Among the provisions tucked into the massive Dodd-Frank financial reform legislation passed three years ago was a requirement that publicly held corporations must disclose whether so-called “conflict minerals” are “necessary to the functionality or production” of a company’s products. Conflict minerals are those, such as tin or gold, that are extracted from the Democratic Republic of Congo or adjoining countries where armed conflict or human rights abuses are likely involved in mining them.
Although it has nothing to do with curbing the financial and banking system abuses that Dodd-Frank is supposed to be about, this simple disclosure regulation doesn’t seem like a bad idea. Perhaps if companies had to disclose that they are making money off of such misery they might be embarrassed into stopping.
However, last week when I noticed that the SEC had issued a list of Frequently Asked Questions, with answers, related to the rule, I was reminded that going into the weeds to see how seemingly benign regulations play out in real life is usually a fun, important story.
The 1,700-word FAQ document deals with everything from whether a public company whose product was only in the packaging material containing conflict minerals had to disclose that in its SEC filing, to when a company that acquires another company that uses conflict minerals has to begin disclosing. And it turns out those FAQs were apparently the first in a series being issued to explain a mind-numbing 356 page — yes 356 pages — rule promulgated two years after Dodd-Frank passed that laid out the disclosure requirements.
That document is a Washington lawyer’s dream. The details ranged from defining the standard of “due diligence” that must be applied when following the chain of custody of the ingredients in the company’s products, to instructions on how to categorize recycled ingredients, to defining “necessary to the functionality,” to specifying the “auditing standards” that must be used for the disclosure.
So, how about a story explaining how many companies — especially the unlikely ones that we don’t instinctively associate with mining — now have lawyers working away on these disclosures, and whether it’s all worth it?
Indeed, whether it’s Dodd-Frank or Obamacare, there are probably dozens of stories out there like this one. I bet an ambitious reporter could pick almost any paragraph of either bill at random and explore what is likely to be the high — even if justifiable — cost of good intentions.
4. Is The FAA about to kill newsstand sales?
While we’re discussing unintended consequences of regulatory decisions, here’s another idea: Last week the Federal Aviation Administration announced that it will probably soon eliminate the much-discredited prohibition on passengers using electronic devices such as e-readers during takeoffs and landings. That rule was about the only reason left that I ever bought a newspaper or magazine at an airport newsstand. I wonder how many readers are like me. Soon after the prohibition is lifted, someone ought to see how key airport vendors like Hudson News have been affected.