US Dodd-Frank Act Section 1502 (Conflict Minerals Disclosure Rule)

The Conflict Minerals Disclosure Rule (enacted 2012, SEC Rule 13p-1) under Section 1502 of the Dodd-Frank Act requires SEC-registered companies to conduct a "reasonable country of origin inquiry" (RCOI) into whether 3TG minerals (tin, tantalum, tungsten, and gold) necessary for a product's function or manufacture originate from the Democratic Republic of the Congo (DRC) or adjoining countries, and to file Form SD annually by May 31. The rule originally required a label stating that products containing DRC-sourced conflict minerals were "not found to be DRC conflict free," but the D.C. Circuit Court of Appeals held that this labeling requirement violated the First Amendment right to free speech, and the labeling requirement was struck down. However, the underlying RCOI and Form SD reporting and due diligence obligations remain in effect, and many companies continue to file Form SD each year. In 2017, during the first Trump administration, the SEC reportedly effectively suspended enforcement of certain elements of the rule (particularly substantive review of due diligence reports), and this state of affairs continues today. Because the SEC itself has not rescinded the rule and the legal existence of the reporting obligation is unchanged, GRI's Level 2 assessment ("no change") is appropriate. The key practical point is that while the rule remains legally in force, the enforcing agency's posture has remained weak since 2017, resulting in nearly a decade of a "the rule is alive but enforcement is loose" state. Several GAO reports have noted that supply chain transparency challenges remain, and it is worth noting for corporate practice that similar regimes in other jurisdictions, such as the EU's conflict minerals regulation, are imposing increasingly stricter expectations.