Congress urges SEC to finalize Dodd-Frank provisions
More than 50 members of the U.S. House have signed a letter to the U.S. Securities and Exchange Commission (SEC), urging that agency to issue final rules of the Dodd-Frank financial reform package requiring mining companies to disclose payments they have made to government in the commercial development of minerals.
The letter, signed by 58 lawmakers, was sent to SEC Chairman Mary Schapiro. In it, the lawmakers express concern that the commission had missed the April 17, 2011 deadline for the provisions’ final rule.
The two provisions, sections 1502 and 1504, are intended to curb corruption and promote transparency among companies involved in resource extraction.
Section 1502, the so-called “conflict minerals provision,” requires companies to examine their supply chains to determine and disclose if their products contain minerals from the Democratic Republic of Congo or surrounding countries. Section 1504, meanwhile, requires companies to disclose to the SEC all payments made to either the U.S. or a foreign government for the extraction of oil and minerals, The Wall Street Journal reported.
Section 1504 is aimed at implementing reporting obligations consistent with the Extractive Industries Transparency Initiative into U.S. law. It would require mining, oil and gas companies to disclose the nature and total amount of payments made to foreign government for each of the company's projects, as well as the type and total amount of payments on a country-by-country basis.
“There is no clear reason for the delay,” the lawmakers wrote. “It has been nearly 18 months since the proposed rules were issued, and the comment period for both rules closed over a year ago. The Commission has had more than enough time to consider and respond to all of the substantive comments from industry, civil society, investors and others.
“This issue is too serious to allow further delay. Conflict minerals and non-transparent payments for natural resource extraction continue to be a weight on developing nations’ growth and are a risk to investors and the public,” the letter said.
“Worse, continued delay undermines efforts in the DRC to make the mining industry more transparent and to diminish the link between minerals and the funding of the brutal violence carried out by warlords,” said the letter. “If the rules are not released soon, some companies will not have to file their first reports until Summer 2014, four years after Dodd-Frank was passed.”
“We urge you to schedule a vote on the final roles to implement Sections 1502 and 1504 by July 1, 2012,” the lawmakers demanded.
On May 16, Oxfam America sued the SEC for allegedly unlawfully delaying the issuance of final rules for Section 1504.
The National Mining Association asserted that Section 1504 would be “impractical, confusing, unnecessarily burdensome, and inconsistent with the purposes of Section 1504.”
The association suggested that project-level disclosure may put companies into conflict with some host government confidentiality restrictions in place on existing projects. “It is critical that the regulations do not place reporting companies into such a ‘no-win’ position, where they could incur sanctions such as fines or even the revocation of a concession,” said a NMA white paper on the issue.