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.
Ready to Assist
In 2010 McGuireWoods established a cross-departmental conflict minerals legal compliance team dedicated to addressing the needs of public and private companies impacted by the CM Rule. The team is a multidisciplinary group that includes attorneys from across our offices with substantive experience in (1) international natural resource and mining law, (2) supply chain management, (3) securities regulation and compliance and (4) corporate investigations/due diligence. Having worked with a number of public and private companies in various industries, we are able to offer practical guidance in navigating the vagaries of the CM Rule, identifying potential or real compliance obligations and, finally, executing a path to corporate compliance and reporting.
Click here to read our client alert regarding the August 2012 adoption of the final CM Rule and click here to read our client alert regarding the SEC’s guidance issued on May 30, 2013.