The DC Circuit just ruled in the conflicts mineral case. See NAM v. SEC. The court struck down a small aspect of the rule on First Amendment grounds.
With respect to the administrative law analysis, the court wrote a very strong opinion upholding the analysis by the SEC. The National Association of Manufacturers challenged the final rule by, among other things, alleging an inadequate cost benefit analysis. Among the authority cited: Bus. Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2011). That case extended the boundaries of administrative law largely by imposing an almost impossible standard for cost-benefit analysis and ignoring the traditional requirement of agency deference.
The panel in NAM v. SEC, however, unanimously went back to the traditional approach taken in administrative review of agency rulemaking. As the court stated: “we find it difficult to see what the Commission could have done better.”
With respect to the first amendment, however, the panel splintered. Two judges agreed to strike down an aspect of the rule. They invalidated the final rule “to the extent the statute and rule require regulated entities to report to the Commission and to state on their website that any of their products have not been found to be ‘DRC conflict free.’ ”
The SEC will have to decide its next step. The case has been sent back to the trial court. Presumably the agency can eliminate the offending language and move forward with the application of the remaining pieces of the rule. Alternatively, the SEC could seek rehearing en banc.
The decision to seek an en banc hearing may be more complicated than usual, as the next post explains.