By Cydney Posner

As predicted, the U.S. Chamber of Commerce and National Association of Manufacturers have filed a lawsuit challenging the SEC's conflict minerals rules. The litigation requests that the rules be modified or set aside. In response, the SEC observed: "While the petitioners did not state a basis for a challenge in their filing, we believe our legal interpretation and economic analysis are sound and we look forward to defending the rule that Congress directed us to write." The plaintiff groups argued in a public statement that "though the measure was well-intentioned, it ‘is not an effective approach to this complex issue….The final conflict mineral rule imposes an unworkable, overly broad and burdensome system that will undermine jobs and growth and may not achieve Congress's overall objectives.'" The case is National Association of Manufacturers v. U.S. Securities and Exchange Commission, 12-1422, U.S. Court of Appeals for the District of Columbia Circuit (Washington).

Companies are not required to file Form SD in compliance with the rules until May 31, 2014. However, the efforts required to comply are extensive and time-consuming and, as a result, many companies have already commenced their due diligence efforts. When the proxy access rules were challenged in the courts, the SEC stayed effectiveness of the rules (in response to a petition filed by the plaintiffs) pending resolution by the D.C. Circuit of the petition for review filed by the two trade organizations. The question now is whether the SEC will do the same in connection with the conflict minerals rules. One difference here is that the conflict minerals rules were implemented under direction from Congress, while the proxy access rules were only authorized by Congress.  Will that make a crucial difference?

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