challenge will not be raised in any enforcement action.
The Court further concludes that review is not clearly and convincingly precluded by statute. The federal securities laws themselves contain no provision for judicial review of SEC rulemaking; and, no other federal statute clearly and convincingly precludes judicial review.
The APA does not preclude review in this case. Since the federal securities acts themselves do not prescribe the procedure for judicial review of SEC rulemaking, the APA provisions are applicable. Those procedures apply "except to the extent that -- (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law." 5 U.S.C. § 701(a). The Court has already eliminated the first exception.
Disposition of another earlier suit filed by these Plaintiffs in the United States Court of Appeals for the District of Columbia suggests that SEC rulemaking is not committed to agency discretion and thus is not beyond review by this court. Natural Resources Defense Council, Inc., v. SEC, No. 72-1148 (D.C. Cir. Feb. 8, 1973). Plaintiffs brought suit for review of the SEC's disposition on 22 December 1971 of Plaintiffs' Rulemaking Petition on the theory that the Court of Appeals had jurisdiction to review that agency action under statutory provision for court of appeals review of an "order" of the Commission. 15 U.S.C. §§ 77i(a), 78y(a). On 8 February 1972 the Court of Appeals dismissed the petition for review, holding that the Commission's failure to grant Plaintiffs' Rulemaking Petition was not a "final order" subject to direct appellate review under the securities laws. Regarding district court review, the Court of Appeals said: "whether the Commission has improperly delayed its action under NEPA or has improperly interpreted that Act are issues which may be resolved in the United States District Court for the District of Columbia where petitioner may proceed by appropriate action under the APA or by way of an action for declaratory judgment." We therefore conclude that SEC rulemaking is not solely committed to agency discretion under the facts and circumstances of this case.
All Plaintiffs have standing to sue. The test for standing stated in Sierra Club v. Morton, 405 U.S. 727, 31 L. Ed. 2d 636, 92 S. Ct. 1361 (1972), and United States v. S.C.R.A.P., 412 U.S. 669, 93 S. Ct. 2405, 37 L. Ed. 2d 254 (1973), is whether (1) the challenged agency action has caused plaintiffs "injury in fact", and (2) the alleged injury is to an interest "arguably within the zone of interests" protected or regulated by the statute. NRDC and some of its members have funds which they want to invest prudently and with a minimum adverse impact upon the environment; some members own common stock which they want to vote prudently and with a minimum adverse impact on the environment. The Court agrees with NRDC and its members that their interest in protecting the environment, in investing their funds, and in voting their shares in a socially responsible manner, have been and continue to be adversely affected and aggrieved by the SEC's failure to adopt corporate disclosure regulations which will require disclosure of a corporation's impact on the environment and statistics about its equal employment practices. NRDC further contends that the interests of its members in using and enjoying natural resources have been and continue to be adversely affected and aggrieved by corporate activity which continues in part because of the failure of the SEC to require the disclosures described above. Similarly, Project's standing stems from its ownership of a small portfolio of securities it desires to manage in a way consistent with the Project's objective of promoting socially responsible corporate behavior. For this reason it needs the information which Plaintiffs seek.
The Center, on the other hand, has another interest which has been injured by the SEC's rulemaking action. The Center participates in research, litigation, educational activities, and agency proceedings, in furtherance of corporate responsibility. The organization's broad public education purposes require information. This need for information has been expressly sanctioned by the United States Court of Appeals for the District of Columbia as an adequate basis for standing. See Scientists' Institute for Public Information v. AEC, 156 U.S. App. D.C. 395, 481 F.2d 1079 at note 29 ( D.C. Cir. 1973).
These injuries to Plaintiffs are wholly adequate to meet the injury-in-fact requirement for standing. The Supreme Court stated in United States v. S.C.R.A.P., 412 U.S. 669, 93 S. Ct. 2405, 37 L. Ed. 2d 254 (1973):
"In interpreting 'injury in fact' we made it clear that standing was not confined to those who could show 'economic harm' . . . . Nor, we said, could the fact that many persons shared the same injury be sufficient reason to disqualify from seeking review of an agency's action any person who had in fact suffered injury."
The Court finds that Plaintiffs have been deprived information necessary for their organizational purposes because of the SEC failure to adopt regulations requiring broader disclosure in the environmental and equal employment opportunity areas. This injury, though in part non-economic, is sufficient injury to support Plaintiffs' standing to sue.
Further, plaintiffs' interests are within the zone of interests protected by the federal securities acts and NEPA. First, the principal purposes of the federal securities laws is full disclosure of material information; this purpose reflects the Brandeis philosophy that "sunlight is said to be the best of disinfectants." See SEC v. Capital Gains Research Bureau, 375 U.S. 180, 11 L. Ed. 2d 237, 84 S. Ct. 275 (1963). Plaintiffs would use the corporate disclosures they seek not only in their role as public educators, but also as investors and voting shareholders making informed, socially responsible investment decisions. Secondly, Congress declared in NEPA (1) that one of the purposes of NEPA is "to promote efforts which will prevent or eliminate damage to the environment," and (2) that "each person has a responsibility to contribute to the preservation and enhancement of the environment," and (3) that "all agencies of the Federal Government shall -- . . . make available to States, . . . institutions, and individuals, advice and information useful in restoring, maintaining, and enhancing the quality of the environment." Plaintiffs seek through public education, investment of funds, and voting of shareholdings, to do their part to encourage corporate responsibility in environmental matters. This Court can conceive of no other individuals or institutions who could have a greater interest which NEPA protects than Plaintiffs.
V. The SEC failed to comply with the procedural requirements of the Administrative Procedure Act in adopting regulations which are published in Release No. 5386, and in denying the equal employment portion of the Plaintiff's Rulemaking Petition.
The administration of the securities law lies in the first instance with the SEC. It is the Commission which must first decide (subject, of course, to the statutory requirements) what information corporations shall provide for the public files of the SEC. Moreover, this interpretation of the securities acts is accorded great weight.
But once the SEC makes rules or regulations for this disclosure, the courts may review that agency action under conditions and standards provided by the APA. See supra at page 697. Indeed, this Court can set aside SEC rules which do not meet the NEPA mandate, if the Court finds that the SEC rulemaking is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Reviewing courts have authority and responsibility to scrutinize agency decisions closely in order to ensure that they proceed from a proper understanding of the relevant laws and in order to correct those decisions which are inconsistent with Congressional mandates, fall short of the statutory policies, or strike an improper balance among conflicting interests. As the Supreme Court stated in NLRB v. Brown, 380 U.S. 278, 13 L. Ed. 2d 839, 85 S. Ct. 980 (1965):
"Reviewing courts are not obliged to stand aside and rubber-stamp their affirmance of administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute. Such review is always properly within the judicial province, and courts would abdicate their responsibility if they did not fully review such administrative decisions. Of course due deference is to be rendered to agency determinations of fact, so long as there is substantial evidence to be found in the record as a whole. But where, as here, the review is not a question of fact, but of judgment as to the proper balance to be struck between conflicting interests, 'the deference owed to an expert tribunal cannot be allowed to slip into a judicial inertia which results in the unauthorized assumption by an agency of major policy decisions properly made by Congress.' American Ship Building Co. v. National Labor Relations Board, 380 U.S. at 318 . . ."