US securities regulators on Wednesday eased the final version of a rule that requires manufacturers to disclose whether their products include certain minerals from the Democratic Republic of the Congo and neighbouring countries, Reuters reported. The Securities and Exchange Commission voted 3-2 to approve the controversial final rule. The reform was mandated by the 2010 Dodd-Frank financial regulatory overhaul, but it had been held up amid industry criticism that the rule would be too onerous. The commission’s two Republican commissioners voted against the rule and said it fell outside the SEC’s mission of investor protection, despite the reform being required by law.

The new rule will come into effect from May 2014. In an opening statement SEC Chairman Mary L. Shapiro noted that after an extensive consultation exercise several aspects of the proposed rule had been changed to narrow down the definitions of what might be considered as conflict minerals and gave smaller companies more leeway in reporting:

“In response to comments that our proposal’s treatment of recycled and scrap minerals would have been overly burdensome, the final rule was changed so that issuers using recycled or scrap sources are not automatically required to conduct due diligence of their supply chain and file a conflict minerals report. Instead, recycled and scrap conflict minerals are treated like other minerals. ……. Because of concerns expressed by commenters, issuers that are unable to determine the source of their conflict minerals after conducting due diligence may, for two years, describe the products containing the minerals as “conflict undeterminable” rather than “not conflict free.” Smaller reporting companies may use the “conflict undeterminable” characterization for four years.”

Other changes included a decision to exempt retailers who attach their own brand to generic products manufactured by third parties from reporting, following intensive lobbying against this.

The SEC made a point of detailing the costs of the reforms before voting on the conflict minerals rule, Reuters reported. The agency has seen its rules successfully challenged in court based on allegations it did not adequately weigh costs and benefits. An SEC official estimated the total industry-wide cost of implementing the new conflict minerals rule for companies would be around $3 billion to $4 billion. The annual cost could run between $206 million and $609 million. “We have taken those critiques very seriously,” SEC commissioner Elisse Walter said, referring to the cost-benefit challenges.