District Court Upholds SEC's Conflict Minerals Rule
The U.S. District Court for the District of Columbia upheld on July 23 the legality of the Security and Exchange Commission’s 2012 conflict minerals rule, in the face of a challenge brought by the National Association of Manufacturers, the Chamber of Commerce, and Business Roundtable. The regulation, which took effect in November 2012, requires users of minerals that are necessary to the functionality or production of a product to disclose annually whether any of those minerals originated in the Democratic Republic of the Congo or an adjoining country (see 12082308).
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The business groups attacked the SEC’s purported failure to conduct an adequate cost-benefit analysis, as well as several specific provisions of the regulation, including the lack of a de minimis provisions, the standard for country of origin, and the rule’s coverage of contract manufacturers. They also said the requirement that companies publish their conflict minerals disclosures on their own websites compels speech in violation of the First Amendment. But the District Court said the SEC reasonably interpreted the applicable laws, including the underlying Dodd-Frank Act. And the court rejected the freedom of speech challenge too, because the disclosure requirement advances the valid government interest of ending conflict in the Democratic Republic of the Congo.