SEC Urges Appeals Court to Dismiss Petition to Review MSRB "Pay to Play" Rule
The SEC requested that the U.S. Court of Appeals for the Sixth Circuit dismiss a petition to review amendments to MSRB Rule G-37 that would extend the rule regarding the disclosure of political contributions to municipal advisors.
The SEC argued that the case should be dismissed for lack of jurisdiction, as there was no SEC "order" or other "agency action" to be reviewed. The SEC argued that an "approval by operation of law of the MSRB's amendments to Rule G37 does not give rise to a 'final order' that [the] Court has jurisdiction to review." The SEC contended that dismissal would avoid practical problems that arise when asking the court to review the agency's "action" of inaction, a step that results in deemed approval via a statutory process set forth by Congress.
Commentary
This case would serve as an illustrative administrative law exam question. On the one hand, the SEC's inaction was effectively influenced by a Congressional determination that the SEC not use any of its appropriated funds to "finalize, issue, or implement any rule, regulation, or order regarding the disclosure of political contributions to tax exempt organizations, or dues paid to trade associations." On the other hand, the SEC's lack of action on this matter may have resulted in rules being adopted by an organization that is overseen by the SEC.
From a policy perspective, the SEC's arguments are problematic. Under the SEC's logic, the agency could ensure that there would be no judicial review of any SRO rulemaking simply by taking no action and letting the rule be deemed "approved."
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