Sunday, June 24, 2012

Ranking House Members Urge SEC to Implement Dodd-Frank Conflict Minerals and Resource Extraction Regulations by July 1

In a letter to SEC Chairman Mary Schapiro, 58 members of the House of Representatives, including many Ranking Members, asked that the SEC schedule a vote on the final regulations implementing Sections 1502 and 1504 of the Dodd-Frank Act by July 1, 2012. If a vote cannot be scheduled by this date, the Members request that Chairman Schapiro respond to the letter by June 29, 2012 with an explanation regarding the extended delay in adopting the implementing regulations and provide a definitive date for a vote on these two sets of regulations.

The signatories to the letter included Rep. Ed Markey (D-MA), Ranking Member of the Natural Resources Committee;  Rep. Barney Frank (D-MA), Ranking Member of the Financial Services Committee,  Rep. Howard Berman (D-CA), Ranking Member of the Foreign Affairs Committee, Rep. Jim McDermott (D-WA),  Ranking Member on the Ways and Means Committee's Subcommittee on Trade; and Rep. Maxine Waters (D-CA), Ranking Member of the House Financial Services Committee's Subcommittee on Capital Markets.

Under the resource extraction regulations implementing Section 1504 of Dodd-Frank, companies engaged in the commercial development of oil, natural gas, or minerals would have to disclose in their annual SEC reports all payments made to either the United States or a foreign government, at the project-level. Under the conflict minerals regulations implementing Section 1502 of Dodd-Frank, companies using minerals such as tin and gold would have to disclose what measure they are taking to avoid making payments to rebel groups or military units in the Democratic Republic of the Congo or an adjoining country. This would help consumers and investors make more informed decisions about the products that they purchase and the companies in which they invest. Section 1502 requires SEC-reporting companies to disclose the measures they use to certify that their products do not contain conflict minerals.

The SEC published proposed regulations to implement these provisions of Dodd-Frank in December 2010, noted the members, adding that unfortunately the SEC has not yet finalized the process by releasing final, enforceable versions of the sets of regulations, both of which had a statutory deadline of April 17, 2011. 

There is no clear reason for the delay, said the Members. The comment period for both sets of regulations closed over a year ago. The SEC has had more than enough time to consider and respond to all of the substantive comments from industry, investors and others, said the Members. The issues involved are too serious to allow further delay, posited the Members, adding that if the regulations are not soon adopted some companies will not have to file their first reports until the summer of 2014, four years after the enactment of Dodd-Frank. The letter emphasized that the regulations move the issues of secret payments and the use of conflict minerals out of the shadows and into the open to help fight corruption and increase government accountability. The regulations will also provide material information to investors to reduce risk and increase choices for ethical investments.