California Conflict Minerals Law

News Brief

By Liz Blong

On October 9, 2011, California Governor Brown approved SB 861, the California law related to conflict materials from the Democratic Republic of the Congo. SB 861 adds Section 10490 to the California Public Contract Code, which precludes companies that are in violation of the conflict materials reporting requirements under Section 13(p) of the Securities Exchange Act of 1934 (as added by Section 1502 of the Dodd-Frank Act) from contracting with state agencies in California.

Applies only to companies contracting with state agencies

Specifically, a company subject to the conflict minerals disclosure requirements under Section 13(p) "is ineligible to, and shall not, bid on or submit a proposal for a contract with a state agency for goods or services related to products or services that are the reason the company must comply with Section 13(p)" if the company "has been found to be in violation of Section 13(p)…by final judgment or settlement…." Eligibility is reinstated from the earlier of the date the company is no longer in violation of Section 13(p), or the date the company makes an amended or corrected filing that complies with Section 13(p), or three years from the final judgment or settlement.

Effective date

The California law is operative from the later of January 1, 2012 or the date the SEC issues final rules to implement Section 1502 of the Dodd-Frank Act. Right now, it's not clear whether the SEC will adopt final rules by the end of 2011 as currently scheduled.

Related Practices & Industries

Public Companies