On August 18, a three-judge panel of the D.C. Circuit, by a vote of two to one, reaffirmed its initial judgment in connection with a conflict minerals case, National Association of Manufacturers, Inc. v. SEC, that the requirements in the conflict minerals statute and related rule compelling companies 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”’ violates companies’ First Amendment rights. In April 2014, when the D.C. Circuit first issued its ruling, the SEC’s Director of Corporation Finance Keith Higgins issued a statement directing that 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,” and that an independent private sector audit would not be required unless a company voluntarily elects to describe a product as “DRC conflict free” in its Conflict Minerals Report.
Form SD filings are next due on May 31, 2016. It seems likely that the SEC will issue additional guidance before this deadline as many are questioning how this recent decision will affect the SEC’s conflict minerals rule and, in particular, the requirement that companies obtain an audit. In remarks at the September meeting of the ABA’s Business Law Section, Director Higgins confirmed that the April guidance and stay on the requirement to obtain an audit will continue in force until the legal challenge is resolved. Director Higgins also indicated that, despite the lapse of the two-year phase-in period, companies should be permitted to continue to use the label “DRC conflict undeterminable.”