Rep Cmte Financial Services

Subcommittee Continues Dodd-Frank Oversight with Conflict Minerals Hearing

Washington, Nov 17 -

WASHINGTON - The Financial Services Monetary Policy and Trade Subcommittee today held a hearing as part of the full committee’s continued oversight of the the Dodd-Frank Act, signed into law by President Obama five years ago. 

Today’s hearing focused on the conflict minerals provision in Dodd-Frank. Section 1502 of Dodd-Frank requires public companies to disclose whether they source “conflict minerals” – tin, tungsten, tantalum, and gold – from the Democratic Republic of Congo (DRC) and its nine neighboring countries. These minerals are used in countless products, from cell phones to apparel.

In April 2014, a panel of the U.S. Court of Appeals for the D.C. Circuit ruled that requiring companies to describe the conflict-free status of their products violated their First Amendment rights. In addition to parts of the rule being struck down, studies have shown that it has not illuminated companies’ sourcing of conflict minerals to any meaningful degree. Critics of the Dodd-Frank conflict minerals provision, many from the DRC region, also argue that Section 1502 has led to a de facto embargo, further impoverishing Africans while leaving local militias unaffected. 

“Five years later, I’m very concerned that this well-intended conflict minerals rule is actually harming the very people it was intended to help,” said Subcommittee Chairman Bill Huizenga (R-MI). 

“As we all know, the SEC has little or no experience in crafting trade sanctions or articulating and enforcing human rights policy, two areas which have not traditionally been within the purview of securities regulation. SEC Chair Mary Jo White has also questioned the SEC’s ability to promulgate rules governing the African minerals trade and whether SEC disclosure powers are best used to meet address societal ills,” Huizenga added. 

Key Takeaways:

  • The Dodd-Frank Act uses a one-size-fits-all approach toward Africa by requiring conflict minerals reporting not only in the DRC but all adjoining countries as well. Dodd-Frank treats 233 million Africans living in 10 distinct countries as one undifferentiated group – an unthinking and patronizing view of the region.
  • An August 2015 Government Accountability Office study found that 67 percent of companies were unable to determine whether the minerals used in their products came from the countries covered by Section 1502. No company was able to determine whether its minerals benefitted armed groups in those countries.

Topline Witness Quote:

  • “Rwanda has taken extensive steps and made great strides in improving accountability and transparency in the mineral supply chain. Today, Rwanda is the country with the best mineral traceability system in the region.Despite all that has been accomplished, our efforts to improve are hampered by the fact that Rwanda was lumped together with nine other countries in Section 1502 of Dodd-Frank. The ten countries covered by this law certainly have some things in common, but they are dissimilar in many significant ways. From economic development to border control, these countries are at all different levels of achievement. Putting them in one group and applying a ‘one size fits all’ regulation is not only an impediment to efficient implementation of the regulations, but further, such an approach fails to recognize efforts made and challenges faced by individual countries..”

– Evode Imena, Minister of State in Charge of Mining, Ministry of Natural Resources, Government of the Republic of Rwanda