Democrats urge U.S. SEC to press ahead on conflict minerals rule

by Reuters
Wednesday, 23 April 2014 11:02 GMT

A trader weighs gold nuggets at an illegal mine-pit in Walungu territory of South-Kivu province near Bukavu, April 5, 2014 REUTERS/Kenny Katombe

Image Caption and Rights Information

By Sarah N. Lynch

WASHINGTON, April 22 (Reuters) - Twelve lawmakers are urging U.S. regulators to implement a new rule requiring companies to disclose if their products contain "conflict minerals" from Africa's Democratic Republic of Congo, even though part of the rule was struck down by a U.S. appeals court last week.

In an April 21 letter to U.S. Securities and Exchange Commission Chair Mary Jo White, the lawmakers told White she should not cave into pressure to delay the rule, which is slated to go into effect on June 2.

"With strong court decisions affirming the key components of the rule, no delay is warranted in the implementation of those requirements," wrote the lawmakers.

The SEC has remained silent on how it plans to proceed after a U.S. appeals court struck down a provision in the conflict minerals rule on the grounds it violates companies' free speech rights.

In particular, the court found fault with a section of the regulation that forces companies to state that their products are not conflict free.

However, the ruling left the rest of the SEC's regulation largely intact. The three business groups that had filed to challenge the rule also wanted the court to find that the SEC had conducted flawed rulemaking and failed to weigh the rule's costs, but the court disagreed.

The SEC's conflict minerals rule was tucked into the 2010 Dodd-Frank Wall Street reform law.

It requires publicly traded manufacturers to disclose to investors whether any tantalum, tin, gold or tungsten used in their products may have originated from the conflict-ridden Democratic Republic of Congo.

Human rights groups strongly back the measure, saying the disclosures would help consumers who want to avoid products that encourage mining in areas gripped by rebel violence and humanitarian conflict.

The rule requires companies to conduct internal inquires into the origin of the minerals used, among other things.

The court's ruling last week affirmed the due diligence requirements.

Next month, the same appeals court is due to rehear a meat labeling case that centers around similar free speech issues.

The SEC could opt to have the conflict minerals case consolidated with the meat labeling case.

Alternatively, it could have the case remanded back to a lower court for further proceedings on the free speech question.

To date, the SEC has not voluntarily stayed the rule despite the ongoing litigation.

An SEC spokeswoman declined to comment on the letter, which was signed by Illinois Democratic Senator Dick Durbin, who authored the conflict minerals provision in Dodd-Frank, along with five other senators and six members of the U.S. House of Representatives.

 (Reporting by Sarah N. Lynch; Editing by Cynthia Osterman)

Our Standards: The Thomson Reuters Trust Principles.