Yesterday afternoon (July 23, 2013) the U.S. District Court for the District of Columbia issued a decision granting an SEC motion for summary judgment to a challenge to the far-reaching SEC Conflict Minerals Rule (implemented pursuant to Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) that had been brought by the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable. As a result, public companies (and the private companies that do business with them) should move forward with efforts to address the daunting compliance challenges presented by the SEC Conflict Minerals Rule.
The rebuffed plaintiffs had challenged the rule (1) under the Administrative Procedure Act as being arbitrary and capricious, and (2) as compelling speech in violation of the First Amendment to the Constitution. In a 63-page decision, the court found “no problems with” the Conflict Minerals Rule as promulgated by the SEC and ruled that the plaintiffs’ “claims lack merit.”
The net result is that the Conflict Minerals Rule continues in effect as promulgated by SEC. While an appeal of the decision may occur, there is likely not enough time prior to the initial compliance deadline for companies to see if the rule gets vacated on appeal. The first set of Form SD and Conflict Mineral Reports are due no later than May 31, 2014, and for some companies will require several months of diligence and outreach to vendors.