(Adds background on rule, opposition)
By Sarah N. Lynch
WASHINGTON, May 14 (Reuters) - A U.S. appeals court on Wednesday denied a request by industry groups to delay the implementation of a new rule that requires companies to determine if their products may contain “conflict minerals” from a war-torn part of Africa.
Wednesday’s decision means that companies will have to start complying with parts of the Securities and Exchange Commission’s new rule on June 2.
It also marks a blow to the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable, the three groups that had challenged the rule and most recently sought to have it delayed.
The SEC’s conflict minerals rule is a requirement from the 2010 Dodd-Frank Wall Street reform law.
It requires publicly traded manufacturers to determine if any tantalum, tin, gold or tungsten used in their products may have originated from the conflict-ridden Democratic Republic of Congo (DRC) and disclose the findings to investors.
In April, the U.S. Appeals Court for the District of Columbia struck down a narrow part of the rule on free speech grounds, saying companies should not be forced to say that their products are not “conflict free.”
The rest of the rule, however, was left intact.
In recent guidance released by the SEC, the agency said it expects companies to continue to conduct the proper due diligence to determine the origin of the minerals and file the reports with the commission.
However, companies will be relieved from certain audit requirements in the rule and also will not be forced to state whether or not the products are conflict free.
The trade groups that challenged the rule had hoped the court would agree to stay the rule, and argued the SEC should not proceed with implementing part of the “costly” measure without first seeking public input. (Reporting by Sarah N. Lynch; Editing by Steve Orlofsky and Dan Grebler)