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The U.S. Court of Appeals for the District of Columbia Circuit declared on August 18 that the U.S. Securities and Exchange Commission (SEC) cannot force public companies to declare whether their products may contain “conflict minerals.”
The 2-1 ruling by the Court of Appeals upheld their April 2014 finding that stayed part of the reporting requirements because they violate free speech. The ruling still largely upholds the majority of the SEC’s conflict minerals rules, which went into effect last year. Companies still must conduct due diligence to try and track the origins of minerals including tantalum, tin, gold or tungsten and file reports to the SEC with their findings, but they are not required to state whether or not the products are deemed “conflict free.”
The decision on Tuesday was the second time that the three-judge panel has reviewed the regulator’s conflict minerals rule. The panel issued the same findings In April 2014, but the SEC asked for a re-hearing, after the U.S. appeals court later upheld another federal regulation requiring companies to label the origins of meat. In Tuesday’s ruling, the court found that the meat labeling case is distinct from the conflict minerals rule. The court also questioned whether the SEC’s rule would truly help diminish the humanitarian crisis, saying such an impact is “entirely unproven and rests on pure speculation.”
An SEC spokeswoman said the agency is reviewing the decision. The agency still has the right to appeal yesterday’s ruling.