Legislative History of Dodd-Frank Conflict Minerals Act

The journey to conflict minerals legislation began in the early 2000s when alarming reports surfaced about mineral resources from the Democratic Republic of Congo (DRC) funding armed conflicts and fueling human rights abuses. This sparked global outrage, leading to coordinated international efforts to prevent the exploitation of these resources and ensure ethical mineral sourcing.

In 2003, the United Nations Security Council adopted a resolution urging all countries to halt the illegal exploitation of DRC’s natural resources. This pivotal move laid the groundwork for numerous initiatives, including establishing certification schemes for DRC’s mineral exports to prevent conflict-driven exploitation.

Rising Awareness in the United States

As international awareness grew, U.S. lawmakers took notice. In 2008, Congressman Jim McDermott introduced the Conflict Minerals Trade Act to restrict the import of certain minerals from the DRC unless certified as conflict-free. Although the bill did not pass, it ignited a crucial debate in Congress and set the stage for future legislation.

U.S. Legislative Efforts Leading to Section 1502 of the Dodd-Frank Act

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, containing a key provision on conflict minerals (Section 1502). This provision mandated that companies disclose their use of conflict minerals in their products and trace the origins of these minerals.

The goal: to provide transparency and accountability in the mineral supply chain, especially from conflict-prone regions in the DRC and surrounding countries.

Legal Challenges and Industry Opposition of conflict minerals regulation

The conflict minerals provision faced opposition from major industry groups, including the National Association of Manufacturers and the U.S. Chamber of Commerce, who argued it would impose excessive reporting burdens and impact economic growth. This led to several legal challenges. In 2014, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the provision violated the First Amendment by mandating companies to make statements deemed not factual or uncontroversial. Despite this ruling, the conflict minerals provision was later reinstated by the U.S. Supreme Court and remains effective, requiring companies to disclose their use of conflict minerals.

Global Impact: The EU’s Conflict Minerals Regulation

Beyond the United States, the European Union has implemented its own regulations addressing conflict minerals. In 2021, the EU Conflict Minerals Regulation went into effect, requiring companies to conduct due diligence on minerals sourced from Conflict-Affected and High-Risk Areas (CAHRAs), including the DRC. This regulation includes guidelines for companies to responsibly manage their mineral supply chains and avoid supporting conflicts.

The EU also maintains an updated list of CAHRAs to help companies prevent indirect support of human rights abuses and conflict through their sourcing practices. These regulations align closely with the goals of Section 1502 of the Dodd-Frank Act, fostering international consistency in conflict-free sourcing standards.

The Compliance Process for CMRT (Conflict Minerals Reporting)

Companies subject to Section 1502 must meet specific reporting standards as part of the SEC Conflict Minerals Rule. The process includes:

• Conducting a Reasonable Country of Origin Inquiry (RCOI): To identify if minerals come from the DRC or other covered regions.
• Filing Form SD with the SEC: Companies disclose their findings publicly, describing the steps taken to trace their mineral sources.
• If Necessary, Submitting a Conflict Minerals Report: This includes categorizing products based on their conflict status (DRC Conflict Free, Not Found to Be DRC Conflict Free or DRC Conflict Undeterminable), conducting due diligence aligned with recognized frameworks, such as the OECD Due Diligence Guidance, and posting findings on the company’s website.

Download our Conflict Minerals eBook to understand everything about CMRT reporting.

Compliance Challenges and the Role of Technology

Due to the complexity of tracking minerals and meeting reporting requirements, many companies turn to Conflict Minerals Compliance Software and managed services. Platforms like Acquis Compliance provide robust tools for supplier communication, compliance data management, and reporting, making it easier to track and verify mineral sources. These services support companies in navigating evolving global conflict minerals regulations, such as the Extended Minerals Reporting Templates (EMRTs) and Additional Minerals Reporting Templates (AMRTs), enhancing transparency in mineral supply chains.

Speak to our compliance experts today to streamline your conflict minerals reporting.