Skip Navigation

The First Amendment Conflict Over Conflict Minerals

The D.C. Circuit takes aim at corporate disclosure.

September 14, 2015

For the past few years, the D.C. Circuit has been wrestling with a First Amendment challenge to a Dodd-Frank provision which required manufacturers to report to the SEC and on their webpages whether their products contained so-called “conflict minerals.”  Here “conflict minerals” are tin, gold, tungsten and tantalum if they were mined in the Democratic Republic of the Congo (DRC) or its neighboring countries including Rwanda.  Congress called them “conflict minerals” because the sale of these minerals has funded civil and cross border armed conflicts in the region.

The manufacturers in National Association of Manufacturers (NAM) v. SEC argued, among other objections, that labeling items as “conflict free” or “not conflict free” in Securities and Exchange Commission (SEC) filings and on their webpages violated their First Amendment rights to not be compelled by the government to speak.

The SEC won at the district court level. A split appellate panel ruled in favor of NAM in 2014.  Then subsequent precedent in the D.C. Circuit called that ruling into question. So the D.C. Circuit reheard the case and in August 2015 came to the same conclusion, but for a slightly different reason.  But once again, a split three judge panel concluded that yes, to force the manufacturers to call tin, gold, tungsten and tantalum “conflict minerals” is a violation of their free speech rights.

NAM v. SEC is troubling for a number of reasons.  First the rhetoric in the case is rather bombastic. At points it quotes George Orwell.  The Orwell quote, from Nineteen Eighty-Four no less, likens the securities regulations at issue to “[a] famous example of governmental redefinition …:




This is all a little odd since Congress provided a statutory definition of conflict minerals which simply turns on the mineral being from a certain geographic location.  It’s not as if the Congress was urging the companies at issue to say anything but the truth.

Yet the Court concluded twice that the label “conflict mineral” was not purely factual and instead was some species of controversial opinion. As the majority states, “[p]roducts and minerals do not fight conflicts. The label ‘[not] conflict free’ is a metaphor that conveys moral responsibility for the Congo war. It requires an issuer to tell consumers that its products are ethically tainted, even if they only indirectly finance armed groups. An issuer, including an issuer who condemns the atrocities of the Congo war in the strongest terms, may disagree with that assessment of its moral responsibility.” 

In dicta, the Court seems to indicate that “fair trade” or “sustainability” labeling could also be out of bounds. In another strange passage the Court asks, “[i]f the government required labels on all internal combustion engines stating that ‘USE OF THIS PRODUCT CONTRIBUTES TO GLOBAL WARMING’ would that be fact or opinion?” The use of all caps is in the original and this part of the opinion seems to throw in climate change denial on top of everything else.

Judge Srinivasan in his dissent in NAM v. SEC (2015) wrote,

The requirement to make that disclosure, in light of the anticipated reaction by investors and consumers, aims to dissuade manufacturers from purchasing minerals that fund armed groups in the DRC region. That goal is unique to this securities law; but the basic mechanism—disclosure of factual information about a product in anticipation of a consumer reaction—is regular fare for governmental disclosure mandates.

The majority’s response was to quote Charles Dickens. (I kid you not. Go read the whole thing for yourself.)

As attorney Ron Fein who filed amicus brief in the case argued that this case misapplies controlling Supreme Court and D.C. Circuit precedent, “two of the panel’s three judges took a broad Supreme Court precedent disfavoring business First Amendment challenges to disclosure rules—which the full D.C. Circuit had ringingly endorsed just last summer—and held that it only applies to advertising.”

The Dean of Yale Law School Robert Post has just published a law review entitled “Compelled Commercial Speech” that captures a myriad of critiques about what the D.C. Circuit is doing in this case and others. The piece doesn’t cover the most recent reaffirmation because it was published before the court ruled again. But many of the objections Dean Post raises are still applicable as the court basically doubled down on its perplexing conclusions.

NAM isn’t the only one raising First Amendment objections. The compelled speech doctrine is being used by corporate plaintiffs to object to a host of government regulations which require disclosures to the public of various kinds.  As Post wrote, there have been a “growing number of circuit court decisions that have used the specific doctrine of ‘compelled commercial speech’ to strike down mandatory commercial disclosures.” However, Post argues these courts are getting it wrong to grant First Amendment carve outs to disclosure regulations because, “[r]egulations that force a speaker to disgorge more information to an audience do not contradict the constitutional purpose of commercial speech doctrine. They may even enhance it.”

Post has warned that giving commercial interests too many First Amendment vetoes risks turning the democratic process inside out. As he wrote, “[i]f the First Amendment were instead interpreted as protecting the autonomy of economic actors, it would mutate from a charter of democratic discussion into a constraint on democratic policymaking. The First Amendment would then no longer establish a political framework empowering ‘We the People’ to decide which economic philosophy we choose democratically to adopt.”

NAM v. SEC is worrisome not just for those who want more transparency about mining in the Congo. As attorney Fein notes, “these judges are coming for the entire set of transparency laws that help make our stock markets the most trusted in the world. And perhaps they won’t stop there; according to these judges, nearly every disclosure or sunshine law in modern society is now subject to corporate First Amendment challenge.” Just when I was feeling all warm and fuzzy about the D.C. Circuit and their approach to anti-pay-to-play laws, now I’m back to worrying what they will do next.

(Photo: Thinkstock)

The views expressed are the author’s own and not necessarily those of the Brennan Center for Justice.