SEC considers rules that pit human rights groups against business interests

A controversial measure on so-called “conflict minerals” that has pitted human rights groups against business interests is among the regulations the SEC will consider implementing during an open meeting on Aug. 22.

The SEC is considering adopting regulations that would implement Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203. The regulation is aimed at cutting off funding for warlords in the Congo who commit atrocities against local populations and use forced labor to mine for gold and other minerals used in a variety of products, including jewelry and cell phones.

Section 1502 requires annual reporting on whether U.S. public companies use conflict minerals originating in the Democratic Republic of the Congo or neighboring countries in their products. It would require public companies that use conflict minerals to document their chain of custody. But that section of the law will not go into effect until the SEC adopts rules to implement its requirements.

Human rights groups have said the law will help reduce funding for warlords who force locals into mining labor and commit human rights violations. But some business interests have said it will be difficult and costly to track minerals back to their origins.

Another section of the Dodd-Frank Act that has put human rights groups and big business at odds also is on the SEC’s agenda. Section 1504 requires U.S. public companies to disclose in an annual report how much they pay governments worldwide for access to oil, natural gas, and minerals.

In May, antipoverty advocate Oxfam America filed a lawsuit asking the U.S. District Court for the District of Massachusetts to order the SEC to issue a final rule. Human rights groups have said the regulations would increase transparency and accountability of leaders in resource-rich countries with high poverty rates.

The petroleum industry is among those who have fought the requirements, saying they would be costly and put U.S. public companies at a disadvantage in bidding against foreign competitors.

The SEC will meet at 10 a.m. on Aug. 22 in Washington; a webcast will be available.

—Ken Tysiac (ktysiac@aicpa.org) is a JofA senior editor.