{"id":946,"date":"2012-09-04T15:23:17","date_gmt":"2012-09-04T15:23:17","guid":{"rendered":"http:\/\/ncjolt.org\/?p=946"},"modified":"2020-06-04T20:54:08","modified_gmt":"2020-06-04T20:54:08","slug":"the-sec-establishes-new-rules-regarding-conflict-minerals-in-the-manufacturing-process","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/the-sec-establishes-new-rules-regarding-conflict-minerals-in-the-manufacturing-process\/","title":{"rendered":"The SEC Establishes New Rules Regarding \u201cConflict Minerals\u201d in the Manufacturing Process"},"content":{"rendered":"

Tuesday, September 4, 2012, by Kelly Anderson<\/strong>
\nJust over a week ago, the Securities and Exchange Commission<\/a> approved new rules that could considerably impact the manufacturing process of numerous American electronic companies.\u00a0 Enacted \u201cunder the umbrella\u201d<\/a> of the Dodd-Frank Wall Street Reform and Consumer Protection Act<\/a>, the new SEC regulations require companies to publicly disclose whether their products contain \u201cconflict minerals,\u201d including tantalum, tin, gold, or tungsten, that originated in the Democratic Republic of the Congo (DRC) or any adjoining countries.
\n\u00a0A primary justification for the Act is that the exploitation and trafficking<\/a> of these conflict minerals by armed groups has been fostering regional conflicts in Central Africa for many years, playing an integral part in the current \u201cemergency humanitarian crisis\u201d<\/a> affecting the region. \u00a0In recent years, activists around the globe have been lobbying for restrictions<\/a> on these conflict minerals, primarily used in the United States for manufacturing of consumer electronic devices.
\nThis new rule<\/a>, applying to all U.S. companies for which these minerals are \u201cnecessary to the functionality or production\u201d of a product manufactured or contracted to be manufactured by the company, requires that the company file annual reports with the SEC under the Securities Exchange Act<\/a>. \u00a0Under this rule, a company is required to carry out a reasonable \u2018country of origin\u2019 examination<\/a>, executed in good faith and designed to identify whether or not the minerals used in its products originated in the DRC or its neighboring countries.
\nDespite the fact that the rules are required<\/a> by the SEC under the Dodd-Frank Act, a potential obstacle regarding enforcement of this new rule is that the SEC lacks sufficient authority<\/a> to take punitive action towards companies that still purchase these select minerals from DRC sources. \u00a0Nevertheless, many technology companies, including Apple, HP, Intel, and Motorola Solutions, have voluntarily amended their policies, building conflict-free programs and demonstrating to the rest of the industry that \u201cclean supply chains\u201d<\/a> can be achieved while still maintaining profits.\u00a0 In fact, social enterprise organizations are gaining popularity, based on beliefs that the market is an increasingly efficient way to promote the public good and people will pay more for goods and services that have positive effects on the world around them.
\n\"\"<\/a>\u00a0
\nAlthough some companies have already taken steps toward reforming their product manufacturing process to exclude conflict minerals or obtain these minerals from scrap or recycled sources, other companies that have not yet made this transition<\/a> may find significant challenges in conforming to this new rule.<\/p>\n

\u201cThey may have a lot of information about their supply chain, but they may never have really looked in the past to see whether any of their products use conflict minerals . . . And if you have a lot of products, with a lot of components and a lot of suppliers, that may be a big job<\/a>.\u201d \u2013Michael Littenberg, a partner at Schulte Roth & Zabel<\/p><\/blockquote>\n

 
\nThe SEC estimates that this new rule may affect over 6,000<\/a> public companies, resulting in billions of dollars in aggregate compliance costs.\u00a0\u00a0 Indeed, the Chamber of Commerce<\/a> is threatening a lawsuit against SEC, alleging that companies will not be able to comply with this rule on account of the high cost of supply-chain clean up.
\nIn a world of limited resources that is becoming increasingly dependent on technology, it is not difficult to see shifting of priorities manifested in government regulations.\u00a0 Investigation into mineral origin is now not only an occasional demand by the concerned technology consumer, but a legal requirement.<\/p>\n","protected":false},"excerpt":{"rendered":"

Tuesday, September 4, 2012, by Kelly Anderson Just over a week ago, the Securities and Exchange Commission approved new rules that could considerably impact the manufacturing process of numerous American electronic companies.\u00a0 Enacted \u201cunder the umbrella\u201d of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the new SEC regulations require companies to publicly disclose …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/946"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=946"}],"version-history":[{"count":1,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/946\/revisions"}],"predecessor-version":[{"id":7707,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/946\/revisions\/7707"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=946"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=946"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}