President Donald Trump is planning to issue a directive targeting a controversial Dodd-Frank rule that requires companies to disclose whether their products contain “conflict minerals” from a war-torn part of Africa, sources familiar with the administration’s thinking.
Reuters could not learn precisely when the directive would be issued or what the final version would say. However, a leaked draft that has been floating around Washington, D.C., and was seen by Reuters on Wednesday calls for the rule to be temporarily suspended for two years.
Reuters could not independently verify the authenticity of the document. The sources spoke on Tuesday on condition of anonymity because they were not authorized to speak on the record about the plan.
The 2010 Dodd-Frank law explicitly gives the president authority to order the U.S. Securities and Exchange Commission(SEC) to temporarily suspend or revise the rule for two years if it is in the national security interest of the United States.
The conflict minerals rule was endorsed by human rights groups that want companies to tell investors if their products contain tantalum, tin, gold or tungsten mined from the Democratic Republic of Congo in the hope that such disclosures would curb funding to armed groups.
Business groups opposed to the measure have contended that it forces companies to furnish politically charged information that is irrelevant to making investment decisions and that it costs too much for companies to trace the source of minerals through the supply chain.
In the leaked draft the Secretary of State and Secretary of the Treasury were asked to propose a plan for addressing human rights violations and the funding of armed groups in the Democratic Republic of Congo and report back within 180 days.
Carly Oboth, a policy adviser at human rights group Global Witness, said in a statement on Wednesday that she was deeply concerned about Trump’s planned executive action.
“This law helps stop U.S. companies funding conflict and human rights abuses in the Democratic Republic of Congo and surrounding countries,” she said.
“Suspending it will benefit secretive and corrupt business practices. Responsible business practices are starting to spread in eastern Congo. This action could reverse that progress.”
A White House executive order last week took aim more broadly at the Dodd-Frank rules that were put into place after the 2007-2009 financial crisis. That order did not single out a particular rule but called on the Treasury Secretary to consult with other regulators, including the SEC, and come back with a report outlining possible regulatory changes and legislation.
A Dodd-Frank SEC disclosure rule that required oil, gas and mining companies to disclose payments to foreign governments was repealed by the Republican-controlled Congress last week.
The conflict minerals rule is one of several disclosure regulations in Dodd-Frank that are unrelated to the financial crisis.
In 2014, a U.S. appeals court struck down part of the conflict minerals law after the Business Roundtable, the U.S. Chamber of Commerce and the National Association of Manufacturers sued the SEC over it.
The court found part of it violated free speech rights of companies by forcing them to publicly state that their products were not conflict free.
The rest of the rule was left intact and companies are required to conduct due diligence and report the details of those inquiries in public reports filed with the SEC.
The SEC cannot repeal the rule without a law passed by Congress. It can, however, use its broad exemptive powers to scale back some of the requirements or stop enforcing the rule entirely.
Last week, Acting SEC Chair Michael Piwowar took steps toward doing that by announcing that he had asked SEC staff to reconsider how companies should comply with it and whether “additional relief” was warranted.
House Financial Services Chairman Jeb Hensarling is planning to reintroduce his Financial CHOICE Act bill, which contains a provision to repeal the conflict minerals rule.