On Wednesday the American Petroleum Institute¬†(API), the largest U.S. trade association for the oil and natural gas industry, the U.S. Chamber of Commerce, the¬†Independent Petroleum Association of America, a U.S. trade association for independent oil and natural gas producers, and the National Foreign Trade Council,¬†the oldest and largest trade association advocating an open, rules-based international trade system, jointly filed a complaint¬†with the D.C. District Court and petition for review¬†with the¬†U.S. Court of Appeals for the D.C.¬†Circuit, seeking to vacate and enjoin the Securities and Exchange Commission from¬†implementing¬†and enforcing the recently adopted, and Dodd-Frank Act-mandated, rule requiring disclosure of certain payments made by resource extraction issuers to the U.S or foreign governments. The case was filed in both the District Court and the Court of Appeals pending resolution of the jurisdiction question.
Among other things, the District Court complaint alleges that the Commission failed to adequately perform a cost-benefit analysis when promulgating the final rule.
Remember it was just last year that the U.S. Court of Appeals for the D.C.¬†Circuit vacated the Commission’s proxy access rule¬†on the basis of the same inadequate cost-benefit analysis argument. However, shortly thereafter the Commission revamped its approach to economic¬†analysis in rulemaking and released an internal memorandum¬†providing guidance on the revised approach.
The disclosure rule at issue in the API et al. v. SEC suit¬†underwent an¬†economic¬†analysis under the revised approach, so it’ll be interesting to see how the court which ultimately¬†hears the case rules on the cost-benefit analysis argument.
The outcome of this case may also influence the approach of others.¬†Compliance¬†Week has already asked Is the Conflict Minerals Rule Next to Face a Legal Challenge?, noting that the U.S. Chamber of Commerce has not ruled out that possibility.
In an unrelated article,¬†Reuters notes that investor groups are also making the cost-benefit analysis argument in the context of the Dodd-Frank Act-mandated proposed rule to¬†lift the ban on general solicitation and general advertising, but that those groups feel it’s still too early to talk about filing a lawsuit.
In any event, the outcome of the API et al. v. SEC suit is one to watch, as it may determine whether the cost-benefit analysis argument becomes a trend.
Update October 24, 2012:
The National Association of¬†Manufacturers, the largest industrial trade association in the U.S., Business Roundtable and U.S. Chamber of Commerce have¬†filed a joint petition with the¬†U.S. Court of Appeals for the D.C.¬†Circuit seeking to have the conflict mineral rules modified or set aside in whole or in part, but without specifying a basis for challenging the rule.