required disclosure or a Conflict Minerals Report for the current year.
However, if that same issuer did not take possession of the minerals
until January 1, the issuer would not have to provide the disclosure or
a report until the end of the year beginning that day and ending on the
subsequent December 31.
---------------------------------------------------------------------------

    \151\ Exchange Act Section 13(p)(1)(A).
---------------------------------------------------------------------------

    In an instance in which an issuer contracts the manufacturing of a
product in which a conflict mineral is necessary to the production of
that product, but the conflict mineral is not included in the product,
the issuer may use the date it takes possession of the product to
determine which reporting year the issuer would have to provide the
required disclosure or Conflict Minerals Report for the conflict
mineral used to produce the product. For example, if a December 31
fiscal year-end issuer takes possession on December 31 of the product
for which a conflict mineral was necessary to produce but that did not
end up in the product, the issuer would have to provide the required
disclosure or a Conflict Minerals Report for the year ended on that
December 31. However, if that same issuer did not take possession of
the product until the subsequent day, January 1, the issuer would not
have to provide the disclosure or a report until the end of the year
beginning that January 1 and ending on the subsequent December 31.
Request for Comment
    59. Is ``possession'' the proper determining factor as to when
issuers should provide the required disclosure or a Conflict Minerals
Report regarding a necessary conflict mineral? If not, what would be a
more appropriate test and why?
    60. Should our rules allow individual issuers to establish their
own criteria for determining which reporting period to include any
required conflict minerals disclosure or Conflict Minerals Report,
provided that the issuers are consistent and clear with their criteria
from year-to-year?
    61. We note it is possible issuers may have stockpiles of existing
conflict minerals that they previously obtained. Do we adequately
address issuers' disclosure and reporting obligations regarding their
existing stockpiles of conflict minerals? If not, how can we address
existing stockpiles of conflict

minerals? Should our rules permit a transition period so that issuers
would not have to provide any conflict minerals disclosure or report
regarding any conflict mineral extracted before the date on which our
rules are adopted? Alternatively, would the reasonable country of
origin inquiry standard for determining the origin of the conflict
minerals and the due diligence standard or guidance for determining the
source and chain of custody of the conflict minerals that originated in
the DRC countries accomplish the same goal? For example, should issuers
be required to inquire about the origin of their conflict minerals
extracted before the date on which our rules are adopted? As another
example, should issuers file a Conflict Minerals Report regarding
conflict minerals that originated in the DRC countries before the date
on which our rules are adopted?

F. Thresholds, Alternatives, Termination, Revisions, and Waivers

1. Materiality Threshold
    As discussed above, the Conflict Minerals Provision's only limiting
factor is that the conflict minerals must be ``necessary to the
functionality or production'' of an issuer's products.\152\ The
provision has no materiality thresholds for disclosure based on the
amount of conflict minerals an issuer uses in its production processes.
Therefore, we are not proposing to include a materiality threshold for
the disclosure or reporting requirements in our proposed rules.
---------------------------------------------------------------------------

    \152\ Exchange Act Section 13(p)(2)(B).
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Request for Comment
    62. Should there be a de minimis threshold in our rules based on
the amount of conflict minerals used by issuers in a particular product
or in their overall enterprise? If so, what would be a proper threshold
amount? Would this be consistent with the Conflict Minerals Provision?
\153\
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    \153\ See letter from Senator Richard J. Durbin and
Representative Jim McDermott, United States Congress (stating that a
de minimis rule would create an overly generous loop-hole because
the weight of essential conflict minerals in many products is very
small).
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2. Recycled and Scrap Minerals
    Our proposed rules would allow for different treatment of conflict
minerals from recycled and scrap sources than from mined sources due to
the difficulty of looking through the recycling or scrap process to
determine the origin of the minerals. As suggested in a letter, we
would consider conflict minerals ``recycled'' that are reclaimed end-
user or post-consumer products, but we would not consider those
minerals ``recycled'' if they are partially processed, unprocessed, or
a byproduct from another ore.\154\ Given the difficulty of looking
through the recycling or scrap process, we expect that issuers
generally will not know the origins of their recycled or scrap conflict
minerals, so we believe it would be appropriate for our proposed rules
to require that issuers using recycled or scrap conflict minerals
furnish a Conflict Minerals Report subject to special rules. Under our
proposed rules,\155\ if issuers obtain conflict minerals from a
recycled or scrap source, they may consider those conflict minerals to
be DRC conflict free.\156\ We believe that including this alternative
approach in our proposed rules is consistent with the Conflict Minerals
Provision because issuers purchasing conflict minerals from recycled or
scrap sources would not implicate the concerns of the provision.\157\
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    \154\ See Multi-Stakeholder Group Letter.
    \155\ See new Items 104(b)(2) and (c)(4) of Regulation S-K, new
Items 16(b)(2) and (c)(4) of Form 20-F, and new General Instructions
B(16)(b)(2) and (c)(4) of Form 40-F.
    \156\ Because our proposed rules would automatically classify
recycled or scrap conflict minerals DRC conflict free, issuers with
products containing such minerals would not need to provide in the
Conflict Minerals Report a description of the recycled or scrap
conflict minerals' processing facilities or country of origin, nor
would they be required to describe their efforts to determine the
mine or location of origin with the greatest possible specificity.
    \157\ See Section 1502(a) of the Act. See also, 156 Cong. Rec.
S3816-17 (daily ed. May 17, 2010) (statement of Sen. Durbin) (``We
can't begin to solve the problems of eastern Congo without
addressing where the armed groups are receiving their funding,
mainly from the mining of a number of key conflict minerals. We, as
a nation of consumers as well as industry, have a responsibility to
ensure that our economic activity does not support such violence.
That is why I join with Senators Brownback and Feingold to support
the Congo conflict minerals amendment, which is now pending on this
bill.''). One of the provision's sponsors, however, indicated that
the Conflict Minerals Provision was intended, in part, to allow
investors to make informed decisions. See 156 Cong. Rec. S3865-66
(statement of Sen. Feingold) (daily ed. May 18, 2010) (stating that
the provision would ``enhance transparency [and] will help the
United States and our allies more effectively deal with these
complex problems, at the same time that they will also help American
consumers and investors make more informed decisions'' [emphasis
added]).
---------------------------------------------------------------------------

    Issuers whose conflict minerals originated from recycled or scrap
sources would be required to disclose in their annual report, under the
``Conflict Minerals Disclosure'' heading, that their conflict minerals
were obtained from recycled or scrap sources and that they furnished a
Conflict Minerals Report regarding those recycled or scrap minerals.
Under our proposed rules, issuers would state in their Conflict
Minerals Report that their recycled or scrap minerals are considered
DRC conflict free. In addition, such issuers would describe the
measures taken to exercise due diligence in determining that their
conflict minerals were recycled or scrap. Again, however, our proposed
rules would not specify the due diligence required of such issuers.
Further, our proposed rules would not define when a conflict mineral is
recycled or scrap. Instead, any issuer seeking to use this alternative
approach would provide its reasons for believing that the conflict
mineral is from recycled or scrap sources in its Conflict Minerals
Report, which would include due diligence on the source of the mineral.
    A number of those that have submitted letters indicated that our
rules should allow conflict minerals from recycled or scrap sources to
be considered as not originating in the DRC countries or as DRC
conflict free.\158\ A number of these letters primarily discussed
recycled gold.\159\ Other letters, however, stated that our proposed
rules should exempt all recycled or reclaimed conflict metals.\160\
Additionally, most of the letters that expressed a view on a recycled
and scrap alternative approach indicated that the approach should
include a certain level of due diligence in determining that the
conflict minerals were derived from recycled or scrap sources.\161\
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    \158\ See, e.g. letters from Jewelers Vigilance Committee,
Howland Greene Consultants LLC, International Precious Metals
Institute, and the National Association of Manufacturers.
    \159\ See letters from Jewelers Vigilance Committee (stating
that recycled gold would be impossible to trace, making an exemption
appropriate) and International Precious Metals Institute (stating
that ``[w]e also believe that recycled gold waste and scrap should
be deemed to be a conflict-free source'').
    \160\ See letters from Howland Greene Consultants LLC (stating
that ``[r]ecycling should be encouraged and recognized as a
legitimate way to classify a listed metal as DRC Conflict Free'')
and the National Association of Manufacturers (stating that our
proposed rules should exempt recycled or scrap minerals because it
``is impossible to track'' the source of these minerals ``due to the
various forms of recycling and thousands of consolidators, reclaims,
and scrap dealers both domestic and foreign'' and because exempting
recycled or scrap minerals ``does not contradict the congressional
intent'' of the Conflict Minerals Provision).
    \161\ See letters from Howland Greene Consultants LLC (stating
that recycled minerals should be classified as DRC Conflict Free
only ``if specific criteria are met'') and International Precious
Metals Institute (stating that recycled gold waste and scrap should
be deemed to be a conflict-free source only ``in the absence of
particular geographical risk or other red flags'').
---------------------------------------------------------------------------

    Our proposed rules regarding recycled and scrap conflict minerals
would apply to all conflict minerals. If recycled or scrap minerals are
mixed with new minerals, the recycled and scrap

alternative approach would apply only to the portion of the minerals
that are recycled or scrap and the issuer would be required to furnish
a Conflict Minerals Report regarding at least the recycled or scrap
minerals. If the issuer's new conflict minerals did not originate in
the DRC countries, that Conflict Minerals Report would contain only
information regarding the recycled or scrap minerals. If, however, the
new conflict minerals originated in the DRC countries, or the issuer
was unable to determine that its new conflict minerals did not
originate in the DRC countries, the Conflict Minerals Report would
include information regarding both the new conflict minerals and the
recycled or scrap conflict minerals.
Request for Comment
    63. Should our rules, as proposed, include an alternative approach
for conflict minerals from recycled or scrap sources as proposed? If
so, should that approach permit issuers with necessary conflict
minerals to classify those minerals as DRC conflict free, as proposed?
Should we require, as proposed, issuers using conflict minerals from
recycled or scrap sources to furnish a Conflict Minerals Report,
including a certified independent private sector audit, disclosing that
their conflict minerals are from these sources? If not, why not?
    64. Instead, should our rules require issuers with recycled or
scrapped conflict minerals to undertake reasonable inquiry to determine
they are recycled or scrapped and to disclose the basis for their
belief that their minerals are, in fact, from these sources?
    65. Should our rules, as proposed, require that issuers use due
diligence in determining whether their conflict minerals are from
recycled or scrap sources as proposed and file a Conflict Minerals
Report including an independent private sector audit of that report? If
so, should our rules prescribe the due diligence required? If our rules
should not require due diligence, should our rules require any
alternative standard or guidance? If so, what standard or guidance?
Should our rules define what constitutes recycled or scrap conflict
minerals? If so, what would be an appropriate definition?
    66. Should this treatment be limited to gold, or should it apply to
all conflict minerals, as proposed?
    67. Is our alternative approach to recycled and scrap minerals
appropriate? Is there a significant risk that conflict minerals that
are not ``DRC conflict free'' may be inappropriately processed and
``recycled'' so as to take advantage of this alternate approach?
    68. Should we allow exemptions to the information required by
smaller reporting companies regarding their use of recycled or scrap
minerals? For example, should we not require smaller reporting to
furnish a Conflict Minerals Report regarding their recycled or scrap
minerals? As another example, if we require smaller reporting companies
to furnish a Conflict Minerals Report with respect to recycled or scrap
minerals, should we not require those issuers to have such Conflict
Minerals Reports audited?
3. Termination, Revisions, and Waivers
    The Conflict Minerals Provision states that the Commission shall
revise or temporarily waive its conflict minerals rules if the
President transmits to the Commission a determination that a revision
or waiver is in the national security interest of the United States and
the President provides reasons for this determination.\162\ However,
any exemption to the Conflict Minerals Provision may last no longer
than two years from the date of the exemption's initial
publication.\163\ Also, the Conflict Minerals Provision's disclosure
and reporting requirements shall terminate when the President
determines and certifies to the appropriate congressional committees
that ``no armed groups continue to be directly involved and benefitting
from commercial activity involving conflict minerals.'' \164\ The
Conflict Minerals Provision may not, however, terminate earlier than
five years after the Act was enacted.\165\ We plan to act in accordance
with these provisions should any of the situations they describe occur.
Our proposed rules, however, would not include these sections of the
Conflict Minerals Provision because we do not believe that a rule to
implement this section is necessary at this time.
---------------------------------------------------------------------------

    \162\ See Exchange Act Section 13(p)(3).
    \163\ Id.
    \164\ Section 1502(e)(4) of the Act defines the term
``appropriate congressional committees'' as the Committee on
Appropriations, the Committee on Foreign Affairs, the Committee on
Ways and Means, and the Committee on Financial Services of the House
of Representatives and the Committee on Appropriations, the
Committee on Foreign Relations, the Committee on Finance, and the
Committee on Banking, Housing, and Urban Affairs of the Senate.
    \165\ See Exchange Act Section 13(p)(4).
---------------------------------------------------------------------------

Request for Comment
    69. Should our rules address specifically the Conflict Minerals
Provision's revision, waiver, or termination requirements? If so, how
should our rules address this?

G. General Request for Comment

    We request and encourage any interested person to submit comments
on any aspect of our proposals, other matters that might have an impact
on the amendments, and any suggestions for additional changes. With
respect to any comments, we note that they are of greatest assistance
to our rulemaking initiative if accompanied by supporting data and
analysis of the issues addressed in those comments and by alternatives
to our proposals where appropriate.

III. Paperwork Reduction Act

A. Background

    The proposed amendments contain ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(the ``PRA'').\166\ We are submitting the proposed amendments to the
Office of Management and Budget (the ``OMB'') for review in accordance
with the PRA.\167\ The title for the collection of information is:
---------------------------------------------------------------------------

    \166\ 44 U.S.C. 3501 et seq.
    \167\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

    (1) ``Regulation S-K'' (OMB Control No. 3235-0071); \168\
---------------------------------------------------------------------------

    \168\ The paperwork burden from Regulation S-K is imposed
through the forms that are subject to the disclosures in Regulation
S-K and is reflected in the analysis of those forms. To avoid a
Paperwork Reduction Act inventory reflecting duplicative burdens,
for administrative convenience we estimate the burdens imposed by
Regulation S-K to be a total of one hour.
---------------------------------------------------------------------------

    (2) ``Form 10-K'' (OMB Control No. 3235-0063);
    (3) ``Form 20-F'' (OMB Control No. 3235-0288); and
    (4) ``Form 40-F'' (OMB Control No. 3235-0381).
    The regulation and forms were adopted under the Securities Act and
the Exchange Act. The regulation and forms set forth the disclosure
requirements for periodic reports and registration statements filed by
companies to help shareholders make informed investment and voting
decisions. The hours and costs associated with preparing and filing the
form constitute reporting and cost burdens imposed by each collection
of information. An agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless it
displays a currently valid control number.
    The proposed rules and form amendments would implement Section
13(p) of the Exchange Act, which was added by Section 1502 of the Act.
As discussed in detail above, the proposed rules and form amendments
would require an issuer to provide statutorily-

mandated information regarding conflict minerals that are necessary to
the functionality or production of a product manufactured or contracted
to be manufactured by such an issuer. In this regard, we are proposing
to add new disclosure and reporting requirements to the above forms,
which would be substantially the same in each form.\169\ The same
conflict minerals disclosure requirements would apply to U.S. and
foreign issuers.
---------------------------------------------------------------------------

    \169\ New Item 4(a) in the Form 10-K would require issuers to
furnish in the Form 10-K the information located in new Item 104 of
Regulation S-K, which would set forth the new disclosure and
reporting requirements to be included in the Form 10-K. For Forms
20-F and 40-F, the new disclosure and reporting requirements are
contained within the form itself.
---------------------------------------------------------------------------

    The proposed rules would require any issuer filing reports under
the Exchange Act to disclose in its annual reports whether conflict
minerals that are necessary to the functionality or production of a
product manufactured or contracted to be manufactured by the issuer
originated in the DRC countries. If so, the issuer would be required to
furnish as an exhibit to its annual report a Conflict Minerals Report
that includes a description of the measures taken by the issuer to
exercise due diligence on the source and chain of custody of those
minerals, which measures shall include an independent private sector
audit of the Conflict Minerals Report that is certified by the issuer.
Also, the Conflict Minerals Report would include a description of the
issuer's products manufactured or contracted to be manufactured that
are not DRC conflict free, the identity of the independent private
sector auditor, the facilities used to process the conflict minerals,
the country of origin of the conflict minerals, and the efforts to
determine the mine or location of origin with the greatest possible
specificity.
    These proposed rules would increase the amount of information that
certain issuers must compile and disclose in their forms and would
increase the disclosure burden in annual reports for certain issuers.
Issuers filing reports under the Exchange Act that do not have conflict
minerals necessary to the functionality or production of a product
manufactured or contracted to be manufactured by those issuers would
have no disclosure or reporting requirements under the rules, but they
would have the burden of determining whether conflict minerals are
necessary to the functionality or production of products they
manufacture or contract to manufacture. Under our proposed rules
implementing the Conflict Minerals Provision, issuers that have
conflict minerals necessary to the functionality or production of a
product manufactured or contracted to be manufactured by those issuers
must determine whether those conflict minerals originated in the DRC
countries. Our proposed rules would require issuers to conduct a
reasonable country of origin inquiry in determining whether their
conflict minerals originated in the DRC countries. This reasonable
country of origin inquiry could vary among issuers, but we believe that
issuers would generally have to conduct a relatively thorough
investigation to meet this standard. Therefore, we believe that the
burden on issuers to determine the origin of their conflict minerals
could be significant. If an issuer determines, however, that its
conflict minerals did not originate in the DRC countries, its
subsequent disclosure burden would be relatively insignificant. Such an
issuer would be required to disclose in its annual report and on its
Web site only that its conflict minerals did not originate in the DRC
countries and disclose in its annual report the reasonable country of
origin inquiry it used to make this determination.
    Issuers with conflict minerals that originated in the DRC
countries, or issuers that were unable to determine that their conflict
minerals did not originate in the DRC countries, would be required to
furnish a Conflict Minerals Report and would be required to use due
diligence in determining the information required in that Conflict
Minerals Report. Our proposed rules would require issuers to disclose,
in their Conflict Minerals Report, the measures they took to exercise
due diligence on the source and chain of custody of their conflict
minerals. Additionally, issuers would have to disclose, based on their
due diligence, whether any of the products they manufactured or
contracted to be manufactured are not DRC conflict free. Also, issuers
would be required to disclose the facilities used to process their
conflict minerals, the country from which their conflict minerals
originated, and the efforts to determine the mine or location of origin
with the greatest possible specificity. Further, issuers would have to
obtain an independent private sector audit of their Conflict Minerals
Report and include in the Conflict Minerals Report a certification that
they obtained such an audit, the identity of the auditor, and the audit
report. Finally, the issuer would be required to post the Conflict
Minerals Report, including the audit report, on its Internet Web site.
    The type of reasonable country of origin inquiry and the due
diligence standard for determining this information could vary among
issuers. Regardless, we expect that all issuers with conflict minerals
that originated in the DRC countries, or issuers that were unable to
determine that their conflict minerals did not originate in the DRC
countries, would have to conduct a thorough investigation to meet the
reasonable country of origin inquiry and due diligence standards, which
could be another significant burden on these issuers. The burden would
be greater on issuers whose products contained conflict minerals that
were not ``DRC conflict free'' because these issuers would have to
determine which of their products contain conflict minerals that are
not ``DRC conflict free,'' whereas issuers with only ``DRC conflict
free'' minerals would not have make such a determination. Compliance
with the proposed amendments by affected issuers would be mandatory.
The disclosure and reports submitted by issuers would not be kept
confidential and there would be no mandatory retention period for the
information disclosed.

B. Burden and Cost Estimates Related to the Proposed Amendments

    The proposed rules and form amendments would require, if adopted,
additional disclosure for an annual report filed on Form 10-K, Form 20-
F, or Form 40-F by an issuer with necessary conflict minerals, which
would increase the burden hour and cost estimates for each of those
forms. For purposes of the PRA, we estimate the total annual increase
in the paperwork burden for all affected companies to comply with our
proposed collection of information requirements to be approximately
153,864 of company personnel time and to be approximately $71,243,000
for the services of outside professionals. These estimates include the
time and cost of collecting the information, preparing and reviewing
disclosure, filing documents, and retaining records.
    In deriving our estimates, we recognize that the burdens will
likely vary among individual companies based on a number of factors,
including the size and complexity of their operations and the number of
products they manufacture or contract to manufacture and the number of
those products that contain conflict minerals. We believe that some
issuers will experience costs in excess of this average in the first
year of compliance with the proposals and

some issuers may experience less than these average costs.\170\
---------------------------------------------------------------------------

    \170\ See letter from the National Association of Manufacturers
(suggesting that any change to an issuer's supply chain computer
systems ``is likely to range from $1 million to $25 million'' per
issuer ``depending on the size and complexity of the supply
chain''). We expect that the internal collection burden will vary
from company to company depending on each company's needs and
circumstances.
---------------------------------------------------------------------------

    We have based our estimates of the effect that the adopted rules
and form amendments, if adopted, would have on those collections of
information as a result of the required due diligence process and
independent private sector audit of the Conflict Minerals Report
primarily on information that we have obtained from various stakeholder
groups.
    We do not expect all issuers' conflict minerals to have originated
in the DRC countries. The DRC accounts for approximately 15% to 20% of
the world's tantalum, and for considerably smaller percentage of the
other three conflict minerals.\171\ Therefore, for the purposes of the
PRA, we assume that only 20% of the 5,994 affected issuers \172\ will
have to furnish an audited Conflict Minerals Report, which would be
1,199 issuers.
---------------------------------------------------------------------------

    \171\ See Jessica Holzer, Retailers Fight to Excape `Conflict
Minerals' Law, The Wall Street Journal, Dec. 2, 2010, at B1. The DRC
also accounts for approximately 4% of the world's tin, see id., and
approximately 0.3% of global gold mine production, see letter from
Jewelers Vigilance Committee (citing to GFMS Gold Survey 2010).
    \172\ We estimate that approximately 5,551 Forms 10-K, 377 Forms
20-F, and 66 Forms 40-F will be affected by the proposed amendments.
---------------------------------------------------------------------------

    Although no entity has yet conducted due diligence for its conflict
minerals supply chain or obtained an audit of this due diligence, we
obtained estimates from one entity that works with NGOs and one
industry group of possible costs associated with conducting the due
diligence and the audit based on the preliminary information they
currently have. The entity that works with NGOs has estimated that the
annual cost of conducting the due diligence for the four conflict
minerals ranges between $20 million and $25 million. An industry group
provided a much lower range of between $8 million and $10 million to
set up a mineral source validation scheme. Although our rules do not
require issuers to use an industry-wide due diligence process to comply
with their due diligence obligations, we expect that most affected
issuers will contribute to and rely on an industry wide due diligence
process as part of their overall compliance.\173\ Therefore, for
purposes of the PRA, we have averaged the highest and the lowest
estimates we received of the due diligence costs to obtain an aggregate
estimate of $16.5 million \174\ for the 1,199 issuers estimated to be
required to file Conflict Minerals Reports.
---------------------------------------------------------------------------

    \173\ See Multi-Stakeholder Group Letter (stating that, although
individual issuers are responsible for their own due diligence, an
issuer ``may rely on an industry wide process where applicable and
appropriate'').
    \174\ ($25 million + $8 million)/2 = $16.5 million.
---------------------------------------------------------------------------

    Issuers that are required to file Conflict Minerals Reports must
also obtain and certify an audit of the Conflict Minerals Report. One
industry group indicated that it preliminarily estimates that each
independent private sector audit of the Conflict Minerals Report will
cost approximately $25,000 on average. We estimate that the 1,199
affected issuers' $25,000 cost would result in to an industry wide
audit of approximately $29,975,000. Therefore, based on these figures,
we estimate the PRA burden for the audit and due diligence requirements
to the industry would be approximately $46,475,000.\175\ We expect that
the rules' effect will be higher during the first year of their
effectiveness, due to the initial costs of creating minerals tracking
systems, and diminish in subsequent years.
---------------------------------------------------------------------------

    \175\ $16,500,000 + $29,975,000 = $46,475,000.
---------------------------------------------------------------------------

    We have derived the burden hour and cost estimates for preparing
the required disclosure in the annual reports and for determining when
a registrant has conflict minerals necessary to the functionality or
production of a product manufactured or contracted to be manufactured
by the registrant by estimating the total amount of time it will take
the company to prepare the disclosure and make the determination. We
estimate that the disclosure preparation for all affected registrants
will take 36 hours per Form 10-K (27 hours in-house personnel time and
a cost of approximately $3,600 for professional services). We estimate
that for Forms 20-F and 40-F, the disclosure preparation will also take
36 hours (9 hours in-house personnel time and a cost of approximately
$10,800 for professional services).
    We derived the above estimates by estimating the average number of
hours it would take an issuer to prepare and review the proposed
disclosure requirements. These estimates represent the average burden
for all companies, both large and small.
    When determining these estimates, we have assumed that:
     For Form 10-K, 75% of the burden of preparation is carried
by the company internally and that 25% of the burden of the preparation
is carried by outside professionals retained by the company at an
average cost of $400 per hour; and
     For Forms 20-F and 40-F, 25% of the burden of preparation
is carried by the company internally and that 75% of the burden of
preparation is carried by outside professionals retained by the company
at an average cost of $400 per hour.

The portion of the burden carried by outside professionals is reflected
as a cost, while the portion of the burden carried by the company
internally is reflected in hours.
1. Form 10-K
    For purposes of the PRA, we estimate that, of the 13,545 Form 10-Ks
filed annually, approximately 5,551 are filed by companies that would
be affected by the proposed rules and form amendments.\176\ We further
estimate that the annual incremental paperwork burden for the Forms 10-
K as a result of the proposed rule and form amendments would be 27
burden hours per affected form associated with the company's
preparation of the disclosure, and $19,983,600 \177\ associated with
the cost of hiring professionals to help prepare the disclosure. In
addition, we estimate for these purposes that those issuers required to
submit a Conflict Minerals Report would also expend a total of
$43,040,161 \178\ associated with the cost of hiring professionals to
conduct the due diligence and the independent private sector audit of
the Conflict Minerals Report.
---------------------------------------------------------------------------

    \176\ We arrived at this number by estimating the number of
issuers that fall under all the SIC codes that our staff believes
most likely to manufacture or contract to manufacture products with
conflict minerals necessary to the functionality or production of
products manufactured or contracted to be manufactured by those
issuers, and subtracted from that figure the number of issuers that
file reports on Form 20-F and Form 40-F.
    \177\ $3,600 x 5,551 = $19,983,600.
    \178\ $46,475,000 x (5551/5994) = $43,040,161.
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2. Regulation S-K
    While the proposed rule and form amendments would make revisions to
Regulation S-K, the collection of information requirements for that
regulation are reflected in the burden hours estimated for Form 10-K.
The rules in Regulation S-K do not impose any separate burden.
Consistent with historical practice, we are proposing to retain an
estimate of one burden hour to Regulation S-K for administrative
convenience.
3. Form 20-F
    For purposes of the PRA, we estimate that, of the 942 Form 20-F
annual reports, approximately 377 are filed

each year by companies that would be affected by the proposed rule and
form amendments.\179\ We estimate that the annual incremental paperwork
burden for the Forms 20-F as a result of the proposed rule and form
amendments would be nine burden hours per affected form associated with
the company's preparation of the disclosure, and $4,071,600 \180\
associated with the cost of hiring professionals to help prepare the
disclosure. In addition, we estimate for these purposes that those
issuers required to prepare a Conflict Minerals Reports would also
expend a total of $2,923,102 \181\ associated with the cost of hiring
professionals to conduct the due diligence and the independent private
sector audit.
---------------------------------------------------------------------------

    \179\ We arrived at this estimate by determining the number of
issuers that fall under all the SIC codes that our staff believes
are most likely to manufacture or contract to manufacture products
with conflict minerals necessary to the functionality or production
of products manufactured or contracted to be manufactured by those
issuers that file reports on Form 20-F.
    \180\ $10,800 x 377 = $4,071,600.
    \181\ $46,475,000 x (377/5994) = $2,923,102.
---------------------------------------------------------------------------

4. Form 40-F
    For purposes of the PRA, we estimate that, of the 205 Form 40-F
annual reports filed each year, approximately 66 are filed by companies
that would be affected by the proposed rule and form amendments.\182\
We estimate that the annual incremental paperwork burden for the Forms
40-F as a result of the proposed rule and form amendments would be nine
burden hours per affected form associated with the company's
preparation of the disclosure, and $712,800 \183\ associated with the
cost of hiring professionals to help prepare the disclosure. In
addition, we estimate for these purposes that those issuers required to
prepare a Conflict Minerals Report would also expend a total of
$511,737 \184\ associated with the cost of hiring professionals to
conduct the due diligence and the independent private sector audit.
---------------------------------------------------------------------------

    \182\ We arrived at this estimate by determining the number of
issuers that fall under all the SIC codes that our staff believes
are most likely to manufacture or contract to manufacture products
with conflict minerals necessary to the functionality or production
of products manufactured or contracted to be manufactured by those
issuers that file reports on Form 40-F.
    \183\ $10,800 x 66 = $712,800.
    \184\ $46,475,000 x (66/5994) = $511,737.
---------------------------------------------------------------------------

C. Summary of Proposed Changes to Annual Compliance Burden in
Collection of Information

    The following table illustrates the estimated changes in annual
compliance burden in the collection of information in hours and costs
for Exchange Act annual reports as a result of the proposed rule and
form amendments.

                                 Table 1
------------------------------------------------------------------------
                                   Number of                 Incremental
              Form                 responses   Incremental  professional
                                     \185\        company       cost
------------------------------------------------------------------------
10-K............................        5,551     149,877    $63,023,761
20-F............................          377       3,393      6,994,702
40-F............................           66         594      1,224,537
------------------------------------------------------------------------

                                                                         Table 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Current annual                                                       Current         Increase in        Proposed
               Form                 response \186\      Current       Increase in      Proposed        professional     professional      professional
                                                     burden hours    burden hours    burden hours         costs             costs            costs
                                    ..............             (A)             (B)     (C)=(A)+(B)                (D)             (E)        (F)=(D)+(E)
                                   ---------------------------------------------------------------------------------------------------------------------
10-K..............................          13,545      21,363,548         149,877      21,513,425     $2,848,473,000     $63,023,761     $2,911,496,761
20-F..............................             942         622,907           3,393         626,300        743,089,980       6,994,702        750,084,682
40-F..............................             205          21,884             594          22,478         26,260,500       1,224,537         27,485,037
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Request for Comment

    We request comment on the accuracy of our estimates. Pursuant to 44
U.S.C. 3506(c)(2)(B), the Commission solicits comments to: (i) Evaluate
whether the proposed collections of information are necessary for the
proper performance of the functions of the agency, including whether
the information will have practical utility; (ii) evaluate the accuracy
of the Commission's estimate of burden of the proposed collection of
information; (iii) determine whether there are ways to enhance the
quality, utility, and clarity of the information to be collected; (iv)
evaluate whether there are ways to minimize the burden of the
collection of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology; and (v) evaluate whether the proposed
amendments will have any effects on any other collections of
information not previously identified in this section.
---------------------------------------------------------------------------

    \185\ This number corresponds to the estimated number of forms
expected to be affected by the proposed rules and form amendments.
    \186\ The proposed rules and form amendments would not change
the number of annual responses.
---------------------------------------------------------------------------

    In particular, we request comment and supporting empirical data for
purposes of the PRA on whether the proposed rule and form amendments:
     Will affect the burden hours and costs required to produce
the annual reports on Forms 10-K, 20-F, and 40-F; and
     If so, whether the resulting change in the burden hours
and costs required to produce those Exchange Act annual reports is the
same as or different than the estimated incremental burden hours and
costs proposed by the Commission.
    Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
these burdens. Persons submitting comments on the collection of
information requirements should direct the comments to the Office of
Management and Budget, Attention: Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs, Room
10102, New Executive Office Building, Washington, DC 20503, and should
send a copy to Elizabeth M. Murphy, Secretary, Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090, with reference
to File No. S7-40-10. Requests for materials submitted to OMB by the
Commission with regard to these collections of information should be in
writing, refer to File No. S7-40-10, and be submitted to the Securities
and Exchange Commission, Office of Investor Education and Advocacy, 100
F Street NE., Washington, DC 20549-0213. OMB is required to make a
decision concerning the collection of information between 30 and 60
days after publication of this release. Consequently, a comment to OMB
is best assured of having its full effect if OMB receives it within 30
days of publication.

IV. Cost-Benefit Analysis

    Section 1502 of the Act amends the Exchange Act by adding new
Section 13(p),\187\ which requires the Commission to promulgate
disclosure and reporting regulations regarding the use of conflict
minerals from the DRC countries. In response to the requirements of
Exchange Act Section 13(p) as set forth in Section 1502 of the Act, the
Commission is proposing new rules and form amendments that would
provide for the disclosure and reporting of the use of conflict
minerals from the DRC countries. The proposed rules and form amendments
implement the requirements in Section 1502 of the Act and, as necessary
or appropriate, require additional disclosure in a manner that we
believe is consistent with Congress's intent.
---------------------------------------------------------------------------

    \187\ See Exchange Act Section 13(p).
---------------------------------------------------------------------------

    First, Section 13(p)(1)(A) indicates that the Conflict Minerals
Provision applies to a ``person described,'' who is defined in Section
13(p)(2)(B) as one for whom conflict minerals are necessary to the
functionality or production of a product manufactured by that
person.\188\ This provision could be read quite broadly to apply to any
business, including individuals and companies that are not subject to
SEC reporting, so long as conflict minerals are necessary to the
functionality or production of a product manufactured by that entity or
individual. We believe that such a broad reading of the provision is
not warranted, however, given the provision's background and its
location in the section of the Exchange Act that pertains to reporting
issuers.\189\ As a result, our proposed rules would apply only to
issuers that file reports with the Commission under the Exchange Act,
provided that conflict minerals are necessary to the functionality or
production of a product manufactured by any such an issuer.
---------------------------------------------------------------------------

    \188\ See supra note 12.
    \189\ See supra note 38.
---------------------------------------------------------------------------

    While our proposed amendments would not define specifically when a
conflict mineral is ``necessary to the functionality or production of a
product,'' we intend our proposed rules to provide that a conflict
mineral is ``necessary to the production of a product'' if a conflict
mineral is intentionally included in a product's production process and
the conflict mineral is necessary to that process, even if that
conflict mineral is not ultimately included anywhere in the final
product. Our proposed amendments would specify that, although a
conflict mineral is necessary to the functionality or production of a
product manufactured or contracted to be manufactured by the issuer, if
that conflict mineral was obtained from recycled or scrap minerals,
that mineral would be considered DRC conflict free. This approach for
recycled or scrap minerals is not included in the Conflict Minerals
Provision, but we believe it is appropriate because such conflict
minerals would not be implicating the concerns that prompted the
enactment of this statutory provision.\190\
---------------------------------------------------------------------------

    \190\ See supra note 157.
---------------------------------------------------------------------------

    Third, Section 13(p)(1)(A) indicates that issuers must disclose
whether their necessary conflict minerals originated in the DRC
countries.\191\ The Conflict Minerals Provision, however, is silent as
to how issuers would determine whether their conflict minerals
originated in the DRC countries. Our proposed amendments would indicate
that an issuer's determination of whether or not any of its necessary
conflict minerals originated in the DRC countries would be required to
be based on a reasonable country of origin inquiry into the minerals'
origins and, if the issuer determines its necessary conflict minerals
did not originate in the DRC countries, that the issuer would have to
disclose in the body of its annual report the reasonable country of
origin inquiry it undertook to make its determination and would have to
maintain reviewable business records to support this determination.
---------------------------------------------------------------------------

    \191\ See Exchange Act Section 13(p)(1)(A).
---------------------------------------------------------------------------

    Fourth, our proposed amendments would specify where the Conflict
Minerals report required by Section 13(p)(1)(A) of the Exchange Act
should be provided.\192\ The statutory provision does not indicate how
issuers should submit their Conflict Minerals Reports to the
Commission. Our proposed amendments would require issuers with
necessary conflict minerals that originated in the DRC countries to
furnish their Conflict Minerals Reports as an exhibit to their annual
report on Form 10-K, Form 20-F, or Form 40-F, as applicable. In
addition, although the Conflict Minerals Provision indicates that the
Conflict Minerals Report must include an independent private sector
audit of such report submitted through the Commission, it is unclear
what record of that independent private sector audit an issuer must
submit to the Commission and how it must do so, if at all. Our proposed
amendments would require issuers to furnish an audit report of the
independent private sector audit as part of and in the same exhibit to
the annual report as the issuer's Conflict Minerals Report. Our
proposed amendments also specify the required certification of the
independent private sector audit. Our proposed amendments would require
an issuer that furnishes a Conflict Minerals Report to include a
statement in the body of its annual report that the Conflict Minerals
Report is furnished as an exhibit to the annual report, that the
Conflict Minerals Report and the certified audit report are available
on its Internet Web site, and the Internet address of the Web site
where the Conflict Minerals Report and audit report are located. Our
proposed amendments would also require that the disclosure be posted on
the issuer's Internet Web site at least until the issuer files its
subsequent annual report.
---------------------------------------------------------------------------

    \192\ Id.
---------------------------------------------------------------------------

    Finally, our proposed amendments would require that the Conflict
Minerals Report be furnished with the Commission, rather than filed.
The Conflict Minerals Provision indicates that the report should be
``submitted'' to us,\193\ but it does not indicate whether the report
should be filed or furnished. Information that is furnished, rather
than filed, with us is not subject to liability under Section 18 of the
Exchange Act. By requiring the Conflict Minerals Report to be furnished
with us, we are subjecting such reports to less liability than would
exist if the reports were filed with us. However, under Exchange Act
Section 13(p)(1)(C), failure to comply with the Conflict Minerals
Provision would deem the issuer's due diligence process ``unreliable''
and, therefore, the Conflict Minerals Report ``shall not satisfy'' our
proposed rules.\194\ Also, issuers that fail to comply with our
proposed rules would be subject to liability for violations of Exchange
Act Sections 13(a) or 15(d), as applicable.\195\
---------------------------------------------------------------------------

    \193\ See Exchange Act Section 13(p)(1)(A).
    \194\ See Exchange Act Section 13(p)(1)(C).
    \195\ 15 U.S.C. 78m(a) and 15 U.S.C. 78o(d).
---------------------------------------------------------------------------

    The Commission is sensitive to the costs and benefits imposed by
the proposed rules and form amendments. The discussion below focuses on
the costs and benefits of the proposals made by the Commission to
implement the Act within its permitted discretion, rather than the
costs and benefits of the Act itself.

A. Benefits

    Overall, we expect that our proposed rules will have the benefit of
furthering Congress's goal of deterring the financing of armed groups
in the DRC countries through commercial activity in conflict minerals.
The proposed rules, if adopted, would specify which companies are
covered by the disclosure and reporting requirements in Section

1502 of the Act and the alternative approach to disclosure for recycled
or scrap minerals. The proposed rules would also specify the
information that reporting companies with necessary conflict minerals
would be required to disclose. This specification would benefit
reporting companies by reducing uncertainty about their compliance with
Commission rules.
    Our proposal specifies the location of the initial disclosure of
conflict minerals' origin and the location of the Conflict Minerals
Report and should make it easier for interested parties to locate this
information. In addition, our proposal to require reporting companies
to furnish the independent private sector audit report would make the
report easily accessible to interested parties. Thus, market
participants and observers may benefit from the increased disclosure
and improved reporting to the extent that they find information about
conflict mineral use relevant to their decision making.
    Additionally, our decision to require issuers to furnish with the
Commission the independent private sector audit report instead of
filing it would free the independent private sector auditors preparing
these reports from assuming expert liability. Relative to the filing
option that we could have proposed, this should decrease the cost to
independent private sector auditors of providing such audits to
conflict minerals-reporting companies. Depending on the state of
competition in the market for independent private sector audits, the
lower costs due to auditors not being required to assume expert
liability could result in lower audit fees, which in turn should
decrease conflict minerals-reporting companies' cost of compliance with
the statute.
    We are proposing that reporting companies covered by Section 1502
of the Act use a reasonable country of origin inquiry in determining
whether their conflict minerals originated in the DRC countries and use
due diligence in making their supply chain determinations. We have
chosen not to provide guidance on what would constitute a ``reasonable
country of origin inquiry.'' Similarly, we have chosen not to propose a
specific standard for due diligence. We believe that these decisions
should benefit reporting issuers by allowing them the flexibility to
use the reasonable country of origin inquiry and due diligence
standards that are best suited to their circumstances. We believe that
disclosure of the inquiry performed and the due diligence undertaken
may benefit market participants if they are interested in learning such
information.
    In addition, our proposed rules and form amendments would provide
that conflict minerals obtained from recycled or scrap sources would be
considered DRC conflict free. This should benefit issuers by providing
an alternative approach for recycled or scrap minerals and reduce their
compliance costs with the disclosure requirements in Section 1502 of
the Act, particularly for recycled or scrap minerals, the origins of
which are difficult to trace.

B. Costs

    We anticipate that reporting companies would incur costs in meeting
the additional disclosure required for their Exchange Act annual
reports under Section 13(p) and the proposed rules and form amendments.
The Commission's proposal to require an exhibit for the Conflict
Minerals Report and that reporting companies furnish with the
Commission the independent private sector audit report as an exhibit to
their annual reports will result in costs related to the preparation of
such exhibits. In addition, including manufacturing companies,
companies contracting to manufacture products, companies contracting
for the manufacture of products to sell under their own brand name or a
separately established brand name, and mining companies as ``persons
described'' would result in a larger number of companies incurring the
disclosure compliance costs, compared to an interpretation that
excluded some of these companies. Not requiring auditors to assume
expert liability could increase the costs to market participants and
other observers because auditors may not have as strong incentives to
ensure their determinations are correct. Also, the Commission's
proposal would require issuers that determine following a reasonable
country of origin inquiry that their conflict minerals did not
originate in the DRC countries must keep reviewable records, which will
result in costs related to obtaining and maintaining these records.
Further, such issuers would also incur costs in disclosing the
reasonable country of origin inquiry in their annual reports. However,
as described above, we believe these approaches are consistent with the
Conflict Minerals Provision.
    If a reporting company chose to incorporate by reference its
independent private sector audit report into a Securities Act document,
the independent private sector auditor would assume expert liability,
if the auditor consented to the inclusion of its report. This would not
be required under our proposals but, if an issuer chose to do so, this
might increase the cost to independent private sector auditors of
providing such audits to issuers furnishing Conflict Minerals Reports.
Depending on the state of competition in the market for independent
private sector audits, the additional cost stemming from the assumption
of expert liability could be passed on to issuers furnishing Conflict
Minerals Reporting in the form of higher audit fees, which in turn
would increase these companies' cost of compliance with the statute,
although, as noted, issuers could avoid such costs by not incorporating
the audit report into their Securities Act filings. In any event, since
this audit market is still in its nascence, and issuers presumably
would not choose to incorporate the report by reference, the above
effects are difficult to assess but are likely insignificant.

C. Request for Comment

    We request comment on the disclosures and accuracy of our estimates
in this section.

V. Consideration of Burden on Competition and Promotion of Efficiency,
Competition and Capital Formation

    Section 3(f) of the Exchange Act requires the Commission, whenever
it engages in rulemaking and is required to consider or determine if an
action is necessary or appropriate in the public interest, also to
consider whether the action will promote efficiency, competition, and
capital formation.\196\ Section 23(a)(2) of the Exchange Act also
requires the Commission, when adopting rules under the Exchange Act, to
consider the impact that any new rule would have on competition.\197\
In addition, Section 23(a)(2) prohibits the Commission from adopting
any rule that would impose a burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act.\198\
---------------------------------------------------------------------------

    \196\ 15 U.S.C. 78c(f).
    \197\ 15 U.S.C. 78w(a)(2).
    \198\ Id.
---------------------------------------------------------------------------

    The Commission is proposing the new rules and form amendments
discussed in this release to implement the requirements of Exchange Act
Section 13(p) as set forth in Section 1502 of the Act. We believe that
our proposed rulemaking would have a different impact on competition in
different industries. In industries where most or all companies are
subject to disclosure or reporting requirements under the statute, we
believe anti-competitive

effects to be unlikely. In industries where not all or only a few
companies are subject to the disclosure or reporting requirements,
issuers that must provide disclosure or furnish Conflict Mineral
Reports would incur competitive costs because of our disclosure and
reporting requirements and clarifications.
    Although the costs to perform the investigative work required and,
if necessary, the independent private sector audit fees could increase
the disclosure and reporting compliance costs for issuers that provide
disclosure or furnish Conflict Minerals Reports versus companies who do
not provide disclosure or furnish such reports, the net effect on
competition would depend on how these costs compare to the benefits
that companies obtain by using conflict minerals from the DRC
countries, such as lower input costs.
    Anti-competitive effects might be of larger magnitude in industries
where the proportion of companies not covered by the Exchange Act
Section 13(p) is larger. For instance, mining issuers might suffer a
competitive disadvantage with respect to mining companies that are not
required to provide disclosure or Conflict Minerals Reports but use DRC
minerals, such as U.S. private mining companies or foreign mining
companies, because the issuers would be required to incur
investigative, disclosure, and reporting costs as a result of the
statute and our rules.
    We are proposing to require issuers to furnish the Conflict
Minerals Report with the Commission instead of filing it and have it
included in Exchange Act reports and Securities Act registration
statements. This requirement may limit the costs to, and the potential
negative impact on, capital formation. We are not currently aware of
any effects on efficiency or capital formation, but we seek comment on
whether there are any such effects.
Request for Comment
    70. We request comment on whether the proposed rules, if adopted,
would promote efficiency, competition, and capital formation or have an
impact or burden on competition. Commentators are requested to provide
empirical data and other factual support for their view, if possible.

VI. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Act Analysis\199\ relates to
proposed rules and form amendments to implement Section 13(p) of the
Exchange Act, which concerns certain disclosure and reporting
obligations of issuers with conflict minerals necessary to the
functionality or production of any product manufactured or contracted
to be manufactured by those issuers. As set forth by Section 13(p), an
issuer with such necessary conflict minerals must disclose whether
those minerals originated in the DRC countries and, if so, must submit
to the Commission a Conflict Minerals Report.
---------------------------------------------------------------------------

    \199\ This analysis has been prepared in accordance with 5
U.S.C. 603.
---------------------------------------------------------------------------

A. Reasons for, and Objectives of, the Proposed Action

    The proposed rule and form amendments are designed to implement the
requirements of Section 1502 of the Act. Specifically, the proposed
rules and form amendments would require all issuers with necessary
conflict minerals to disclose in their annual reports whether those
conflict minerals originated in the DRC countries. Issuers with
necessary conflict minerals that originate in the DRC countries, or
that are unable to determine that their necessary conflict minerals did
not originate in the DRC countries, must provide the conflict minerals
disclosure specified by our rules in their Exchange Act annual reports.
    Any issuer with necessary conflict minerals that did originate in
the DRC countries, or that is unable to determine that its necessary
conflict minerals did not originate in DRC countries, also must furnish
as an exhibit to its Exchange Act annual reports a Conflict Minerals
Report, which requires the issuer to describe the measures it has taken
to exercise due diligence on the source and chain of custody of such
minerals, which measures shall include an certified independent private
sector audit that shall constitute a critical component of due
diligence. The Conflict Minerals Report must include a description of
the products manufactured or contracted to be manufacture that are not
DRC conflict free, the identification of the independent private sector
auditor, and the disclosure of the facilities used to process the
conflict minerals, the country of origin of the conflict minerals, and
the efforts to determine the mine or location of origin with the
greatest possible specificity. Also, issuers shall make available to
the public on their Internet Web sites their Conflict Minerals Reports.

B. Legal Basis

    We are proposing the rule and form amendments contained in this
document under the authority set forth in Sections 6, 7, 10, and 19(a)
of the Securities Act, and Sections 12, 13, 15, and 23(a) of the
Exchange Act.

C. Small Entities Subject to the Proposed Amendments

    The proposals would affect small entities that file annual reports
with the Commission under the Exchange Act, and that have conflict
minerals necessary to the functionality or production of products they
manufacture or contract to manufacture. Exchange Act Rule 0-10(a) \200\
defines an issuer to be a ``small business'' or ``small organization''
for purposes of the Regulatory Flexibility Act if it had total assets
of $5 million or less on the last day of its most recent fiscal year.
We believe that the proposals would affect small entities with
necessary conflict minerals as defined under Section 13(p). We estimate
that there are approximately 793 companies to which conflict minerals
are necessary and that may be considered small entities.
---------------------------------------------------------------------------

    \200\ 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

D. Reporting, Recordkeeping, and Other Compliance Requirements

    The proposed rule and form amendments would add to the annual
disclosure requirements of companies with necessary conflict minerals,
including small entities, by requiring them to comply with the
disclosure and reporting obligations under Section 13(p) and provide
certain additional disclosure in their Exchange Act annual reports.
Among other matters, that information must include, as applicable:
     Disclosure as to whether conflict minerals necessary to
the functionality or production of a product manufactured or contracted
to be manufacture by an issuer did originate in the DRC countries; and,
if so,
     A Conflict Minerals Report furnished as an exhibit to the
annual report, which includes a certified independent private sector
audit report.
     Reviewable business records regarding any determination
that an issuer's conflict minerals did not originate in the DRC
countries.
    The same disclosure and reporting requirements would apply to U.S.
and foreign issuers. We are proposing to amend Form 10-K and Regulation
S-K to require domestic issuers to provide the conflict minerals
information. Because Regulation S-K does not directly apply to Forms
20-F and 40-F,\201\ we propose to amend those forms to include the same
disclosure

requirements for issuers that are foreign private issuers.\202\
---------------------------------------------------------------------------

    \201\ While Form 20-F may be used by any foreign private issuer,
Form 40-F is only available to a Canadian issuer that is eligible to
participate in the U.S.-Canadian Multijurisdictional Disclosure
System (``MJDS'').
    \202\ Proposed Item 16 under Part II of Form 20-F and proposed
General Instruction B(16) of Form 40-F.
---------------------------------------------------------------------------

E. Duplicative, Overlapping, or Conflicting Federal Rules

    We believe there are no federal rules that duplicate, overlap or
conflict with the proposed rules.

F. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider significant
alternatives that would accomplish the stated objectives, while
minimizing any significant adverse impact on small entities. In
connection with the proposals, we considered the following
alternatives:
    (1) Establishing different compliance or reporting requirements
which take into account the resources available to smaller entities;
    (2) Exempting smaller entities from coverage of the disclosure
requirements, or any part thereof;
    (3) The clarification, consolidation, or simplification of
disclosure for small entities; and
    (4) Use of performance standards rather than design standards.
    We believe that separate disclosure requirements for small entities
that would differ from the proposed reporting requirements, or
exempting them from those requirements, would not achieve the
disclosure objectives of Section 13(p). The proposed rules are designed
to implement the conflict minerals disclosure and reporting
requirements of Section 13(p). That statutory section applies to all
issuers with necessary conflict minerals, regardless of size. However,
the reasonable country of origin inquiry standard for determining
whether conflict minerals originated in the DRC countries and the due
diligence standard necessary for making the supply chain determinations
in the Conflict Minerals Report are performance standards and would
vary based on the facts and circumstances of each individual issuer. We
have requested comment as to whether we should provide an exemption for
smaller reporting companies and whether doing so would be consistent
with the statute.
    The proposed rules would require clear disclosure about the source
and chain of custody of an issuer's necessary conflict minerals, which
may result in increased transparency about the origin of those
minerals. The proposed requirement to disclose the information in the
body of and as an exhibit to an issuer's Exchange Act annual report may
simplify the process of submitting the proposed conflict minerals
disclosure and Conflict Minerals Reports. In addition, furnishing the
Conflict Minerals Reports and the audit reports as exhibits would
simplify the search and retrieval of this information regarding
issuers, including small entities, for investors and other interested
persons.
    We have otherwise used design rather than performance standards in
connection with the proposed amendments because, based on our past
experience, we believe the proposed amendments would be more useful if
there were specific disclosure requirements. In addition, the specific
disclosure requirements in the proposed amendments would promote
consistent and comparable disclosure among all issuers with necessary
conflict minerals.

G. Solicitation of Comment

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     How the proposed amendments can achieve their objective
while lowering the burden on small entities;
     The number of small entity companies that may be affected
by the proposed amendments;
     Whether small entity companies should be exempt from the
rule;
     The existence or nature of the potential impact of the
proposed amendments on small entity companies discussed in the
analysis; and
     How to quantify the impact of the proposed amendments.
    Respondents are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. Such
comments will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rule amendments are adopted, and
will be placed in the same public file as comments on the proposed
amendments themselves.

VII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''),\203\ a rule is ``major'' if it has resulted,
or is likely to result in:
---------------------------------------------------------------------------

    \203\ Public Law 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment or
innovation.
Request for Comment
    71. We request comment on whether our proposals would be a ``major
rule'' for purposes of SBREFA. We solicit comment and empirical data
on:
     The potential effect on the U.S. economy on an annual
basis;
     Any potential increase in costs or prices for consumers or
individual industries; and
     Any potential effect on competition, investment or
innovation.

VIII. Statutory Authority and Text of The Proposed Amendments

    The amendments described in this release are being proposed under
the authority set forth in Sections 6, 7 10, 19(a), and 28 of the
Securities Act, as amended, and Sections 12, 13, 15(d), 23(a), and 36
of the Exchange Act, as amended.

List of Subjects 17 CFR Parts 229 and 249

    Reporting and recordkeeping requirements, Securities.

Text of The Proposed Amendments

    For the reasons set out in the preamble, the Commission proposes to
amend title 17, chapter II, of the Code of Federal Regulations as
follows:

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K

    1. The authority citation for part 229 continues to read in part as
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll,
78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 80a-37, 80a-
38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless
otherwise noted.
* * * * *
    2. Add Sec.  229.104 to read as follows:

Sec.  229.104  (Item 104) Conflict minerals disclosure.

    (a) If any conflict minerals, as defined by paragraph (c)(3) of
this section, are necessary to the functionality or production of a
product manufactured or contracted to be manufactured by the registrant
in the year covered by the annual report, the registrant must disclose
in its annual report under a separate heading entitled ``Conflict
Minerals Disclosure'' whether any of

these conflict minerals originated in the Democratic Republic of the
Congo or an adjoining country, as defined by paragraph (c)(1) of this
section or that the registrant is not able to determine that its
conflict minerals did not originate in the Democratic Republic of the
Congo or an adjoining country. The registrant's determination of
whether or not any of these conflict minerals originated in the
Democratic Republic of the Congo or an adjoining country, or its
inability to determine that these conflict minerals did not originate
in the Democratic Republic of the Congo or an adjoining country, must
be based on its reasonable country of origin inquiry. If the registrant
determines that its conflict minerals necessary to the functionality or
production of a product manufactured or contracted to be manufactured
by it did not originate in the Democratic Republic of the Congo or an
adjoining country, the registrant must make that disclosure available
on its Internet Web site and must also disclose this determination in
its annual report under the separate ``Conflict Minerals Disclosure''
heading along with the reasonable country of origin inquiry it
undertook to make its determination, that its disclosure is located on
its Internet Web site, and the address of that Internet Web site. The
disclosure must remain on the registrant's Internet Web site at least
until the registrant files its subsequent annual report. Also, the
registrant must maintain reviewable business records to support any
such negative determination.
    (b) If any conflict minerals necessary to the functionality or
production of a product manufactured or contracted to be manufactured
by the registrant originated in the Democratic Republic of the Congo or
an adjoining country, if the registrant is unable to determine that
such conflict minerals did not originate in the Democratic Republic of
the Congo or an adjoining country, or if such conflict minerals came
from recycled or scrap sources, the registrant must:
    (1) Furnish a Conflict Minerals Report as an exhibit to its annual
report with the following information:
    (i) A description of the measures taken by the registrant to
exercise due diligence on the source and chain of custody of the
conflict minerals or to exercise due diligence in determining that the
conflict minerals came from recycled or scrap sources, which shall
include but not be limited to a certified independent private sector
audit of the Conflict Minerals Report, conducted in accordance with
standards established by the Comptroller General of the United States,
that shall constitute a critical component of the registrant's due
diligence in establishing the source and chain of custody of the
conflict minerals or that the conflict minerals came from recycled or
scrap sources;
    (ii) A certification by the registrant that it obtained such an
independent private sector audit;
    (iii) A description of any of the registrant's products
manufactured or contracted to be manufactured containing conflict
minerals that are not ``DRC conflict free,'' as defined in paragraph
(c)(4) of this section, the facilities used to process those conflict
minerals, the country of origin of those conflict minerals, and the
efforts to determine the mine or location of origin with the greatest
possible specificity; and
    (iv) The audit report prepared by the independent private sector
auditor, which identifies the entity that conducted the audit.
    (2) In addition to the disclosures required by paragraph (a) of
this section, disclose under the separate ``Conflict Minerals
Disclosure'' heading in the annual report that the registrant has
furnished a Conflict Minerals Report as an exhibit to the annual
report; that the Conflict Minerals Report and the certified independent
private sector audit report are available on its Internet Web site; and
the Internet address of its Internet Web site where the Conflict
Minerals Report and audit report are located.
    (3) Make the Conflict Minerals Report, including the certified
audit report, available to the public by posting the text of the report
on its Internet Web site. The text of the Conflict Minerals Report must
remain on the registrant's Internet Web site at least until the
registrant files its subsequent annual report.
    (c) For the purposes of this section, the following definitions
apply:
    (1) Adjoining country. The term adjoining country means a country
that shares an internationally recognized border with the Democratic
Republic of the Congo.
    (2) Armed group. The term armed group means an armed group that is
identified as a perpetrator of serious human rights abuses in the most
recently issued annual Country Reports on Human Rights Practices under
sections 116(d) and 502B(b) of the Foreign Assistance Act of 1961 (22
U.S.C. 2151n(d) and 2304(b)) relating to the Democratic Republic of the
Congo or an adjoining country for the year the annual report is due.
    (3) Conflict mineral. The term conflict mineral means:
    (i) Columbite-tantalite (coltan), cassiterite, gold, wolframite, or
their derivatives; or
    (ii) Any other mineral or its derivatives determined by the
Secretary of State to be financing conflict in the Democratic Republic
of the Congo or an adjoining country.
    (4) DRC conflict free. The term DRC conflict free means that a
product does not contain conflict minerals that directly or indirectly
finance or benefit armed groups in the Democratic Republic of the Congo
or an adjoining country. Conflict minerals that a registrant is unable
to determine did not originate in the Democratic Republic of the Congo
or an adjoining country are not ``DRC conflict free.'' Conflict
minerals that a registrant obtains from recycled or scrap sources are
considered DRC conflict free.

Instructions to Item 104

    (1) A registrant that files reports with the Commission under
Sections 13(a) (15 U.S.C. 78m(a)) or 15(d) (15 U.S.C. 78o(d)) of the
Exchange Act, for whom conflict minerals are necessary to the
functionality or production of a product manufactured or contracted to
be manufactured by that registrant, shall provide the information
required by this item. A registrant that mines conflict minerals would
be considered to be manufacturing those minerals for the purpose of
this item.
    (2) The information required by this Item shall not be deemed to be
``filed'' with the Commission or subject to the liabilities of section
18 of the Exchange Act (15 U.S.C. 78r), except to the extent that the
registrant specifically incorporates the information by reference into
a document filed under the Securities Act or the Exchange Act. The
disclosure required by this Item need not be provided in any filings
other than an annual report on Form 10-K (Sec.  249.310 of this
chapter). Such information will not be deemed to be incorporated by
reference into any filing under the Securities Act or the Exchange Act,
except to the extent that the registrant specifically incorporates it
by reference.
    3. Amend Sec.  229.601 in the exhibit table to add entry (96) and
add paragraph (b)(96) to read as follows:

Sec.  229.601   (Item 601) Exhibits.

    (a) * * *
    Exhibit Table * * *

                                                                      Exhibit Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Securities Act Forms                                        Exchange Act Forms
                                    --------------------------------------------------------------------------------------------------------------------
                                       S-1      S-3    S-4 \3\    S-8      S-11     F-1      F-3    F-4 \3\     10    8-K \5\    10-D     10-Q     10-K
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                      * * * * * * *
(36) through (95) [Reserved].......     N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A
(96) Conflict Minerals Report......  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......       X
(97) [Reserved]....................     N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A
(98) [Reserved]....................     N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *
    (b) * * *
    (96) Report on conflict minerals from the Democratic Republic of
the Congo or an Adjoining Country. The report required by Item
104(b)(1) of Regulation S-K, if applicable.
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    4. The authority citation for part 249 continues to read in part as
follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C.
1350, unless otherwise noted.
* * * * *
    5. Amend Form 20-F (referenced in Sec.  249.220f) by adding Item 16
and by adding paragraph 16 to the Instructions as to Exhibits.
    The addition reads as follows:

    Note: The text of Form 20-F does not, and this amendment will
not, appear in the Code of Federal Regulations.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 20-F

* * * * *

PART II

* * * * *

Item 16. Conflict Minerals Disclosure

    (a) If any conflict minerals, as defined by paragraph (c)(3) of
this Item, are necessary to the functionality or production of a
product manufactured or contracted to be manufactured by the registrant
in the year covered by the annual report, the registrant must disclose
in its annual report under a separate heading entitled ``Conflict
Minerals Disclosure'' whether any of these conflict minerals originated
in the Democratic Republic of the Congo or an adjoining country, as
defined by paragraph (c)(1) of this Item, or that the registrant is not
able to determine that its conflict minerals did not originate in the
Democratic Republic of the Congo or an adjoining country. The
registrant's determination of whether or not any of these conflict
minerals originated in the Democratic Republic of the Congo or an
adjoining country, or its inability to determine that these conflict
minerals did not originate in the Democratic Republic of the Congo or
an adjoining country, must be based on its reasonable country of origin
inquiry. If the registrant determines that its conflict minerals
necessary to the functionality or production of a product manufactured
or contracted to be manufactured by it did not originate in the
Democratic Republic of the Congo or an adjoining country, the
registrant must make that disclosure available on its Internet Web site
and must also disclose this determination in its annual report under
the separate ``Conflict Minerals Disclosure'' heading along with the
reasonable country of origin inquiry it undertook to make its
determination, that its disclosure is located on its Internet Web site,
and the address of that Internet Web site. The disclosure must remain
on the registrant's Internet Web site at least until the registrant
files its subsequent annual report. Also, the registrant must maintain
reviewable business records to support any such negative determination.
    (b) If any conflict minerals necessary to the functionality or
production of a product manufactured or contracted to be manufactured
by the registrant originated in the Democratic Republic of the Congo or
an adjoining country, if the registrant is unable to determine that
such conflict minerals did not originate in the Democratic Republic of
the Congo or an adjoining country, or if such conflict minerals came
from recycled or scrap sources, the registrant must:
    (1) Furnish a Conflict Minerals Report as an exhibit to its annual
report with the following information:
    (i) A description of the measures taken by the registrant to
exercise due diligence on the source and chain of custody of the
conflict minerals or to exercise due diligence in determining that the
conflict minerals came from recycled or scrap sources, which shall
include but not be limited to a certified independent private sector
audit of the Conflict Minerals Report, conducted in accordance with
standards established by the Comptroller General of the United States,
that shall constitute a critical component of the registrant's due
diligence in establishing the source and chain of custody of the
conflict minerals or that the conflict minerals came from recycled or
scrap sources;
    (ii) A certification by the registrant that it obtained such an
independent private sector audit;
    (iii) A description of any of the registrant's products
manufactured or contracted to be manufactured containing conflict
minerals that are not ``DRC conflict free,'' as defined in paragraph
(c)(4) of this Item, the facilities used to process those conflict
minerals, the country of origin of those conflict minerals, and the
efforts to determine the mine or location of origin with the greatest
possible specificity; and
    (iv) The audit report prepared by the independent private sector
auditor, which identifies the entity that conducted the audit.
    (2) In addition to the disclosures required by paragraph (a) of
this Item, disclose under the separate ``Conflict Minerals Disclosure''
heading in the annual report that the registrant has furnished a
Conflict Minerals Report as an exhibit to the annual report; that the
Conflict Minerals Report and the certified independent private sector
audit report are available on its Internet Web site; and the Internet
address of its Internet Web site where the Conflict Minerals Report and
audit report are located.
    (3) Make the Conflict Minerals Report, including the certified
audit report, available to the public by posting the text of the report
on its Internet Web site. The text of the Conflict Minerals Report must
remain on the registrant's Internet Web site at least until the
registrant files its subsequent annual report.
    (c) For the purposes of this Item, the following definitions apply:

    (1) Adjoining country. The term adjoining country means a country
that shares an internationally recognized border with the Democratic
Republic of the Congo.
    (2) Armed group. The term armed group means an armed group that is
identified as a perpetrator of serious human rights abuses in the most
recently issued annual Country Reports on Human Rights Practices under
sections 116(d) and 502B(b) of the Foreign Assistance Act of 1961 (22
U.S.C. 2151n(d) and 2304(b)) relating to the Democratic Republic of the
Congo or an adjoining country for the year the annual report is due.
    (3) Conflict mineral. The term conflict mineral means:
    (i) columbite-tantalite (coltan), cassiterite, gold, wolframite, or
their derivatives; or
    (ii) any other mineral or its derivatives determined by the
Secretary of State to be financing conflict in the Democratic Republic
of the Congo or an adjoining country.
    (4) DRC conflict free. The term DRC conflict free means that a
product does not contain conflict minerals that directly or indirectly
finance or benefit armed groups in the Democratic Republic of the Congo
or an adjoining country. Conflict minerals that a registrant is unable
to determine did not originate in the Democratic Republic of the Congo
or an adjoining country are not ``DRC conflict free.'' Conflict
minerals that a registrant obtains from recycled or scrap sources are
considered DRC conflict free.

Instructions to Item 16

    (1) Item 16 applies only to annual reports, and does not apply to
registration statements on Form 20-F. A registrant must provide the
information required in Item 16 beginning with the annual report that
it files for its first full fiscal year beginning after [April 15,
2011].
    (2) A registrant that files reports with the Commission under
Sections 13(a) (15 U.S.C. 78m(a)) or 15(d) (15 U.S.C. 78o(d)) of the
Exchange Act, for whom conflict minerals are necessary to the
functionality or production of a product manufactured or contracted to
be manufactured by that registrant, shall provide the information
required by this item. A registrant that mines conflict minerals would
be considered to be manufacturing those minerals for the purpose of
this item.
    (3) The information required by this Item shall not be deemed to be
``filed'' with the Commission or subject to the liabilities of section
18 of the Exchange Act (15 U.S.C. 78r), except to the extent that the
registrant specifically incorporates the information by reference into
a document filed under the Securities Act or the Exchange Act. The
disclosure required by this Item need not be provided in any filings
other than an annual report on Form 20-F (Sec.  249.220f of this
chapter). Such information will not be deemed to be incorporated by
reference into any filing under the Securities Act or the Exchange Act,
except to the extent that the registrant specifically incorporates it
by reference.
* * * * *

Instructions as to Exhibits

* * * * *
    16. The Conflict Minerals Report required by Item 16 of this Form,
if applicable.
* * * * *
    6. Amend Form 40-F (referenced in Sec.  249.240f) by adding
paragraph (16) to General Instruction B as follows:

    Note:  The text of Form 40-F does not, and this amendment will
not, appear in the Code of Federal Regulations.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 40-F

* * * * *

GENERAL INSTRUCTIONS

* * * * *

B. Information To Be Filed on This Form

* * * * *
    (16) Conflict Minerals Disclosure
    (a) If any conflict minerals, as defined by paragraph (c)(3) of
this Instruction, are necessary to the functionality or production of a
product manufactured or contracted to be manufactured by the registrant
in the year covered by the annual report, the registrant must disclose
in its annual report under a separate heading entitled ``Conflict
Minerals Disclosure'' whether any of these conflict minerals originated
in the Democratic Republic of the Congo or an adjoining country, as
defined by paragraph (c)(1) of this Instruction, or that the registrant
is not able to determine that its conflict minerals did not originate
in the Democratic Republic of the Congo or an adjoining country. The
registrant's determination of whether or not any of these conflict
minerals originated in the Democratic Republic of the Congo or an
adjoining country, or its inability to determine that these conflict
minerals did not originate in the Democratic Republic of the Congo or
an adjoining country, must be based on its reasonable country of origin
inquiry. If the registrant determines that its conflict minerals
necessary to the functionality or production of a product manufactured
or contracted to be manufactured by it did not originate in the
Democratic Republic of the Congo or an adjoining country, the
registrant must make that disclosure available on its Internet Web site
and must also disclose this determination in its annual report under
the separate ``Conflict Minerals Disclosure'' heading along with the
reasonable country of origin inquiry it undertook to make its
determination, that its disclosure is located on its Internet Web site,
and the address of that Internet Web site. The disclosure must remain
on the registrant's Internet Web site at least until the registrant
files its subsequent annual report. Also, the registrant must maintain
reviewable business records to support any such negative determination.
    (b) If any conflict minerals necessary to the functionality or
production of a product manufactured or contracted to be manufactured
by the registrant originated in the Democratic Republic of the Congo or
an adjoining country, if the registrant is unable to determine that
such conflict minerals did not originate in the Democratic Republic of
the Congo or an adjoining country, or if such conflict minerals came
from recycled or scrap sources, the registrant must:
    (1) Furnish a Conflict Minerals Report as an exhibit to its annual
report with the following information:
    (i) a description of the measures taken by the registrant to
exercise due diligence on the source and chain of custody of the
conflict minerals or to exercise due diligence in determining that the
conflict minerals came from recycled or scrap sources, which shall
include but not be limited to a certified independent private sector
audit of the Conflict Minerals Report, conducted in accordance with
standards established by the Comptroller General of the United States,
that shall constitute a critical component of the registrant's due
diligence in establishing the source and chain of custody of the
conflict minerals or that the conflict minerals came from recycled or
scrap sources;
    (ii) a certification by the registrant that it obtained such an
independent private sector audit;
    (iii) a description of any of the registrant's products
manufactured or contracted to be manufactured containing conflict
minerals that are not ``DRC conflict free,'' as defined in paragraph
(c)(4) of this Instruction, the

facilities used to process those conflict minerals, the country of
origin of those conflict minerals, and the efforts to determine the
mine or location of origin with the greatest possible specificity; and
    (iv) the audit report prepared by the independent private sector
auditor, which identifies the entity that conducted the audit.
    (2) In addition to the disclosures required by paragraph (a) of
this Instruction, disclose under the separate ``Conflict Minerals
Disclosure'' heading in the annual report that the registrant has
furnished a Conflict Minerals Report as an exhibit to the annual
report; that the Conflict Minerals Report and the certified independent
private sector audit report are available on its Internet Web site; and
the Internet address of its Internet Web site where the Conflict
Minerals Report and audit report are located.
    (3) Make the Conflict Minerals Report, including the certified
audit report, available to the public by posting the text of the report
on its Internet Web site. The text of the Conflict Minerals Report must
remain on the registrant's Internet Web site at least until the
registrant files its subsequent annual report.
    (c) For the purposes of this Instruction, the following definitions
apply:
    (1) Adjoining country. The term adjoining country means a country
that shares an internationally recognized border with the Democratic
Republic of the Congo.
    (2) Armed group. The term armed group means an armed group that is
identified as a perpetrator of serious human rights abuses in the most
recently issued annual Country Reports on Human Rights Practices under
sections 116(d) and 502B(b) of the Foreign Assistance Act of 1961 (22
U.S.C. 2151n(d) and 2304(b)) relating to the Democratic Republic of the
Congo or an adjoining country for the year the annual report is due.
    (3) Conflict mineral. The term conflict mineral means:
    (i) columbite-tantalite (coltan), cassiterite, gold, wolframite, or
their derivatives; or
    (ii) any other mineral or its derivatives determined by the
Secretary of State to be financing conflict in the Democratic Republic
of the Congo or an adjoining country.
    (4) DRC conflict free. The term DRC conflict free means that a
product does not contain conflict minerals that directly or indirectly
finance or benefit armed groups in the Democratic Republic of the Congo
or an adjoining country. Conflict minerals that a registrant is unable
to determine did not originate in the Democratic Republic of the Congo
or an adjoining country are not ``DRC conflict free.'' Conflict
minerals that a registrant obtains from recycled or scrap sources are
considered DRC conflict free.

Notes to Paragraph (16) of General Instruction B

    (1) Paragraph (16) of General Instruction B applies only to annual
reports, and does not apply to registration statements on Form 40-F. A
registrant must provide the information required in paragraph (16)
beginning with the annual report that it files for its first full
fiscal year beginning after [April 15, 2011].
    (2) A registrant that files reports with the Commission under
Sections 13(a) (15 U.S.C. 78m(a)) or 15(d) (15 U.S.C. 78o(d)) of the
Exchange Act, for whom conflict minerals are necessary to the
functionality or production of a product manufactured or contracted to
be manufactured by that registrant, shall provide the information
required by this Instruction. A registrant that mines conflict minerals
would be considered to be manufacturing those minerals for the purpose
of this Instruction.
    (3) The information required by this Instruction shall not be
deemed to be ``filed'' with the Commission or subject to the
liabilities of section 18 of the Exchange Act (15 U.S.C. 78r), except
to the extent that the registrant specifically incorporates the
information by reference into a document filed under the Securities Act
or the Exchange Act. The disclosure required by this Instruction need
not be provided in any filings other than an annual report on Form 40-F
(Sec.  249.240f of this chapter). Such information will not be deemed
to be incorporated by reference into any filing under the Securities
Act or the Exchange Act, except to the extent that the registrant
specifically incorporates it by reference.
* * * * *
    7. Amend Form 10-K (referenced in Sec.  249.310) by adding Item
4(a) as follows:

    Note:  The text of Form 10-K does not, and this amendment will
not, appear in the Code of Federal Regulations.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

* * * * *

PART I

* * * * *

Item 4. Specialized Disclosures

    (a) Furnish the information required by Item 104 of Regulation S-K
(Sec.  229.104 of this chapter).

Instruction

    A registrant must provide the information required in Item 4
beginning with the annual report that it files for its first full
fiscal year beginning after [April 15, 2011].
* * * * *

    By the Commission.

    Dated: December 15, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-31940 Filed 12-22-10; 8:45 am]
BILLING CODE 8011-01-P