On November 21, petitioners challenging the SEC’s new conflict minerals rule filed a “Preliminary Statement of Issues” with the D.C. Circuit Court of Appeals, setting forth an overview of the challenges they intend to raise in further briefing.

As discussed in an earlier post, on October 19, the U.S. Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable filed a petition seeking review of the conflict minerals rule, which was released on August 22.

As indicated in their most recent filing, petitioners intend to argue that:

• The SEC’s economic analysis of the rule was inadequate;
• The SEC’s refusal to adopt a de minimis exception to the rule was erroneous, arbitrary and capricious, or an abuse of discretion;
• The SEC’s application of the rule to companies that ”contract to manufacture” (as opposed to manufacture) products contain conflict minerals was erroneous, arbitrary and capricious, or an abuse of discretion;
• The SEC’s interpretation of “did originate” in the original legislation as “reason to believe . . . may have originated” is erroneous, arbitrary and capricious, or an abuse of discretion;
• The SEC’s standards and requirements for the “reasonable country of origin” inquiry are was erroneous, arbitrary and capricious, or an abuse of discretion;
• The structure of the transition period established in the rule is erroneous, arbitrary and capricious, or an abuse of discretion;
• The legislation pursuant to which the rule was drafted compels speech in violation of the First Amendment to the U.S. Constitution; and
• The SEC, in promulgating the rule, otherwise acted in a manner that was arbitrary and capricious, an abuse of discretion, unlawful, or contrary to a constitutional right.

Petitioners also filed a consent motion proposing an expedited briefing schedule for the court’s review of the case. Petitioners and the SEC have agreed on the following proposed calendar:

• Petitioners’ Opening Brief — January 18, 2013
• Respondent’s Brief — March 4, 2013
• Briefs of Any Intervenors or Amici in Support of Respondents — March 11, 2013
• Petitioners’ Reply Brief — March 25, 2013
• Deferred Appendix — March 27, 2013
• Final Briefs — March 29, 2013

In arguing that the SEC acted arbitrarily and capriciously, petitioners will need to show, by a preponderance of the evidence, that the SEC did not have a proper basis for the specific determinations it made in drafting the requirements established in the final rule. Petitioners must also confront the fact that petitioners the SEC was acting in response to a direct mandate from Congress in issuing the final rule. These are high burdens to meet and petitioners’ opening brief, expected in mid-January, will be scrutinized closely.

Petitioners will likely focus significant briefing on the adequacy of the SEC’s economic analysis. As the SEC acknowledged in the text of the final rule, this is a case where significant compliance costs must be weighed against intended humanitarian benefits that are difficult, if not impossible, to quantify.

In another recent development in the case, on November 19, Amnesty International filed a motion for leave to intervene in support of the SEC.