On May 14, 2014, the U.S. Court of Appeals for the District of Columbia Circuit issued a per curium order denying the motion filed by the National Association of Manufacturers (“NAM”) to stay the SEC’s Conflict Minerals Rule. The court previously held on April 14 that it is unconstitutional for the Rule to require companies to declare which of their products “have not been found to be DRC Conflict Free.” NAM had argued that a stay was warranted because, among other things, it would be able to demonstrate in later proceedings that the court should vacate the Rule as purposeless. NAM also argued that reporting issuers would suffer substantial harm in the form of billions of dollars of unrecoverable compliance costs, if they are required to comply with a rule that the court ultimately overturns.

The immediate impact of the court’s order is that the Rule’s June 2, 2014, reporting deadline remains in effect for covered issuers; however, pursuant to the SEC’s May 2, 2014, order partially staying its Conflict Minerals Rule, covered companies are not required to state “DRC conflict free”, “DRC Conflict Undeterminable” or “have not been found to be ‘DRC Conflict Free’” with respect to their covered products. Additionally, unless a covered company elects to describe its products as “DRC Conflict Free”, an independent private sector audit is no longer required.

We continue to monitor events closely and will provide additional updates as they become available, but do not anticipate any significant developments prior to June 2.