October 12, 2012

Industry Groups Sue to Kill Dodd-Frank – Or At Least Redo Resource Extraction Rules

As I return from our week of executive pay conferences, Scott Kimpel of Hunton & Williams gives us this news:

A collection of industry groups has sued the SEC in federal district court to block implementation of the resource extraction disclosure rules promulgated in late August under Section 1504 of Dodd-Frank. The plaintiff trade groups raise a number of claims, including a faulty cost-benefit analysis and deficiencies under the Administrative Procedures Act, the Securities Exchange Act and the 1st Amendment. The act of filing suit does not immediately stay the rules. In recent challenges to SEC rules, the Commission has generally stayed the controversial rules on a voluntary basis after negotiation with plaintiffs’ counsel. Should the Commission refuse to do so here, the plaintiffs could then petition the court for that relief.

The action concerning Section 1504 begs the question as to what may happen to its companion statute, Section 1502, concerning conflict minerals. The two rulemakings employed similar arguments concerning Congressional intent and the scope of Congress’s mandate; a putative plaintiff may choose to raise some of the criticisms leveled in the 1504 complaint against the Section 1502 release as well. It remains to be seen if any groups will in fact come forward with a challenge.

To be clear, the apparent objective of this challenge is not necessarily to make the prospect of rulemaking go away forever. Unless the plaintiffs are successful in setting aside the entire statute as violative of the Constitution – or absent an amendment of Dodd-Frank – the Commission will have to go back to the drawing board if the rules are eventually struck down (which is far from certain) after all appeals are exhausted. This suit presents a different scenario than the SEC’s rules on mutual fund governance, equity-indexed annuities and proxy access–each of which was struck down, but none of which was compelled by statute, which gave the Commission discretion not to re-propose.

Here is the complaint posted in our “Resource Extraction” Practice Area – and here’s the Chamber’s press release about the lawsuit…

Starting Monday: Draft Registration Statements Required to Be Submitted Using EDGAR

Yesterday, Corp Fin announced that draft registration statements are required to be filed via Edgar starting this Monday, October 15th. This applies to both emerging growth companies under the JOBS Act and foreign private issuers. Here are related blogs leading up to this development…

President’s “Iran Sanctions” Executive Order Impact Foreign Subsidiaries and Require SEC Disclosure

On Tuesday, President Obama issued an Executive Order implementing certain sanctions set forth in the “Iran Threat Reduction and Syria Human Rights Act of 2012”, which was signed into law in August. The Act expands the reach of the U.S. sanctions law against Iran by expanding the types of activities subject to sanctions and extending the prohibitions to foreign entities owned or controlled by U.S. persons. The Act also creates a new obligation for SEC reporting companies to disclose in their filings whether they or their affiliates knowingly engaged in Iran-related activities as noted in these memos posted in our “National Security” Practice Area.

– Broc Romanek