The Securities and Exchange Commission (SEC) has delayed its issuance of final regulations to implement the conflict minerals provision of the Dodd-Frank Financial Reform Act which was signed into law in 2010. The rulemaking is now listed as an “Upcoming Activity” in the January-June 2012 time frame on its Web site.

The delay is good news for AASA, HDMA, MERA and OESA member companies. Member companies operating on a calendar year should have an additional year to report on their use of conflict minerals than they would have had the SEC issued the regulation in December. For supplier companies who are not publicly held, this will give additional time to develop practices to determine origin of specific minerals in order to provide the information to customer companies.

The regulations originate from Sec. 1502 of the Dodd Frank Financial Reform Act which seeks to address the atrocities in the Democratic Republic of Congo (DRC) and surrounding regions. It requires the SEC to publish reporting requirements for companies whose products contain conflict minerals from the DRC and adjoining countries by disclosing the mine of origin and smelter used to process the minerals into metals.

SEC’s Notice of Proposed Rulemaking, issued in late 2010, required that all companies report to the SEC whether products were conflict mineral free or contained conflict minerals. Under the proposed rule, if it is impossible to determine the minerals origin, the product would be treated as containing conflict minerals. In April 2011, Chrysler, Ford, Honda, Nissan, and Toyota sent a letter to all Tier 1 suppliers outlining what will be necessary from suppliers to comply with the requirements.

MEMA and other business groups had proposed to the SEC that they allow a phased-in approach which would provide industry necessary time to develop due diligence plans to adequately trace the sources for minerals. Also, industry is advocating for a de minimis standard because it will be virtually impossible to trace the minerals in every product in which they are used. It is still unclear whether or not the SEC will include these measures in its final regulation. MEMA continues to work with other stakeholders to educate the SEC and Congress on what the practical difficulties were in the proposed rule.

For more information, please contact Catherine Boland.