§ 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act targets human rights abuses abroad, rather than financial reforms at
home. It requires certain reporting companies to make disclosures about the
conflict minerals necessary in the production or function of their products. After
repeated delays, the SEC finalized a conflict minerals disclosure rule, outlining
the process companies must follow to satisfy their disclosure obligations. This
comment discusses that process, as well as the costs imposed on the companies
required to make conflict minerals disclosures. It also highlights an important
effect of those costs: reporting companies will seek to improve their supply
chains and pass some of the mandated due diligence burden to other supply
chain businesses through contracts. But enforcement of these contracts, breaches,
and litigation in foreign jurisdictions will all increase the total costs of the
conflict minerals disclosure regime, including on foreign suppliers themselves.
This comment concludes that until the international community collectively
commits to end the conflict minerals trade, § 1502 and the SEC conflict minerals
rule will not effectively achieve their intended benefits. The costs of compliance
are simply too high.
McKay S. Harline,
Can We Make Them Obey? U.S. Reporting Companies, Their Foreign Suppliers, and the Conflict Minerals Disclosure Requirements of Dodd-Frank,
Nw. J. Int'l L. & Bus.