NAM’s Challenge to Conflict Minerals Disclosure Requirement Comes to an End

This month, a federal court concluded the National Association of Manufacturers(NAM) legal challenge to one problematic provision requiring disclosure of supply chain information about the use of “conflict minerals” in manufactured products.

The NAM has had a long history of defending the rights of manufacturers against government-compelled speech that violates the First Amendment. Restrictions on commercial speech are carefully reviewed by the courts to ensure that they are narrowly tailored to achieve a substantial government interest, such as preventing fraud or deceptive sales campaigns. But the speech that was mandated by the government under this law imposed an additional burdenrequiring affirmative research, investigation and analysis, recordkeeping and finally reporting to the Securities and Exchange Commission (SEC).

After several years of litigation, the federal appeals court in the District of Columbia ruledtwicethat the disclosure requirement is unconstitutional. Being forced to label a product as “conflict free” or not ethically taints and stigmatizes companies, many of which simply cannot determine the ultimate source of trace minerals from smelters around the world. Neither the government nor Amnesty International appealed this ruling to the Supreme Court, and on April 3, the trial court closed the case, declaring Sec. 1502 of the Dodd-Frank Act and the SEC regulation on conflict minerals unconstitutional to the extent that the statute and the rule require regulated entities to report to the Commission and to state on their websites that any of their products have not been found to be ‘DRC conflict free.’”

Our victory in this case has been and will continue to be used to help the NAM challenge other government-mandated speech, such as shop floor poster requirements, misleading product labeling laws and excessive disclosures of third-party allegations. And yet, the closing of this case and the subsequent determination by the SEC Division of Corporation Finance that it will not recommend enforcement action to the SEC if companies file conflict minerals reporting disclosures under certain provisions do not go far enough. The NAM continues to strongly urge the SEC to consider implementing a full suspension of the conflict minerals rule.

Quentin Riegel

Quentin Riegel

Vice President and Deputy General Counsel at National Association of Manufacturers
Quentin Riegel is the vice president and deputy general counsel for the National Association of Manufacturers (NAM). As part of the Manufacturers' Center for Legal Action, Mr. Riegel works to strengthen the NAM's ability to promote manufacturing policy objectives through litigation. He also serves as general counsel for the Council on Competitiveness, a group of CEOs, university presidents and labor leaders working to ensure America's competitiveness. Mr. Riegel has been in the General Counsel's office since 1980.
Quentin Riegel

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