[Federal Register Volume 79, Number 88 (Wednesday, May 7, 2014)]
[Notices]
[Page 26297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-10437]
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SECURITIES AND EXCHANGE COMMISSION
[File No. S7-40-10; Release No. 72079]
Securities Exchange Act of 1934; In the Matter of Exchange Act
Rule 13p-1 and Form SD; Order Issuing Stay
May 2, 2014.
On April 14, 2014, the United States Court of Appeals for the
District of Columbia Circuit issued a decision in National Association
of Manufacturers, et al. v. SEC, et al., No. 13-5252 (D.C. Cir. April
14, 2014). That case involved a challenge to Exchange Act Rule 13p-1
and Form SD.\1\ The rule and form were adopted pursuant to Section
13(p) of the Securities Exchange Act of 1934, which was added by
Section 1502 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act.\2\ The Court of Appeals rejected all of the challenges
to the rule based on the Administrative Procedure Act and the Exchange
Act. The Court of Appeals, however, concluded that Section 13(p) and
Rule 13p-1 ``violate the First Amendment to the extent the statute and
rule require regulated entities to report to the Commission and to
state on their Web site that any of their products have `not been found
to be `DRC conflict free.' ' '' \3\ In so concluding, the Court of
Appeals specifically noted that there was no ``First Amendment
objection to any other aspect of the conflict minerals report or
required disclosures.'' \4\ In an order issued concurrently with the
decision, the Court of Appeals withheld the issuance of its mandate
until seven days after disposition of any timely petition for rehearing
or petition for rehearing en banc. As a result, the earliest date on
which the Court of Appeals's mandate is likely to issue is June 5,
2014. Under Rule 13p-1, the first reports are due to be filed on June
2, 2014.
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\1\ Conflict Minerals, 77 FR 56,274 (Sept. 12, 2012) (codified
at 17 CFR 240, 249b).
\2\ Public Law 111-203, 124 Stat. 1376, 2213 (2010).
\3\ Slip. Op. at 23.
\4\ Slip. Op. at 17 n.8.
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Section 705 of the Administrative Procedure Act provides that an
agency may postpone the effective date of an action taken by it pending
judicial review when it finds that ``justice so requires.'' 5 U.S.C.
705. In light of the Court of Appeals's decision, the Commission finds
that it is consistent with what justice requires to stay the effective
date for compliance with those portions of Rule 13p-1 and Form SD that
would require the statements by issuers that the Court of Appeals held
would violate the First Amendment. Among other things, a stay of those
portions of the rule avoids the risk of First Amendment harm pending
further proceedings. Moreover, limiting the stay to those portions of
the rule requiring the disclosures that the Court of Appeals held would
impinge on issuers' First Amendment rights furthers the public's
interest in having issuers comply with the remainder of the rule, which
was mandated by Congress in Section 1502 and upheld by the Court of
Appeals.
Accordingly, it is ordered, pursuant to Section 705 of the
Administrative Procedure Act, that the effective date for compliance
with those portions of Rule 13p-1 and Form SD subject to the Court of
Appeals's constitutional holding are hereby stayed pending the
completion of judicial review, at which point the stay will terminate.
For more detailed guidance regarding compliance, issuers should refer
to the statement issued by the staff on April 29, 2014, and any further
guidance subsequently provided.\5\
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\5\ On April 30, 2014, the National Association of
Manufacturers, the Chamber of Commerce, and Business Roundtable
filed a motion requesting that the Commission stay Rule 13p-1 in its
entirety. In accordance with the above order, the motion is denied.
By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-10437 Filed 5-6-14; 8:45 am]
BILLING CODE 8011-01-P