“So, you’re a rocket scientist?” That question, put by investment banker Jared Cohen to Peter Sullivan, an associate who has figured out that the bank they both work for is dangling on the precipice of collapse, is among the most memorable from the 2011 film Margin Call. Sullivan’s response? “I was, yeah,” but “the money here is considerably more attractive.”
In Doe, the court held that the SEC had reasonably interpreted its rule concerning a whistleblower’s eligibility for an award under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Two whistleblowers argued that they were eligible for an award in connection with the SEC’s investigation of Novartis AG, a pharmaceutical company, for violations of the Foreign Corrupt Practices Act. The SEC concluded they weren’t entitled to an award because the information they shared with the SEC didn’t lead to the successful enforcement action against Novartis. Instead, they alleged misconduct at two of Novartis’s competitors. That scenario, the SEC concluded, did not fit with any of the three fact patterns that make a whistleblower eligible for an award under Exchange Act Rule 21F-4(c).
The D.C. Circuit held that Rule 21F-4(c) is ambiguous on the key question in the case: Are the three fact patterns in the rule exhaustive or merely illustrative? The whistleblowers had forfeited any argument that they fit within the fact patterns in the rule. But, they argued, the Rule clearly treated its fact patterns as illustrative but not exclusive. To the contrary, the SEC argued, the Rule clearly meant its three fact patterns to be exhaustive. That being so, then the whistleblowers’ failure to fit within one or more of those scenarios doomed their demand for an award. The court’s per curiam opinion concluded that neither party was right about the Rule being unambiguous. Rather, the Rule didn’t clearly answer the key question before the court. The regulatory text did not include “restricting or limiting language.” Nor did it include language confirming that the three fact patterns were “merely illustrative.”
With “no clues pointing one way or the other,” the court asked whether the SEC’s interpretation of its own regulation was due deference under Kisor v. Wilkie. It was. None of Kisor’s “three guiding principles” were in serious doubt. But the whistleblower’s argument as to the second principle required the court to explain that not every matter of agency expertise is “rocket science”:
The petitioners protest that determining a whistleblower’s eligibility for an award is not “rocket science” and therefore cannot lie within the Commission’s substantive expertise. Agencies can and frequently do, as the SEC does here, possess expertise in fields of varying complexity, including in those less convoluted than “rocket science.” The SEC’s interpretation of its whistleblower award program regulations undoubtedly implicates its “policy expertise.”
It isn’t rocket science, and, in this case, it didn’t pay either.
Judge Henderson concurred in the judgment with an opinion that cited the 1992 film My Cousin Vinny. D.C. Circuit judges have now cited that classic not once, not twice, but three times. By my count, that puts the D.C. Circuit well ahead of the other circuits. (The Second, Sixth, and Seventh have cited the film once each, and the Fifth Circuit referred to it in an unpublished opinion only to affirm a magistrate judge’s refusal to allow a litigant to play an excerpt from the film. What a shame.) In Judge Henderson’s view, Rule 21F-4(c) was clear that its list of fact patterns was exhaustive.
The most interesting point of disagreement between Judge Henderson and the majority concerned expressio unius. Is it a maxim or a canon? The per curiam opinion called it a “maxim” and doubted whether it “can be called a canon”: “When context indicates a list is meant to be exclusive, the ‘canon’ applies; when context does not so indicate, the ‘canon’ does not apply.” Judge Henderson, referring to expressio unius as an “interpretive canon,” would have applied it to resolve any lingering doubt about the plain meaning of Rule 21F-4(c)’s text.
So much for rockets, and on to electricity: LSP Transmission Holdings II v. FERC is a classic FERC case with bread-and-butter administrative law questions and highly technical energy regulatory issues. The petitioner builds electricity transmission projects. Its petition for review concerned compliance with Commission Order No. 1000, which required incumbent transmission providers to use competitive bidding when selecting developers. There’s an exception to Order 1000, however, when competitive bidding would result in delay that “threaten[s] system ‘reliability.’” ISO New England is a regional transmission organization subject to Order 1000. The petitioner argued that ISO New England wasn’t complying with the Order’s competitive bidding requirement and that FERC erred in concluding otherwise in a 2020 order.
The D.C. Circuit made short work of the petition for review in an opinion by Judge Randolph, joined by Judge Rogers and Judge Pillard. After disposing of some threshold issues, the court concluded on the merits:
[The petitioner] urges the Commission to abandon its current rules because far too many projects are winding up exempt from competition. LSP may have a point. If a theory does not work in practice, there is usually something wrong with the theory. See John Stuart Mill, Autobiography 79 (J. Bennett ed., 2017) (1873). Yet [the petitioner] did not challenge the Commission’s finding that ISO New England had not violated the Commission’s tariff. And although the number of reliability projects so far exempted from competitive bidding exceeded those open to competition, the appropriate balance struck – between competitive procurement and quick redress of reliability needs – is the sort of policy judgment left to the Commission.
Is that the first citation to Mill’s Autobiography in a D.C. Circuit opinion? I believe it is, if a quick Westlaw search is any guide. From My Cousin Vinny to Mill’s Autobiography in one week of published opinions!
Judge Jackson was a member of the panel for argument in the remaining cases for which we saw published opinions this week but did not participate in either opinion, as she awaits an historic confirmation to the Supreme Court that “appear[s] . . . all but” assured.
In Wisconsin Voters Alliance v. Harris, the court held that a district court’s order referring an attorney to the Committee on Grievances for possible discipline was not a final order for purposes of appeal under 28 U.S.C. § 1291. “To call the underlying action in this case ambitious would be an understatement,” Judge Tatel wrote in his opinion for the Court, which was joined by Judge Katsas. That action sought to enjoin certification of Joseph Biden’s win in the 2020 presidential election. Analogizing the district court’s referral order to “a run-of-the-mill agency order initiating an administrative investigation,” the court reasoned that the appeal was premature.
In United States v. Trabelsi, the court decided not to depart from its 2017 decision in the same matter. The appellant was challenging his extradition from Belgium to the United States to stand trial on terrorism charges. This challenge failed in the D.C. Circuit in 2017 and again this week. The Court held that the appellant had shown no reason to reopen issues it had already decided. On this point, Judge Wilkins and Judge Rao agreed. They disagreed, however, about whether the court should reach a point of treaty interpretation that Judge Rao raised in her concurring opinion.
On this point, Judge Rao suggested that the separation of powers constrains courts in their method of treaty interpretation. The issue concerned Article 5 of the Extradition Treaty Between Belgium and the United States, which, the appellant argued, afforded him a non bis in idem right against successive prosecutions by different sovereigns. Judge Rao reasoned that respect for presidential authority in foreign affairs “requires courts to take a text-first approach to treaty interpretation.” Under this approach, the Treaty did not confer an individual non bis in idem right. The court should have said so “at the outset,” Judge Rao reasoned, because the issue implicated the separation of powers and presidential authority in foreign affairs. Judge Wilkins concluded that the United States had forfeited this argument.
 The panel was Judges Henderson, Tatel, and Ginsburg, with Judge Henderson concurring in the judgment.
First, the interpretation “must be one actually made by the agency.” In other words, “it must be the agency’s ‘authoritative’ or ‘official position,’ rather than any more ad hoc statement not reflecting the agency’s views.” Second, “the agency’s interpretation must in some way implicate its substantive expertise.” And third, “an agency’s reading of a rule must reflect ‘fair and considered judgment’ to receive . . . deference.” (internal citations omitted)