With this terse order by the D.C. Circuit, it is official, the SEC's conflict minerals rule is unconstitutional ... but only to the extent that it requires public issuers who did make use of conflict minerals to state on their disclosures that their products have “not been found to be ‘DRC conflict free.’” 

The idea is that this was forcing firms to declare that they had blood on their hands, and I find it all pretty unconvincing.  The SEC can require firms to make disclosures in particular ways, it can require firms to make climate change disclosures, and it can tell them to identify, say, risk factors of participating in a securities offering that make the issuer look bad.  This is all forced speech, and a disclosure based agency couldn't function if it couldn't require disclosures, including uncomfortable disclosures, permitting an inference that the issuer is incompetent, naive, whatever, and that the speaker would rather not say.  

There may be a line that can be drawn - the SEC can require firms to say uncomfortable things, but it can't require them to say an exact set of words that make them look bad.  I guess that would be a rule, but it wouldn't be much of a rule.

For example, consider the conflict minerals rule itself, which is both unconstitutional and very much in effect.  Although companies do not have to attest that the products they make are not DRC-conflict free, they do have to do everything else: investigate their supply chains, describe their investigation, and report on the results of that investigation, including whether it revealed that they make products involving conflict minerals.

Anyway, Congress hasn't lost its taste for conflict minerals, and bills have been introduced in the House and Senate to add to the SEC's policing in this area.  That's something that will not overjoy those in the agency who never thought of it as the tip of the spear in the spreading of human rights values.

There's a nice wrap over at Jim Hamilton's, and I've written about conflict minerals, as has Jeff Schwartz.

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