With approximately six weeks until SEC votes on the final conflict minerals regulations, the US Chamber of Commerce filed new comments with the Commission calling for the rule to be re-proposed based on “important questions raised during the comment period [that] remain unresolved.”
The key points brought forth by the Chamber include:
- That the SEC did not consider the impact of the rule on companies other than those already subject to SEC. “The SEC estimate fails to reflect the costs to private companies that serve as suppliers and vendors to reporting companies, as well as the costs to other reporting companies and service as suppliers and vendors to companies that are directly impacted by the proposed Rule.”
- That the SEC did not address the request from the Small Business Administration (SBA) for “an amended initial regulatory flexibility analysis for the proposed rule to reflect the costs of the proposed rule and the number of small businesses impacted.”
- With the artificially low numbers of estimated companies affected, the cost impact is materially undermined. Other credible studies, including those from the National Association of Manufacturers (NAM) and Tulane University’s Payson Center for International Development, indicated “a disparity between the SEC estimates and those provided as part of the rulemaking record is of such note and import that the SEC should review its proposal and conduct a new cost-benefit analysis.” The Chamber referenced last year’s lawsuit on proxy access, which SEC lost on similar grounds.
- A new cost-benefit analysis of the rule would likely result in the rule being classified as a “major rule”, subject to additional administrative processes and analyses.
- Safe harbor provisions and deminimis exemptions must be incorporated into the final rule “because of the inherent problems many companies will face in tracking their supply chain, they may not be able to reach a definitive conclusion as to whether their minerals were derived from a tainted source”.
- Similarly, scrap/recycled material exemptions must be incorporated into the final rule, otherwise, the rule would ” limit the market for all secondary smelters…[and] forc[e] U.S. manufacturers to use primarily smelted materials.” NAM argued further that “The same standard of “reasonable inquiry” for determining that the minerals did not originate from conflict mines in the DRC or adjoining countries should apply to recycled materials.”