Manufacturing Groups Make Last-Gasp Effort on Conflict Minerals Rules
With a regulation in the 2010 Dodd-Frank Wall Street reform law set to take effect June 2, three major trade groups have asked for a final stay on the Securities and Exchange Commission's implementation of the rule. Despite a partial legal victory for the groups last month, most of the regulations remain in place.
One of the most contentious (but under-the-radar) aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act is close to taking effect. That is, unless three large trade groups get their way in a federal appeals court.
This week, the National Association of Manufacturers (NAM), the U.S. Chamber of Commerce, and the Business Roundtable asked a U.S. appeals court to stop the Securities and Exchange Commission from implementing a rule requiring companies to report whether their products use precious minerals acquired from conflict zones. But the move comes as most legal options to block the rule have been exhausted. More details:
A partial victory: The regulation that had raised the most concern was a requirement that publicly traded companies report to the SEC and state on their websites whether any of their products have not been found to be “DRC [Democratic Republic of Congo] conflict free.” That requirement was overturned last month by the U.S. Appeals Court for the District of Columbia Circuit on First Amendment grounds. The rest of the reporting and disclosure rule was left standing. The SEC issued clarification on the issue last week, requiring companies to comply with all other aspects of the rule (some companies must file conflict minerals reports that disclose where minerals used in their products came from; others need only disclose that country-of-origin inquiries took place). The court decision came about 18 months after the three trade groups filed suit over the rule.
One last request: With the rule still set to take effect June 2, the three groups asked the appeals court for a stay, saying that without the requirement to state whether a product was free of conflict minerals, the reporting requirements no longer made sense. “Because of the agency’s decision to enforce a tremendously costly rule that no longer achieves the statute’s goals and that will likely be vacated, appellants respectfully seek a temporary stay of the rule until the district court’s decision on remand regarding the appropriate remedy,” the groups wrote in their court filing, according to Reuters.
Why the pushback? Business groups such as the Chamber and the Business Roundtable say the regulations will unduly burden the supply chain. Nonetheless, some groups have largely accepted that the rule is likely to be implemented. NAM and several other organizations with supply-chain interests launched a compliance center this year to assist the thousands of companies expected to be affected by the law.
(photo by Spencer Platt/Getty Images)