## Facts

- Congress enacted § 1502 of the Dodd–Frank Act (codified in relevant part at 15 U.S.C. § 78m(p)) to address armed groups’ financing through trade in certain minerals from the Democratic Republic of the Congo (DRC) and adjoining countries.
- Section 1502 directed the Securities and Exchange Commission (SEC) to issue rules requiring public companies to investigate and disclose whether specified “conflict minerals” (gold, tantalum, tin, tungsten) used in products originated from covered countries.
- The SEC adopted the conflict minerals rule (17 C.F.R. § 240.13p-1; Form SD, 17 C.F.R. § 249b.400), requiring covered issuers to conduct supply-chain inquiries, perform due diligence in specified circumstances, and file disclosures.
- The rule required certain issuers to describe products in SEC filings and on company websites using language such as that products had “not been found to be ‘DRC conflict free.’”
- National Association of Manufacturers, the U.S. Chamber of Commerce, and Business Roundtable challenged the rule under the Administrative Procedure Act (APA), the Exchange Act, and the First Amendment.
- The district court granted summary judgment to the SEC and upheld the rule in full; the business groups appealed.

## Issues

1. Whether the SEC acted arbitrarily or capriciously under the APA in adopting the conflict minerals rule, including its cost analysis, refusal to include a de minimis exception, and interpretation of key statutory terms.
2. Whether the SEC exceeded its statutory authority in implementing § 1502.
3. Whether compelling issuers to describe products as not “DRC conflict free” violates the First Amendment as compelled speech.

## Decision

- The D.C. Circuit affirmed the district court as to most statutory and APA challenges and upheld the bulk of the rule.
- The court held the SEC reasonably implemented Congress’s directive and did not act arbitrarily in its cost analysis or in declining to create a de minimis exception absent statutory support.
- The court held the compelled description requiring issuers to state products had “not been found to be ‘DRC conflict free’” (or equivalent) violated the First Amendment.
- The court reversed in part and remanded, invalidating the statute and rule only to the extent they compelled the “not DRC conflict free” labeling requirement.

## Legal Principles

- When Congress makes the central policy choice in a statute, an agency implementing that directive receives deference for reasonable choices within the statutory scheme, and courts will not require an agency to add exemptions not found in the text.
- Under the APA, an agency need not quantify benefits that cannot reasonably be monetized; it may consider non-economic benefits reflected in Congress’s legislative judgment when assessing regulatory costs and benefits.
- Compelled commercial disclosures receive more deferential review under *Zauderer* only when the government requires “purely factual and uncontroversial” information, typically tied to preventing deception.
- A compelled statement that conveys moral or political judgment, rather than a neutral factual disclosure, is not evaluated under *Zauderer* and must satisfy heightened First Amendment scrutiny.
- The government cannot require regulated entities to adopt contested moral characterizations of their conduct or products when less speech-restrictive, factual alternatives are available.

## Conclusion

The D.C. Circuit sustained the SEC’s conflict minerals disclosure framework against most APA and statutory attacks, but held that forcing issuers to describe products as not “DRC conflict free” impermissibly compelled speech, invalidating the rule and statute only to that limited extent and remanding for further proceedings.


Nat’l Ass’n of Mfrs. v. SEC, 748 F.3d 359 (D.C. Cir. 2014)