In SEC v. Business Roundtable, the DC Circuit struck down the SEC's proxy disclosure rule in part because the agency failed to do an adequate cost-benefit analysis:
We ... hold the Commission acted arbitrarily and capriciously for having failed once again — as it did most recently in American Equity Investment Life Insurance Company v. SEC, ... and before that in Chamber of Commerce ... — adequately to assess the economic effects of a new rule. Here the Commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters.
With that quote in mind, now consider a point Walter Olson made on his blog about the SEC's forthcoming conflict minerals disclosure regime:
Some expected that the big new SEC regulations on industrial users of tin, tungsten, tantalum and gold would mostly affect electronics and jewelry makers, but the actual net being cast is far wider. Manufacturers in general must investigate the supply chains of their products in order to comply with the disclosure requirements, no small matter at a firm like Kraft with 40,000 products and 100,000 suppliers. (Kraft found that the minerals may turn up in pouch packaging of juice products.) No wonder the SEC’s absurd initial estimates of a mere $70 million economy-wide compliance cost have given way to estimates a hundred times higher or more. ...
If the SEC doesn't pull up its socks and do a serious cost-benefit analysis, it may discover that Business Roundtable has become a verb. As in, the court Business Roundtabled yet another SEC rule.
