March 1, 2013 – March 8, 2013
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Sanders (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.
General Dynamics Armament and Technical Products – Conflict Minerals Policy
General Dynamics Armament and Technical Products, a designer, developer and producer of market leading weapon, armament and vehicle survivability systems, recently released a statement on conflict minerals. Excerpts from the policy follow. “General Dynamics is required to submit a Special Disclosure Report – Form SD prior to May 31 for product sales in the preceding calendar year. To enable GDATP to comply with this requirement, suppliers will be required to complete a Conflict Minerals Certification with their proposal and/or in fulfillment of any GDATP Purchase Order. The due diligence required to substantiate this certification must describe the process utilized to determine the existence of any conflict minerals and their country of origin. MSDS documentation, engineering drawings, and detailed government specifications, are examples of how to determine conflict mineral content.”
For General Dynamics’ complete statement on conflict minerals, including its Conflict Minerals Certification form and General Terms and Conditions for Purchases under a U.S. Government Contract, please see General Dynamics – Conflict Minerals.
IPC: Will the SEC Issue Compliance Guidance on Conflict Minerals Rule?
IPC is asking the all-important question that many reporting companies and industry groups have been asking: Will the SEC Issue Compliance Guidance on the Conflict Minerals Rule? Although the SEC released a 350-plus page accompanying release with the rule back in August 2012, many important terms have gone undefined, which has led to a further need for guidance as companies attempting to comply with the rule play the guessing game of whether they “manufacture” a “product.” IPC notes that “the SEC’s Division of Corporation Finance has received requests from manufacturers for guidance on the rule according to an SEC official of the division’s rulemaking office.” IPC notes that “it has been rumored that the SEC may issue guidance on the conflict minerals regulations.” But until the SEC releases further guidance on the conflict minerals rule, companies will have to continue making decisions based on reasonable or good faith inquiries. We have heard the SEC Staff has indicated that further guidance in advance of the May 31, 2014 filing date is unlikely.
SEC Files Initial Brief in Conflict Minerals Rule Challenge on March 1, 2013
On Friday, March 1, 2013, the U.S. Securities and Exchange Commission (SEC), as contemplated by the briefing schedule, filed its initial brief in the U.S. Court of Appeals, District of Columbia, responding to the business groups who are asking the court to either set aside or modify the conflict minerals rule as it was adopted in August of 2012.
The SEC, in its initial brief, mainly asserts that it is not “authorized to second-guess and recalibrate policy judgments Congress made when it ordered the [SEC] to promulgate the rule” and that “neither the Administrative Procedure Act nor the [SEC’s] obligation to determine as best it can the economic implications of its rules gives the agency license to frustrate Congress’s purposes.” The SEC contends that it was merely carrying out Congress’s intent.
Please keep an eye out for a complete analysis and review of the SEC’s initial brief in a future blog post.
HDMA: Suppliers Begin Costly Audit for African ‘Conflict Minerals’
The Heavy Duty Manufacturers Association (HDMA), in an article in its March 5, 2013 issue of Diesel Download, titled “Suppliers Begin Costly Audit for African ‘Conflict Minerals’, notes that “truck makers and suppliers say they will be among the industries hardest hit” by the conflict minerals rule. In the article, Ann Wilson, senior vice president of government affairs for the Motor and Equipment Manufacturers Association, states “[w]e have been strongly suggesting to [manufacturers] that they form a committee with their legal office, their purchasing people and their internal accounting people to really take a look at the regulation and if they have to comply, how they’re are going to comply.”
WSJ: Reporting Rules Boost Value of Third-Party Due Diligence
Ben DiPietro of the Wall Street Journal (WSJ) observes that an “increase in reporting requirements from issues such as conflict minerals, Iran sanctions and anti-bribery laws” has forced companies to evaluate and confirm whether their suppliers are acting ethically and responsibly and are conforming to the companies’ standards.
Stephen Donovan, Chief Ethics and Compliance Officer for International Paper Co., and James Carroll, Ford Motor Co.’s Director of Corporate Compliance, both agree that incorporating their respective company’s code of conduct into supplier agreements is one method of holding suppliers accountable.
For Mr. DiPietro’s complete article, please see “Reporting Rules Boost Value of Third-Party Due Diligence.”