Minerals GUIDANCE SEC CONFLICT MINERALS RULE

Transcription

1 Conflict Minerals GUIDANCE SEC CONFLICT MINERALS RULE APRIL 2013

2 DISCLAIMER This Guide has been prepared by the American Coatings Association (ACA) for the entire industry; primarily paint formulators, their customers, and their suppliers. The information is offered in good faith and believed to be reliable, but is made without warranty, expressed or implied, as to merchantability, fitness for a particular purpose, or any other matter. This document and the examples included herein do not claim to satisfy all current regulatory requirements. Following this document does not guarantee compliance with any regulation. Users are cautioned that the regulations and interpretations on which this document is based are subject to change, which may invalidate any or all of the comments contained herein. This Guidance is not intended to provide specific advice, legal or otherwise, on particular products or processes. Manufacturers, processors, distributors, and other users of this document should consult with their own legal and technical advisors in complying with the SEC Conflict Minerals rule. ACA, its members and contributors do not assume any responsibility for the user s compliance with applicable laws and regulations nor for any persons relying on these materials for compliance, or for any loss or damage arising from reliance on this document by any party.

3 TABLE OF CONTENTS I. INTRODUCTION...1 A. The Basics of the SEC Conflict Minerals Rule...1 B. What are Conflict Minerals?...1 C. How the Conflict Minerals Rule Affects the U.S. Paint and Coatings Industry...1 II. OUTLINE OF THE RULE...2 A. Step 1: Determining Whether a Company is Covered by the Conflict Minerals Rule...2 B. Step 2: Reasonable Country of Origin Inquiry...3 C. Step 3: Supply Chain Due Diligence and Conflict Minerals Report...4 III. LITIGATION...4 A. NAM, Chamber of Commerce, Business Roundtable vs. SEC...4 B. ACA s Amicus Brief...5 C. SEC Reply Brief...6 IV. INTERNAL POLICY...7 A. Sample Conflict Minerals Policy Statement...7 B. Building a Conflict Minerals Compliance Team...7 C. Getting Started...8 D. Other Useful Suggestions...8 V. OECD DUE DILIGENCE GUIDELINES...8 VI: FREQUENTLY ASKED QUESTIONS...11 APPENDIX: SEC FLOWCHART OF FINAL RULE...13

4 I. INTRODUCTION A. The Basics of the SEC s Conflict Minerals Rule On August 22, 2012, the U. S. Securities and Exchange Commission (the SEC) finalized the Conflict Minerals Rule. This rule was mandated by the United States Congress, passed in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Congress included this provision in the Dodd-Frank Act in an effort to further the humanitarian goal of ending conflict in the Democratic Republic of the Congo (DRC) and the adjoining region. This conflict has been partially financed by the trade of certain minerals, known as conflict minerals, in the DRC and in surrounding countries, including Angola, Burundi, Central African Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and Zambia (the Covered Countries ). The rule requires all U. S. publically traded companies to conduct supply chain due diligence to determine the origin of minerals that have been associated with the on-going conflict in the DRC. The rule took effect on January 1, 2013 and requires annual reporting. The first reporting period ends May 31, B. What are the Conflict Minerals? The Conflict Minerals currently include gold as well as tin, tantalum and tungsten, the derivatives of casserite, columbite-tantalite, and wolframite, respectively. These conflict minerals are commonly referred to as the 3TGs. The U.S. Government has determined these minerals are financing conflict in the DRC and adjoining countries. The term conflict minerals applies to all 3TG minerals, whether or not they originated in the Covered Countries. The Dodd-Frank Act authorizes the U.S. Secretary of State to designate additional minerals if it is determined that trade related to those minerals is being used to fund conflict in the Covered Countries. C. How the Conflict Minerals Rule Affects the U.S. Paint and Coatings Industry All U.S. publically traded paint and coatings companies that manufacture or contract to manufacture products for which conflict minerals are necessary to the products functionality or production are covered by the scope of the Conflict Minerals Rule. The principle concern of the paint and coatings industry is tin, which is often used as a catalyst in polymer manufacturing. The SEC states that catalysts are not necessary for the production or functionality of a product if the catalyst is completely washed away. However, the SEC did not include a de minimis threshold; therefore, if your product contains any amount of tin, it falls within the scope of the rule. Due to the lack of a de minimis threshold, it is reasonable to project a large number of paint and coating manufactures will be manufacturing products that contain tin and, therefore, have to conduct a Reasonable Country of Origin Inquiry (RCOI). Due to the paint and coating industry s complex supply chain and frequent formulation changes, the Conflict Minerals Rule will have a widespread impact on our industry. ACA believes that, due to the complexity of the rule and the large supply chains employed by the industry, it is important for members to start their compliance efforts as soon as 1

5 possible. This guidance aims to explain the three step compliance process of the rule and provide useful information to comply with the rule. II. OUTLINE OF THE RULE The rule sets out a three-step compliance process, as follows: 1. A company must determine if, based on its use of conflict minerals, it is covered by the rules. 2. If a company is covered by the rules it must conduct, in good faith, a Reasonable Country of Origin Inquiry (RCOI) that is reasonably designed to determine if the conflict minerals originated in the covered countries or come from scrap or recycled sources. 3. If a company determines that its conflict minerals originated in the covered countries and are not from scrap or recycled sources, or has reason to believe that its conflict minerals may have originated in the covered countries or may not be from scrap or recycled sources, the company must exercise due diligence on the source and chain of custody of its conflict minerals and must file a Conflict Minerals Report and independent audit related to its due diligence. A. Step 1: Determining Whether a Company is Covered by the Conflict Minerals Rule A company (issuer) is covered by the rule if both of the following criteria are met: 1. The company files reports with the SEC under Section 13(a) or 15(d) of the Exchange Act; and 2. Conflict minerals are necessary to the functionality or production of a product manufactured by the company or contracted by the company to be manufactured. While not specifically defined in the rule, the SEC provided guidance in the final rule release for the following terms: Manufacture The SEC considers this term to be generally understood; it does not include those who only service, maintain, or repair a product containing conflict minerals. Contract to Manufacture Determined based on the degree of influence the company exercised over the product s manufacture (materials, parts, ingredients or components). This does not include: Specifying or negotiating terms with a manufacturer that do not directly relate to the manufacturing of the product; Affixing the company s brand, marks, logo, or label on a generic product manufactured by a third party; or Servicing, maintaining, or repairing a product manufactured by a third party. Necessary to the Functionality This determination requires a facts and circumstance analysis with consideration given to: 2

6 Whether a conflict mineral is contained in and intentionally added to the product or any component of the product and is not a naturally-occurring by-product; Whether a conflict mineral is necessary to the product s generally expected function, use, or purpose; or If a conflict mineral is incorporated for purposes of ornamentation, decoration, or embellishment, whether the primary purpose of the product is ornamentation or decoration. Necessary to the Production Determined by whether a conflict mineral is contained in the product and intentionally added in the product s production process, including the production process of any component of the product and whether the conflict mineral is necessary to produce the product. B. Step 2: Reasonable Country of Origin Inquiry If a company determines that it is covered by the rules it must conduct, in good faith, a Reasonable Country of Origin Inquiry that is reasonably designed to determine if such conflict minerals originated in the covered countries or come from scrap or recycled sources. The company is not required to conduct further due diligence on the origin of the conflict minerals if, as a result of the RCOI, the company determines that: 1. Its conflict minerals did not originate in the covered countries; 2. It has no reason to believe that its conflict minerals may have originated in the covered countries; 3. It reasonably believes that its conflict minerals are from scrap or recycled sources. If the company is not required to conduct further due diligence it is still required to provide disclosures related to its RCOI in form SD (Specialized Disclosure). If, as a result of the RCOI, the company knows or has reason to believe that the conflict minerals may have originated in the covered countries, the company must exercise due diligence on the source and chain of custody of the conflict minerals following a nationally or internationally recognized due diligence framework. The Organisation for Economic Co-operation and Development s (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas (see also the supplement for tin, tantalum, tungsten and gold) currently satisfies the requirement for source and chain of custody due diligence. The adopting release does not offer specific guidelines for performing an RCOI, but it does state that what constitutes a RCOI will depend on facts and circumstances analysis including, the company s size, products, relationships with suppliers and other factors. It is likely that what qualifies as a reasonable inquiry will likely evolve over time as procedures for supply chain tracing and certification become more established. 3

7 C. Step 3: Supply Chain Due Diligence and Conflict Minerals Report A company that knows, based on its RCOI, that the conflict minerals necessary to the functionality or production of its products did originate in the Covered Countries, or has reason to believe the conflict minerals may have originated in the Covered Countries, AND knows or has reason to believe the conflict minerals are not, or may not be, from recycled or scrap sources, must exercise due diligence on the source and chain of custody of such conflict minerals. The rules require that a company s due diligence conform to a nationally or internationally recognized due diligence framework. The adopting release states that the OECD Due Diligence Guidance satisfies the rules criteria and may be used by companies as a framework to satisfy the rules due diligence requirements. A Conflict Minerals Report should be filed as an exhibit to Form SD. The report must include a description of the measures the issuer has taken to exercise due diligence on the source and chain of custody of its conflict minerals. The Conflict Minerals Report must include the following information: The country of origin of those conflict minerals Any efforts made to determine the mine or location of origin with the greatest possible specificity The facilities used to process those conflict minerals, such as the smelter or refinery through which the issuer s minerals pass A description of any products that are not DRC conflict free. The form of this description is not prescribed and can be determined by the issuer, depending on its industry and individual circumstances Additionally, the company must obtain an independent private sector audit of its Conflict Minerals Report and include a statement in the report to this effect. III. LITIGATION A. NAM, Chamber of Commerce, Business Roundtable vs. SEC The National Association of Manufacturers (NAM), the U.S. Chamber of Commerce and the Business Roundtable filed suit challenging the SEC s final rule on conflict minerals disclosure on Oct. 19, In its filing, the U.S. Chamber of Commerce stated that the conflict minerals rule is inconsistent with federal law and creates an unworkable system that will impose billions of dollars in costs on American businesses, large and small, with no clear benefits to the people of the Congo or the neighboring countries. The coalition is asking the court to address a number of legal issues including: (1) whether the SEC s economic analysis is inadequate, in violation of the Securities Exchange Act of 1934 and the Regulatory Flexibility Act; (2) whether the SEC acted in a manner that was arbitrary and capricious in 4

8 violation of the Administrative Procedure Act, e.g. by refusing to adopt a de minimis exception, by the way the agency structured the transition period, by misinterpreting the statute to sweep into the regulatory net non-manufacturers who contract to manufacture products, etc.; and (3) whether the statute violates the First Amendment. B. ACA s Amicus ACA took the lead in garnering critical information from its members and enlisting five other major industry trade groups to participate with case study information and financial assistance for the effort, supporting the Petition for Review filed by NAM, the Chamber, and the Business Roundtable v. the U.S. Securities and Exchange Commission for its misguided approach to issuing its final Conflict Minerals rule (Section 1502) of the Dodd-Frank Act. While emphasizing our collective support for the goal of the legislative measure, which is to help end the humanitarian crisis in and around the Democratic Republic of the Congo, ACA s amicus brief argues, however, that in drafting particular provisions in the rule governing, e.g., de minimis uses of conflict mineral derivatives, the SEC failed to apprise itself of the economic consequences of its action, either with respect to U.S. industry or the situation in the Congo. Thus, it violates the SEC s foremost statutory mandate to determine the economic implications of its rules, whereby, as the U.S. Court of Appeals (D.C.) has repeatedly explained: the Commission has a unique obligation to consider the effect of [its new rules] upon efficiency, competition, and capital formation and its failure to apprise itself and hence the public and the Congress of the economic consequences of a proposed rule makes publication of the rule arbitrary and not in accordance with law. Thus, the ACA brief supports petitioners and argues that the court should send the rule back to the SEC for revised rulemaking conducted in accordance with the SEC s statutory obligations. Specifically, the amicus brief highlighted the dire consequences and unnecessary burdens on manufacturers imposed by failing to adopt a sensible de minimis exception for those whose products may (or may not) contain mere trace elements of conflict metals (e.g. Tin) as a result of manufacturing processes (e.g., the use of catalysts) employed by third party suppliers of ingredient materials at one stage, or more, in long upstream supply chains. The brief goes on to point out that by failing to adequately define what it means to be a derivative of a conflict mineral, the SEC has potentially expanded the economic scope of the regulation to markets with only the most tenuous connection, if at all, to the Congo and the purpose of its statutory authority. Thus, we maintain that the SEC Rule is arbitrary and capricious, and it should be set aside. Experts on the Democratic Republic of Congo, including a former U.S. Assistant Secretary of State for African Affairs, have submitted a separate amicus brief, which argues that the rule will likely worsen conditions in the DRC, since it incentivizes a permanent de facto embargo, as the SEC itself acknowledges. 5

9 C. SEC Reply Brief SEC filed its response brief and oral arguments will be heard in May One of ACA s goals in preparing the amicus brief was to secure "clarifications" from the SEC in its brief that might benefit industry, even if the full challenge to the Conflict Minerals rule is not successful. We appear to have made some headway in that secondary goal, particularly with regard to packaging and the scope of the investigation/due diligence requirement, as follows: Packaging: At page 50, footnote 9 in its brief, the SEC responds directly to the case studies in our amicus brief. The most notable SEC response is with respect to packaging, which the SEC fairly clearly states is not covered by the conflict minerals rule: "Moreover, amici's concerns that the rule 'could be read to include a product's packaging' (Industry Br.20) are overstated, as nothing in the release states that packaging is included." Investigation obligation: The SEC went to some length at various places in its brief to clarify the nature of the investigation obligation as being less onerous than might otherwise be suggested by the rule. The following quotes from the SEC brief are the most favorable on this issue: 1. The SEC states that issuers would be able to comply with the Reasonable Country of Origin Inquiry obligation by "seeking and obtaining reasonably reliable representations from their suppliers" and that issuers are "not required to receive representations from all of their suppliers." SEC Br. at "Even if an issuer is unable to determine the origin of its conflict minerals with certainty, if its Reasonable Country of Origin Inquiry yields no reason to believe its minerals may have originated in the covered countries, it is not required to conduct due diligence." SEC Br. at The "further step of due diligence" is required "when (but only when) such issuers encounter red flags during their Reasonable Country of Origin Inquiry." SEC Br. at The "rule does not require exact tracking of every stage of a component's manufacture" and "issuers are permitted to rely on reasonable representations from suppliers and/or smelters in certain circumstances." SEC Br. at "And while the Commission did not adopt petitioners' specific flow-down clauses proposal [i.e., contracts with suppliers with clauses precluding the use of conflict minerals], consistent with its flexible approach, the Commission did not prohibit it either. Indeed, the proposal which they describe as including verification of the credibility of suppliers' information appears consistent with Commission guidance." SEC Br. at 59. On the broader arguments raised by the petition and ACA s amici brief, the SEC did not contest our showing that it failed to quantify the impacts of their various rulemaking decisions on efficiency, competition and capital formation. Instead, the SEC argued that it was not required to conduct such an analysis because Congress had already made the determination that the investigation and disclosure requirements were necessary. The SEC argued that, in this context, its qualitative analysis of the impacts of these decisions was all that was required. The central legal issue in the challenge to the SEC rule is 6

10 accordingly squarely presented for the court. Our position is that SEC cannot avoid its fundamental charge, nor may Congress permit it through this vehicle to avoid its affirmative obligations under its organic authorizing statute indeed, beginning on page 34, the Commission acknowledges that it did not (could not) perform quantitative analysis, as required. IV. INTERNAL POLICY This section is meant to provide a practical approach to building a basis for compliance. It is by no means the only way to comply. It is important to understand the complexity of this rule and the abilities of your team. The Conflict Minerals Team should consider, based on their ability to comply with rule as a team and their current individual roles within the company, if it is necessary to hire outside help to comply. It could be helpful to look into vendor software or possibly hiring a consulting firm to help establish your compliance program. Finally ACA suggests thoroughly documenting your procedures and updating your employee manuals to reflect your new Conflict Minerals Program. A. Sample Conflict Minerals Policy 1. Suppliers must prove that its practices are in compliance with section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as adopted by the U. S. Securities and Exchange Commission. 2. Suppliers must submit, upon request, all documentation regarding due diligence efforts. 3. Suppliers must notify, in writing, which products or substances contain the 3TG metals. Upon formulation change, the suppler will certify, in writing, that a product either now contains or now does not contain the 3TG metals. 4. The supplier agrees to provide the necessary information on their suppliers to insert company name upon request to determine the original source of the 3TG metals in products purchased by insert company name. 5. The supplier further agrees to work with insert company name and distribute any additional information needed to support insert company name in their compliance with the SEC Conflict Minerals Rule. B. Building a Conflict Minerals Compliance Team 1. Assemble an internal Conflict Minerals Team. This should include team members from: procurement, manufacturing, engineering, legal, information technology, accounting and internal auditing. 2. Pick a team leader. Either from procurement or legal. It is important that upper management provides the team leader with the proper authority. Compliance with this rule will require many people, from many departments, from several locations, working together. The team leader must have the ability to implement the necessary timelines for compliance. 7

11 3. Establish a communication leader. This person will be responsible for answering questions and organizing the associated policy and resources. They will ensure consistency within the team. 4. Develop an understanding of the OECD due diligence guidelines. This guidance will outline the process, but it is import to have a deep understanding of the program before you start your company s due diligence efforts. 5. Conduct internal training. Train the necessary non-team members on the rule. 6. Work with IT to determine how to track your supplier information. It will be important to have a program in place before starting to collect data. C. Getting Started 1. Determine which products are covered by the rule. Be sure to link which suppliers provide which products. 2. Develop a timeline and budget. 3. Begin to reach out to suppliers. If a supplier doesn t have to comply, it could be useful to meet with them in person so they understand the importance of the rule. 4. Update your supply chain policy and inform suppliers of these changes. If possible, renegotiate contracts to reflect Conflict Minerals Policies. 5. Develop Reasonable Country of Origin questionnaires to send to suppliers. Focus on their procurement policies. See OECD Guidelines. 6. Conduct a pilot program. Send out questionnaires to a small sample to test your procedures. 7. Sample vendor software and consultants. After reviewing your sample program, speak with outside vendors to determine if their solutions could streamline your program. D. Other Useful Suggestions 8. Develop a Risk Management Plan. 9. Benchmark your supply chain policy. 10. When developing new suppliers attempt to screen their conflict minerals compliance before entering a contract. V. OECD DUE DILIGENCE The Organization for Economic Co-operation and Development developed this guidance to serve as a framework for companies mining in the DRC and adjoining nations to have a practical method to ensure they were not supporting the human rights atrocities occurring in the area. The guidance is a five step process. 8

12 Five-Step Framework for Due Diligence: 1. Establish strong company management systems: a. Adopt and communicate, to the public and suppliers, your supply chain policy for sourcing from the DRC region that includes: i. A policy commitment setting forth your company s principles, for reference, on supply chain transparency that your company will use to determine with whom they conduct business relationships. ii. A clear and coherent management process to ensure risks are managed. This should include a commitment to the OECD supply chain due diligence steps. b. Structure an internal team to conduct supply chain due diligence. i. Assemble an internal Conflict Minerals Team. This should include team members from: procurement, manufacturing, engineering, legal, information technology, accounting and internal auditing. ii. Pick a team leader. Normally either from procurement or legal. It is important that upper management provides the team leader with the proper authority. Compliance with this rule will require many people, from many departments, from several locations, working together. The team leader must have the ability to implement the necessary timelines for compliance. iii. Establish a communication leader. This person will be responsible for answering questions and organizing the associated policy and resources. They will ensure consistency within the team. iv. Develop an understanding of the OECD due diligence guidelines. This guidance will outline the process, but it is import to have a deep understanding of the program before you start your company s due diligence efforts. v. Conduct internal training. Train the necessary non-team members on the rule. Setup a system to establish accountability within the supply chain due diligence program. vi. Work with IT to determine how to track your supplier information. It will be important to have a program in place before starting to collect data. c. Create a system of controls and transparency for your supply chain. i. Establish a supply chain transparency program that allows for the notation of: country of origin and transportation to the smelter/refiner. It may be difficult to track this; work with companies using the same suppliers to help break open the supply chain. ii. Maintain records for 5 years. iii. Support digital information sharing on suppliers, smelters and miners. d. Engage your suppliers. Consider incorporating supply chain due diligence into contracts with your suppliers. Possibly assist your suppliers in their due diligence efforts. i. Establish long term relationships with suppliers. ii. Communicate expectations to suppliers; again include your Conflict Minerals Policy in contracts. 9

13 e. Establish a company or industry-wide grievance mechanism as an early-warning riskawareness system. 2. Identify and assess risk in your supply chain. Downstream companies should identify risk by checking their suppliers due diligence against this guidance. Again, it could be useful to work with companies who are also sourcing from the same supplier. a. Identify all suppliers in your supply chain. b. Identify the scope of your supplier s risk assessment. Engage the supplier by asking to review their supply chain information. c. Assess whether the supplier has completed all the necessary due diligence steps. i. Gain evidence on their supply chain policy. ii. Review collected information. iii. Cross check with due diligence steps. iv. Work with suppliers to mitigate risk and improve due diligence practices. d. Attempt to conduct spot checks at supplier s facilities. e. Risk that require action: i. Minerals that originate from, or have been transported via the DRC or adjoining countries. ii. The minerals are claimed to originate from a country with limited resources. iii. The minerals are claimed to originate from the DRC or adjoining countries. iv. The company s suppliers, or other known upstream companies, have shareholder or other interest in companies that operate in the DRC or adjoining countries. v. The company s suppliers, or other known upstream companies, are known to have sourced from the DRC or adjoining countries in the last 12 months. f. Assess risk of adverse impacts in light of standards of their supply chain. 3. Design and implement a strategy to respond to identified risks. a. Report results to senior management. b. Develop a risk management plan. i. Manage risks that do not require termination of relationships with supplier. ii. Pressure suppliers to mitigate their own risk by sourcing from non-drc locations. 1. Threaten to suspend relationships with suppliers using DRC conflict minerals. 2. Work with companies sourcing from the same supplier to build a stronger case to pressure supplier. c. Conduct and monitor the Risk Management Plan. i. Track performance and report to senior management. ii. Consider dropping suppliers if risk mitigation fails. d. Undertake additional fact and risk assessments for risks requiring mitigation or after a change of circumstance. 4. Conduct a third-party audit of smelters /refiners due diligence practices. a. Plan an independent third-party audit for suppliers using smelters who are sourcing from high-risk areas. i. The scope should cover all activities, processes and systems used by suppliers to conduct their due diligence. 10

14 ii. The audit should determine the conformity of the supplier s process to the OECD due diligence guidelines. iii. Principles of the audit: 1. Independent audit this ensures impartial results. 2. Competence auditors should conform to requirements in chapter 7 of ISO on Competence and Evaluation of Auditors. 3. Accountability. iv. Audit Activities: 1. Preparation objectives, scope, language and criteria should be sent to the auditor to determine feasibility. 2. Document Review all documentation of suppliers due diligence should be reviewed. 3. In-site Investigations: a. Check your supplier s facilities. b. Sample supplier s smelter. c. Meet with the assessment team. d. Consult with local governments, UN experts etc. 4. Audit Conclusions. v. Conduct the audit. 5. Report annually on supply chain due diligence. a. Outline the company s supply chain due diligence policy. Explain the conflict minerals management structure. b. Describe the process taken to identify and audit the supplier s due diligence efforts. Maintain a list of qualified suppliers who follow OECD due diligence guidelines. c. Publish audits. VI: FREQUENTLY ASKED QUESTIONS 1. What does 3TGs stand for? The 3TG metals are Tin, Tungsten, Tantalum and Gold. 2. What are conflict minerals? Conflict minerals are minerals mined in conflict areas and harsh conditions resulting in human rights violations. 3. What sourcing areas does the rule cover? The rule covers minerals mined in the Democratic Republic of Congo and its adjoining nations. 4. Are production machines covered by the rule? Are they considered necessary to the production? No. 5. Are derivatives covered by the rule? Yes. In the respondents brief the SEC stated derivatives were covered by the rule. 6. Which companies fall under the scope of the Dodd-Frank Act Section 1502? Companies that must report have to meet 3 criteria: 11

15 1. The company must be a publically traded company. 2. The company must manufacture or contract to manufacture products using the 3TGs. 3. The 3TGs must be necessary to the functionality or production of the product. 7. What does it mean for a conflict mineral to be necessary to the functionality of a product? The rule does not give a specific definition; rather there is a minimal amount of guidance. -Was the 3TG mineral intentionally added? -Is the 3TG mineral necessary to the products generally expected purpose? 8. Is packing necessary to the functionality of a product? No, in responding to the Amicus brief, the SEC stated that packing is not covered by the rule. 9. Is there a de minimis threshold associated with reported? No, if there is ANY amount of the 3TGs in your product, your company must report. 10. Are recycled materials covered by the rule? No. 11. What if I cannot determine if my products contain the 3TGs from the covered countries? For a two year period your company can claim an undeterminable status. Afterwards you ll have to report as if your products contain conflict minerals. 12

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