The US House of Representatives has passed a financial regulatory bill that would fully repeal the conflict minerals reporting rule.
The far-reaching Financial CHOICE Act – like a bill of the same name introduced last session – seeks to overhaul the nation's financial regulations under the Dodd-Frank Act. Among many reforms, HR 10 calls for the repeal of section 1502 of the law, and that provisions affected by the section be "restored or revived as if [it] had not been enacted".
Dodd-Frank section 1502 requires publicly traded companies to conduct due diligence and report to the Securities 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 the Congo (DRC), or neighbouring countries.
The Financial CHOICE Act passed the House along party lines, with just one Republican crossing the aisle to vote against it with all 185 Democrats.
The measure now heads to the Senate, where comprehensive overhaul of the nation’s financial regulations is expected to face significant hurdles given strong minority opposition. But even if the passage of the bill in its current form may prove challenging, there remains the opportunity for consideration of more targeted measures to reform certain aspects of the law.
Pressure mounts against reporting rule
Passage of HR 10 comes amid a spike in scrutiny of the conflict minerals reporting rule.
Earlier this year, former acting SEC chairman Michael Piwowar directed staff to "reconsider" the agency’s implementation of the rule and welcomed feedback from affected parties.
And in April, Mr Piwowar issued a statement in which he suggested the SEC would no longer enforce the requirement that companies submit enhanced disclosure on their due diligence efforts.
Rumours have also swirled that President Trump would issue an executive order putting the rule on hold for two years.
While industry groups have been divided in their support for the reporting scheme, NGOs have remained vocal in reiterating the importance of its continued enforcement.
Writing in this month’s CW Global Business Briefing, the Enough Project’s Ian Schwab and Annie Callaway say "reversing the still fledgling progress made by this key supply chain transparency measure could spark a return to a situation in Congo, where armed groups once again control every mine through intimidation and violence."
"At a time when Congo’s political future remains unnervingly uncertain and violence is already on the rise, any additional fuel to the fire could have disproportionately devastating ramifications," they add.