SEC - U.S. Securities and Exchange Commission
09/17/2025 | Press release | Distributed by Public on 09/17/2025 11:10
Repeal By Extension: Statement on Yet Another Extension of the Form PF Compliance Date
Here we are again. I can't say that I'm surprised that we are back for yet another compliance date extension for Form PF - just three months after our last vote on the exact same issue. We clearly have not been dissuaded from our desire to slowly but surely extinguish duly adopted amendments to Form PF via extension after extension - after extension - despite the command of the Administrative Procedure Act (APA) to engage in transparent notice and comment rulemaking when rescinding rules. And while I'm not surprised we're back, I am surprised and disappointed by our repeated flouting of the APA. So unsurprisingly, I cannot support yet another extension.[1]
With its third and longest extension to date,[2] the Commission finally comes clean. Today's release further suggests that we are delaying the recent amendments, collectively "Final Form PF," yet again to buy ourselves more time to write them out of existence - before they ever go into effect. In other words, it seems we are delaying them indefinitely - and as long as it takes - to undo them. This is a thinly veiled sleight of hand to dismantle the work of a prior Commission while weaseling out of the clear requirements of well-established law.
Indefinite Extensions
First, there is clear judicial precedent holding that an indefinite extension of a duly adopted rule is not permitted.[3] In the past, courts have recognized sudden reversals of agency action without notice and comment under the APA as a "danger signal."[4] In the absence of the APA process, courts fear that an agency may undo what it has accomplished through a rulemaking without giving the public an opportunity to comment on the prospect of repealing that work.[5] Recognizing that there is a heightened risk of an APA violation in these circumstances, courts have required close scrutiny of such actions.[6]
Courts have applied this heightened analysis to the effective dates of agency action, specifically.[7] The Third Circuit, in fact, has been asked the exact question I had before today's meeting: "[M]ay [an] agency promulgating [a] rule postpone it indefinitely without subjecting that indefinite postponement to the notice and comment procedures of the APA?"[8] In short, the Court's answer was no. The Court held that the APA could not be read to allow for indefinite extensions of a rule's effective date because such a reading would permit an agency to "(albeit indirectly) repeal a rule simply by eliminating (or indefinitely postponing) its effective date."[9]
We know it is not unheard of for the Commission to extend compliance dates for a short, set amount of time to allow registrants more runway to prepare for new rules.[10] But that is not what we endeavor to do today. With multiple extension requests for longer and longer time periods, we convey our clear intent to indefinitely delay the compliance date of the final Form.[11] We also fail, yet again, to seek public comment on a potential path forward, further demonstrating our willingness to conduct Commission action without public input. This approach calls into question the legitimacy of each of these Commission actions and defies clear directives from the APA and the courts.[12]
It's also deeply troubling that we do not acknowledge any of this directly relevant precedent in today's release - or in either of the two previous Form PF extension releases. Perhaps we know that we cannot legally justify these extensions, and so we aren't even going to try. I worry about ignoring the courts in the same way that we ignore the compliance dates for Final Form PF.
Lack of Good Cause
Second, the release fails to show good cause that might otherwise justify our decision to forgo notice and comment rulemaking. While the APA generally requires notice and comment rulemaking, an agency may proceed without notice and comment when it finds, for good cause, that notice and public procedure are "impracticable, unnecessary, or contrary to the public interest."[13]
"Good cause" is meant to be a high bar.[14] Courts have cautioned that this exception must be narrowly construed to avoid creating an untenably large loophole in the APA.[15] This exception is not designed to accommodate cyclical changes in the composition of the Commission and shifting policy goals.[16] Certainly, in rare circumstances, good cause can exist. But the release doesn't even really try to argue that the standard is met here.[17] It simply refers back to the same arguments we've been parroting for the last two extensions regarding the Presidential Memorandum and supposed compliance challenges. And, even so, the courts have specifically objected to an agency's delay made without notice and comment in response to an Executive Order.[18] Our inability to provide a detailed justification is telling.[19]
Here again, the release declines to engage in any legal analysis of precedent, and instead simply cites to a few industry letters as our justification for another extension. But, it's clear these claims are being furnished as cover to further delay the final Form. Interestingly, it seems that a few of the letters cited as support for those claims in the release are not even publicly available.[20] This is a far cry from how our rulemaking process is meant to function.
A Future of Regulatory Uncertainty
There is a reason courts have forbidden this type of behavior. This approach erodes duly adopted Commission rulemakings. It erodes the rule of law. Continuity and certainty are beneficial to registrants, investors, and the stability of the markets at large. When the Commission adopts a rule, the investing public and other market participants should be able to rely on that rule as the law until the Commission engages in transparent notice and comment rulemaking to change or repeal those rules. In fact, the Eight Circuit just reiterated this to us, noting: "[i]t is the agency's responsibility to determine whether its Final Rules will be rescinded, repealed, modified, or defended in litigation."[21]
The right thing to do would be to allow the new Form to go into effect and then, in time, engage in a notice and comment rulemaking to repeal the amendments if this Commission so desires. Instead, we are creating a new normal where the APA is optional and final rules are only final when we feel like it. The outcome of today's vote is significant well beyond its impacts to Final Form PF. Today's vote signals that we are willing to repeatedly bend - or, in this case, extend - the rules until they break.
Even though I am unable to support today's release, I am grateful to the staff in the Division of Investment Management, the Division of Economic and Risk Analysis, and the Office of the General Counsel for their work on this release.
Thank you.
[1] I note that I did not support either previous compliance date extension. See Form PF; Reporting Requirements for All Filers and Large Hedge Fund Advisers; Extension of Compliance Date, Release No. IA-6838 (Jan. 29, 2025) [90 FR 9007 (Feb. 5, 2025)]; Form PF; Reporting Requirements for All Filers and Large Hedge Fund Advisers; Further Extension of Compliance Date, Release No. IA-6883 (June 11, 2025) [90 FR 25140 (June 16, 2025)].
[2] Form PF; Reporting Requirements for All Filers and Large Hedge Fund Advisers; Further Extension of Compliance Date, Release No. IA-[XXXX] (Sept. 17, 2025).
[3] See Nat. Res. Def. Council, Inc. v. U.S. E.P.A., 683 F.2d 752 (3d Cir. 1982) (holding that an indefinite extension of a rule's effective date constituted a "rule" under the APA and required notice and comment rulemaking.).
[4] See, e.g., Nat. Res. Def. Council, at 760-61 ("By postponing the effective date of the amendments, EPA reversed its course of action up to the postponement. That reversal itself constitutes a danger signal. Where the reversal was accomplished without notice and an opportunity for comment, and without any statement by EPA on the impact of that postponement on the statutory scheme pursuant to which the amendments had been promulgated, the reviewing court must scrutinize that action all the more closely to insure [sic] that the APA was not violated.").
[5] See Consumer Energy Council of Am. v. FERC, 673 F.2d 425, 446 (D.C. Cir. 1982), aff'd sub nom. Process Gas Consumers Grp. v. Consumer Energy Council of Am., 463 U.S. 1216, 103 S. Ct. 3556, 77 L. Ed. 2d 1402 (1983).
[6] See supra note 4.
[7] See Nat. Res. Def. Council, 683 F.2d at 761-62 ("In general, an effective date is 'part of an agency statement of general or particular applicability and of future effect.' It is an essential part of any rule: without an effective date, the 'agency statement' could have no 'future effect,' and could not serve to 'implement, interpret, or prescribe law or policy.' In short, without an effective date a rule would be a nullity because it would never require adherence.").
[8] Nat. Res. Def. Council, 683 F.2d at 761.
[9] Nat. Res. Def. Council, 683 F.2d at 762 ("[A] holding that EPA's action here was not a rule subject to the rulemaking procedure of the APA would create a contradiction in the statute where there need be no contradiction: the statute would provide that the repeal of a rule requires a rulemaking proceeding, but the agency could (albeit indirectly) repeal a rule simply by eliminating (or indefinitely postponing) its effective
date, thereby accomplishing without rulemaking something for which the statute requires a rulemaking proceeding.").
[10] See, e.g., Amendments to Form ADV; Extension of Compliance Date, Release No. IA-3129 (Dec. 28, 2010) (extending the compliance date for Form ADV amendments for four months to provide certain investment advisers additional time to design, test and implement systems and controls to satisfy their obligations to prepare and deliver brochure supplements); Press Release: SEC Extends New Short Sale Rule Compliance Date (Nov. 4, 2010) (extending the compliance date for Rule 201 and Rule 200(g) of Regulation SHO from November 10, 2010 to February 28, 2011 to provide additional time to market participants for programming and testing of systems for implementation); Disclosure of Mutual Fund After-Tax Returns; Extension of Compliance Date, Release No. 33-8010; 34-44850 (Sept. 26, 2001) (extending the compliance date for amendments to rule 482 under the Securities Act and rule 34b-1 under the Investment Company Act from October 1, 2001 to December 1, 2001 to give funds and third-party providers sufficient time to resolve outstanding technical issues regarding the appropriate methodology to be used in calculating standardized after-tax returns and perform any necessary systems changes).
[11] I acknowledge the technical distinction between an effective date and a compliance date, however, they are functionally identical in terms of the APA analysis in our current circumstances.
[12] See supra note 4.
[13] See 5 U.S.C. 553(b)(B).
[14] "Any agency faces an uphill battle to meet that burden. The D.C. Circuit has repeatedly warned that 'the good cause exception "is to be narrowly construed and only reluctantly countenanced."'" Nat'l Venture Cap. Ass'n v. Duke, 291 F. Supp. 3d 5, 16 (D.D.C. 2017) (quoting Util. Solid Waste Activities Grp. v. EPA, 236 F.3d 749, 754 (D.C. Cir. 2001)).
[15] See Am. Iron & Steel Inst. v. E.P.A., 568 F.2d 284, 292 (3d Cir. 1977).
[16] Senate Rept. No. 752, 79th Congress, 1st Session at 16. (1945) ("Impracticable" means a situation in which the due and required execution of the agency functions would be unavoidably prevented by its undertaking public rule-making proceedings . . . "Public interest" supplements the terms "impracticable" or "unnecessary"; it requires that public rule-making procedures shall not prevent an agency from operating and that, on the other hand, lack of public interest in rule making warrants an agency to dispense with public procedure.").
[17] See Nat'l Venture Cap. Ass'n v. Duke, 291 F. Supp. 3d 5, 16 (D.D.C. 2017) ("Because notice and comment is the default, 'the onus is on the [agency] to establish that notice and comment' should not be given.").
[18] See Nat. Res. Def. Council, 683 F.2d at 767 ("[I]t was possible to comply with both the APA and with E.O. 12291. Thus, E.O. 12291 does not constitute good cause for EPA's failure to comply with the APA when it initially postponed the effective date of the amendments.").
[19] The courts are clear that "good cause" cannot be the result of an agency's own delay. See Nat'l Venture Cap. Ass'n, 291 F. Supp. 3d at 16; Council of S. Mountains, Inc. v. Donovan, 653 F.2d 573, 581 (D.C. Cir. 1981) ("Otherwise, an agency unwilling to provide notice or an opportunity to comment could simply wait until the eve of a statutory, judicial, or administrative deadline, then raise up the "good cause" banner and promulgate rules without following APA procedures."). Moreover, courts have been unmoved by arguments, like the ones in today's release, that last minute agency action was needed to avert compliance with rules because they were soon to be eliminated. Env't Def. Fund, Inc. v. E.P.A., 716 F.2d 915, 920-21 (D.C. Cir. 1983) ("EPA's justification for invoking the good cause exception was an alleged pressing need to avoid industry compliance with regulations that were to be eliminated. According to the agency, it was 'essential to take ... action [ ] before the regulated community expend[ed] resources.'").
[20] I note that two letters in the release are not publicly available. See supra note 2, at n. 7. Moreover, none of the letters cited in the release were submitted to a public comment file. See id.
[21] See State of Iowa v. Securities and Exchange Commission, Order No: 5557595 (8th Cir. Sept. 12, 2025).
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