WASHINGTON 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 of Congo.
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 Wednesday.
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 inadequate."
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 equipment.
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 groups said.
The SEC has until March 1 to file a response, according to the court docket.
(Reporting by Aruna Viswanatha; Editing by Dan Grebler)