On 18 August 2015, a divided panel of the US Court of Appeals for the District of Columbia Circuit, in National Association of Manufacturers v. SEC ("NAM"), upheld its earlier ruling that requiring companies to describe their products as having "not been found to be 'Democratic Republic of the Congo ("DRC") conflict free'" is unconstitutional, thereby invalidating a part of the SEC's conflict minerals rule.
This most recent decision means nothing changes for SEC reporting companies that file conflict minerals disclosure on Form SD. Following the D.C. Circuit's initial decision in NAM, the SEC's Division of Corporation Finance had issued a statement that it expected reporting companies to continue to comply with the provisions of the conflict minerals rule that were upheld by the court. However, no company is required to describe its products as "DRC conflict free," having "not been found to be 'DRC conflict free,'" or "DRC conflict undeterminable". An independent private sector audit will not be required unless a company voluntarily elects to describe a product as "DRC conflict free" in its Conflict Minerals Report. This has been the status for the last two conflict minerals reporting periods (calendar years 2013 and 2014), and, unless the SEC changes the position it took following the D.C. Circuit's first decision, companies should expect to continue to prepare their conflict minerals disclosure as they have in the past.
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