24 07 13 Bloomberg – SEC Rule on Listing ‘Conflict Minerals’ Upheld by U.S. Court

     “Finding no problems with the SEC’s rulemaking and
disagreeing that the ‘conflict minerals’ disclosure scheme
transgresses the First Amendment, the court concludes that
plaintiff’s claims lack merit,” U.S. District Judge Robert
Wilkins wrote, dismissing a challenge to the reporting
requirement brought by three business groups.
     The rule is part of the 2010 Dodd-Frank Act overhauling
securities markets and applies to certain minerals, including
gold, tin, tungsten and tantalum, mined in the Democratic
Republic of the Congo and neighboring countries. It’s intended
to help ensure that use of the minerals doesn’t benefit armed
groups responsible for extreme violence in the region.
     The National Association of Manufacturers, the Business
Roundtable and the U.S. Chamber of Commerce claimed in their
suit that being required to publish conflict-mineral disclosures
on their own websites is compelled speech that violates the
First Amendment. In writing the rule, the agency was arbitrary
and capricious, they said.
     “We are reviewing the court’s decision and our options
going forward,” Jamie Hennigan, spokesman for the National
Association of Manufacturers, said in an e-mail. “We continue
to believe this rule, while well intentioned, is unsupported by
the agency’s own record.”

                      ‘Appropriate Manner’

     “We are pleased the court found that the commission acted
reasonably in drafting this congressionally mandated rule and
conducted its economic analysis in an appropriate manner,” SEC
spokesman Kevin Callahan said in an e-mailed statement.
     The measure applies to companies with SEC-reporting
obligations for whom the minerals are “necessary to the
functionality or production” of an item they manufacture, the
agency said in an Aug. 22 statement announcing the rule’s
adoption.
     It applies to Apple Inc., Boeing Co. and thousands of other
U.S.-listed manufacturers whose products use the metals.
     Wilkins’s ruling follows a July 2 district court decision
throwing out another SEC rule, also required by Dodd-Frank, that
mandated disclosure of payments by about 1,100 public oil,
natural gas and mining companies to foreign governments.
     That regulation was intended to increase transparency and
thwart corruption by giving citizens of resource-rich countries
information about their governments’ oil and mineral revenue.

                          Not Convinced

     The district court in that case said it wasn’t convinced
that public disclosure of full reports of payments was required
by law.
     The conflict minerals case is National Association of
Manufacturers v. U.S. Securities and Exchange Commission,
12-1422, U.S. Court of Appeals for the District of Columbia
Circuit (Washington).
     The payments case is American Petroleum Institute v. U.S.
Securities and Exchange Commission, 12-cv-01668, U.S. District
Court, District of Columbia (Washington).