On April 29, 2014, the SEC issued a statement regarding the effect of the recent Court of Appeals decision on the Conflict Minerals Rule; on May 2, 2014, the SEC issued a partial stay pending final judicial review.

The statement was issued in response to the decision of the United States Court of Appeals for the District of Columbia Circuit on April 14, 2014 in the case challenging Exchange Act Rule 13p- 1 and Form SD. The Court of Appeals rejected various challenges to the rule, but concluded that Exchange Act Section 13(p)(1) and Rule 13p-1 violate the First Amendment to the extent they require regulated entities to report to the SEC and to state on their website that any of their products have “not been found to be „DRC conflict free.‟”

Subject to any further action taken by either the SEC or a court, companies are expected to adhere to the previous June 2 deadline for initial reports on Form SD (and any related Conflict Minerals Report). In addition, the Form SD and any related Conflict Minerals Report should comply with those portions of Rule 13p-1 and Form SD that the Court of Appeals upheld. Specifically, companies that do not need to file a Conflict Minerals Report should disclose their reasonable country of origin inquiry and briefly describe the inquiry they undertook and for companies required to file a Conflict Minerals Report, the report should include a description of the due diligence undertaken. The statement notes that if a company has products that fall within the scope of Items 1.01(c)(2) or 1.01(c)(2)(i) of Form SD (i.e., products that have not been found to be “DRC conflict free” or products that are “DRC conflict undeterminable,” in each case as defined in Form SD), the company would not have to identify the products as “not found to be „DRC conflict free‟” or “DRC conflict undeterminable,” but should disclose, for those products, the facilities used to produce the conflict minerals, the country of origin of the minerals and the efforts to determine the mine or location of origin.

No company is required to describe its products as “DRC conflict free,” having “not been found to be „DRC conflict free,‟” or “DRC conflict undeterminable.” If a company voluntarily elects to describe any of its products as “DRC conflict free” in its Conflict Minerals Report, however, it must obtain an independent private sector audit (IPSA) as required by the rule. Pending further action, an IPSA will not be required unless a company voluntarily elects to describe a product as “DRC conflict free” in its Conflict Minerals Report.

In light of the Court of Appeal‟s April 14, 2014 decision, the SEC issued an order on May 2, 2014 specifying that the effective date for compliance with those portions of Rule 13p-1 and Form SD subject to such decision are stayed pending the completion of judicial review, at which point the stay will terminate. The order then refers issuers to the April 29, 2014 statement (and any further guidance subsequently provided) for more detailed guidance regarding compliance with the rule and Form SD.