U.S. House Committee: SEC Conflict Minerals Rule Is Hurting Those It Was Meant To Help
Last Tuesday, the U.S. House Financial Services Subcommittee on Monetary Policy and Trade held an oversight hearing on the Securities and Exchange Commission’s (SEC) conflict minerals regulations. Subcommittee Chairman Bill Huizinga (R-MI) said he is concerned “that this well-intended conflict minerals rule is actually harming the very people it was intended to help.”
Rep. Huizinga also questioned whether the SEC was equipped to oversee this regulation. He noted, “[T]he SEC has little or no experience in crafting trade sanctions or articulating and enforcing human rights policy, two areas which have not traditionally been within the purview of securities regulation” and that “SEC Chair Mary Jo White has also questioned the SEC’s ability to promulgate rules governing the African minerals trade and whether SEC disclosure powers are best used to meet [and] address societal ills.”
During the hearing, members of Congress heard testimony from Rwanda’s Minister of State in Charge of Mining, Ministry of Natural Resources and Government Evode Imena who also argued the SEC’s rule had harmed the region. Imena told the committee, “Rwanda has taken extensive steps and made great strides in improving accountability and transparency in the mineral supply chain” and “despite all that has been accomplished, our efforts to improve are hampered by the fact that Rwanda was lumped together with nine other countries in Section 1502 of Dodd-Frank.”
Lawmakers also heard from witnesses about companies’ difficulty complying with the rule. University of Utah law professor Jeff Schwartz testified that the regulation was a “failure” because the more than 1,300 companies that are affected by the rule cannot “provide sufficient insight into conflict mineral supply chains.” Indeed, the U.S. Government Accountability Office published a report prior to the hearing that made the same conclusion. That study found 67 percent of companies that are required to submit reports under this rule were unable to determine whether the minerals in their supply chain came from the Democratic Republic of Congo or the surrounding region. The GAO report also found that not one company “could determine whether the minerals benefited or financed armed groups in those countries.”
In related news: according to Chemical Watch, European Union institutions are expected to begin negotiations on the European Parliament’s proposed changes to it conflict minerals regulation.