In a letter to SEC Chair Mary Schapiro, four prominent House Democrats, including Rep. Barney Frank (D-MASS) urged the SEC to quickly complete the conflict minerals regulations implementing Section 1502 of the Dodd-Frank Act. The letter also said that the SEC should incorporate the OECD due diligence guidance in the regulations. Section 1502 of the Act requires companies that report to the SEC to disclose the measures they use to certify that their products do not contain conflict minerals from the Congo. Companies also have to track their supply chains back to a mineral's origin. Earlier this year, the SEC announced that the issuance of final rules for Section 1502 would be delayed beyond the April 17 date established in law. Noting that we are now almost five months past that April deadline, the House Democrats said that, unless the regulations are promulgated soon, an entire year of implementation could be missed, since the law requires companies to begin reporting in the first fiscal year after regulations are finalized. For many companies, the fiscal year begins in January. The lawmakers also said that delays in implementation will seriously undermine the aim of the provision to reduce violence on the ground as quickly as possible and will send the wrong message to companies about the importance of this provision. The House Democrats encouraged the SEC to build upon the OECD byy adopting the five step due diligence framework set out in the OECD's "Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas". The OECD guidance was developed in coordination with a broad range of companies, non-governmental organizations, processing facilities, and regional governments. It represents an international consensus on how to approach the minerals trade without contributing to violence and human rights violations. In July, the Department of State endorsed this framework. The House Democrats also said that Section 1502(b) is intended for all manufacturing companies thatuse minerals in their products, regardless of how small the percentage or what label they manufacture under, to be required to trace and disclose information on their supply chains. This intention should be reflected in the final regulations. In addition, the representatives also advised that companies should not be allowed to report that the minerals in their products are of "indeterminate origin". Rather, if companies fail to determine the origin ofthe minerals in their products, they must describe them as "Not DRC conflict free" in their Conflict Minerals report. Otherwise, a perverse incentive is created for companies not to exercise full due diligence, which could result in "indeterminate" mineral characterizations that would render the determinations meaningless .
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