NAM, Chamber of Commerce, and BRT v. U.S. Securities and Exchange Commission (SEC)
U.S. Chamber's Position
The U.S. Chamber of Commerce joined a broad-based business coalition including the National Association of Manufacturers (NAM) and the Business Roundtable (BRT) to challenge the SEC's "Conflict Minerals Rule." The coalition's opening brief on the merits explains:
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’s heightened obligation under the Securities Exchange Act of 1934 to analyze the economic impact of its rules.
Of course, the Commission had to follow the congressional directive to impose a rule. But Congress did not mandate these massive costs. The pertinent statutory provisions are brief and general, imposing certain requirements and leaving the remainder to the Commission’s rulemaking process. And in that process, the Commission both misconstrued those statutory requirements and acted arbitrarily in filling the gaps that remained. By refusing to create a de minimis exception, requiring companies to undertake an onerous “reasonable country of origin inquiry,” expanding the rule’s scope to non-manufacturers, and providing for an irrational transition period, the Commission greatly multiplied the rule’s unprecedented burden on U.S. companies, with no showing of benefits to the Congolese people. Furthermore, the rule’s authorizing statute itself violates the First Amendment by compelling companies to indicate publicly that their products contribute to human rights abuses in the DRC—a statement, for most companies, as unfounded as it is politically charged.
The U.S. Chamber appealed the District Court's decision on 8/12/2013. Decided 4/14/2014.
In light of the D.C. Circuit's en banc decision in American Meat Institute v. U.S. Department of Agriculture, which expanded the situations in which a more limited scrutiny standard applies, a rehearing petition was granted on 11/18/2014. Decided 8/18/2015.
Petition for rehearing en banc filed 10/2/2015. Denied 11/9/2015.
Final judgment issued 4/3/2017.