District Court Makes Decision On Conflict Minerals Reporting

The NAED is working with the National Association of Manufacturers in a lawsuit over the conflict minerals reporting requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

A part of that act requires certain U.S. and foreign companies to report the use of so-called “conflict minerals” from the Democratic Republic of the Congo or adjoining countries.  The requirements will force manufacturers and distributors who are not subject to SEC reporting to maintain extensive records of their source materials. The NAM believes compliance with the Conflict Minerals Act could cost manufacturers between $9 and $16 billion dollars a year.

On Tuesday, April 15, the Washington D.C. District Court issued an opinion in the lawsuit filed by the NAM over the Conflict Minerals Act.

While we wait for a final decision, you are encouraged to visit our online forum. NAED’s Vice-President of Government Affairs Ed Orlet will be posting regular updates there as we receive them.

Meanwhile, here is the letter the NAM sent to its task force members.

To NAM Conflict Minerals Task Force Members:

As you know, yesterday the U.S. Court of Appeals for the DC Circuit issued its opinion in the conflict minerals case, NAM v. SEC.

While we are very pleased with our hard fought victory on First Amendment grounds, it will take some time to sort out the practical impact for covered companies and much will depend on the actions of the SEC in response to the ruling. The court upheld the SEC’s authority to require due diligence and reporting to the SEC; however, the public reporting aspects of the rule were found to be unconstitutional compelled speech under the First Amendment. Assuming the court does not sua sponte stay the rule until the reporting requirements can be worked out by the SEC, we may file a motion for a stay with the court. The SEC may also decide to delay the effective date of the rule pending a rework of the reporting requirements. We are hopeful that they will do so. A lot depends on how they interpret the constitutional deficiencies of their rule. A very narrow reading could lead them to conclude that it is simply the magic words “Not DRC conflict free” that is the problem. A broader reading would lead them to conclude that the whole public reporting aspect of the rule is problematic and needs to be revisited through notice and comment rulemaking.

Further complicating this situation is the fact that there is another case in the DC Circuit concerning First Amendment limits on compelled commercial speech that will be heard en banc on May 19th. American Meat Institute v. Dept. of Agriculture deals with country of origin labeling. It is possible the court could sua sponte decide to hear our case en banc, as it did in American Meat Institute. So we may find in the next day or two that we are facing an en banc rehearing on our First Amendment issue.

We expect this situation to begin to clarify in the next couple of days and we will keep you apprised as this all develops.


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