Back in December, MetalMiner interviewed Sarah Altschuller, an attorney in the Corporate Social Responsibility practice of Foley Hoag LLP about the legal case brought forward by NAM, The Business Round Table and the Chamber of Commerce against the SEC, and in particular Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
It appears as though Sarah’s read of the case lined up exactly as the US District Court found on July 23 – essentially throwing out all of the legal arguments made by the plaintiffs.
Section 1502 Stands in its Current Form
We caught up with Lawrence Heim of the Elm Consulting Group, who presented at MetalMiner’s Conflict Minerals EDGE conference back in early May, to get his take on the lawsuit:
MetalMiner: Yesterday, the US District Court essentially threw out the case against the SEC. Were you surprised at all by the fact that all of the arguments challenging the regulation were essentially thrown out?
Lawrence Heim: Not being a lawyer, I wasn’t sure what to expect. I had read the pleadings filed and my sense was that SEC’s position was strong on some points, but NAM had certain reasonable arguments as well.
MM: Do you anticipate that there will be more legal challenges brought forward, or is this the last we’ll hear from the challengers of the rules? Why or why not?
LH: This opinion generally centered on whether the SEC had the authority to make the decisions it did, and the court held that SEC did indeed have – and appropriately used – that authority. I could see an appeal that drills down into the technical decisions themselves, rather than the process SEC applied in making the technical decisions. But not being an attorney, I don’t know if this is possible. I read one legal expert who indicated that any appeal would have to be filed by Aug. 22; there may not be enough time to craft an appeal.
MM: Together with Spend Matters, MetalMiner recently ran a webinar on conflict minerals. We were somewhat surprised to see conflict minerals compliance budgets a little lower in dollars budgeted than other compliance initiatives. Do you think the market has “held back” on program implementation because of this legal case? Why/why not?
LH: There has been slower implementation – and much less spending – on compliance initiatives than anyone predicted. The recent PwC survey revealed this, and our own experiences as well as other service providers with whom we have relationships further support this.
My view is that there are two reasons for the delays, and another specifically related to smaller budgets. I believe companies have indeed delayed action until the lawsuit was resolved. In addition, since this is viewed by many as a non-value-added cost/activity, procrastination has played a role – not wanting to spend the money.
A key factor on the budget figures is that there is less reliance on external consulting/IT systems than anticipated. Internal staff has taken on the program design, implementation and management originally part of an outsourcing strategy. Again, companies are trying not to spend money and are therefore pushing activities to in-house staff. The problem is that most of these folks are already too busy as it is, so program development tends to lag in these cases, especially where other things are considered more important.
So while companies may now begin to spend their budgets, they will almost certainly take a hard look at their previous cost estimates and scale them back, with the idea of relying more on internal support than first planned.
Read the second half of the interview here.