Conflict minerals rule: Extraordinary costs, doubtful benefits
Business Roundtable has joined the U.S. Chamber of Commerce and National Association of Minerals to challenge the Security and Exchange Commission's rule that imposes new, enormously expensive rules on businesses, demanding that they report any use of "conflict minerals" in their products. This week, we filed our brief with the U.S. Court of Appeals for the D.C. Circuit laying out the case. It's excellent work by the good lawyers at Sidley Austin.
From the introduction (and we've added paragraph breaks).
The Securities and Exchange Commission’s (SEC’s) “conflict minerals” rule may have been motivated by good intentions—to reduce funding to armed groups and help end the terrible conflict in the Democratic Republic of the Congo (DRC).
As the dissenting Commissioners pointed out, however, good intentions are no substitute for rigorous analysis, and the Commission’s analysis here was woefully inadequate. Indeed, the Commission admitted it did not determine whether the rule will provide any benefits to the people of the DRC, and a number of commenters warned that the rule could unintentionally make the humanitarian situation worse.
At the same time, the Commission found that the rule will impose staggering costs on American businesses: $3 to $4 billion for initial compliance, and an additional $200 to $600 million per year for ongoing compliance, making this one of the costliest rules in SEC history. Some commenters calculated that costs would be substantially higher still. By imposing extraordinary costs without showing they will achieve any benefits, the SEC violated the Administrative Procedure Act (APA) and the agency' heightened obligation under the Securities Exchange Act of 1934 to analyze the economic impact of its rules.
- Reuters, "U.S. business groups challenge SEC rule on Congo minerals"
- Wall Street Journal (blog), "Business Groups Fully Brief “Conflict Minerals” Legal Challenge"