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Conflict Mineral Court Ruling Update

Thursday August 20, 2015

See below The Franklin Partnership's update on the ongoing appeals regarding Conflict Minerals Rules (Section 1502 Dodd Frank).

Background - PMPA was an Amici on the original appeal of this rule. The courts agreed with our first amendment claims, but they left the balance of the rule intact. As a result, we continue to have to go through the Conflict mineral diligence and reporting, if we provide parts  to companies covered by the SEC rule.

The update from Franklin Partnership reports that the original decision was upheld by the U.S. Court of Appeals for the D.C. Circuit. They found that publically traded companies covered by the rule cannot be compelled to self- declare that their products do not contain conflict minerals sourced from DRC or surrounding countries.  The basis that they upheld was the first amendment rights of the companies would be violated by compelling them to so declare.

However, this Appeals court ruling does not address the expensive and time consuming requirements to investigate and report sourcing of the 3T’s plus G required by the Rule. We can expect to see more court appeals  in the future according to the Franklin partnership report.

Bottom line for our shops - we still need to investigate and report  if the products that we provide to a Dodd Frank publically traded   “covered company”  contain Tin, Tungsten, Tantalum, or Gold.  For more information on how to comply,  get our guidance document : Conflict Minerals Reference Guide

Franklin Partnership Update on Conflict Minerals:

On Tuesday, August 18, 2015, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit reaffirmed its previous ruling that the U.S. Government cannot compel publicly traded companies to self-declare that their products do not contain minerals sourced from the Democratic Republic of Congo (DRC) or surrounding countries. This ruling upholds an April 2014 Court decision that forcing companies to publicly state they are “DRC conflict free” or “DRC Conflict Undeterminable” violates the First Amendment. While this is an important ruling affirming our coalition’s lawsuit, it does not affect the U.S. Securities and Exchange Commission’s (SEC) authority to require due diligence and reporting of tin, tungsten, tantalum, or gold (3TG).

The legal challenges from both sides are far from complete. We expect the SEC to appeal the ruling and seek a hearing before the full Court of Appeals, likely taking several months and continuing into 2016. The fundamental issue of how and why the government compels speech is destined for the U.S. Supreme Court; which we believe will ultimately have to decide the First Amendment argument of publicly declaring oneself “conflict free.”

On the same day as the August 18th decision, the nonpartisan U.S. Government Accountability Office (GAO) released a report showing that 67 percent of companies who filed conflict mineral reports could not determine whether their 3TG came from the covered “conflict” countries. Of the remaining third able to trace their minerals back to a source, only four percent declared the materials originated in the DRC or nearby countries.

Despite the ruling and continued victory on First Amendment grounds, downstream suppliers who have received conflict minerals requests from their customers should continue to comply and submit information as done in the past. Sources indicate to us that regardless of how courts ultimately decide on the actual SEC Conflict Mineral Rule, the vast majority of publicly traded companies with a compliance program in place will likely continue to operate as such and require certifications/reports from their suppliers. The companies believe that even if the U.S. Government does not compel them to continue this action, the general public and other threats to their brand name will.