GAO to SEC: Still No Final Rule on Conflict Minerals? Really?

By now, the SEC’s leisurely pace for adopting the mining & minerals provisions under Dodd-Frank has become almost comical. The final rule for Section 1503 (Mine Safety Disclosure) was published approximately one year after the rule was initially proposed. The rules under Section 1504 (Disclosure of Payments by Resource Extraction Issuers) and Section 1502 (Conflict Minerals) haven’t done any better – the final versions of the rules proposed back in December of 2010 have yet to surface. And folks are getting antsy.

Yesterday the GAO published a relatively neutral-sounding report, “Conflict Minerals Disclosure Rule: SEC’s Actions and Stakeholder-Developed Initiatives,” that talked about all the various factors leading to the SEC’s delay in finalizing the conflict mineral rule. Section 1502 of the Dodd-Frank Act requires the SEC to issue a disclosure rule for companies using conflict minerals (tin, tantalum, tungsten, and gold) in their products, and it’s a complicated and controversial subject.

The SEC claims that since July 2010, it has received “a large and steady volume of comment letters […] with over 400 distinct comment letters posted to its website.” (Knowledge Mosaic subscribers can see comments here.) The time to address these comment letters, along with the many meeting requests from external stakeholders have supposedly contributed to the SEC’s delays.

In addition, the GAO says that the SEC has faced a sharp learning curve in “develop[ing] contextual understanding” about “relevant in-region political and economic actors, economic arrangements between these actors, and other evolving issues in these [mineral-rich, war-torn] countries,” and that the Commission has taken on “complex and time-consuming” “rigorous economic analysis” as a result.

The problem is, these delays are more than just a slight professional embarrassment – according to the GAO, various stakeholders have already developed and implemented initiatives that may help affected companies comply with the anticipated rule. Now, “due to the uncertainty regarding potential due diligence and disclosure requirements stemming from SEC’s delay in issuing a final rule, some stakeholders’ efforts to improve their initiatives through expansion and harmonization have been hindered.”

GAO’s recommendations? “GAO recommends that the Chairman of SEC identify remaining steps and associated time frames to issue a final rule.”

For background on the conflict minerals provisions, check out some of our previous posts. And don’t forget to check out the GAO report for more details on the delays.

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