A court decision in a legal battle over meat labeling requirements is could solidify the status of the Securities and Exchange Commission’s conflict minerals disclosure requirements.
This week, the U.S. Court of Appeals for the District of Columbia Circuit ruled against food producers, led by the American Meat Institute, who argued that a U.S. Department of Agriculture requirement to label meat produces with their country of origin was compelled speech, a violation of First Amendment protections, and that the government could only enforce such labeling if there was evidence of consumer deception. A similar tactic has been deployed by critics of conflict minerals disclosures who claim that assessing their supply chains for the use tantalum, tin, gold, and tungsten that may benefit violent militia groups in the Congo, and reporting any use of these materials, could force companies to stigmatize themselves and imply they have “blood on their hands,” as a previous court decision described it.
The opinion issued this week, written by Judge Stephen Williams on behalf of a majority of the 11-judge appeals court panel, ruled against the meat producers. The intent of Congress, he wrote, was “enabling customers to make informed choices based on characteristics of the products they wished to purchase, including United States supervision of the entire production process for health and hygiene.”
While “some legislators also expressed the belief that people would have a special concern about the geographical origins of what they eat,” this actually reinforces the “the utility of these disclosures in the event of any disease outbreak known to have a specific country of origin, foreign or domestic,” Williams wrote. “The existence of “other, superior means to protect food safety doesn’t delegitimize a congressional decision to empower consumers to take possible country-specific differences in safety practices into account,” nor does it “undercut the economy-wide benefits of confining the market impact of a disease outbreak.”
Although product safety is not a concern underlying the conflict minerals rule, the court’s refusal to treat meat-packing disclosures as compelled speech nevertheless bolsters its standing amid legal challenges to its constitutionality by the National Association of Manufacturers, U.S. Chamber of Commerce, and the Business Roundtable.
In April, the U.S. Appeals Court for the District of Columbia Circuit found a requirement that companies reveal not just their supply chain due diligence, but whether or not their products are “conflict free” was a violation of free speech protections. The SEC, in response, issued a partial stay of the rule. Filings needed to go ahead as planned, but without the status declarations that were found, for now, to be unconstitutional. As part of the decision, the case was also remanded back to the district court for a more in-depth evaluation of constitutional issues.
In June, citing the similar judicial review over the constitutionality of country-of-origin meat labeling rules, the SEC petitioned the U.S. Court of Appeals for the D.C. Circuit for yet another judicial hearing to settle the lingering question of whether certain conflict minerals disclosures are constitutional. “There is a significant possibility that the en banc decision in the American Meat Institute case will clarify the question of whether consideration of the panel's First Amendment analysis by the full court is warranted,” the SEC wrote in its petition. If the SEC prevails, opponents of the rule would have the last-resort option of appealing to the Supreme Court.
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