On October 19, the U.S. Chamber of Commerce and the National Association of Manufacturers filed a petition seeking review of the Securities and Exchange Commission’s final conflict minerals rule, as released on August 22. Earlier today, the U.S. Court of Appeals for the District of Columbia issued an initial order establishing a preliminary schedule for the submission of documents by both the petitioners and the SEC.
The petition was filed pursuant to Rule 15(a) of the Federal Rules of Appellate Procedure, which provides the basis for petitioners to seek review of the orders of federal agencies, and requests that the “rule be modified or set aside in whole or in part.”
A challenge to the conflict minerals rule was not unexpected. That said, petitioners must overcome the fact that the SEC was acting in response to a direct mandate from Congress in issuing the final rule. This is not like the earlier, and successful, challenge to the SEC’s proxy access rule, discussed in several previous posts, in which the SEC issued the rule without a direct Congressional mandate.
That said, as with the proxy access rule, the petitioners’ arguments are likely to focus on the extent to which the SEC did a proper economic analysis of the final rule. Petitioners may also seek to challenge the propriety of the SEC’s involvement in a rule-making with fundamentally humanitarian and foreign policy goals.
In an initial response to the petition, SEC spokesman John Nester observed
"while the petitioners did not state a basis for a challenge in their filing, we believe our legal interpretation and economic analysis are sound and we look forward to defending the rule that Congress directed us to write."
Earlier this month, Foley Hoag attorneys presented a webinar providing background and guidance on the new rule. Copies of the slides from the webinar are available here (.pdf).