New Court Ruling Does Not Alter Conflict Minerals Law

On Aug. 18, a federal appeals court again ruled that a provision in the Dodd-Frank act requiring public companies to declare whether their minerals are conflict free violates the Constitution, but it otherwise left the rule intact.

A three-judge panel of the D.C. Circuit Court of Appeals reaffirmed its 2014 decision that said mandating public companies to use the conflict-free wording—as required by Sect. 1502 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act—represents compelled speech that violates the First Amendment.   

The Securities and Exchange Commission had asked for a rehearing of the April 2014 ruling, after the full court of appeals ruled on a similar case.

But the 2-1 majority simply reaffirmed its belief that the conflict-free wording contained ideological overtones, as not everyone agrees minerals fuel conflict. The majority opinion approvingly cited an argument from the National Association of Manufacturers, which has challenged the rule, that the designation requires companies to “publicly condemn” themselves.

Despite this, the bulk of the provision remains intact, says Cecilia Gardner, president and CEO of the Jewelers Vigilance Committee.

The ruling means “that little piece of compelled speech is unconstitutional,” she says. “Companies still have to file their reports. The conflict minerals rules still apply.”

The law went into effect in May 2014. As gold and tungsten are among the covered minerals, public jewelry companies had to file reports on their mineral supply chains.

JCK News Director