SEC Votes on Final Conflict Minerals Regulation

This morning, the Securities and Exchange Commission (SEC) voted in favor (3-2) of a final conflict minerals regulation. Overall, the final regulation is an improvement from the proposed rule and addresses 80 percent of the concerns raised by IPC.

Although compliance will still be a significant burden for the industry, we believe the final rule makes reasonable accommodations to lowering the burden while achieving Congressional intent. See our notes from the public meeting held this morning and a fact sheet distributed by the SEC. The SEC has not posted the text of the final regulation, but expects to make it available later this week. Once the final rules are published, IPC will conduct a more comprehensive review and provide additional information.

The final rule provides burden relief to the industry by establishing a unified reporting schedule, creating an indeterminate category, implementing a phase-in period, and removing the requirement that a CMR report is required for any recycled or scrap materials contained in a product. IPC has been a strong advocate for these provisions and are very pleased they are included in the final rules.

• Following a reasonable country of origin inquiry, companies unable to determine the origin of the conflict minerals in their product may report the source of their conflict minerals as indeterminate for two years. Small companies have four years (the SEC did not define a small company during the meeting).
• Unlike the proposal which would have required a CMR for all recycled or scrap sources of conflict minerals, companies need only conduct, disclose and describe a reasonable inquiry to verify that the conflict minerals come from scrap or recycled sources.  A CMR is required only if the reasonable inquiry indicates that the source may not be from scrap or recycled sources.
• CMR reports will be filed as part of a new SD form. The deadline for submitting the SD will be May 31 of each year, with data from January to December reported. The first report will be due May 31, 2014 for data from January 2013-December 2013. The SEC had originally proposed that each company would file according to their fiscal year. By providing a uniform reporting deadline, the burden on the supply chain will be reduced.

At their IPC Midwest meetings tomorrow, IPC’s due diligence and data exchange committees will begin reviewing necessary changes to IPC-developed compliance tools in light of today’s information. We expect to publish a compliance guideline later this year.  Additionally, on Friday we will announce the first of several conflict minerals seminars to be held this fall.  (Editors note – please visit http://www.ipc.org/conflict-minerals for a more detailed compliance summary and information on the fall seminars).

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