White House plans directive targeting ‘conflict minerals’ rule -sources

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By Sarah N. Lynch and Emily Stephenson | WASHINGTON

WASHINGTON President Donald Trump is planning to
issue a directive targeting a controversial Dodd-Frank rule that
requires companies to disclose whether their products contain “conflict minerals” from a war-torn part of Africa, sources
familiar with the administration’s thinking.

Reuters could not learn precisely when the directive would
be issued or what the final version would say. However, a leaked
draft that has been floating around Washington, D.C., and was
seen by Reuters on Wednesday calls for the rule to be
temporarily suspended for two years.

Reuters could not independently verify the authenticity of
the document. The sources spoke on Tuesday on condition of
anonymity because they were not authorized to speak on the
record about the plan.

The 2010 Dodd-Frank law explicitly gives the president
authority to order the U.S. Securities and Exchange Commission
(SEC) to temporarily suspend or revise the rule for two years if
it is in the national security interest of the United States.

The conflict minerals rule was endorsed by human rights
groups that want companies to tell investors if their products
contain tantalum, tin, gold or tungsten mined from the
Democratic Republic of Congo in the hope that such disclosures
would curb funding to armed groups.

Business groups opposed to the measure have contended that
it forces companies to furnish politically charged information
that is irrelevant to making investment decisions and that it
costs too much for companies to trace the source of minerals
through the supply chain.

In the leaked draft the Secretary of State and Secretary of
the Treasury were asked to propose a plan for addressing human
rights violations and the funding of armed groups in the
Democratic Republic of Congo and report back within 180 days.

Carly Oboth, a policy adviser at human rights group Global
Witness, said in a statement on Wednesday that she was deeply
concerned about Trump’s planned executive action.

“This law helps stop U.S. companies funding conflict and
human rights abuses in the Democratic Republic of Congo and
surrounding countries,” she said.

“Suspending it will benefit secretive and corrupt business
practices. Responsible business practices are starting to spread
in eastern Congo. This action could reverse that progress.”

A White House executive order last week took aim more
broadly at the Dodd-Frank rules that were put into place after
the 2007-2009 financial crisis. That order did not single out a particular rule but called on the Treasury Secretary to consult
with other regulators, including the SEC, and come back with a
report outlining possible regulatory changes and legislation.

A Dodd-Frank SEC disclosure rule that required oil, gas and
mining companies to disclose payments to foreign governments was
repealed by the Republican-controlled Congress last week.

The conflict minerals rule is one of several disclosure
regulations in Dodd-Frank that are unrelated to the financial

In 2014, a U.S. appeals court struck down part of the
conflict minerals law after the Business Roundtable, the U.S.
Chamber of Commerce and the National Association of
Manufacturers sued the SEC over it.

The court found part of it violated free speech rights of
companies by forcing them to publicly state that their products
were not conflict free.

The rest of the rule was left intact and companies are required to conduct due diligence and report the details of
those inquiries in public reports filed with the SEC.

The SEC cannot repeal the rule without a law passed by
Congress. It can, however, use its broad exemptive powers to
scale back some of the requirements or stop enforcing the rule

Last week, Acting SEC Chair Michael Piwowar took steps
toward doing that by announcing that he had asked SEC staff to
reconsider how companies should comply with it and whether “additional relief” was warranted.

House Financial Services Chairman Jeb Hensarling is planning
to reintroduce his Financial CHOICE Act bill, which contains a
provision to repeal the conflict minerals rule.

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