On July 29th, in American Meat Institute v. U.S. Department of Agriculture, the U.S. Court of Appeals for the D.C. Circuit, sitting en banc, held that country-of-origin labeling of meat products is not unconstitutionally compelled speech in violation of the First Amendment. This outcome increases the likelihood that the full D.C. Circuit will rehear the court’s earlier decision National Association of Manufacturers v. SEC, in which a three-judge panel struck down the portion of the SEC’s Conflicts Mineral Rule that required companies to describe certain products as not “DRC conflict free”, as unconstitutionally compelled speech.
In National Association of Manufacturers, the court declined to apply the more lenient standard of review set forth in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), under which mandated disclosures do not violate the First Amendment if they are limited to purely factual and uncontroversial information and are reasonably related the government’s interest in preventing consumer deception. The court rejected the SEC’s argument that Zauderer should be applied more broadly to disclosure requirements that serve other government interests, such as those related to the disclosure of conflict minerals. Because the Conflict Minerals Rule is not related to the State’s interest in preventing consumer deception, the court applied the higher intermediate standard of scrutiny for commercial speech articulated in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980). Under Central Hudson, the government must show that a substantial government interest that is directly and materially advanced by the restriction, and that the restriction is narrowly tailored to serve the substantial government interest. The disclosure requirements in the Conflict Minerals Rule failed to meet this higher standard.
The SEC subsequently requested an en banc rehearing of National Association of Manufacturers, pending the outcome of American Meat Institute. Now, the full court has explicitly rejected the panel’s narrow application of Zauderer: “To the extent that other cases in this circuit may be read as holding to the contrary and limiting Zauderer to cases in which the government points to an interest in correcting deception, we now overrule them.” Specifically, the court, applying Zauderer, upheld the Department of Agriculture’s regulation requiring country-of-origin labeling for meat products, even though the government interest was not the prevention of deception, but rather the context and long history of country-of-origin disclosures that enable consumers to choose American-made products, the consumer interest in extending such requirements to food products, and the individual health concerns and market impacts that arise in an outbreak of a food-borne illness.
Even if the D.C. Circuit grants the SEC’s request for an en banc rehearing of National Association of Manufacturers, which now seems likely, it remains uncertain whether the panel’s decision will be reversed. The key question will be whether the government’s interest in conflict minerals disclosure requirements falls within this broader interpretation of Zauderer’s government interest prong. There are marked differences between the government’s interest in country-of-origin food labeling and in conflict mineral disclosures.