Earlier this month, the U.S. Court of Appeals for the D.C. Circuit Court held oral arguments on whether the requirement that publicly traded companies disclose the use of certain minerals from certain African countries is a violation of the First Amendment and whether the SEC took arbitrary actions when adopting the rule.
A trio of business groups challenged the Securities and Exchange Commission’s conflict minerals rule, but the district court upheld the rule. The rule, meant to cut off funding for those perpetrating human rights abuses, requires companies to disclose whether their products contain tin, tunsten, tantalum, or gold from the Democratic Republic of Congo and its neighbors, but the business groups question whether the rule would help the African people and argue that complying with the rule would cost companies billions of dollars. They also argue that the SEC could make compliance less of a burden by exempting those companies who use only trace amounts of the minerals in question. The First Amendment argument is that the rule forces them to criticize their own products; during the oral arguments, the panel seemed concern that making companies share this information could be a “slippery slope.” The SEC argues that it is following its Congressional mandate by creating the rule.