A panel of the U.S. Court of Appeals for the DC Circuit has agreed to rehear the case of National Association of Manufacturers v. SEC, 748 F.3d 359 (2014), responding to petitions for rehearing submitted by the Securities Exchange Commission and Amnesty International. The Court will consider the First Amendment implications of compelled commercial speech in view of a recent en banc decision by the court in American Meat Institute v. Department of Agriculture, 760 F.3d 18 (2014).
In the first National Association of Manufacturers (“NAM”) decision, the Court of Appeals reviewed the “conflict minerals” rules adopted by the SEC which apply to issuers of securities regulated by the agency. Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (relevant parts codified at 15 U.S.C. §§ 78m(p), 78m note), requires the SEC to issue regulations requiring firms using “conflict minerals” to investigate and disclose the origin of those minerals. See 15 U.S.C. § 78m(p)(1)(A). Briefly, the “conflict minerals” rules apply to minerals extracted from the Democratic Republic of the Congo.
The NAM challenged those aspects of the rules which would require an issuer to describe its products as “conflict free”, both in its reports to the SEC and on its corporate website. The panel agreed that such disclosure was compelled speech and it was protected under the First Amendment, and that rule was vacated. However, a few months later, the DC Circuit Court held that regulatory “county of origin” disclosures mandated by the Department of Agriculture did not violate the producer’s First Amendment protections, and partially overruled the NAM case.
On rehearing, the parties are ordered to discuss these precedents, which should result in some clarification of this vexing issue.
Additional Source: SEC Adopts Final Rules on Conflict Minerals Reporting