November 18, 2014 / 5:30 PM / 6 years ago

U.S. court to rehear Africa "conflict minerals" disclosure rule

WASHINGTON, Nov 18 (Reuters) - A U.S. court on Tuesday agreed to reconsider the free-speech aspects of a federal regulation requiring publicly-traded companies to disclose if their products contain “conflict minerals” from a war-torn part of Africa.

The U.S. Court of Appeals for the District of Columbia Circuit said in an order it would grant a request by the U.S. Securities and Exchange Commission and rehear the case. In the court’s first ruling on the issue in April, a three-judge panel threw out the disclosure requirement.

The SEC rule mandates that manufacturers that are public corporations must say whether any tantalum, tin, gold or tungsten in their products might have come from the troubled Democratic Republic of Congo

Business groups, including the National Association of Manufacturers, say the rule violates companies’ free speech rights under the U.S. Constitution’s First Amendment 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.

The case is National Association of Manufacturers v. SEC, U.S. Court of Appeals for the District of Columbia Circuit, No. 13-5252. (Reporting by Lawrence Hurley; Editing by Kevin Drawbaugh and Andrew Hay)

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