Cost-Benefit Analysis and the Conflict Minerals Rule

70 Pages Posted: 14 Jan 2016 Last revised: 9 Jun 2016

See all articles by Jeff Schwartz

Jeff Schwartz

University of Utah - S.J. Quinney College of Law

Alexandrea Nelson

Government of the State of Utah

Date Written: January 12, 2016

Abstract

The SEC made headlines when, in its release announcing the final version of its controversial Conflict Minerals Rule, the agency estimated that the rule would cost industry between $3-$4 billion in the first year alone. These figures have been widely accepted and have anchored a heated debate about the rule’s cost. But this Article proves that the estimate is baseless. The SEC engaged in a dense mathematical discussion of potential compliance expenses, but the core of its analysis rested on inapt and unsound economic models and empirical work. First, this finding means that the SEC’s figures should play a muted role in the ongoing public discourse. Second, our study of the SEC’s work, and the context surrounding it, sheds light on the controversy around cost-benefit analysis. The D.C. Circuit has held that the SEC, like many other agencies, must quantify and weigh the costs and benefits of its regulations. This Article provides an empirical contribution to the growing body of research that calls into doubt the deepening trust that policymakers and courts have bestowed upon this mode of analysis.

Keywords: cost-benefit analysis, conflict minerals, Section 1502, Dodd-Frank, conflict minerals rule

JEL Classification: D61

Suggested Citation

Schwartz, Jeff and Nelson, Alexandrea, Cost-Benefit Analysis and the Conflict Minerals Rule (January 12, 2016). Administrative Law Review, June 2016; University of Utah College of Law Research Paper No. 151. Available at SSRN: https://ssrn.com/abstract=2714620

Jeff Schwartz (Contact Author)

University of Utah - S.J. Quinney College of Law ( email )

383 S. University Street
Salt Lake City, UT 84112-0730
United States

Alexandrea Nelson

Government of the State of Utah ( email )

United States

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