The
flowchart, an impressive visual tool, is augmented by narrative discussions of
various topics and terms used in Section 1502 and the implementing regulations.
Under the final rules, a company that uses any of the designated minerals must
conduct a good-faith, country-of-origin inquiry reasonably designed to determine
whether any of its minerals originated in the covered countries or are from
scrap or recycled sources. If the inquiry determines that the company knows that
the minerals did not originate in the covered countries or come from scrap or
recycled sources, or that the company has no reason to believe the minerals may
have originated in the covered countries and may not be from scrap or recycled
sources, then it must disclose the determination and briefly describe its
inquiry and findings on new Form SD.
Also,
companies required to file a conflict minerals report must exercise due
diligence on the source and chain of custody of their conflict minerals. The due
diligence measures must conform to a nationally or internationally recognized
due diligence framework, such as the due diligence guidance approved by the
Organization for Economic Co-operation and Development (OECD).
If a
company determines that its products are DRC-conflict free—that is, the minerals
may originate from the covered countries but did not finance or benefit armed
groups—then the company must: (1) obtain an independent private-sector audit of
its conflict minerals report; (2) certify that it obtained such an audit; (3)
include the audit report as part of the report; and (4) identify the auditor.
The independent audit would verify that the company’s due diligence was
conducted in conformity with an internationally recognized due-diligence
guideline—i.e., the OECD Due Diligence Guidance, which the staff noted is the
only nationally or internationally recognized due diligence
guideline.
Further background can be found at the Squire Sanders conflict-minerals
resources page.