According to a Bloomberg BNA report, a representative of the Chamber of Commerce, one of the plaintiffs in National Association of Manufacturers, Inc. v. SEC, the conflict minerals case currently pending in the DC Circuit, claims that the litigation “is sparking new interest by Congress in the requirements.” Don’t bank on it, at least in the near term. For those subject to the rule, Form SD for the 2014 calendar year is due on June 1 this year.
You may recall that, in April, a three-judge panel of the D.C. Circuit struck down a portion of the SEC’s conflict minerals rule on First Amendment grounds. In that case, the Court decided that the requirement to disclose whether companies’ products were “not found to be DRC conflict free” amounted to “compelled speech” in violation of companies’ First Amendment rights. Both the SEC and Amnesty International filed petitions with the D.C. Circuit requesting a rehearing regarding the First Amendment issue, and all sides have now filed briefs on the key issues identified by the Court.
The Chamber representative attributed this renewed “interest” in the “clarity” that emerged as a result of the Court’s opinion “regarding disclosures that are ‘specifically designed to shame a company….This is something that we think is important moving forward as Congress looks at these types of issues….We suspect that we’re going to see Congress take a second look at conflict minerals to ensure that any type of disclosures in that area conform with the court’s ruling.’” (It’s worth noting here that the Court did not object to the conflict minerals inquiry required by Dodd-Frank and SEC rules or to the mandatory disclosure in general; rather, the Court found objectionable only the narrow requirement to disclose whether companies’ products were “not found to be DRC conflict free.” And even that, as noted above, is currently under appeal.)
The article reported that Congressman Bill Huizenga of Michigan, one of the signatories to the letter to SEC Chair Mary Jo White urging that she end the SEC’s pending appeal of the conflict minerals rule, was, according to his spokesman, “working with others to address concerns regarding the conflict minerals requirements, including that they are not helping the Congolese miners as intended. They are looking at both the SEC requirements as well as Dodd-Frank….’No option is off the table.’” According to the article, Congressman Huizenga had “previously voiced concerns in congressional hearings that Section 1502 [of Dodd-Frank] has, if anything, made the situation worse in the DRC.” Of course, a decision by Congress to reexamine whether the rule was actually helping to achieve its goal or was counterproductive could lead to more significant changes in the mandate; however, there is no indication at this point that that type of inquiry is on Congress’s immediate horizon.
A Chamber representative advised BNA that the House may hold a hearing on conflict minerals this year, which “could lead to new legislative efforts to address some of the issues the court found objectionable….” Nevertheless, a representative of the House Financial Services Committee advised BNA that he was not “aware of any immediate plans in the committee regarding conflict minerals.”