U.S. judge narrows probe into leaks to Bloomberg reporters

By Tom Hals

WILMINGTON, Del (Reuters) - A U.S. judge reversed course on Friday and narrowed an ongoing investigation seeking the identities of sources who leaked confidential information about bankrupt mining company Molycorp to reporters at Bloomberg LP.

U.S. Bankruptcy Judge Christopher Sontchi said he realized he went too far in trying to protect a confidential mediation process by ordering last week that 123 people disclose their communications with Bloomberg regarding Molycorp.

"I think that this order as currently drafted is overly broad and needs to be narrowed," Sontchi said after a hearing in Wilmington, Delaware.

The original order required declarations describing all contacts with Bloomberg reporters over the prior 60 days. Sontchi said that should be narrowed to require people to disclose what they know about leaks reported in three articles.

In addition, the declarations should be limited to information provided to Jodi Xu Klein, Steven Church and Fion Li, who reported the articles published on Dec. 11 and Dec. 15 in 2015 and Jan. 5.

"We are encouraged by today's ruling - it goes a long way in allowing the press to do its job," said John Micklethwait, Bloomberg's editor in chief, in a statement. He said when reporters cannot talk to sources confidentially, the public is deprived of news on matters of significant interest.

The articles reported on the failure of a confidential mediation ordered by Sontchi, and on bidding interest in Molycorp's assets, including an idled mine in Mountain Pass, California.

The mine was once among the world's largest for rare earths, which are chemical elements used in cell phones and military equipment.

Sontchi also appeared to suggest the original order covered too lawyers, bankers and advisers. "Not every one of the 123 has to submit a declaration."

Sontchi acknowledged that last week he was too focused on the threat posed by the leaks to the integrity of the court process and readily accepted the order because no party opposed it.

He directed the parties to work out a new process for submitting declarations about the leaks. Declarations that were submitted to the court earlier this week should be destroyed without being unsealed, he said.

The Reporters Committee for Freedom of the Press had written Sontchi, expressing concerns about the original order. Gregg Leslie, the group's legal defense director, said judges typically look into leaks only if they jeopardize the integrity of a trial or a defendant's constitutional rights.

(Editing by Jeffrey Benkoe, Bernard Orr)