Acting Securities and Exchange Commission Chairman Michael Piwowar took the first steps toward scaling back the conflict mineral disclosure rule Jan. 31, directing the SEC staff to reconsider the agency’s guidance on the rule.
The rule requires companies and foreign private issuers in the U.S. to report their use of so-called “conflict minerals”—gold, tantalum, tin and tungsten from the Democratic Republic of Congo and adjacent countries—if those minerals are “necessary” to a product made by the companies. The SEC adopted the rule in August 2012 as required by Section 1502 of the Dodd-Frank Act.
Since its enactment, however, parts of the rule have twice been struck down by a federal appeals court as violating the First Amendment. In both cases, the rule was found to be an unconstitutional compelled disclosure. Subsequent to these judicial developments, the SEC stayed the parts of the rule deemed unconstitutional and issued guidance on compliance with the rule in light of the decisions.
In his statement, Piwowar said, “I am directing the staff to consider whether the 2014 guidance is still appropriate and whether any additional relief is appropriate in the interim.” The acting chairman has asked that comments be submitted within the next 45 days regarding the rule and the agency’s subsequent guidance.
Separately this week, Congress began efforts to eliminate a disclosure rule requiring oil, gas and mining companies listed in the U.S. to report to the SEC payments they make to the federal and foreign governments, including taxes and royalties.
The so-called “resource extraction” rule has seen its own share of litigation, first being struck down in federal court in 2013 after a lawsuit by the American Petroleum Institute. The agency’s revised version of the rule was adopted in June and is set to go into effect in 2018. The agency's second attempt at the disclosure rule came after Oxfam sued to expedite the rulemaking.
The House of Representatives will today consider a joint resolution of disapproval of the rule under the Congressional Review Act.
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