SEC Acting Chairman Michael S. Piwowar issued a “Statement on the Commission’s Conflict Minerals Rule” and another statement titled “Reconsideration of Conflict Minerals Rule Implementation.”
Chairman Piwowar reviewed the history of the litigation and resulting SEC guidance noting “In April 2014, the Court of Appeals for the D.C. Circuit held that a portion of the disclosure required by the Commission’s Conflict Minerals Rule violated the First Amendment. Shortly thereafter, the then-Director of the Division of Corporation Finance issued guidance regarding compliance with the Rule in light of the court’s decision and the Commission issued an order staying the effect of the compliance date for those portions of the rule found to be unconstitutional. The case was subsequently remanded to the district court for further consideration. The litigation remains ongoing and the staff’s guidance remains in effect.”
While a new judge has been assigned to the district court case, as of yesterday there has been no activity on the docket.
Chairman Piwowar also noted “While visiting Africa last year, I heard first-hand from the people affected by this misguided rule. The disclosure requirements have caused a de facto boycott of minerals from portions of Africa, with effects far beyond the Congo-adjacent region. Legitimate mining operators are facing such onerous costs to comply with the rule that they are being put out of business. It is also unclear that the rule has in fact resulted in any reduction in the power and control of armed gangs or eased the human suffering by many innocent men, women, and children in the Congo and surrounding areas. Moreover, the withdrawal from the region may undermine U.S. national security interests by creating a vacuum filled by those with less benign interests.”
As a result, Chairman Piwowar has directed the staff to reconsider whether the 2014 guidance on whether the conflict minerals rule is still appropriate and whether any additional relief is appropriate. Chairman Piwowar is soliciting comments from all interested parties in the next 45 days.
Public companies are advised to continue preparation for filing upcoming conflict minerals reports unless and until the SEC issues new guidance. Suppliers should also note that even if the SEC were to change its stance, some companies that have invested in responsible supply chain initiatives are likely to continue to require some sort of certification.