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SEC Announces August Meeting to Consider Final Conflict Minerals Rule

Beveridge & Diamond, P.C., July 3, 2012

SEC Announces August Meeting to Consider Final Conflict Minerals Rule

The Securities and Exchange Commission (“SEC”) has announced that it will hold an open meeting on August 22, 2012 to consider adopting a final rule to implement the conflict minerals disclosure requirements of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act").  The final rule was originally due in April 2011, and the SEC has recently come under pressure from members of the House of Representatives over the delay.  The meeting, which is open to the public, will begin at 10:00 a.m. and will be held in the SEC Auditorium, Room L-002, 100 F Street, NE, Washington, DC.

The announcement follows a letter from fifty-eight Democratic members of the House of Representatives to SEC Chairman Mary Schapiro on June 22, 2012 expressing concern that the SEC has not yet finalized rules to implement the conflict minerals provisions of the Dodd-Frank Act.  The letter urged Chairman Schapiro either to schedule a vote on the conflict minerals rule by July 1, 2012, or to respond by June 29, 2012 with an explanation for the delay and a definitive date for a vote on the rule. 

The final rule is expected to detail new SEC disclosure requirements for publicly traded companies using specified minerals or their derivatives which will in turn entail the adoption of due diligence policies and procedures throughout the supply chain.  An overview of the Dodd-Frank conflict minerals provisions and the SEC’s proposed rule can be found here

Maryland Enacts Conflict Minerals Law

On May 2, 2012, Governor Martin O’Malley signed the Maryland State Procurement and Congo Conflict Minerals Bill into law. The law prohibits the state government from procuring supplies or services from companies that fail to meet the SEC’s conflict minerals reporting requirements established under the Dodd-Frank Act. California enacted a similar law in October of 2011.

The Maryland law bans units of the state government from contracting with companies: (1) that have not made the requisite SEC conflict minerals disclosure; (2) whose disclosure “is considered under federal law to be an unreliable determination”; or (3) whose disclosure contains false information. Units of the state government are required to provide notice of these constraints when soliciting procurement bids. The law is to take effect on October 1, 2012.

The Maryland and California laws are part of a broader trend among governments and other entities to consider conflict minerals in their purchasing decisions.  A handful of municipalities, including Pittsburgh, PA, St. Petersburg, FL, and Edina, MN, have adopted policies to favor products that are free of minerals that have financed armed conflict in the Democratic Republic of the Congo.  DePauw University in Indiana has adopted a similar purchasing policy.

For additional information, please contact Paul Hagen at (202)789-6022, phagen@bdlaw.com, Russell LaMotte at (202)789-6080, rlamotte@bdlaw.com, Laura Duncan (San Francisco office) at (415)262-4003, lduncan@bdlaw.com, or Graham Zorn at (202)789-6024, gzorn@bdlaw.com.

Key Documents and Links:

SEC Meeting Announcement for August 22, 2012

Letter from House Democrats to Chairman Mary Schapiro, June 22, 2012

Maryland State Procurement and Congo Conflict Minerals Bill

California Conflict Minerals Law, SB 861

City of Pittsburgh Conflict Minerals Proclamation

City of St. Petersburg Conflict Minerals Resolution

Edina City Council Supports Purchasing Products with Conflict-Free Minerals

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