Industry Groups File Motion for Full Stay of Conflict Minerals Disclosure Rule

五月 12, 2014 | Energy, Natural Resources & Utilities

 

This is a further update to our coverage of the final rules adopted by the Securities and Exchange Commission (the “Commission”) for the implementation of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires issuers who file annual reports with the Commission to provide annual disclosure regarding their use of “conflict minerals” (the “Final Rule”). For a complete discussion of the conflict minerals disclosure requirements, please see our prior client alerts (see OMM August 22, 2012, Client Alert: SEC Adopts Conflict Minerals Disclosure Requirements; see also OMM June 3, 2013, Client Alert: SEC Staff Publishes FAQs on Conflict Minerals Disclosure).

On April 14, 2014, the U.S. Court of Appeals for the D.C. Circuit (the “DC Court”) issued an opinion that unanimously upheld the Final Rule under the Administrative Procedure Act, but invalidated the requirement that an issuer provide disclosure, using the phrase “not been found to be DRC conflict free,” if its products contain metals mined in the Congo or other conflict jurisdictions (see OMM April 24, 2014, Client Alert: DC Circuit Decision Holds Aspect of Conflict Minerals Disclosure Rule Violates First Amendment, Creating Uncertainty on Rule Implementation).

On April 29, 2014, the Commission’s Division of Corporation Finance issued a statement on the DC Court’s decision, implementing a partial stay in regards to those portions of the Final Rule deemed to violate the First Amendment by the DC Court’s ruling, but leaving in place the June 2, 2014 Form SD filing deadline for issuers (see OMM May 1, 2014, Client Alert: Securities and Exchange Commission Issues Statement on DC Court of Appeals Decision on Conflict Minerals Rule).

On May 5, 2014, the National Association of Manufacturers, Chamber of Commerce of the United States of America, and Business Roundtable (“Petitioners”) filed an Emergency Motion requesting that the DC Court stay the Final Rule, including the June 2, 2014 Form SD filing deadline. Petitioners argue that “without the compelled confession, the current rule makes little sense as presently designed,” and does not fulfill the objectives of Dodd-Frank Section 1502. Petitioners claim that the Final Rule “no longer ‘create[s] incentives’ by shaming companies and it no longer ‘enhances transparency’ by purportedly informing the public whether an issuer sourced minerals from armed groups in the DRC.” Petitioners claim they will suffer irreparable harm if compelled to comply with the Final Rule prior to a decision by the district court on remand, due to the “extraordinary and unrecoverable expenditures as well as unresolvable legal uncertainty about the rule’s requirements.” Petitioners requested the DC Court make the decision by May 26, 2014.

1 National Association of Manufacturers et al. v. Securities Exchange Commission, No. 13-5252, available at http://www.cadc.uscourts.gov/internet/opinions.nsf/D3B5DAF947A03F2785257CBA0053AEF8/$file/13-5252-1488184.pdf

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