By Aruna Viswanatha
WASHINGTON, Jan 16 (Reuters) - Business groups on Wednesday
filed their most expansive case yet attacking a new U.S.
securities rule that requires companies to determine if their
products contain minerals from the war-torn Democratic Republic
The lawsuit is one of several challenging rules from the
Securities and Exchange Commission, including those mandated by
the 2010 Dodd-Frank financial regulatory overhaul.
The National Association of Manufacturers, the U.S. Chamber
of Commerce and Business Roundtable filed notice of their
lawsuit last November but did not explain their case until
The groups based much of their case on an argument that has
helped them win similar cases -- that the SEC did not adequately
weigh the rule's costs and benefits before approving it, as
rule-making procedures require.
In a brief filed in Washington federal appeals court, the
groups said the SEC never determined whether the rule would
provide any benefits to the people in Congo, and also estimated
the rule could impose $3 billion to $4 billion of initial
compliance costs on American businesses.
The groups echoed commission members who voted against the
rule and said: "good intentions are no substitute for rigorous
analysis, and the Commission's analysis here was woefully
The groups also challenged several specific provisions of
the rule, including one under which the SEC declined to grant
exceptions for trace amounts of the minerals, which include
gold, tin, tantalum or tungsten. Such minerals are used in
everything from cans to cell phones and computers to medical
In approving the rule in August, the commission said it
concluded it lacked the authority to adopt such an exception.
The groups said the rule also violated the First Amendment
by requiring companies to disclose that certain of their
products are "not DRC conflict free." Such a rule would compel
companies to make "misleading and stigmatizing public statements
linking their products to terrible human rights abuses," the
The SEC has until March 1 to file a response, according to
the court docket.
Follow us on Twitter @ReutersLegal | Like us on Facebook