On May 14, 2014, the US Court of Appeals for the District of Columbia Circuit issued an order denying a motion by several business groups for a complete stay of the conflict minerals rule, Rule 13p-1 under the Exchange Act. With the issuance of the order denying the stay, it appears that the first filings under the conflict minerals rule must be made as scheduled by June 2, 2014. In accordance with SEC guidance and a partial stay of the requirements of the conflict minerals rule issued by the SEC, companies may make their first conflict minerals filing with certain modifications. These modifications are designed to account for the April 14, 2014 Court of Appeals ruling that certain requirements of the rule as adopted by the SEC violate the First Amendment to the US Constitution.

On April 14, 2014, the Court of Appeals ruled on a legal challenge brought by the business groups against the conflict minerals rule. The ruling held that the rule violates the First Amendment to the US Constitution to the extent it requires companies to disclose that their products have "not been found to be 'DRC conflict free.'" As adopted by the SEC, the rule required this disclosure under certain circumstances. The Court of Appeals rejected several other arguments challenging the rule as arbitrary and capricious under the Administrative Procedure Act and Exchange Act. The Court of Appeals remanded the action to District Court for further proceedings consistent with the ruling. However, the ruling did not stay the conflict minerals rule, and it was clear that the proceedings on remand would not be resolved before the first filing deadline under the rule (June 2, 2014). For more information on the holding, see Legal Update, Conflict Minerals Challenge: DC Circuit Strikes Disclosure Provision and Upholds Rest of Rule.

On April 29, 2014, Keith Higgins, director of the SEC Division of Corporation Finance, released a statement describing the SEC staff's expectations for companies reporting under the conflict minerals rule in light of the Court of Appeals' April 14, 2014 ruling. The guidance:

For more information on Director Higgins' statement, see Legal Update, Companies Must Report under Conflict Minerals Rule with Modifications: SEC Staff.

Also on April 29, 2014, the business groups filed with the SEC a motion to stay the implementation of the conflict minerals rule and a brief in support of the motion. The motion requested that the SEC act on the motion by May 1, 2014 and indicated that the business groups intended to seek a stay from a court if the stay was denied by the SEC. On May 2, 2014, the SEC issued a formal order partially staying the conflict minerals rule. Consistent with Director Higgins' April 29, 2014 statement, the order only stays the requirements of the conflict minerals rule held to violate the First Amendment. The order also denied the business groups' motion to stay the conflict minerals rule in its entirety. In response, on May 5, 2014, the business groups filed their emergency motion requesting a complete stay of the rule with the Court of Appeals.

For more information on the conflict minerals rule, see Practice Note, Conflict Minerals Diligence.