Article by Jocelyn M. Arel , Christopher J. Austin , Mitchell S. Bloom , Michael H. Bison , John J. Egan, III , Richard A. Kline , Arthur R. McGivern Michael J. Minahan , William J. Schnoor, Jr. , Bradley C. Weber Lawrence S. Wittenberg , and Raymond C. Zemlin , After multiple delays and extensions, the SEC appears poised to issue final rules implementing Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), which requires the SEC to establish new disclosure rules regarding companies' uses of "conflict minerals" from the Democratic Republic of the Congo (the "DRC") and adjoining countries (Angola, Burundi, Central African Republic, Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and Zambia). This bipartisan addition to the Dodd-Frank Act represents an attempt by Congress to create public pressure on corporate practice(s) at companies that use minerals derived from this region. Congress believes "the exploitation and trade of conflict minerals originating in [the DRC and adjoining countries] is helping to finance conflict characterized by extreme levels of violence..., particularly sexual- and gender-based violence, and contributing to an emergency humanitarian situation therein."
The Dodd-Frank Act required the SEC to adopt rules relating to conflict minerals by April 2011. The SEC issued a proposed rule in December 2010 and comments on this proposal were originally due by January 31, 2011. In response to the large number of comments received, the SEC extended the public comment period until March 2, 2011. Then the SEC announced that it would miss the statutory deadline of April 15, 2011, and many expected final rules to be issued in late 2011. Now, based on comments from SEC Chairman Mary Schapiro during a March 6, 2012 congressional budgeting hearing, final rules are expected in "the middle of" 2012. Chairman Schapiro cited the complexity and extraordinary nature of the rule as a reason for the delay.
Overview of the SEC's Proposed Rules1
What is a Conflict Mineral?
The proposed rules define the term "conflict mineral," without regard to its country of origin, as the following minerals, any derivatives thereof and any other minerals or derivatives determined by the U.S. Secretary of State to be financing conflict in the DRC countries:
Cassiterite – Tin is derived from cassiterite and used in tin plating and as a solder for joining pipes and...