Companies Are Using the First Amendment to Dodge Regulations
Corporations have pioneered a new legal strategy that exploits the First Amendment to fight regulatory measures and consumer protections, taking aim at everything from emissions disclosures to drug price caps to social media reforms.
Google office building in Cambridge, Massachusetts. (Plexi Images / GHI / UCG / Universal Images Group via Getty Images)
Corporations are weaponizing the First Amendment to argue they don’t have to comply with regulations they oppose. Referencing faulty science and controversies they helped engineer, these companies have pioneered a novel legal strategy taking aim at emissions disclosures, drug price caps, social media reforms, and other consumer and public health protections.
Companies are backing their claims with the “compelled speech” principle in the First Amendment, which states that the government cannot force people to say something they disagree with.
Experts say the large corporations using this strategy are undermining efforts to regulate corporate behavior. They say these arguments limit states’ ability to act on matters not covered by federal law — and threaten everything from consumer warnings on toxic products to nutrition labels for restaurant food.
Most pressingly, this approach is being used to challenge California’s new precedent-setting emissions disclosure law, which requires all major companies doing business in the state to make public how much pollution they’re emitting throughout their supply chain. Polluters argue that such laws unfairly compel them to engage in “controversial speech” — relying on the idea that climate change is still controversial, a concept many of these companies helped engineer.
Right-wing groups have weaponized this compelled speech argument before, using it to defend organizations that refuse to give their employees adequate reproductive health care benefits and support unlicensed pregnancy centers that intentionally mislead their clients. The argument has impeded the government’s ability to investigate financial wrongdoing. Foreign kleptocrats and domestic companies have allegedly exploited this lack of transparency to launder money through real estate investments and shell companies.
Major corporations have also picked up the argument in cases relating to drug pricing, social media, human rights, and emissions. In other cases, corporations have attempted to conceal the source of online political advertisements and deter states from addressing climate change.
These efforts are being spearheaded by trade groups with financial backing from massive multinational corporations that have an interest in whittling away regulations. The US Chamber of Commerce, a corporate lobbying group heavily funded by Big Oil, is involved in numerous compelled speech cases that have emerged over the past decade.
If the courts agree that lawmakers can’t compel businesses to express “controversial” or “politically charged” messages, the effects could be devastating to wide-ranging regulatory efforts, said James Wheaton, founder of the public-interest law firm the First Amendment Project and former president of the Environmental Law Foundation.
“Anything can be political and controversial because science doesn’t deal in absolute certainty,” said Wheaton, “The threshold for proving controversy is extremely low, and the science behind it doesn’t have to be sound — it just needs to exist.”
Wheaton also expressed concern that trade groups and agriculture businesses fighting California’s emissions disclosure bill called the regulation a “pressure campaign” aimed at shaping company behavior. In their legal complaint, the corporate interests claimed that such disclosures would enable policymakers and activists to “single out companies” for boycotts and investigations.
“What is the point of any regulation then, if not to change and shape behavior?” said Wheaton.
Scarlet Letters and Confessions of Sins
The “compelled speech” doctrine, detailed under the Constitution’s First Amendment, is designed to safeguard individuals from being forced by the government to express messages or adopt beliefs they disagree with — especially if the subject is considered controversial. For instance, the Supreme Court ruled in a landmark 1943 case that public school students could not be compelled to salute the American flag or recite the Pledge of Allegiance.
But over the past decade, businesses and right-wing interest groups have used the doctrine to fight — and successfully overturn — a series of regulations that protected investors, deterred criminal activity, and defended human rights.
In 2014, the US Chamber of Commerce challenged the Securities and Exchange Commission over the agency’s “conflict mineral” rule, which aimed to inform consumers when companies relied on mineral extraction that exacerbated violence and humanitarian conflict.
The rule, which was designed to give consumers freedom of choice when they buy mineral-heavy products like computers and cars, was vehemently opposed by electronics and automobile manufacturers who argued that it would create a “scarlet letter statute” to shame businesses. An appeals court agreed, striking down part of the regulation that required company transparency.
Since then, similar lawsuits have ramped up. In 2020, Sysco, a food distribution and restaurant supplies company, took on the National Labor Relations Board, arguing that companies cannot be compelled to read out notices of labor violations to workers during work hours. According to Sysco’s lawsuit, the labor rule would contradict the company manager’s own message of advocating against unionization and mandate a “confession of sins.” The “sins” in this case involved repeated coercive threats to dismiss employees if they unionize.
These tactics have also been used to fight federal efforts to make medications more affordable. The Biden administration established a program in 2023 under the Inflation Reduction Act that aims to negotiate the maximum price of certain expensive drugs covered by Medicare and levy higher taxes on companies that refuse to negotiate. Blurring the lines of what qualifies as speech, the US Chamber of Commerce argued in July 2023 that forcing pharmaceutical companies to “agree” with price determinations is government-compelled speech, an argument that the federal court of the Southern District of Ohio blocked in September 2023.
That same year, the US Chamber of Commerce used the strategy to target a government rule mandating that companies disclose their stock buybacks to the Securities and Exchange Commission and investors. Stock buybacks, a practice that was considered illegal market manipulation until 1982, involve companies buying up their own stock to benefit shareholders at the expense of innovation and employee development.
The chamber argued that requiring companies to disclose their rationale for repurchasing stock shares should qualify as compelled speech, even though legal scholars have said that “speech” like contracts or tax returns has traditionally been outside the scope of protected communication.
Better Markets, an advocacy group pushing for greater financial transparency and financial reform on Wall Street, filed an amicus brief backing the Securities and Exchange Commission rule, calling such disclosures the “lifeblood” of security laws and the chamber’s arguments a threat to “the foundation of securities regulation in the United States.”
The US Court of Appeals for the Fifth Circuit ruled against the Securities and Exchange Commission and canceled its stock buyback rule in December 2023. This decision has made other mandatory shareholder disclosures, such as requiring companies to divulge their environmental or stock market risks, more vulnerable to legal challenges.
Small business associations used the same argument to challenge the government’s ability to fight money laundering and terrorism financing. Under the new Corporate Transparency Act, businesses must disclose the names and other personal information of people who own and control the company, in order to help uncover shell companies that are being used to hide unlawful activities.
Business groups like the National Small Business Association immediately sued to block the new law, arguing that making those companies disclose such personal information was compelled speech and violated their First Amendment rights. In March 2024, the district court hearing the case agreed, ruling that the Corporate Transparency Act “exceeds the Constitution’s limits on the legislative branch.” The law will remain in effect while the Department of Justice files its appeal, but in the meantime, the businesses that brought the lawsuit will be exempt.
“These companies are advancing these arguments because they have seen some of these arguments prevail in other cases,” said Olivier Sylvain, Professor of Law at Fordham University and former advisor to the chair of the Federal Trade Commission. “Companies should not be able to claim that traditional commercial practices are expressive conduct and subject to the same kind of protections that a political campaign is.”
Engineering Scientific Doubt
Corporations’ weaponization of the First Amendment could soon have far-reaching climate impacts, thanks to a new lawsuit that could allow some of the largest polluters to hide their emissions.
In 2023, the California legislature passed a package of landmark disclosure laws mandating that all major companies doing business in the state disclose how much pollution they emit throughout their supply chain. The laws also require companies to inform investors of climate-related financial risks. As one of the world’s largest economies, California emits more than 380 million metric tons of greenhouse gasses, and the new rules, which are slated to be implemented in 2026, would affect around ten thousand businesses.
But in January 2024, the US Chamber of Commerce and various agriculture interest groups, represented by the California-based law firm Gibson, Dunn & Crutcher, a fossil fuel industry favorite, sued the California Air Resources Board, challenging the new disclosure laws.
In the complaint, the companies argued that by requiring them to disclose their emissions, these laws would compel them to publicly express a “speculative, noncommercial, controversial, and politically charged message.” The complaint additionally called such laws a “pressure campaign” aimed at shaping company behavior.
The companies further alleged that attempting to exert accountability through speech is unconstitutional and that these laws would enable policymakers and activists to “single out companies” for boycotts and investigations.
However, many of the companies claiming that an issue like emissions is controversial have taken part in engineering the “controversy” themselves. They have done so by influencing education, shaping media, and even directly funding research to support their own stance.
The American Farm Bureau Federation, one of six plaintiffs fighting the emissions disclosure laws, has been rejecting climate science and fighting climate measures for decades.
In 1980, the Federation, a farmer and rancher lobbying group with six million members across the country, called for abolishing the Environmental Protection Agency in its annual policy statement. A decade later, it opposed the Kyoto Protocol, a landmark international climate agreement, arguing in a Senate hearing before the Committee on Agriculture, Nutrition, and Forestry that there wasn’t enough information and scientific research to justify climate action.
While the federation seems to have adjusted its official stance on climate science since then, it has continued to state that it “supports additional access for exploration and production of oil and natural gas,” and that cutting fossil fuels in the near term would threaten Americans’ standard of living.
The current case against California’s emission disclosure laws is also brought by the US Chamber of Commerce, a major business lobbying group that has also been involved in at least four similar litigations over the past decade.
Even though the chamber claims to represent millions of businesses, it is mostly backed by major corporations, especially oil companies. Its major funders include the Koch Foundation, a conservative organization run by the Koch Industries oil and gas conglomerate that spent more than $140 million promoting climate denialism over the past three decades. It’s also backed by ExxonMobil, the largest US-based oil and gas company, which according to Greenpeace, an environmental research and advocacy organization, purposely spread disinformation about climate change. The oil giant spent more than $240,000 lobbying in California over the last three months of 2023, including lobbying against the emissions disclosure bills, among other issues.
Supporters of California’s disclosure efforts say the controversies these corporate lobbyists have manufactured around emissions don’t justify delaying vital climate action.
“Scientific knowledge is constantly evolving and thus subject to ‘controversy,’” wrote Vivian Wang, an attorney for the Natural Resources Defense Council, in an amicus brief for a 2021 case in a pesticide company’s lawsuit against California’s mandatory safety warnings. “That does not confer upon us a freedom to ignore the knowledge we already have, or to postpone the action that it appears to demand at a given time.”
Business groups’ challenge to California’s emissions disclosure laws is set to be heard by a federal court this fall.
A Federal Regulatory Void
The compelled speech arguments corporations are using could impact matters far beyond climate change. A pending decision in the US Supreme Court involving the strategy could decide the future of all social media platforms.
An advocacy group funded by Meta, Google, Twitter/X, and other tech companies challenged a number of laws in Texas and Florida that would regulate how large social media companies control content posted on their sites. The companies argue that choosing the type of content that appears on their platforms is an editorial decision and therefore protected by the First Amendment.
An amicus brief filed by the Knight First Amendment Institute at Columbia University, an educational organization that researches and promotes freedom of speech, points out that accepting the social media platforms’ argument would make it extremely difficult, if not impossible, for governments to govern user privacy, promote competition, and ensure smooth information exchange.
If these various state laws succumb to what Sylvain of Fordham Law calls a “barrage of attacks” using compelled speech arguments, there would often be no federal regulations to fill the void.
“States are definitely trying to fill in where the federal government can’t,” said Sylvain. “But these same companies are going after the states as well, and they are invoking more than just the First Amendment.”
Under a set of rules called the “Major Questions Doctrine,” administrative branches have limited power to act on issues deemed to have political and economic significance. This restricts agencies like the Environmental Protection Agency and the Food and Drug Administration from making decisions on some matters related to public health, such as limiting emissions and regulating tobacco.
In June 2022, the Supreme Court decided that the Environmental Protection Agency does not have the authority to issue a greenhouse gas emissions rule that would shift electricity generation away from coal plants, which are responsible for a quarter of all energy-related emissions in the nation.
In their efforts to gut consumer protection laws, Professor Sylvain at Fordham University says he believes corporations have “reached well beyond” what many would consider protected speech.
“Courts should really be objective in their evaluation, and in my mind, the existing doctrine actually pushes back against many of these companies’ claims,” said Sylvain. “Courts have the responsibility to remain skeptical and hold the line, or else the First Amendment would become unrecognizable.”