California Seeks to Lessen the Conflict of Minerals

California uses the impetus of the federal Dodd-Frank Act to take action on a state level against conflict minerals in the Democratic Republic of Congo. What impact can one state have?

On July 15, 2010, the United States Federal Government passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Act’s mission is “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.” Embedded in this 848-page, Wall Street-focused document are five and a half pages that address the conflict minerals trade in the Democratic Republic of Congo (DRC). This brief mention provides just enough space for the United States Federal Government to require companies who file with the Securities and Exchange Commission to disclose their mineral sources, as well as to demand the State Department confront this illicit minerals trade.

This trade refers to the gold, tin, tungsten, and tantalum internationally exported from mines in the DRC. These minerals are incorporated into everyday electronics, such as cell phones, computers, and digital cameras. Many consumers have voiced their concerns regarding the involvement of electronics companies in this corrupt trading system. The trade is ridden with controversy because of the violent Congolese and Rwandan militias in Eastern Congo that control the mines. They take advantage of the DRC’s natural resources to personally profit from the land’s raw materials. In the process, they rape and kill Congolese citizens, subject mineworkers to desolate conditions, and construct an environment of economic hardship. As chronicled by several human rights organizations, such as Jewish World Watch and Enough Project, these militiamen constantly seek to reinforce their position of control and to keep citizens impotent.

“Gold from eastern Congo. The war in Congo is fueled by a thriving gold trade today, with armed groups controlling mines and earning an estimated $50 million last year from selling gold and minerals. This gold is from a day's work at Kaniola mine” Photo and Caption Courtesy of ENOUGH Project / Flickr Creative Commons

The State of California uses this federal act as momentum in its construction of state Senate Bill 861, authored by Senate Majority Leader Ellen M. Corbett. The goals of this bill surpass those established in the Dodd-Frank Act. According to a press release from Senator Corbett’s office, this bill “prohibits the state from contracting with companies that use minerals sold by the militias in their products.” The bill takes national legislation and applies stricter enforcement on a local level. Naama Haviv, Assistant Director of Jewish World Watch, explains in an e-mail the relationship between the national and state regulations saying that SB 861 terminates “State contracts with companies that fail to comply with the Federal reporting requirements laid out in Dodd-Frank.” “California becomes first state to pass conflict mineral legislation,” boasted a The Christian Science Monitor headline on September 14, 2011. This article, as well as a previous one from April 13, 2011 entitled “California takes decisive step against Congo’s conflict minerals,” applauds California for using the impetus of the Dodd-Frank Act to create further restrictions for businesses whose mineral sources are involved in the environmental and humanitarian conflict in the Congo.

A representative in Corporate Responsibility at Intel deflected any potential concerns regarding business repercussions from SB 861 stating, “If you are in compliance [with the Dodd-Frank Act], the California [legislation] is irrelevant.” Thus, unless electronics companies fail to comply with national legislation, they will not be deeply affected by SB 861. Furthermore, it appears California consumers need not fear negative outcomes on their electronics products as a result of the state bill. At the same time, it is crucial to note the way in which SB 861 strategically implements another layer of enforcement and ensures businesses remain aware of their global impact.

Within the activist community, California’s efforts are being seen as a decisive step forward to terminate the corrupt Congolese mineral trade. Laura Heaton, writer and blog editor for the non-profit Enough Project, and author of last month’s The Christian Science Monitor article, praises California’s deeper enforcement of the Dodd-Frank Act as “indeed a step forward” and “a huge victory for activists.” She also commends the immense progress of the federal act itself: “the fact that [this] piece of legislation was championed by a broad bi-partisan coalition in Washington is no small accomplishment.” Activists and consumers have long been pressuring the government to take action on this matter and to hold electronics companies responsible for their financial contribution to major human rights violations.

With regard to Senate Bill 861 specifically, Senator Corbett was quoted in a press release from her office saying, “This legislation will help cut off the cash flow, and support, for lawless militias engaged in heinous human rights violations.” Congressmen Henry Waxman (D–CA) also commented on this bill in an e-mail saying he “appreciate[s] the California State Assembly’s efforts to end the trade of these tainted commodities.” Even though companies such as Intel do not appear concerned about economic implications of the bill, it is important to note that California has the eighth largest economy in the world. To display the economic weight of this bill, Senator Corbett’s press release reveals, “California spends $8.9 billion annually in state contracts. The legislation is supported by 28 U.S. investment firms with assets totaling $130 billion.” SB 861 was passed in the State Assembly on September 8 and was signed by California Governor Edmund G. Brown Jr. on October 9.