Analyzing the National Toxicology Program’s (NTP) 13th Report on Carcinogens

By James Lee

On October 3, 2014, the National Toxicology Program (NTP) published the 13th Report on Carcinogens (RoC), which is a congressionally mandated, science-based, public health document that the NTP prepared for the United States Department of Health and Human Services. In addition, the Occupational Safety and Health Administration (OSHA) mandates under HazCom 2012 any chemical listed in the NTP RoC be listed in Section 11 of the safety data sheet (SDS) along with any potential carcinogen identified by IARC or OSHA.

Four substances were newly added to this edition, which brings the total reported listings to 243 substances. These substances include:

  • 1-bromopropane (CASRN 106-94-5);
  • pentachlorophenol and by-products of its synthesis (CASRNs 87-86-5 for pentachlorophenol and 131-52-2 for pentachlorophenol, sodium salt);
  • cumene (CASRN 98-82-8);
  • and ortho-toluidine (CASRN 95-53-4)

The NPT report identifies agents, substances, mixtures or exposures in two categories: “known to be a human carcinogen” and “reasonably anticipated to be a human carcinogen.”

Based on new cancer studies, o-toluidine is now listed as known to be a human carcinogen, instead of reasonably anticipated to be. O-toluidine is a synthetic chemical commonly used in producing rubbers, pesticides and dyes. Three other chemicals – 1-bromopropane, pentachlorophenol mixture, and cumene – are added as reasonably anticipated to be a human carcinogen. 1-bromopropane is a solvent widely used as a cleaner for optics, electronics, and metals, as well as a solvent for aerosol-applied adhesives.  Pentachlorophenol and by-products are used in wood preservatives, commonly for treating utility poles, wood pilings, fence posts, and lumber for construction. Cumene, a natural component of coal tar and petroleum, is used primarily to produce acetone and phenol.

In light of these recent changes to NTP RoC, affected companies (producers of rubbers, pesticides and dyes; specialty solvents; wood preservatives; or acetone and phenol) that are currently authoring their SDSs may need to re-evaluate Section 11 (Toxicological Information) to determine if it needs a revision.

List of “Worldwide Conflict Mineral Processing Facilities” Produced by U.S. Commerce Department

By Kirsten Wallerstedt  

As obliged under Section 1502(d)(3)(C) of the Dodd-Frank Act (Act), the U.S. Department of Commerce (Commerce) has compiled a list of “all known conflict mineral processing facilities worldwide.” The release of this list should assist companies that must comply with Section 1502 of the Dodd-Frank Act in identifying unique smelters of conflict minerals in their supply chains. In its report, Commerce noted the “considerable lack of publicly available information on processing facilities” and noted that the list covers only “known” facilities in the world, which included data supplied by specific government entities and other organizations as listed in the report.

Commerce reported several “limitations and challenges” to collecting the required data, including producers of metals that are “off the grid,” “makeshift smelters” throughout Africa which ship the product overseas to scrap yards and informal metal traders, and intermediaries that do not record the chain of custody of the metal. The report specifically calls out the Shanghai Gold Exchange (SGE), which accounts for 15-20% of all commercial gold sold worldwide, for not releasing or keeping records of where its gold is sourced from. Commerce also notes that the vast majority of gold sold worldwide is comingled at the SGE, and concludes that “any material that is purchased through the SGE is untraceable to a smelter, refiner, or processor of origin.”

Conflict minerals are defined in the Dodd-Frank Act as columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives, which are listed as tin, tantalum, and tungsten. The four “conflict minerals,” tantalum, tin, tungsten and gold, are collectively called the “3TG.” Commerce listed what it believes are unique smelters and refiners of 3TG globally, noting the source of data on each facility. The list includes over 130 each of gold and tin smelters and refiners, over 90 for tungsten, and around 70 global tantalum refiners and smelters.

As part of their methodology, Commerce used data on 3TG processing facilities supplied by the U.S. Geological Survey (USGS), and then added data from existing lists from the US Government Accountability Office (GAO), the Organization for Economic Cooperation and Development (OECD), the London Bullion Market Association (LBMA), the Electronic Industry Citizenship Coalition (EICC), and used related information from the Global e-Sustainability Initiative (GeSI), Dubai Multi Commodities Centre (DMCC), and the World Gold Council (WGC). Commerce believes this is “the most comprehensive list to date of all known processing facilities in the world.”

The release of this list should assist companies that must comply with Section 1502 of the Dodd-Frank Act in identifying unique smelters worldwide, and should help eliminate aliases, duplicates, and misinformation from their own smelter lists. Affected companies that meet certain criteria under the Act are required to publicly report a list of facilities (smelters or refiners) used to process the conflict minerals that are in their products, among other requirements.

For purposes of compliance with Section 1502 of the Dodd-Frank Act, the conclusion that material sourced through the SGE cannot be traced to the origin means that a company can likely not reasonably conclude that a material from SGE is “DRC Conflict Free,” as defined in the Act. Therefore, material sourced from the SGE would likely qualify under the Act as “not found to be ‘DRC conflict free.’”

The Commerce list does not indicate whether any particular facility on the list processes minerals that are used to fund conflict in the Covered Countries. The Covered Countries are defined in the Act as the Democratic Republic of the Congo and its adjoining countries.   


3E Company has a new Supply Chain Product Compliance Solution that can engage your suppliers to obtain and manage compliance data, identify risks, and maintain records. The service links your products directly to news alerts that affect your company’s obligations. For more information, please visit:

The Dynamic Global Regulatory Landscape: Leveraging Data and Technology to Enhance Compliance and Reduce Risk

By Uday Virkud

In the few short months since I’ve joined the 3E team, I have learned that the global environmental regulatory landscape has never been more complex, and companies are struggling to conform to the myriad of regulations that impact their business.

As noted by Gartner’s John A. Wheeler in the firm’s recent Hype Cycle for Governance, Risk and Compliance Technologies, 2014: “Product safety and compliance are not optional activities, and managing the process manually is inefficient and prone to error. In addition, ongoing changes to regulations — such as the 2012 Occupational Safety and Health Administration (OSHA) decision to align the current Hazard Communication Standard (HCS) with the United Nations’ Globally Harmonized System of Classification and Labelling of Chemicals (GHS) — add to the challenge of staying in compliance. The developing maturity of the technology options reduces the risk of replacing manual processes or legacy systems.”

Indeed, as the dynamic regulatory landscape continues to shift and evolve, the role of data and technology is becoming increasingly important. Properly applied and managed, data and technology can have a dramatic impact on the bottom line, ultimately helping companies mitigate risk, increase workplace and employee safety, achieve compliance, and avoid costly fines and penalties.

As a result, industry’s demand for accurate data and comprehensive, innovative solutions has never been greater. This trend, when combined with growing consumer and investor interest in product safety, sustainability and corporate social responsibility, validates our ambitious product roadmap as well as our vision for the company’s future.

3E will continue to focus on innovation and product improvements that best meet the needs of our customers. As the environmental health and safety (EH&S) regulatory compliance domain and technology evolves, 3E stands ready to meet these challenges as the leading provider of EH&S data, software and services. We proudly serve companies throughout the supply chain and product lifecycle with our robust solution set, creating products specific to our customers’ EH&S compliance needs.

3E is committed to innovation and to excellence, and we look forward to continuing to serve our important constituents – our customers – and helping them overcome their compliance challenges and create a safer, greener world. In the future, you will hear from me, as well as other members of the executive leadership team, about some of the important initiatives that we have undertaken to promote innovation and improvement.

US Sanctions Now Include Conflict Minerals in the Democratic Republic of the Congo

By Kirsten Wallerstedt

The existing Democratic Republic of the Congo (DRC) Sanctions were updated on 8 July 2014 due to a new Executive Order. US sanctions can now be used against a company’s actions or policies that threaten the peace, security, or stability of the DRC, including against any entity that is complicit in the “illicit trade in natural resources in the Democratic Republic of the Congo.” This may affect companies’ filings with the SEC under the conflict minerals law.

President Obama’s new Executive Order (E.O.) amends President Bush’s Executive Order 13413 of 27 October 2006. The amendments to E.O. 13413 apply to persons who are “responsible for or complicit in, or (who) have engaged in, directly or indirectly,” certain activities in or in relation to the DRC, including:

  • support to persons, including armed groups, involved in activities that threaten the peace, security, or stability of the DRC;
  • support to persons that undermine democratic processes or institutions in the DRC;
  • the illicit trade in natural resources of the DRC;

U.S. sanctions are administered by the Office of Foreign Asset Control (OFAC), which is active in enforcement. A fact sheet released by the White House states that the purpose of these amendments is to expand the sanctions criteria “to allow for more U.S. flexibility in targeting persons contributing to the conflict in the DRC.”

This Executive Order holds a lot of significance for US companies if it is applied to the SEC disclosures under the Conflict Minerals provision of the Dodd Frank Act (Section 1502). All property and interests that are in the possession or control of listed persons “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in” under E.O. 13413. These “persons” include those who “have engaged in, directly or indirectly…support to persons, including armed groups, involved in activities that threaten the peace, security, or stability of the Democratic Republic of the Congo … (including) through the illicit trade in natural resources.”

Failing to comply with the requirements of the Executive Order can subject a company or individual to penalties of up to the greater of $250,000 or twice the amount of the underlying transaction. Criminal penalties of up to $1,000,000 and imprisonment for up to 20 years may be imposed on any person who willfully commits, attempts or conspires to commit, or aids or abets in the commission of a violation of E.O. 13413.

Companies subject to the conflict minerals law (Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, Section 1502) should take this development very seriously, as these companies are compelled to disclose information about their sourcing of certain minerals from the targeted region. Information contained in the required SEC disclosures may reveal violations of these updated sanctions. Affected companies should be aware that their international subsidiaries are captured under the sanctions criteria as well.

Furthermore, Obama’s Executive Order applies to all US persons, which includes private companies. While private companies are not required to file public disclosures with the SEC, they are now subject to the same OFAC sanctions as the public companies are.

3E Company has a new Supply Chain Product Compliance Solution that can engage your suppliers to obtain and manage compliance data, identify risks, and maintain records. The service links your products directly to news alerts that affect your company’s obligations. For more information, please visit:

Reforming California’s Proposition 65

By James Lee

California Proposition 65 (Prop 65) is possibly one of the most expansive state environmental laws for the chemical industry. Officially entitled, the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health & Safety Code section 25249.5 et seq., requires persons conducting business in the state to provide a clear and reasonable warning in sign or label before exposing consumers or employees to chemicals listed as carcinogens or reproductive toxins under the law. However, if the exposure is below the established safe harbor levels (No Significant Risk Levels (NSRL) for carcinogens and Maximum Allowable Dose Levels (MADL) for reproductive toxins), the warning is not required.

There are approximately 900 chemicals currently listed under Prop 65, which are compiled by the Office of Environmental Health Hazard Assessment (OEHHA). Even though Prop 65 designates the term “known to cause” cancer or reproductive harm, many of the substances on the list are not necessarily known carcinogens or reproductive toxins, but are only those that could, under certain circumstances, pose a risk of cancer or reproductive harm evidenced by the existing scientific data.

Businesses that breach Prop 65 are subject to civil penalties of up to $2500 per day for each offense, as well as injunctions requiring violating parties to provide the required warnings, or to cure the violation. There is a small business exemption that exempts businesses with less than ten employees from Prop 65 action.

On March 7, 2014 OEHHA published proposed amendments to Prop 65. The proposed revision would substantially change the warnings if products or premises contain Prop 65 chemicals and the changed warnings are to convey “more clarity to the Proposition 65 warning requirements and more specificity regarding the minimum elements for providing a ‘clear and reasonable’ warning for exposures that occur from a consumer product, including foods and exposures that occur in occupational or environmental settings.”

Probably the most significant amendment, however, is that businesses would no longer be able use the “safe harbor” warning language if a Prop 65-listed chemical may be in their product. The proposed regulation instead requires them to know definitively the chemical content of all their products and premises, including possible contaminants, and warn of potential “exposures” to the specified chemicals.

At the same time, the increased burden in creating the Globally Harmonized System of Classification and Labeling of Chemicals (GHS) style warnings and additional language requirements can be costly for businesses of any size. The proposal also requires companies to submit information about the chemicals to OEHHA for posting to a website. All of these requirements create a substantial economic and human resources burden for businesses, combined with the potential risk of new enforcement lawsuits for those who do not or cannot comply.

Industry Reaction

OEHHA on April 14, 2014 held a public workshop to discuss its proposed amendments in Sacramento, California and was met by strong opposition of many stakeholders, including the California Chamber of Commerce, California Manufacturers and Technology Association, American Coatings Association, and Association of Home Appliance Manufacturers. After an overview of the revisions by OEHHA and showing example images of the proposed warnings, many trade groups presented pointed questions and expressed opposition and skepticism. After the workshop, OEHHA extended the public comment submission deadline to June 13, 2014. On June 18, 2014, OEHHA published the public comments received on the pre-regulatory proposal on its website.

Close to 60 comments were submitted from various industry associations and NGOs. Most comments were from industry groups, which were largely opposed to the proposal. Expectedly, several public interest groups were supportive of OEHHA’s proposal. The general consensus of stakeholders is that the businesses to be most financially burdened by the proposed changes are mostly unaware of the proposals and will not raise concerns in time to have any meaningful effect on the legislative development.

The Impact on Business

In addition to the financial costs, businesses are concerned about whether they can obtain the information required to comply with the proposal. Currently under Prop 65, businesses are not required to disclose the specific identities of chemicals in a product, nor do they have to disclose specific potential exposure information to OEHHA. In most cases, distributors, importers, restaurants and retailers do not have the detailed ingredient data like chemical manufacturers and suppliers do. However, the proposed amendments would expand the “clear and reasonable warning” requirement considerably:

  • The proposal requires the listing of 12 “common” chemicals on warning labels.
  • Companies would need to submit full rosters of the listed chemicals in their products or premises.
  • Detailed information concerning occupational hazard and environmental exposure potential must be submitted to OEHHA, including “reasonably available” data on exposure levels, routes and types and steps the public may take to reduce or eliminate exposure.
  • OEHHA’s website would publish such information, supposedly to increase public knowledge about Prop 65 chemicals.

Those businesses that rely on manufacturers or suppliers to provide such data can easily be targeted for lawsuits when their manufacturers or suppliers add a newly listed Prop 65 substance without prior knowledge or notice. Additionally, the proposed information submission requirements are simultaneously heavy and vague, which can produce compliance traps stemming from minor and technical errors. For instance, several important terms are undefined (e.g., “reasonably available”), and such oversight can create basis for lawsuits. Lastly, the exhaustive disclosure requirements create a concern for protecting confidential business information (CBI) of chemical manufacturers and suppliers.

Instead of placing greater burden of proof on plaintiffs or revising the enforcement framework to reduce enforcement lawsuits, OEHHA’s proposed changes place greater burden on businesses and open up more opportunities for Prop 65 violations.

It is anticipated that companies will face lawsuits if they unintentionally fail to warn about a chemical they were not aware of or do not comply to the letter with the proposals’ burdensome data-submission requirements. OEHHA declared that its goals for Proposition 65 reform were: providing more useful warnings to the public; establishing warning standards for increased compliance certainty for businesses; and reducing litigation. However, the amendments do not seem compatible with the purpose for change, and Proposition 65 remains a troublesome law.

Self-Certification and the European Union’s Responsible Sourcing Initiative

By Kirsten Wallerstedt

Earlier this month, I gave a webinar on the European Union’s Responsible Sourcing initiative. The EU Proposal contains many synergies with the U.S. conflict minerals law and should be of interest to companies operating in the EU or the U.S., and would also be of interest to suppliers and distributors to these markets. Here are some follow-up insights on the proposal based on audience questions during that presentation.

Several questions from the audience centered on the self-certification process that is proposed under the EU Responsible Sourcing proposal. Here are some important insights about the proposed process to become a “self-certified” responsible importer in the EU:

  1. It’s the process that matters. Rather than require companies to achieve a (sometimes impossible) goal of being “conflict free,” the EU initiative focuses on implementing supply chain due diligence and a risk management strategy. This approach takes into account the fact that suppliers in the supply chain often change sources or sub-suppliers without your knowledge. It also accounts for the constantly evolving state of which regions will qualify as a conflict-affected or high-risk area under the law. The goal of this proposal is for a company to be agile in keeping track of the sources of materials in its supply chain, and to have a robust system for identifying and addressing red flags as they arise.
  2. Companies are self-certified – not products.
  3. Only importers of products listed in Annex I are subject to the certification processnot products that contain these materials or parts. This is a much more narrow scope than the U.S. law, which applies to products that contain any trace of these minerals.
  4. As drafted, there is only a process in place for EU importers of Annex I products to get self-certified – there is no allowance for other companies to self-certify as “conflict free”.
  5. Audits of your self-certification are required, and companies may be subject to ex-post checks by a Member State competent authority if there is relevant information received, such as substantiated concerns from third parties.

The EU Responsible Sourcing initiative proposes a process by which any importer of the Annex I listed products – minerals or metals containing tin, tantalum, tungsten and gold – may self-certify as a responsible importer by declaring to a Member State competent authority that it adheres to the supply chain due diligence obligations set out in the regulation. The proposal will be debated this Fall.

For more information about the initiative and some insights into how it may impact your company, please view the free webinar here.


Lessons from the Road: Insights from Chemical Watch’s Global Supply Chain Workshop

Lessons from the Road: Insights from Chemical Watch’s Global Supply Chain Workshop

By Kirsten Wallerstedt

Last week, I had the pleasure of presenting a session on Conflict Minerals: the U.S. Conflict Minerals Law & EU’s Responsible Sourcing Initiative at Chemical Watch’s Global Supply Chain Workshop. My portion of the presentation focused on the implementation of the US Conflict Minerals Law, while my co-presenter, Mrs. Signe Ratso, Director, Trade Strategy and Analysis, Market Access Directorate-General for Trade, European Commission, addressed the EU’s responsible sourcing regulations.

Ms. Ratso’s presentation was full of valuable information on the EU’s regulation; key insights included:

An update on implementation. The proposal will likely take a couple of years to become law. It has to go through the appropriate channels to be approved by the Parliament and Council, and then will have to be ratified by the Member States.

It will be voluntary. The EU expects the voluntary nature of the proposal to be effective for several reasons:

o   Companies are concerned about their reputation

o   Collective pressure on importers, e.g. within an industry

o   80% of companies that responded to the public consultation said they have an interest in responsible sourcing

o   The review that must happen three years after (as in the proposal language) enactment is another “stick” – if a critical mass of companies are not opting-in, the EU would likely make the requirement mandatory.

A better understanding the 3TG scope. This only applies to the 3TG and their ores, with a few other items listed e.g. “tin bars, rods, profiles and wires”. See Annex I of the regulation for the list. According to Ms. Ratso, the EU opted not to include products that contain these minerals in order to make the regulation more manageable.

Goal. The EU proposal is “process-based” – different from the U.S. law, which is focused on due diligence but also whether you are “conflict free” or “not conflict free.”

Attendees very much appreciated Ms. Ratso’s expertise and counsel, as there have many questions and debate surrounding the EU’s initiative. In fact, her analysis – as well as mine – is based on the proposed language, which may or may not change during the political process. As always, companies that have an interest in the content of the final proposal should engage during the rulemaking process.

There were also several questions related to the industry’s obligations under the Dodd-Frank Act as well. Understanding these emerging regulatory obligations can certainly be a complex and time-consuming undertaking.  It should be noted, however, that since the EU proposal is based on the same OECD due diligence guidance as the US law, there will likely be synergies between many of the obligations and processes.

Should you choose to partner with a service provider to help you understand or meet your obligations, we recommend choosing a partner or solution that supports due diligence under the OECD guidance in order to fully capitalize on these efficiencies. If you don’t know whether and how this proposal may affect your company, a reputable service provider such as 3E can help explain how this proposal can support enhanced Dodd-Frank compliance.

Do you have questions about your conflict minerals obligations? Feel free to leave a comment below. You may also be interested in my recent post on Verisk’s blog here. In addition, 3E Company will also be hosting a webinar on preparing your SEC disclosure. Registration information can be found here.

SAP EHSM & the Food Industry: Enhancing Conformance with Regulatory Obligations

By Erin McVeigh

For the past fifteen years, 3E has worked diligently with our clients and partners to establish and enhance best practices for integrating EH&S regulatory content into the SAP EHS Management (SAP EHSM) application and for handling regulatory change management on a global basis.

With environmental, health and safety (EH&S) regulations continually expanding in volume and complexity, and increasingly impacting product stewardship and workplace safety, the associated EH&S compliance data is cumbersome to manage in-house and requires deep domain expertise. Finding, maintaining, and acting on that data can be difficult and painfully time consuming. Fully managing compliance initiatives requires regulatory data spanning a broad array of topics and regions.

Consider for example, the regulations impacting global flavor, fragrance, specialty chemical and active ingredient manufacturers for the food and beverage industry. Such companies are impacted by an array of regulations originating from regulatory bodies around the globe. To conform to these standards and regulations, these companies require access to up-to-date and reliable EH&S content, rules, phrases and templates.

Given the complexity of thoroughly tracking such data, many companies opt to partner with a trusted third party resource on such initiatives. Such an approach can yield deeper insight into  regulations specifically related to the food and flavor industry, and can also facilitate the integration of this data into SAP.

When choosing an outsourced solution provider, we recommend evaluating the following criteria:

  • Industry relationships. It is important to work closely with industry associations such as the Flavor and Extract Manufacturers Association (FEMA) to understand industry concerns and stay on top of regulatory challenges.
  • A lifecycle approach. It is important for your partner to be able to support you through the entire lifecycle of your chemical and product portfolio. Doing so can help food and flavoring manufacturing companies meet compliance requirements quickly and provide accurate documentation for products based on composition, classification, use and distribution.
  • Data integrity. Regulatory content should be vetted on a daily basis.
  • Flexibility. Different rule configurations can help you implement a standard solution, while configuring rules specifically for your individual business needs, without costly customization fees.

In addition, should you desire to outsource the authoring of your safety data sheets (SDSs), you should choose a partner that fully understand the intricacies involved in authoring for a food manufacturing company.

OSHA HazCom 2012 brought about a number of changes to the current SDS authoring process specifically for the food industry. Some of these changes include the new requirement to include unknown toxicity in your calculations and disclose this data on the SDS, or classifying and including new hazards such as combustible dust.

With these changes it is imperative for companies to have a fully designated process, with access to comprehensive data. Integrating high quality regulatory and scientific data and innovative tools with SAP EHSM can helps companies in the food industry reduce their compliance burdens and streamline their authoring processes.

Have a question or a comment for us? We’d love to hear from you in the comments below.

EU Announces Voluntary Scheme for Conflict Minerals

By Kirsten Wallerstedt

On March 5 the European Union announced its proposal for responsible sourcing for minerals from conflict zones. The Regulation would require importers who “opt-in” to the self-certification scheme to exercise due diligence in line with the OECD Due Diligence Guidance.

The big question is – will this voluntary proposal have any teeth? The answer will be an immediate “yes” for companies that supply to EU government offices, which will adopt a “responsible sourcing” policy. Presumably other European government agencies and private companies will adopt policies of only sourcing from conflict-free importers, a step which would significantly increase the pull of the “self certification” option.

U.S. companies may well have a leg up to sell in Europe under the responsible sourcing scheme, since many of those that have had to comply with the U.S. law have already had to establish and conform their due diligence programs to the OECD Guidance.

Similar to the U.S. law, the aim of the EU proposal is to stop armed groups from financing their activities through the mining of and trade in minerals. The EU proposal also covers the same four minerals as its U.S. counterpart: tin, tantalum, tungsten and gold.

The EU will publish an annual list of EU and global ‘responsible smelters and refiners’ in an effort to increase public accountability and enhance supply chain transparency. The initiative also proposes a number of incentives to opt-in, including public procurement, financial support for small and medium sized enterprises to carry out due diligence, visible recognition for the efforts of EU companies who source responsibly, as well as involvement with the local governments and stakeholder groups to facilitate responsible mineral sourcing.

3E Company has a new Supply Chain Product Compliance Solution that can engage your suppliers to obtain and manage compliance data, identify risks, and maintain records. The service links your products directly to news alerts that affect your company’s obligations. For more information, please visit:

Conflict Minerals Compliance – Heads Up: Purchases You Make This Year May End Up Reportable After the Transition Period

By Kirsten Wallerstedt

If your company has been relying on the “Undeterminable” designation to get you through the first two reporting periods – heads up. Your transition period may already be over, and you didn’t even realize it.

Many companies may not realize that parts and components they are purchasing in 2014 may very well end up being reportable in the May 2016 conflict minerals report, when the Transition Period is no longer in force. This is because companies that buy items/parts/components this year and complete the manufacture of the final product anytime after January 1, 2015 – which is only 11 months away – then those products are reportable for the following period, which is the May 2016 deadline. The Transition Period ends with the 2015 reporting deadline. Thus, your business may end up required to report your products as ‘not found to be conflict free,’ based on supplier practices and policies that are in place right now.

Why is this? The Final Rule issued by the SEC explains that the reporting period applies to products for which the manufacture of that product was completed in that calendar year. So if you buy components in 2014, but you do not complete the manufacture of the product until 2015, then you would not report on the conflict minerals information for that component until the following year, which is the May 2016 reporting deadline.

What does this mean? You may have thought that since we are still within the two-year Transition Period, that your policies and purchases will not be held to a higher level of scrutiny. However, you may be wrong! Depending on when you complete the manufacture of your products, the sourcing and thus conflict minerals information may be from years prior.

What to do. If your company wants to avoid reporting products as “not found to be ‘DRC Conflict Free,’” 3E recommends acting now to engage your suppliers to avoid this fate. 3E Supply Chain (3E SC) provides a solution that can engage and educate suppliers, obtain the needed conflict minerals information, and report back to you on the condition of your supply chain with enough time left to make any needed changes to avoid an unfavorable conflict minerals report.

For more information, please join our free webinar “Conflict Minerals Compliance: Preparing for Your SEC Filing” on February 13. Additional information can be found here.