May 10, 2012 
Steve Pudles, Chairman of the Board of IPC — Association Connecting Electronics Industries®, today testified before Congress to urge common-sense changes to the U.S. Securities and Exchange Commission (SEC) proposed rule on conflict minerals. IPC is advocating changes to the draft SEC rule implementing Section 1502 of the Dodd-Frank Act that would lessen the burden on small manufacturing companies and make it easier for companies to more efficiently and effectively comply with the regulations.
“IPC supports the underlying goal of Section 1502 of the Dodd-Frank Act, which is to address the grave human rights situation in the Democratic Republic of the Congo (DRC),” testified Pudles, who is also the CEO of Spectral Response LLC, an electronics manufacturing services company located in Lawrenceville, Georgia. “However, I am concerned that the SEC’s draft regulations [that implement Section 1502] place a great burden on the private sector with too little regard for the challenges they place on small businesses and the benefits they offer the people of the DRC.
“I encourage the SEC to implement the requirements of Section 1502 in a manner that supports the goals of the statute without unduly burdening U.S. manufacturing industries or causing unnecessary disruptions of the legitimate minerals trade, which is vital to the livelihood of the people of the DRC,” said Pudles. “Sensible changes or additions to the proposed rule could dramatically mitigate the costs while maintaining the spirit of Section 1502.”
Compliance costs associated with the proposed SEC rule are significant and create additional onus for small companies already operating on slim profit margins. For example, an IPC survey of its members indicated average compliance costs could exceed $230,000 per year. An independent analysis of the costs, conducted by Tulane University, puts total compliance costs at $7.9 billion, which is more than 100 times the SEC’s estimate.
In his testimony before the House Financial Services Subcommittee on International Monetary Policy and Trade, Pudles called for some key changes to the proposed SEC rule that would ease the compliance burden on U.S. small manufacturers. Pudles recommended the inclusion of a reasonable phase-in provision to give companies time to understand the final regulations and query supply chains accordingly. He proposed the implementation of a single reporting date, so supply chain companies aren’t required to constantly respond to inquiries throughout the year. Pudles also encouraged the inclusion of an alternative approach for recycled or scrap sources in order to reduce the amount of virgin materials used in the manufacturing process.
Other IPC recommendations include reporting exemptions for products outside of the supply chain’s control; provision of a de minimis level to focus on significant uses of conflict minerals; provision of non-binding examples of due diligence; and a transitional category of
