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May 29, 2014

Appeals Court Should Reconsider Decision in Conflict Minerals Rule Lawsuit

Citing First Amendment, Court Struck Down Requirement That Corporations Describe Their Products as Having Not Been Found to Be Conflict-Free

WASHINGTON, D.C. – The U.S. Court of Appeals for the District of Columbia Circuit should reconsider a decision striking down on First Amendment grounds a requirement that corporations publicly report whether their products contain certain minerals, the trade in which is fueling violence in the Democratic Republic of the Congo (DRC), according to a petition filed today with the court.

Amnesty International filed the petition and is represented by Public Citizen attorneys.

Industry groups in 2012 challenged the Securities and Exchange Commission’s (SEC) conflict minerals rule, which requires certain companies that file reports with the SEC to investigate and publicly disclose whether their products contain conflict minerals from the DRC or adjoining countries and whether the trade in those minerals helps finance armed groups contributing to the conflict. Amnesty International is an intervenor in the case in support of the SEC.

On April 14, a panel of the D.C. Circuit upheld the conflict minerals rule against most of the challenges, including a challenge to the SEC’s analysis of the rule’s costs and benefits. However, the court of appeals invalidated a portion of the rule requiring that companies use specific language when reporting that their products have “not been found to be DRC-conflict free.” The court of appeals held that requiring this specific descriptor violates regulated entities’ First Amendment right against compelled commercial speech.

Today’s petition by Amnesty International also asks the court to wait until the resolution of another case about a compelled commercial disclosure before revisiting the conflict minerals rule decision. In American Meat Institute v. USDA, the meat industry is challenging a country-of-origin labeling rule on First Amendment grounds. In March, a panel of the D.C. Circuit upheld the rule, concluding that the government could constitutionally require the commercial disclosure because it was reasonably related to a permissible government purpose. On April 4, the court ordered a rehearing of that decision by the full court, and the full court heard argument on May 19.

“A rehearing on the conflict minerals rule case is necessary to ensure consistency with other rulings on this issue, including decisions by numerous appellate courts that have upheld similar commercial disclosure requirements,” said Julie Murray, one of the Public Citizen attorneys handling the case. “The panel’s decision here, if not reconsidered, would undermine the government’s ability to require important commercial disclosures that inform the decisions of investors and consumers.”

For nearly two decades, the DRC has been in the grip of armed conflict that has caused the suffering of millions. An important source of funding for armed groups in the DRC is the minerals trade, which supplies tin, tantalum, tungsten and gold that end up in popular consumer products. In 2010, Congress acted to lessen the use of conflict minerals fueling violence in the DRC by including in the Dodd-Frank Wall Street Reform and Consumer Protection Act a requirement that certain companies that file reports with the SEC investigate and disclose publicly whether their products rely on conflict minerals from the DRC or adjoining countries and whether the trade in those minerals helps finance armed groups contributing to the conflict. The SEC’s conflict minerals rule implements that statutory requirement.

View more information on the case.

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