Conflict Minerals Ruling To Be Reconsidered

A Washington appeals court agreed to rehear a ruling that said requiring companies to disclose the use of conflict minerals violates their free speech rights.

The full panel of the United States Court of Appeals in Washington will reconsider a case decided in April by a three-judge panel. The full court granted a request for the re-hearing from the U.S. Securities and Exchange Commission.

The SEC conflict mineral rule, part of the 2010 Dodd-Frank law overhauling financial regulation, obligates companies, including manufacturers and distributors of electrical products, to disclose whether any minerals mined in war-torn central African countries are used in their products.

The dispute over the minerals disclosure is one a series of recent challenges by businesses to government regulation on the grounds that the rules impinge First Amendment rights.

Business groups, including the National Association of Manufacturers, say the rule violates companies’ free speech rights by in essence forcing them to condemn their own products.

The main reason for the rehearing is that the appeals court, in a July decision, clarified its approach to cases involving free speech challenges to government rules mandating company statements.

In the July ruling, the court rejected a food industry challenge to a federal meat labeling rule, saying there was no free speech violation.

The ruling was a precedent setting decision by the entire court that established the legal rationale for future cases.

The bulk of the SEC rule is now in effect, including a requirement that companies conduct due diligence on their supply chains to determine minerals’ origins. The part that the appeals court threw out required companies to state that their products are not “DRC conflict free” if their internal investigations lead them to that conclusion.

A three-judge panel will on a date yet to be scheduled hear another round of oral arguments in the case before issuing a new ruling.

In granting the re-hearing, the court asked both sides to address how other rulings involving government-mandated disclosure, including a recent decision on country-of-origin-labeling of meat, would affect the conflict minerals case.

The case is National Association of Manufacturers v. SEC, 13-5252, U.S. Court of Appeals for the District of Columbia.

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