
untimely under § 78y(a)(1). The Petitioners maintained that
the relevant deadline is not provided by § 78y(a)(1), which
pertains to orders, but rather § 78y(b)(1), which pertains to
rules. Under the latter subsection, a petition for review must
be filed “within sixty days after the promulgation of the rule.”
15 U.S.C. § 78y(b)(1) (emphasis added). Under the
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Petitioners’ interpretation, their deadline was Monday, July 13,
2020.1 A motions panel of this court referred the
Commission’s motion to dismiss to the merits panel.

II.

This case presents a straightforward question of statutory
interpretation: whether the Amendments are “final order[s] of
the Commission” within the meaning of § 78y(a)(1). A
statutory deadline should be clear and predictable and,
accordingly, we answer the question by drawing a bright line,
holding that the Commission’s designation conclusively
determines which filing deadline applies. Cf. United States v.
Boyle, 469 U.S. 241, 248 (1985) (“The time has come for a rule
with as ‘bright’ a line as can be drawn consistent with the
statute.”).

The Petitioners ask us to look at the substance of the
Amendments rather than the label the Commission gives them.
They note that the Amendments “do not involve case-specific
individual determinations” and are intended to “have only
future effect.” These features, they say, make the Amendments
more consistent with rules than orders.

The Act does not define “order” or “rule” so we look to
the definitions in the Administrative Procedure Act (APA).
See Watts v. SEC, 482 F.3d 501, 505 (D.C. Cir. 2007). Under
the APA, an order is “the whole or a part of a final disposition,
whether affirmative, negative, injunctive, or declaratory in
form, of an agency in a matter other than rule making.” 5

1
An agency rule is considered promulgated on the date it is
published in the Federal Register. See Horsehead Res. Dev. Co. v.
EPA, 130 F.3d 1090, 1093 (D.C. Cir. 1997). As noted supra, the
Amendments were published in the Federal Register on May 12,
2020.
 6
U.S.C. § 551(6). A rule is “the whole or a part of an agency
statement of general or particular applicability and future effect
designed to implement, interpret, or prescribe law or policy.”
Id. § 551(4). In other words, an order is virtually any
authoritative agency action other than a rule.

As a leading treatise recognizes, the APA’s definitions of
order and rule “overlap significantly.” 1 Richard J. Pierce, Jr.,
Administrative Law Treatise 701 (5th ed. 2010). The overlap
is understandable—perhaps unavoidable—because orders, like
rules, “may affect agency policy and have general prospective
application.” Conf. Grp., LLC v. FCC, 720 F.3d 957, 966 (D.C.
Cir. 2013) (quoting N.Y. State Comm’n on Cable Television v.
FCC, 749 F.2d 804, 815 (D.C. Cir. 1984)). We have
recognized that “[m]ost norms that emerge from a rulemaking
are equally capable of emerging (legitimately) from an
adjudication,” Qwest Servs. Corp. v. FCC, 509 F.3d 531, 536
(D.C. Cir. 2007); it may not be possible, then, to say whether
the Amendments comprise orders or rules merely by
examining their substance. This makes the substance of an
SRO-initiated Plan amendment a particularly poor basis for
determining the applicable filing deadline.

Neither does the procedure the Commission used to
approve the Amendments resolve the question of which filing
deadline applies. Sections 78y(a)(1) and 78y(b)(1) provide for
judicial review of orders and rules, respectively, allowing any
defects, whether procedural or substantive, to be remedied. For
instance, a petition challenging a putative Commission rule
would be subject to § 78y(b)(1)’s filing deadline even if the
Commission had failed to comply with the notice-and-
comment procedures in § 553 of the APA; we would not
conclude that the challenged rule was defective and thus not an
authentic rule within the meaning of § 78y(b)(1). See M.M.V.
v. Garland, No. 20-5106, 2021 WL 2483861, at *3 (D.C. Cir.
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June 18, 2021) (A federal statute’s “bar on judicial review of
certain ‘policies adopted’ would be ineffective if ‘adopted’
were construed to mean ‘lawfully adopted’ as determined by a
reviewing court.”). Likewise, even if we agreed that the
Amendments should have been promulgated as rules, this
argument would challenge the Amendments qua orders—and
thus be subject to the § 78y(a)(1) deadline.

Instead of focusing on an amendment’s substance or the
procedure used to effectuate it, we think it better to give
conclusive weight to the Commission’s designation.
Construing § 78y(a)(1)’s use of “order” to mean “order
identified as such” avoids the pitfalls of the other two
approaches and—critically—promotes predictability and
clarity. Regulated parties should be able to answer a simple
procedural question (“What is my filing deadline?”) without
having to answer a complex merits question (“Did the agency
properly proceed through adjudication?”). As the United
States Supreme Court has explained, certainty and
predictability are central to well-functioning statutory
limitations. See, e.g., United States v. Briggs, 141 S. Ct. 467,
471 (2020) (“clarity” is “one principal benefit” of limitations
provisions); Young v. United States, 535 U.S. 43, 47 (2002)
(“certainty” is one of the “basic policies furthered by all
limitation provisions” (alteration accepted) (internal quotations
omitted)); Owens v. Okure, 488 U.S. 235, 240 (1989)
(“[p]redictability” is “a primary goal of statutes of
limitations”).

This is not to say that an appeal to these goals can or should
overcome plain statutory language. “[W]ith respect to filing
deadlines[,] a literal reading of Congress’ words is generally
the only proper reading of those words.” United States v.
Locke, 471 U.S. 84, 93 (1985). But if the meaning of a
statutory deadline is contested, there is precedent for
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interpreting the deadline using an easily ascertained bright line.
In Irwin v. Department of Veterans Affairs, for instance, the
Supreme Court determined whether the 30-day window for
filing a Title VII lawsuit against the government began when
the plaintiff’s attorney’s office received a certain notice or
when the attorney himself received the notice. See 498 U.S.
89, 91–92 (1990). Choosing the former, the Supreme Court
noted that “[t]he practical effect of a contrary rule would be to
encourage factual disputes about when actual notice was
received, and thereby create uncertainty in an area of the law
where certainty is much to be desired.” Id. at 93.

In Newell v. SEC, the Ninth Circuit considered when an
order is “entered” pursuant to § 78y(a)(1)’s filing deadline. See
812 F.2d 1259, 1260 (9th Cir. 1987). It concluded that the date
of an order’s entry is its caption date and noted the “need for
temporal certainty with respect to the commencement of appeal
periods.” Id. at 1261. “[C]ertainty cannot be served,” it
reasoned, “by an ‘entry’ date interpreted other than as the
caption date.” Id. Likewise, in a case interpreting an
ambiguous filing deadline in a different federal statute, we
chose the interpretation that resulted in “certainty of rights and
deadlines.” Env’t Def. Fund, Inc. v. Costle, 631 F.2d 922, 938
(D.C. Cir. 1980). See also Patton v. Dir., Off. of Workers’
Comp. Programs, U.S. Dep’t of Lab., 763 F.2d 553, 560 n.14
(3d Cir. 1985) (“clarity and predictability” are “vital to litigants
when filing deadlines are involved”).

Granted, there are instances in which we have looked
beyond an agency’s label to the substance of its action. See,
e.g., Safari Club Int’l v. Zinke, 878 F.3d 316, 332–33 (D.C. Cir.
2017); Nat’l Ass’n of Home Builders v. U.S. Army Corps of
Engineers, 417 F.3d 1272, 1284 (D.C. Cir. 2005); Sugar Cane
Growers Co-op. of Fla. v. Veneman, 289 F.3d 89, 95–96 (D.C.
Cir. 2002); Philadelphia Co. v. SEC, 164 F.2d 889, 899–900
 9
(D.C. Cir. 1947). But the Petitioners draw the wrong lesson
from these cases, which stand for the proposition that an
agency label does not determine the substantive legal standard
under which we evaluate agency action. In Safari Club, the
agency claimed that its ban on the importation of sport-hunted
elephant trophies was “the product of informal adjudications”
and therefore not subject to APA notice-and-comment. 878
F.3d at 320, 331. We disagreed. Because the decision
constituted a “final rule,” the agency had to give notice and
comment. Id. at 331–32. Sugar Cane Growers was similar.
There, the agency defended its payment-in-kind program for
sugar beets, which it implemented via press release rather than
rulemaking. 289 F.3d at 91–92. We held that the program
constituted a rule, not an “isolated agency act.” Id. at 95
(internal quotations omitted). Home Builders and Philadelphia
Co. involved whether an agency label could prevent any
judicial review. See Home Builders, 417 F.3d at 1284 (agency
rule subject to review under Regulatory Flexibility Act);
Philadelphia Co., 164 F.2d at 900 (D.C. Cir. 1947) (agency
order subject to review under Public Utility Holding Company
Act).

Here, by contrast, the dispute involves when judicial
review is appropriate. Had the Petitioners met the filing
deadline, they would have been free to challenge the
Commission’s approval of the Amendments by way of order
rather than rule. Deferring to the Commission’s designation
affects only the deadline by which the Amendments can be
challenged, not the Amendments’ judicial reviewability or the
substantive legal standard applicable to their merits.

“Filing deadlines, like statutes of limitations, necessarily
operate harshly and arbitrarily with respect to individuals who
fall just on the other side of them, but if the concept of a filing
deadline is to have any content, the deadline must be enforced.”
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Locke, 471 U.S. at 101. For the reasons we have discussed, the
Petitioners find themselves on the wrong side of § 78y(a)(1)’s
filing deadline, thereby depriving us of subject matter
jurisdiction. See Domestic Sec., Inc. v. SEC, 333 F.3d 239, 245
(D.C. Cir. 2003). Accordingly, the petitions for review are
dismissed.

So ordered.