One year ago I blogged about how the Conflict Minerals Rules would affect the electronics manufacturing services industry. Despite companies being subject to these requirements either by ruling, or by being a supplier in the reporting trail, the U.S. Court of Appeals has ruled regulations set forth on Conflict Minerals violates the 1st Amendment.
The initial ruling spurred on the filing of a suit from various parties including the National Association of Manufacturers (NAM) in 2012. “In April 2014, the Court determined that provisions of the Dodd-Frank Act that required companies to state their products have “not been found to be DRC conflict free” violate the companies’ First Amendment rights. A three-judge panel reaffirmed that decision in August 2015 after the SEC appealed the April ruling in November 2014. The SEC and Amnesty International filed a petition to rehear the case in front of the entire D.C. Circuit U.S. Court of Appeals on October 2. That petition was denied on November 9th.”
The European Union lead the way in establishing requirements for RoHs products, while the U.S. had initiated the charge in deterring the usage of Conflict Minerals. Regardless of the issues with implementation of the Conflict Minerals reporting to the SEC under the Dodd-Frank Act in the U.S., the EU has opted to proceed with implementing a similar policy of their own. Instead of focusing solely on the DRC, the EU feels that it is necessary to expand the monitoring and reporting of potential Conflict Minerals usage to any area that may contain corruption and conflict surrounding the harvesting and sales of minerals. Additionally, the EU has expanded the list of minerals that are to be reported on to include cobalt, a by-product of copper, silver, and nickel mining. Aside from changes to the geographic areas and minerals affected, companies operating in the EU will also feel the pressures of more mandatory reporting versus voluntary reporting – another example of how global regulations may impact U.S. business.
Closer to Home
What does all of this mean for OEMs, contract manufacturers, and their supply chains here in the States? At the moment, managing corporate Conflict Minerals policies will continue to provide challenges, both with determining the policies as well as executing any reporting their policies require with their supply chain, whom likely include small, private businesses that the original Conflict Minerals ruling didn’t apply to in the first place.
With the EU still moving to mandate that companies report on Conflict Minerals, including a greater scope in both geographic disclosure and mineral classification, any companies that are involved in business operations in Europe will still be required to spend time and resources on determining the origination of minerals to ensure compliance with the EU’s new rules.
Ruling Likely Not the End of Conflict Minerals
With the U.S. Court of Appeals ruling in favor of the reporting to be in violation of the 1st Amendment, these requirements will still be something that electronics manufacturing industry must continue to take into consideration. There is a 90 day window in which the SEC has to file a petition for a “writ of certiorari”. From there, the litigation in this matter could continue for many years, and while companies may not be required to submit reports officially, other factors including the EU and the CM platform of corporate social responsibility, will keep the issue alive. Therefore, it is not likely that requests into the supply chains will come to an abrupt halt due to this ruling. What are your thoughts? Let us know.