Beveridge & Diamond

Conflict Minerals Update: The Courts, Congress, Canada and EU Consultations

Beveridge & Diamond, P.C., May 23, 2013

Recent developments in the courts, Congress and in jurisdictions outside the U.S. suggest that the obligations of companies to disclose their use of “conflict minerals” will evolve further in the months and years ahead.

  • In early May, the appellate court hearing the challenge to the Securities and Exchange Commission’s (SEC’s) conflict minerals rule transferred the case to a lower court, increasing the likelihood that the legal battle over the rule will extend into 2014.
  • Congress has taken a renewed interest in assessing the impact of the conflict minerals disclosure provisions of Dodd-Frank while renewing calls for U.S. diplomatic efforts to end the conflict in the region.
  • Outside the United States, both Canada and the European Union are moving forward with consideration of new legislation on the sourcing of minerals from conflict-affected areas in the Democratic Republic of Congo (DRC) and elsewhere.
  • These developments come as a wide range of companies take steps to engage suppliers on the origins of conflict minerals in their supply chains.

Brief Background

The SEC finalized a rule implementing Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in August 2012. The rule requires many companies to investigate and disclose details on their use and sourcing of tin, tungsten, tantalum and gold in their products. The first disclosures under the rule, covering calendar year 2013, are due by May 31, 2014. For further information on the requirements in the conflict minerals rule, click here.

Litigation Update

A coalition of business groups petitioned the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) for review of the rule. The petitioners argued in part that the SEC failed to properly evaluate the economic effects of the rule and that the SEC acted arbitrarily and capriciously in crafting the rule.

Although the court agreed to hear the case on an expedited basis, it issued an order transferring the case to federal district court on May 2, 2013 (shortly after dismissing a challenge to another SEC rule on jurisdictional grounds).

The federal district court has agreed to expedite its review of the SEC rule. The court will hear oral arguments on July 1, 2013.  Even so, the transfer will likely result in an extended period of uncertainty about the future of the rule, lasting until the trial court considers the case and issues a decision, which will then likely result in an appeal back to the appeals court.

Congress Holds Hearings on Implementation

The House Subcommittee on Monetary Policy and Trade, a subcommittee of the Financial Services Committee, held a hearing on May 21 on “The Unintended Consequences of Dodd-Frank’s Conflict Minerals Provision.” Witnesses included David Aronson, a freelance writer and observer of the DRC; Mvemba Dizolele, a Visiting Fellow at the Hoover Institution; Rick Goss, Senior Vice President of Environment and Sustainability, Information Technology Industry Council; and Sophia Pickles, Policy Advisor, Global Witness. Prepared statements from each of the witnesses are available here.

Members of the subcommittee raised concerns about the impacts of Section 1502 and the SEC rule on the people and economy of the DRC region, and about whether their implementation will reduce conflict in the DRC region. No further hearings are scheduled at this time, but this subcommittee and others in Congress are likely to continue to monitor the effects of Section 1502 as implementation continues.

Senate Resolution on the DRC

That hearing followed the introduction of Senate Resolution 144 by Senator Chris Coons (D-DE) “Concerning the ongoing conflict in the Democratic Republic of the Congo and the need for international efforts supporting long-term peace, stability, and observance of human rights.” The Resolution “calls on all relevant nations, including destination and transit countries, to increase cooperation on ending the illicit trade in conflict minerals, wildlife, and wildlife parts, which continues to fuel and fund violence and to deprive citizens of economic opportunity in the Democratic Republic of the Congo and the broader region.” The Resolution also “urges the President to appoint a Special Envoy to the Great Lakes in the near-term in order to represent the United States in international and regional efforts to end the conflict and secure sustainable peace, stability, and safety for the people of the Democratic Republic of the Congo.” Co-sponsors of the Resolution include Senators Boozman (R-AR), Durbin (D-IL) and Isakson (R-GA). The Resolution has been referred to the Senate Committee on Foreign Relations and a copy can be found here.

Activity in Other Jurisdictions

European Union

On March 27, the European Commission began collecting input from interested parties on a potential EU initiative for responsible sourcing of minerals. The scope of the consultation is much broader than Dodd-Frank, and seeks input on mineral sourcing from all conflict-affected areas, not just those in and around the DRC. The deadline for participating in the consultation is June 26, 2013. The questionnaire is available here.

A member of the European Parliament (MEP Judith Sargentini (Greens/EFA)) has also announced a conference on the EU’s “imminent” legislative proposal on conflict minerals for Monday June 3, 2013 in Brussels. The conference will include participation from several leading human rights NGOs and underscores the growing momentum in Europe for action on conflict minerals.


On March 26, a member of Canada’s opposition party introduced legislation similar to Section 1502 of Dodd-Frank. Bill C-486 would require companies incorporated under Canadian federal or provincial laws to report on their use of tin, tungsten, tantalum, and gold from the Great Lakes Region of Africa, including the DRC. A Canadian company would have to exercise due diligence on its extraction, processing, purchasing, and trading in or use of those minerals. If a company finds that it has processed, purchased, traded in, used, or extracted one of those minerals, or that it has contracted to do so, the company would have to submit a report to the Minister of Foreign Affairs detailing its due diligence and findings. The text of the proposed legislation can be found here.

U.S. States: Massachusetts & Connecticut

The legislatures of at least two U.S. states – Massachusetts and Connecticut – are considering proposals that would bar companies that do not meet their Dodd-Frank reporting obligations from bidding on or receiving state procurement contracts. These bills are similar to legislation already in place in California and Maryland. The Connecticut legislation would further bar the State Treasurer from investing state funds in a company that has not met its Dodd-Frank reporting obligations. The Massachusetts proposal is available here; the Connecticut proposal is available here.

Beveridge & Diamond Participation in EICC/GeSI Workshop

The Global e-Sustainability Initiative (GeSI) and the Electronic Industry Citizenship Coalition (EICC) hosted its most recent workshop on conflict minerals due diligence and disclosure in Hong Kong. The workshop featured panels and breakout sessions on tools to support conflict-free sourcing and smelter and downstream company due diligence. Lauren Hopkins, an attorney in the San Francisco office of Beveridge & Diamond, P.C., provided the legal update for the workshop which included participation from a wide-range of suppliers in the Asia-Pacific region. Additional information about the workshop and related materials are available here.

For more information about these and other developments related to conflict minerals due diligence and disclosure, please contact Paul Hagen (, Russ LaMotte (, Lauren Hopkins ( or Graham Zorn (

For a printable PDF of this article, please click here.




Media Contact

Attorney Contacts
Attorney Contacts