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By Yin Wilczek
March 3 — The litigation over the Securities and Exchange Commission's conflict minerals rule is sparking new interest by Congress in the requirements, a business representative said March 3.
The rule—mandated by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act—requires issuers publicly to report their use of tantalum, tin, gold, or tungsten from the Democratic Republic of Congo and surrounding areas.
In April 2014, the U.S. Court of Appeals for the District of Columbia Circuit invalidated a part of the regulation, citing First Amendment grounds.
Before the D.C. Circuit's ruling, Congress hadn't had that “clarity” from the courts regarding disclosures that are “specifically designed to shame a company,” said Tom Quaadman, vice president of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness.
“This is something that we think is important moving forward as Congress looks at these types of issues,” Quaadman continued. “We suspect that we’re going to see Congress take a second look at conflict minerals to ensure that any type of disclosures in that area conform with the court’s ruling.”
Quaadman spoke with other Chamber representatives during a telephone conference with reporters to announce the release of the organization's annual “Fix. Add. Replace. (FAR) Agenda.”
At least one lawmaker is looking at fixes for the requirements—Rep. Bill Huizenga (R-Mich.), who previously voiced concerns in congressional hearings that Section 1502 has, if anything, made the situation worse in the DRC.
The lawsuit challenging the SEC rule was filed by the Chamber, the National Association of Manufacturers and the Business Roundtable. The D.C. Circuit panel now is rehearing the case.
At the Chamber teleconference, Quaadman cited a letter sent in late February by a group of Republican congressmen telling SEC Chair Mary Jo White to abandon the agency's appeal of the ruling.
After the conference, Quaadman also told Bloomberg BNA that the House held a hearing on conflict minerals in the past and may do so again this year. “Such a hearing and the implications of the court ruling could lead to new legislative efforts to address some of the issues the court found objectionable,” he said.
A House Financial Services Committee representative said he is not aware of any immediate plans in the committee regarding conflict minerals.
Meanwhile, Huizenga spokesman Brian Patrick told BBNA that the congressman is working with others to address concerns regarding the conflict minerals requirements, including that they are not helping the Congolese miners as intended.
They are looking at both the SEC requirements as well as Dodd-Frank, Patrick said. “No option is off the table.”
Huizenga was a signatory to the letter asking the SEC to drop the conflict minerals appeal. He chairs the HFSC's Monetary Policy and Trade subcommittee.
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The Chamber's FAR Agenda is available at http://www.centerforcapitalmarkets.com/wp-content/uploads/2013/08/CCMC-2015-FAR-Agenda.pdf.
The lawmakers' letter is available at http://op.bna.com/car.nsf/r?Open=ywik-9u9tv3.
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