Domestic Manufacturers Hit by Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Act”), recently signed into law by President Obama, contains within its “Miscellaneous Provisions” a passage which could have a broad impact on manufacturers of consumer and other goods. American manufacturers of goods such as cell phones, lap tops, precision tools, appliances, lightbulbs, medical equipment and machine parts should be aware that the Act imposes new reporting and disclosure requirements requiring them to submit an annual report to the Securities and Exchange Commission (“SEC”) disclosing whether their products contain any of the commonly used minerals columbite-tantalite (coltan), cassiterite, gold, wolframite and their derivatives, as well as any other mineral determined by the Secretary of State to be financing conflict in the Democratic Republic of the Congo or an adjoining country. If so, the companies must describe what measure they are taking to track the minerals’ origin. The disclosure must also be made publicly on the firms’ web sites.
Companies are subject to the Act’s requirements if they are required to file reports with the SEC (i.e. are publicly traded companies), and if conflict minerals are necessary to the functionality or production of a product they manufacture. The report must be made annually and include a description of the measures taken to exercise due diligence on the source and chain of custody of the minerals and a description of all manufacture products that are not conflict mineral-free, the facilities used to process the conflict minerals, their country of origin and the efforts made to determine the mine or location of origin. The report must also be independently audited.
The Act requires the SEC to promulgate regulations implementing the audit and disclosure requirements by April, 2011. This process will allow interested parties to comment on the process and to identify certain areas of concern to the SEC so importers or manufacturers of any goods containing these minerals should monitor this process closely. The Act also requires the State Department, in conjunction with USAID, to submit to Congress a strategy to address the linkages between human rights abuses, armed group, the mining of conflict mineral and commercial products. The strategy must include a plan to provide guidance to commercial entities on the formulation of the due diligence plans the companies put in place to track the source of the minerals they use. Finally, the Act also requires the State Department to produce a map identifying the mineral-rich zones, trade routes and areas under the control of armed groups in the Congo and adjoining countries. Both the strategy document and the map should assist manufacturers in developing their plans and procedures for compliance with the Act’s reporting requirements.
For more information or for assistance in responding to the SEC’s request for comments please contact Julie Mendoza, Donald Cameron or Charles Hunnicutt.