2012 -- S 2539

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LC01868

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO PUBLIC PROPERTY AND WORKS

     Introduced By: Senators Perry, Miller, DeVall, and Nesselbush

     Date Introduced: February 28, 2012

     Referred To: Senate Corporations

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 37 of the General Laws entitled "PUBLIC PROPERTY AND

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WORKS" is hereby amended by adding thereto the following chapter:

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     CHAPTER 2.5

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CONFLICT MINERALS

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     37-2.5-1. Legislative findings. – The general assembly finds and declares that:

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     (1) The Democratic Republic of Congo was devastated by a civil war carried out in 1996

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and 1997 and a war that began in 1998 and ended in 2003, which resulted in widespread human

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rights violations and the intervention of multiple armed forces or armed nonstate actors from

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other countries in the region.

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     (2) Despite the signing of a peace agreement and subsequent withdrawal of foreign forces

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in 2003, the eastern region of the Democratic Republic of Congo has continued to suffer from

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high levels of poverty, insecurity, and a culture of impunity, in which illegal armed groups and

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military forces continue to commit widespread human rights abuses.

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     (3) According to a study by the international rescue committee released in January 2008,

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conflict and the related humanitarian crisis in the Democratic Republic of Congo have resulted in

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the deaths of an estimated five million four hundred thousand (5,400,000) people since 1998 and

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continue to cause as many as forty-five thousand (45,000) deaths each month.

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     (4) Sexual violence and rape remain pervasive tools of warfare used by all parties in

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eastern region of the Democratic Republic of Congo to terrorize and humiliate communities,

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resulting in community breakdown which causes a decrease in the ability of affected communities

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to resist control by illegal armed forces and a loss of community access to minerals. Sexual

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violence and rape affects hundreds of thousands of women and girls, frequently resulting in

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traumatic fistula, other severe genital injuries, and long-term psychological trauma.

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     (5) A report released by the government accountability office in December 2007,

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describes how the mismanagement and illicit trade of extractive resources from the Democratic

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republic of Congo supports conflict between militias and armed domestic factions in neighboring

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countries.

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     (6) In October 2002, the United Nations group of experts on the Democratic Republic of

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Congo called on member states of the United Nations to adopt measures, consistent with the

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guidelines established for multinational enterprises by the organization for economic co-operation

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and development, to ensure that enterprises in their jurisdiction do not abuse principles of conduct

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that they have adopted as a matter of law.

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     (7) In February 2008, the United Nations Group of Experts on the Democratic Republic

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of Congo stated, “individuals and entities buying mineral output from areas of the eastern part of

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the Democratic Republic of Congo with a strong rebel presence are violating the sanctions regime

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when they do not exercise due diligence to ensure their mineral purchases do not provide

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assistance to illegal armed groups” and defined due diligence as including the following:

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determining the precise identity of the deposits from which the minerals they intend to purchase

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have been mined; establishing whether or not these deposits are controlled or taxed by illegal

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armed groups; and refusing to buy minerals known to originate, or suspected to originate, from

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deposits controlled or taxed by illegal armed groups.

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     (8) In its final report, released on December 12, 2008, the United Nations Group of

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Experts on the Democratic Republic of the Congo found that official exports of columbite-

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tantalite, cassiterite, wolframite, and gold are grossly undervalued and that various illegal armed

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groups in the eastern region of the Democratic Republic of Congo continue to profit greatly from

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these natural resources by coercively exercising control over mining sites from where they are

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extracted and locations along which they are transported for export.

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      (9) United Nations Security Council Resolution 1857, unanimously adopted on

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December 22, 2008, broadens existing sanctions relating to the Democratic Republic of Congo to

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include “individuals or entities supporting the illegal armed groups … through the illicit trade of

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natural resources”; and encourages member countries to ensure that companies handling minerals

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from the Democratic Republic of Congo exercise due diligence on their suppliers.

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     (10) Continues weak governance in the Democratic Republic of Congo has allowed the

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illicit trade in the minerals columbite-tantalite, cassiterite, wolframite, and gold to flourish, which

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empowers illegal armed groups, undermines local development, and results in a loss or misuse of

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tax revenue for the Government of the Democratic Republic of Congo. The development of

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stronger governance and economic institutions that support legitimate cross-border trade in such

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minerals would help prevent the exploitation of such minerals by illegal armed groups and

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enable the hundreds of thousands of people who depend on such minerals for their livelihoods to

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benefit from such minerals.

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     (11) Metals derived from columbite-tantalite, cassiterite, wolframite, and gold from the

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Democratic Republic of Congo are used in diverse technological products sold worldwide,

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including mobile telephones, laptop computers, and digital video recorders.

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     (12) In February 2009, the electronic industry citizenship coalition and the global e-

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sustainability initiative released a statement asserting that use by the information communications

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technology industry of mined commodities that support conflict in such countries as the

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Democratic Republic of Congo is unacceptable and electronics companies can and should uphold

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responsible practices in their operations and work with suppliers to meet social and

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environmental standards with respect to the raw materials used in the manufacture of their

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products.

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     (13) Notwithstanding the extensiveness of the supply chains of technological products

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and the extensiveness of the processing stages for the metals derived from columbite-tantalite,

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cassiterite, wolframite, and gold used in such products, companies that create and sell products

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that include such metals have the ability to influence the situation in the Democratic Republic of

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Congo by doing all of the following: exercising due diligence in ensuring that their suppliers

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provide raw materials in a manner that does not directly finance armed conflict, result in labor or

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human rights violations, or damage the environment; verifying the country from which the

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minerals used to derive such metals originate, the identity of the exporter of the minerals, and that

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all appropriate tax payments are made; and committing to support mineral exporters from the

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Democratic Republic of Congo that fully disclose their export payments and certify that their

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minerals do not directly finance armed conflict, result in labor or human rights violations, or

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damage the environment.

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     (14) It is the sense of the legislature that the exploitation and trade of conflict minerals

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originating in the Democratic Republic of Congo is helping to finance conflict characterized by

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extreme levels of violence in the eastern Democratic Republic of Congo, particularly sexual-and-

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gender-based violence, and contributing to an emergency humanitarian situation.

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     (15) The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into

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law by President Barack Obama on July 21, 2010. This law requires those who file with the

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securities exchange commission and use minerals originating in the Democratic Republic of

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Congo in manufacturing to disclose measures taken to exercise due diligence on the source and

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chain of custody of the materials and the products manufactured.

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     37-2.5-2. Definitions. – (a) For the purpose of this chapter, the following words shall

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have the following meanings:

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     (1) “Company” means any corporation, whether for profit or not-for-profit, domestic

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corporation or foreign corporation, as defined in section 7-1.2-106, financial institution,

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cooperative, association, receivership, trust, holding company, firm, joint stock company, public

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utility, sole proprietorship, partnership, limited partnership, or any other entity recognized by the

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laws of the United States and/or the state of Rhode Island for the purpose of doing business.

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     (2) “Scrutinized company” refers to a company that has been found to be in violation of

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section 13(p) of the Securities Exchange Act of 1934 by final judgment or settlement entered in a

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civil or administrative action brought by the Securities and Exchange Commission by not

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adhering to section 1502 of the Dodd-Frank Wall Street Reform Act, H.R. 4173. ENR.

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     37-2.5-3. Scrutinized company ineligible for contracts with the state. – A scrutinized

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company is ineligible to, and shall not, bid on or submit a proposal for a contract with a state

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agency for goods or services related to products or services which provide the basis for

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compliance with section 13(p) of the securities exchange act of 1934.

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     37-2.5-4. Severability. – If any provision of this chapter or the application thereof to any

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person or circumstances is held invalid, such invalidity shall not affect other provisions or

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applications of the chapter, which can be given effect without the invalid provision or application,

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and to this end the provisions of this chapter are declared to be severable.

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     SECTION 2. This act shall take effect upon passage, or upon the date that the United

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States Securities and Exchange Commission issues the final rules and regulations on the

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implementation of section 1502 of public law 111-203, whichever occurs later in time.

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LC01868

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PUBLIC PROPERTY AND WORKS

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     This act would prohibit scrutinized companies under the Dodd-Frank Wall Street Reform

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and Consumer Protection Act (as a result of failure to use due-diligence relating to tracing the

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chain of custody of certain conflict minerals contributing to violence originating in the

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Democratic Republic of Congo) from contracting with the state of Rhode Island.

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     This act would take effect upon passage or upon the date that the United States Securities

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and Exchange Commission would issue the final rules and regulations on the implementation of

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section 1502 of Public Law 111-203 whichever occurs later.

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LC01868

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