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Bill passed in House would defund conflict minerals rule

Places - USA - House of Reps and capitol building, Washington DC © United States Government Work

The US House of Representatives has passed an appropriations bill, containing an amendment that would defund enforcement of the nation’s conflict minerals reporting rule.

Amendment 34 to the Financial Services and General Government Appropriations Act, 2017 (HR 5485) was introduced by Representative Bill Huizenga (R-Michigan), chairman of the House Financial Services Monetary Policy and Trade Subcommittee. It states that no funds appropriated by the bill could be used to “implement, administer, or enforce” provisions in section 1502 of the Dodd-Frank Act.

Section 1502 requires publicly traded companies to conduct due diligence and report to the Security and Exchange Commission (SEC) on whether their sourcing of conflict minerals – tin, tungsten, tantalum and gold (3TG) – is supporting armed groups in the Democratic Republic of Congo (DRC) or its neighbouring countries.

Having cleared the House on a 239-185 vote, the measure will now be considered in the Senate.

Impact on the ground

NGO, the Enough Project, said that Mr Huizenga’s “11th-hour amendment … would undermine years of progress that have been made by companies, private sector initiatives and regional governments to support conflict-free minerals sourcing from Congo.”

The organisation says that many Congolese communities and leaders support the reporting rule, and “have seen direct positive impacts” from its implementation.

Holly Dranginis, the NGO's senior policy analyst, urged senators to “send a clear message that corporate executives cannot turn a blind eye to where their minerals come from, by voting no on this amendment.”

Mr Huizenga did not respond to Chemical Watchs request for comment.

But at a November hearing of the House Financial Services Monetary Policy and Trade Subcommittee in November 2015, Mr Huizenga had said: “Five years later [after the passage of Dodd-Frank Act], I’m very concerned that this well-intended conflict minerals rule is actually harming the very people it was intended to help.”

“As we all know, the 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,” Mr Huizenga had added.

Political priorities

Since enactment of Dodd-Frank, major industry groups like the National Association of Manufacturers (Nam) have lauded the stated goals of section 1502, but raised concerns with the cost of implementing the reporting rule. They have also questioned whether the SEC is the appropriate body to address such social objectives.

The US Chamber of Commerce and Nam filed suit against the commission in October 2012, seeking a revision or discarding of the reporting rule.

The ensuing legal battle has gone on for years. Most recently, the SEC did not seek a petition for the court to reconsider its decision that the law cannot require a company to describe whether its products have been found to be “conflict-free” or not.

But the due diligence and reporting requirements under the law continue to remain in place.

And although companies have been required to report their due diligence efforts since 2014, “conflict minerals” have been declared as a lobbying issue for some 20 organisations and companies so far this year, according to publicly available lobbying disclosure forms reviewed by Chemical Watch this week.

These included big spenders and plaintiffs Chamber of Commerce ($15.75m declared lobbying expenses in Q1) and Nam ($1.92m in Q1), which both named “conflict minerals” among the issues they are lobbying on this year.

Nam did not respond to a request for comment on amendment 34.

In a separate proposal, Republicans in the House Financial Services Committee are seeking to repeal and replace Dodd-Frank. Although unlikely to gain momentum, the measure – if passed into law as currently proposed – would fully repeal the conflict minerals reporting rule.

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