Experts question the harmful impacts of the SEC rule on communities in the DRC

A commentary by Davis Polk on lexology online notes that a group of academics and former government officials with expertise on the DRC have filed a dossier supporting the legal challenge of the SEC’s rules on conflict minerals. The document argues that the SEC did not properly evaluate the impact of the rule since, if it had, it would have concluded that the expense associated with compliance by companies has caused sourcing from the DRC to be avoided, harming the livelihood of miners and worsening overall circumstances in that – and the adjoining – countries. A proper assessment would also have concluded how the costs prevent companies from investing in traceability programs that would enable them to determine whether minerals are from mines controlled by armed groups. This expert group states that its goal is not to support the commercial interests of the original challengers including the Chamber of Commerce and the Business Roundtable, but rather to emphasize that the SEC rule fails to advance the objective to weaken armed groups in the DRC. The brief describes the history of the conflict in the DRC that led Congress to adopt Section 1502 in the Dodd-Frank Act, with the perverse effect of forcing thousands of miners to flee from their only means of support and abandon mine sites, due to the increased strength of the very armed groups that the Law wanted to help eradicate. The SEC reply is due 1st March 2013. A growing number of researchers have published evaluations questioning the effectiveness of the regulation, and showing concern over the impacts of the de-facto embargo evident in the central African region, which are summarised here.