Federal appeals court rejects business group’s motion to stay entire conflict minerals rule
On Wednesday, the U.S. Court of Appeals for the District of Columbia Circuit rejected an emergency motion filed by the National Association of Manufacturers, the U.S. Chamber of Commerce, and the Business Roundtable to stay the SEC’s conflict minerals rule in its entirety until the U.S. District Court for the District of Columbia addresses the appeals court’s earlier remand order (see Editor’s Note below). The group argued that the conflict minerals rule no longer achieves its purpose, that it is likely to be vacated, and that a stay would avoid “forcing companies to implement an interim procedure for filing truncated reports under unilateral staff guidance that is subject to change at any time.”
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Editor’s Note: On April 14, 2014, the appeals court held that parts of the conflict minerals rule and of Section 1502 of the Dodd-Frank Act violate the First Amendment to the extent that they require issuers to disclose that their products have “not been found to be ‘DRC conflict free’” and remanded the case back to the district court. The SEC subsequently responded to the appeals court’s ruling by stating that it still expects issuers to file a new special disclosure form (Form SD) and, if applicable, a Conflict Minerals Report (CMR) on or before the due date but that issuers will not be required to identify any products as “not been found to be ‘DRC conflict free’” or “DRC conflict undeterminable.” (Issuers may elect to identify products as “DRC conflict free”; however, they would be required to obtain an independent private sector audit.) On May 2, 2014 the SEC issued a stay of the effective date of those portions of its conflict minerals rule that the appeals court deemed unconstitutional. See Deloitte’s May 1, 2014, journal entry for additional information. |
It is uncertain how the district court’s forthcoming opinion will affect issuers. For the moment, they will still need to file Form SD and, if applicable, a CMR on or before June 2, 2014.
