In a letter dated July 28, 2011, the leaders of the House Committee on Financial Services submitted additional comments to the SEC on the yet-to-be-finalized conflict minerals regulations. The Committee Leaders, Congressmen Spencer Bachus, Gary Miller, Robert Dold and Steve Stivers, provided their recommendations on specific elements of a transitional implementation plan for Section 1502 of the Dodd-Frank Act.
Key points brought forth in the letter include:
- The State Department’s most recent map of Conflict Zone Mines is incomplete, the mine sites are inaccessible, the Congolese Ministry of Mines cannot obtain verifiable information, and the information in the map is insufficient for companies t use in effective due diligence.
- Creation of a new temporary category – “indeterminate origin.” This would exempt companies from filing SEC reports when the origin is not possible to ascertain. Due diligence efforts would still be required and proper filings made once the source is determined.
- Retaining the “indeterminate origin” classification as permanent for scrap materials.
- A call to establish a de minimis standard for conflict minerals.
It is interesting to note that the letter explicitly indicates the need for a “multi-tiered certification system, especially at the smelter and refinery level”. Such a program is not required by the law, but may provide a key information element for companies subject to SEC reporting on conflict minerals.
At the same time, it is important to remember that use of/reliance on information from a certification system is simply one element of the program and reporting required. Additional management processes are still needed for the internal use, management, risk assessment and reporting of that information. That is sometimes not recognized by those entities who are emphasizing certification systems.
See the letter here: HFSC ltr to SEC re Conflict Minerals