On April 14, the U.S. Court of Appeals for the District of Columbia Circuit struck down portions of a Securities and Exchange Commission (SEC) rule requiring companies to disclose whether their products contain conflict minerals. The new ruling indicates that such disclosures violate companies’ right to freedom of speech under the First Amendment.

The previous SEC rule, which stemmed from the 2011 Dodd-Frank Wall Street Reform and Consumer Protection Act, aimed to curb violence in the Democratic Republic of the Congo by discouraging companies from using minerals sourced in that region of Africa such as gold, tantalum, tin, and tungsten. Purchasing these minerals may directly or indirectly finance armed groups in the region, possibly contributing to outbreaks of violence and human rights violations. Opponents of the rule argued that the specific disclosures were overly cumbersome since many of their products require only very small quantities of the minerals in question.

The new ruling strikes down disclosures relating to specific products, but upholds portions of the rule requiring companies to investigate whether their products contain conflict minerals and file public reports on their findings. Companies would not, however, be required to list the specific products that contain the minerals.

Groups on both sides of the issue expressed confidence that the SEC will find alternate methods for increasing transparency in extractive industries.

Sources: E&E News, Wall Street Journal

Updated 5/5/14