SEC Reconsidering Implementation of Conflict Minerals Rule
The Securities and Exchange Commission is reconsidering whether to go forward with reporting requirements for “conflict minerals” from the Democratic Republic of the Congo and surrounding countries, Acting SEC Chairman Michael Piwowar said on Jan. 31 (here). The review by SEC staff, which follows the beginning of the first full reporting period under the conflict minerals rule on Jan. 1, will consider whether modified reporting requirements set in 2014 are “still appropriate and whether any additional relief is appropriate in the interim,” he said. Comments on “all aspects of the rule and guidance” are due March 17 (here), Piwowar said in a separate statement (here).
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The review comes in part due to the “unexpected duration” of a lawsuit challenging the conflict minerals rule. The U.S. Court of Appeals for the D.C. Circuit ruled certain aspects of the regulation unconstitutional in 2014 (see 14041517), namely a requirement that companies would have to say a product is “not DRC conflict free” in company reports and on company websites if they include tantalum, tin, gold or tungsten that originated in the Democratic Republic of the Congo or an adjoining country. Guidance adopted by the SEC in response to the court ruling said reports must still be filed, but companies won’t have to identify their products as containing or possibly containing conflict minerals (see 14050226).
The reconsideration is also warranted because of the unintended consequences the “misguided” rule is having in the D.R. Congo, Piwowar said. “The disclosure requirements have caused a de facto boycott of minerals from portions of Africa, with effects far beyond the Congo-adjacent region. Legitimate mining operators are facing such onerous costs to comply with the rule that they are being put out of business,” he said. “It is also unclear that the rule has in fact resulted in any reduction in the power and control of armed gangs or eased the human suffering of many innocent men, women, and children in the Congo and surrounding areas.” Piwowar, a Republican, was named acting chairman of the SEC on Jan. 23. Commissioner Kara Stein, a Democrat and the only other commissioner with three of five positions on the SEC vacant, did not comment.