On August 18, 2015, the Court of Appeals for the DC Circuit upheld its previous decision against the Security Exchange Commission’s disclosure requirement under the Conflict Minerals Regulations. The full opinion is here. Under Section 1502 of the Dodd-Frank Act, publicly owned companies must disclose to the SEC and on their websites whether the minerals tantalum, tin, tungsten, or gold used in finished products are sourced from conflict-free mines in the Democratic Republic of the Congo. The court decision struck this part of the regulation stating that the disclosure requirement violated the First Amendment. Specifically, the Court stated that the requirement to disclose whether the minerals are sourced from conflict-free mines is government forced speech.
In the law, to compel a company to certain speech requires a review of the government interest behind the requirement and whether the requirement effectively meets the stated interest. The Court determined that the disclosure requirement found in the Conflict Minerals regulations did not meet the elements for the compelled speech. The government interest to “ameliorate the humanitarian crisis in the DRC” was a sufficient interest. However, the SEC was unable to produce evidence showing that that the disclosure statements of whether products were free of conflict minerals would have achieved this objective. Consequently, the Court held that the disclosure requirement did not meet the objective and violated the First Amendment right to free speech. The Court’s decision strikes only the disclosure requirement. Publicly traded companies are still required to review its supply chain and determine whether the minerals it sources comes from conflict-free mines in the DRC and present the findings to the SEC.