Today, the D.C. District Court entered final judgment in National Association of Manufacturers v. SEC, holding that Section 1502 of Dodd-Frank and Rule 13p-1 and Form SD, Conflict Minerals, violate the First Amendment to the extent that the statute and the rule require regulated entities to report to the SEC and to state on their websites that any of their products “have not been found to be ‘DRC conflict free.’” In addition, pursuant to the APA, the Court held the rule unlawful and set it aside but only to the extent that it requires regulated entities to report to the SEC and to state on their websites that any of their products “have not been found to be ‘DRC conflict free.’” (For background on the case, see this PubCo post.)
It is now up to the SEC to determine whether and how to revise the existing rules or whether to let stand, at least for the meantime, the Corp Fin guidance that was issued in 2014 and is currently in effect. That guidance requires companies to make the mandated filing on a timely basis without including a statement as to the conflict-free status of the products that could be deemed to violate the First Amendment. (See this PubCo post.)
Notably, however, in February, Acting SEC Chair Michael Piwowar issued two statements on the conflict minerals rule, which advise that he had directed “the staff to consider whether the 2014 guidance is still appropriate and whether any additional relief is appropriate in the interim.” In the meantime, at the end of February, Acting Corp Fin Director Shelley Parratt reminded companies that, notwithstanding the two statements issued by Acting SEC Chair Michael Piwowar and all of the Executive Orders aimed at deregulation, the conflict minerals rule continues in effect. The staff is, however, reviewing comments on these rules as they are received. (See this PubCo post.)
SideBar: Bloomberg BNA has reported that the State Department has launched a new review of “how best to support responsible sourcing of conflict minerals,” which will continue through April 28. Although it’s not known whether the SEC is involved in the State Department’s efforts, BNA suggests that the review “could help determine the next step in a potential rethink” of the SEC conflict minerals rule. Will the current rules be revised based on comments received? Or could the State Department review cause the issue to be moved outside of the SEC’s jurisdiction entirely to a different agency that would employ a different regulatory framework? See this PubCo post.