Header graphic for print

Conflict Minerals Law

The Source for Legal Insights & Analysis on Conflict Minerals Compliance

Conflict Minerals Rule Weekly Recap #89 – November 21, 2014

Posted in Weekly Recaps
November 21, 2014 – November 28, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Patton Boggs (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

Conflict Minerals Case to Be Reheard

As Dynda points out in her blog post titled Conflict Minerals Case to Be Reheard, on November 18, 2014, the U.S. Court of Appeals for the District of Columbia granted the SEC’s petition to rehear the court’s April 2014 conflict minerals decision following the same court’s July 2014 decision in the American Meat Institute v. USDA case.

In American Meat Institute, the court upheld USDA regulations requiring country-of-origin labels to be placed on meat products, reasoning that the information called for in those labeling requirements is factual and non-controversial and thus the requirement should be reviewed under a rational basis test for commercial speech instead of a more exacting scrutiny.

This past summer, the SEC petitioned the court to rehear the conflict minerals case under the less exacting scrutiny that was used in American Meat Institute. Now that the SEC’s petition has been granted, Dynda notes that “there is still a chance that all of the disclosure requirements of the conflict minerals rule could apply to reporting companies.”

Note: The decision won’t impact the inquiry or due diligence obligations, so companies should continue to work on their supplier outreach and other compliance steps.

Global Witness Charges that Europe Is Dragging Its Feet on Conflict Minerals

Michael Gibb, Campaign Leader for Conflict Resources at Global Witness, in a Huffington Post UK Blog post titled Europe Is Dragging Its Feet on Conflict Minerals, commented on the March 2014 European Commission’s proposed regulation, stating, “But, [the proposed regulation] is toothless. It covers only 0.05% of EU companies involved in the trade and these companies only have to check their supply chains if they choose to opt in. The proposed scheme does not cover products, such as [jewelry] and mobile phones, and will effectively leave the EU without any meaningful regulation to make sure Europe’s mineral trade is conducted responsibly.”

We expect that Global Witness and other NGO’s will continue with this same message as the debate in the European Parliament begins.

Solutions for Hope Receives Grant from Motorola Solutions Foundation to Expand Conflict Minerals Program

Solutions for Hope, a self-described “platform that supports companies, civil society organizations, and governments working together to responsibly source minerals from regions experiencing conflict where market access is limited by opaque supply chains,” received a grant from Motorola Solutions Foundation to expand its platform to other regions of the world and other minerals.

According to the Solutions for Hope website, “[i]n 2011, Motorola Solutions and AVX joined forces and created the Solutions for Hope tantalum program to test the feasibility of responsible, traceable sourcing of tantalum from the Democratic Republic of Congo (DRC) to promote economic stability of the area.”

For more information, please see Motorola Solutions’ press release.

Conflict Minerals Rule Weekly Recap #88 – November 14, 2014

Posted in Weekly Recaps
November 14, 2014 – November 21, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Patton Boggs (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

CFSI Updates Conflict Minerals Reporting Template

The Conflict-Free Sourcing Initiative, an initiative of the Electronic Industry Citizenship Coalition and the Global e-Sustainability Initiative, recently updated its Conflict Minerals Reporting Template, a tool used to facilitate supply chain information between suppliers and customers.

According to the press release, the updated template (Version 3.02), includes an updated Standard Smelter List and translation improvements. The updated Standard Smelter List will now identify smelters at the “entity” level instead of the “corporate level” where as to the latter, “one entry may have represented multiple individual facilities.”

The Conflict Minerals Reporting Template can be used free of charge.

California Polytechnic State University – Conflict Minerals Statement

As you may recall, the academic senate at California Polytechnic State University, or Cal Poly, passed a resolution on May 20, 2014, requiring the Cal Poly procurement department to “take into account whether electronic products contain conflict minerals in future purchasing decisions and…favor verifiably conflict-free products.” Another resolution required the department to publish a conflict minerals policy on its website to that effect. Last week, Cal Poly published a conflict minerals policy on its website. Excerpts from the policy follow:

“Cal Poly is aware of the role that minerals found in consumer electronics products play in perpetuating the current humanitarian crisis in the eastern Democratic Republic of the Congo. Cal Poly supports the efforts of the EICC, and encourages companies to join the coalition and other similar programs in order to help ensure that their products do not contain conflict minerals and are in fact benefiting Congolese communities. Cal Poly urges companies to implement the OECD due diligence guidelines, and will favor companies that are taking steps to implement them.”

To read the entire conflict minerals policy, see Cal Poly Conflict Minerals Policy.

 

Conflict Minerals Rule Case To Be Reheard

Posted in Conflict Mineral Compliance, Legal Challenges, News and Analysis

We’ve been waiting for months.  And now, the Court of Appeals for the District of Columbia has granted the SEC’s petition for rehearing of the court’s April 2014 decision that found that certain disclosure requirements of the conflict minerals rule violated the First Amendment.  The parties have been ordered to file supplemental briefs to discuss:

  • The effect of the American Meat Institute decision on the First Amendment ruling in this case.
  • The meaning of “purely factual and uncontroversial information”  in compelled commercial speech cases.
  • Whether information is “uncontroversial” is a question of fact or of law.

All of these points will be relevant when the court considers whether certain disclosure requirements in the conflict minerals rule should be found (again) to be unconstitutional as compelled commercial speech.   So, with this order for rehearing, there is still a chance that all of the disclosure requirements of the conflict minerals rule could apply to reporting companies. 

 

Conflict Minerals Rule Weekly Recap #87 – November 7, 2014

Posted in Weekly Recaps
November 7, 2014 – November 14, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Patton Boggs (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

Debate on the European Union’s Proposed Conflict Minerals Regulation Began Last Week

J. De Ruyt, in his article titled, Debate in the European Parliament on the European Commission’s Conflict Minerals Proposal, which was posted on The National Law Review’s website, noted that the Committee on International Trade began debating on the EU proposal late last week. Mr. De Ruyt further noted that a hearing is already scheduled for the beginning of December in the Trade and Development Committees. Mr. De Ruyt expects the debate to continue into the next year.

SEC: Don’t Expect Comments on First-Year Conflict Minerals Filings

During the Practicing Law Institute’s Annual Institute on Securities Regulation, Shelley E. Parratt, the Deputy Director of the SEC’s Division of Corporation Finance, commented that issuers should not expect the SEC to comment on any of the first-year conflict minerals filings. Ms. Parratt did reserve SEC comment on future filings.

Of course, Ms. Parratt was not speaking on behalf of the SEC, but only expressing her personal views. However, this should provide some comfort to issuers for now.

Conflict Minerals Rule Weekly Recap #86 – October 31, 2014

Posted in Weekly Recaps
October 31, 2014 – November 7, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Patton Boggs (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

Global Witness Releases White Paper About Chinese Guidelines Concerning Conflict Minerals

The Chinese Chamber of Commerce for Minerals, Metals, and Chemical Importers and Exporters (CCCMC), in conjunction with the German development agency GIZ, recently published guidelines for its member companies operating overseas.

Global Witness, a non-governmental organization, published a white paper that, among other things, summarizes the guidelines.

The  guidelines provide that member companies should:

  • Conduct an assessment to define whether the mining project from which traded minerals originate or the mineral trading routes used are located in a conflict-affected and/or high-risk area.
  • Adapt existing due diligence measures to the specific needs of conflict-affected and/or high-risk areas. Measures should be audited by a third-party and publicly reported.
  • When operating in a conflict-affected and/or high-risk area, take steps to monitor the business relations, transactions, and flows of funds and resources and avoid the trade of conflict minerals.

It is important to note that the guidelines only apply to the CCCMC members and can be undertaken on a voluntary basis.

The CCCMC is affiliated with the Chinese Ministry of Commerce.

Opinion: African Archbishop Calls on European Parliament to Make Proposed Conflict Minerals Regulation Binding, Among Other Things

Mgr François-Xavier Maroy Rusengo, an Archbishop of Bukavu and President of the Provincial Assembly of Bishops of Bukavu and Kindu, drafted an opinion editorial which was published by EurActiv.com.

In the opinion editorial, Mgr François-Xavier Maroy Rusengo, calls for three (3) amendments to the proposed EU regulation:

  1. Include companies located in the downstream portion of the supply chain in the scope of the regulation, not just importers as currently drafted.
  2. Broaden the scope of the definition of conflict minerals to include all natural resources, not just the 3TGs as currently contemplated.
  3. Amend the proposed regulation to make binding on companies.

Conflict Minerals Rule Weekly Recap #85 – October 24, 2014

Posted in Weekly Recaps
October 24, 2014 – October 31, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Patton Boggs (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

SEC Commissioner Speaks: SEC Should Not Handle Conflict Minerals Reports

John Kester of the Wall Street Journal reports on Commissioner Daniel Gallagher, Jr.’s speech at Fordham University School of Law. Commissioner Gallagher stated, “Those [Dodd-Frank] mandates distract from the SEC’s proper regulatory oversight and strap its limited resources.” Commissioner Gallagher does not believe that the SEC has the appropriate resources to handle conflict minerals reports and instead thinks that the Department of Defense or Department of State would be better-suited.

As for background, Commissioner Gallagher is one of five SEC commissioners. His term expires in 2016.

Socially Responsible Investors Urge European Parliament to Make Proposed EU Conflict Minerals Regulation More Compatible with U.S. Rule

Twenty-four (24) signatories, including Trillium Asset Management, Boston Common Asset Management, and Eurosif, released a joint statement urging the European Parliament, European Commission, and European Council to adopt a European Union conflict minerals rule that is similar to the U.S. conflict minerals rule.

The statement reads, “We recommend, however, that the regulation proposed in March 2014 be amended to ensure an important level of harmonization between the European proposal and currently operational US federal rules on corporate conflict minerals due diligence and reporting. Thus, the undersigned sustainable and responsible global investors and investment organizations, representing 855 billion euros in assets under management, are writing to urge the adoption of legislation on conflict minerals (tin, tantalum, tungsten, and gold, or “3TG”) that better aligns with Section 1502 of the US Dodd‐Frank Wall Street Reform and Consumer Protection.”

Specifically, the signatories recommend:

  1. The reporting mechanism should be mandatory.
  2. The rule should apply to any European company that manufactures or contracts to manufacture products containing 3TG that is necessary to product functionality or manufacture.

Conflict Minerals Rule Weekly Recap #84 – October 17, 2014

Posted in Weekly Recaps
October 17, 2014 – October 24, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Patton Boggs (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

Catholic Leaders Call on European Union to Make Due Diligence System Mandatory

The International Cooperation for Development and Solidarity (CIDSE), “an international alliance of Catholic development agencies working together for global justice,” released a statement on conflict minerals signed by several bishops and leaders of the Catholic church throughout the world.

The statement, among other things, calls for the EU to adopt a mandatory due diligence system. The Catholic leaders reason, “[a]s many of us are first-hand witnesses to the powerful dynamics in regions affected by conflict, having engaged in dialogue with all involved, we can assure that nothing less will be able to change the behavior of companies and other actors.”

The Catholic leaders also call on the EU to increase the scope of the natural resources covered by the proposed regulation and ensure that there is shared responsibility across the supply chain.

TheRaceToTheBottom.org Comments on Tulane University’s Survey

Back in Conflict Minerals Weekly Recap #82, we brought to your attention Tulane University’s conflict minerals survey, which analyzed the reports filed in the 2014 conflict minerals season.

TheRacetoTheBottom.org, a collaborative blog, analyzed Tulane University’s study and made a few comments that we want to bring to your attention:

  • In referencing the total cost of compliance in Tulane University’s study (approx. $710 million), the blog comments, “it appears that despite the allegation made in the original suit challenge the SEC’s conflict minerals rule that the agency failed to conduct an appropriate cost-benefit analysis, the SEC actually came quite close.” The author of the blog post further comments, “regardless, it cannot be denied that the aggregate cost is large…”
  • The blog also notes the survey results of whether issuers would like to see the conflict minerals rule or Section 1502 amended: 65% said yes, 4% said no and 31% had no comment.

Conflict Minerals Rule Weekly Recap #83 – October 10, 2014

Posted in Weekly Recaps
October 10, 2014 – October 17, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Sanders (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

Mining Weekly: Sourcing Practices Changing as US Law on Mineral Imports Takes Hold

Anine Vermeulen, a reporter for Mining Weekly, in her article titled Sourcing Practices Changing as US Law on Mineral Imports Takes Hold, discusses with Sophia Pickles, Campaigner at Global Witness, among other things, what NGOs are expecting of companies as it relates to their conflict minerals compliance practices. Ms. Pickles states, “We want to see public reporting and real proof of companies behaving responsibly – not sourcing minerals that might have funded fighting or human rights abuses.”

In addition to interviewing Ms. Pickles, Ms. Vermeulen also discusses the impact South African laws and regulations have on the conflict minerals trade. She paraphrases ENSAfrica mining and environmental law director Lloyd Christie by stating, “while the authority for the South African government to place regulatory restrictions on importing certain minerals is in place, this process might require augmentation and refinement.”

Supply Chain Management Review: The Serious Gaps Exposed Through Conflict Mineral, Supply Chain Compliance

Patrick Burnson, Executive Editor of Supply Chain Management Review, in his article titled The Serious Gaps Exposed Through Conflict Mineral, Supply Chain Compliance quotes Jess Krauss, CEO of Source Intelligence, about his observations regarding this past years filings. Mr. Krauss states, “In our analysis of Securities and Exchange Commission filings this year and through our detailed ongoing observations, far too many companies are severely lagging in getting commitments from suppliers to provide detailed information.”

Mr. Krauss then goes on to discuss a tool available to companies to assist them in assessing and validating their supplier data.

Interview Webinar: Conflict Minerals Post Filing Insights, a Deep-Dive Interview with Chris Bayer

Triple Pundit is hosting a webinar on Wednesday, October 15th at 1:00 P.M. EDT, titled Conflict Minerals Post Filings Insights, a Deep-Dive Interview with Chris Bayer. According to the press release accompanying the webinar sign-up, the webinar will “address a broad range of conflict minerals post-filing questions as well as present insights from a supplier’s perspective from last year’s filing results.”

Conflict Minerals Rule Weekly Recap #82 – October 3, 2014

Posted in Weekly Recaps
October 3, 2014 – October 10, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Sanders (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

Tulane University’s Study – Year 1 Reports and Cost of Compliance

In an online presentation format, Tulane University’s Payson Center for International Development released a study this past week analyzing the reports filed in the 2014 conflict minerals season. According to a Tulane University press release regarding the study, Tulane University found that reporting companies spent on average approximately $545,00 worth of time and effort to comply with the conflict minerals rule. According to the study, small issuers (those with less than $100 million in revenue) spent on average approximately $190,000 in time and effort to comply with the rule. The press release quotes Dr. Chris Bayer, adjunct lecturer, “This study settles the question of Section 150[2]’s compliance costs to issuers, providing stakeholders with a point of reference and benchmarks.”

In future Recaps, we will present more of the Tulane study’s findings.

Roko Alloys: Conflict Minerals Policy

Roko Alloys, an international recycling company, released its conflict minerals policy. Excerpts from the conflict minerals policy follow. “Roko Alloys has adopted the Electronic Industry Citizenship Coalition (EICC) Code of Conduct. In particular, Roko is fully committed to ensure that the tantalum it sources and mines does not directly or indirectly finance or benefit armed groups that are perpetrators of human rights abuses in the Democratic Republic of the Congo or an adjoining country. Under this policy, Roko Alloys expects all its suppliers to have in place policies and due diligence measures that will enable us to reasonably assure that products and components supplied to us containing conflict minerals are DRC conflict free. Roko expects our suppliers to comply with the Electronic Industry Citizenship Coalition (EICC) Code of Conduct and conduct their business in alignment with its policies.”

To read Roko Alloys’ complete conflict minerals policy, please see its conflict minerals policy.

Conflict Minerals Rule Weekly Recap #81 – September 26, 2014

Posted in Weekly Recaps
September 26, 2014 – October 3, 2014
The summaries provided in this Weekly Recap do not necessarily represent the views of Squire Sanders (US) LLP and should not be deemed to be endorsements of them. The Recap is intended to be a compilation of articles and events to encourage discussion within the conflict minerals community and to keep our readers updated on the most recent developments.

Canadian Conflict Minerals Act Opposed

This past week, the Canadian parliament held a second reading vote on the Conflict Minerals Act (Bill C-486). According to the summary of the bill, which was taken directly from the bill itself, the bill would have “required Canadian companies to exercise due diligence in respect of the exploitation and trading of designated minerals originating in the Great Lakes Region of Africa in seeking to ensure that no armed rebel organization or criminal entity or public or private security force that is engaged in illegal activities or serious human rights abuses has benefited from any transaction involving such minerals.”

The bill was ultimately defeated on the second reading vote. Paul Dewar (Ottawa Centre), sponsor of the Conflict Minerals Act, released the following statement shortly after the defeat of the bill, “I am inspired by the widespread interest and support this bill has generated from thousands of Canadians, as well as civil society and industry organizations. I look forward to continuing to work with stakeholders to make Canada a leader in ending the trade in conflict minerals.”

Global Witness Begins Campaign Against European Commission Proposal in Advance of Debate

Global Witness, a non-governmental organization, is calling on friends and supporters to e-mail Members of the European Parliament in advance of the debate on the European Commission’s March 2014 proposed rule. Last March, the European Commission proposed a new voluntary system for supply chain due diligence self-certification, which focuses on the upstream portion of supply chain, specifically the more than 400 importers of minerals into the EU. For a more detailed summary, see our blog post titled EU Releases Draft of Conflict Minerals Regulation, Proposes Voluntary Scheme.

Global Witness feels that the European Commission’s proposed rule is not enough. “The European Commission is offering up a voluntary scheme - meaning most companies won’t even have to abide by it. Plus, it only covers a paltry 0.05% of European companies involved in the trade. It is unlikely to have any significant impact on the trade in conflict minerals. You still won’t know if the companies selling your favorite purchases are acting responsibly,” the campaign website provides.

The debate will certainly be interesting to watch. As noted by some commentators, several pro-business Members of the European Parliament (who presumably supported the less burdensome proposed rule) were defeated in their respective elections this past May 2014.