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Securities and Exchange Commission (SEC) Directs Issuers to Comply with Parts of the Conflict Minerals Rule

On April 29, 2014, the Securities and Exchange Commission (“SEC”) issued a statement directing issuers to file any reports required under Rule 13p-1 on or before the June 2, 2014 deadline based on those parts of the Conflict Minerals Rule that were upheld by the D.C. Circuit.  The statement was issued notwithstanding a Joint Statement issued by two of the five SEC Commissioners urging a complete stay of the Rule pending the final outcome of the litigation and a motion to stay the Rule filed with the SEC by industry parties (National Association of Manufacturers, U.S. Chamber of Commerce, and Business Roundtable).  Perhaps most notably, the SEC’s April 29 statement clarifies that issuers are not required to describe any products as “DRC conflict undeterminable,” an issue that was not expressly addressed in the D.C. Circuit’s decision.

The full statement is available here.

Key Implications for Issuers

  • The SEC expects issuers to file on or before the June 2, 2014 deadline.

  • No issuer is required to describe its products as “DRC conflict free,” having “not been found to be ‘DRC conflict free,’” or “DRC conflict undeterminable.”

  • If an issuer voluntarily elects to describe any of its products as “DRC conflict free” in its Conflict Minerals Report, it must obtain an independent private sector audit (“IPSA”) as required by the Rule.  Otherwise, an IPSA will not be required.

  • If an issuer has products that fall within the scope of Items 1.01(c)(2) or 1.01(c)(2)(i) of Form SD (i.e., products that would have been described as “DRC conflict undeterminable” or “not found to be ‘DRC conflict free’”), the issuer must still disclose for those products:

    • the facilities used to process the conflict minerals;

    • the country of origin of the minerals; and

    • the efforts to determine the mine or location of origin.

Next Steps

Because the earliest date on which the D.C. Circuit Court’s mandate could issue is June 5, 2014, several days after the filing deadline, it is unlikely that the pending litigation will further impact any reporting requirements before the deadline.  Similarly, both recent congressional testimony from SEC Chair Mary Jo White indicating that the SEC intends to continue implementation of the rule, as well as the SEC’s issuance of the April 29 statement, suggests that the Commission is unlikely to grant a discretionary stay of the Rule’s requirements in response to the motion filed by the industry petitioners.  Issuers should therefore review their reports in light of the new clarifications from the SEC regarding product descriptions and should prepare to file these reports on time.

The April 29 statement indicated that the SEC Division of Corporate Finance will consider the need to provide additional guidance in advance of the filing due date.

© 2020 Beveridge & Diamond PC National Law Review, Volume IV, Number 178



About this Author

Paul E. Hagen Environmental Attorney Beveridge & Diamond Washington, DC

Paul helps clients navigate increasingly complex environmental requirements governing global supply chains and products across their life-cycle.

He works with leading companies to anticipate and comply with product-related environmental requirements in the U.S. and in key markets worldwide. He has represented U.S. business interests in the negotiation and implementation of regional and global environmental agreements that drive national legislation and the circular economy.

Extended Producer Responsibility (EPR) 

Paul advises companies on compliance...

Lauren A. Hopkins Consumer Products Attorney Beveridge & Diamond San Francisco, CA
Office Managing Principal

Lauren’s practice focuses primarily on global product stewardship, responsible sourcing, and corporate sustainability.

She advises clients across a range of industry sectors on environmental, social and governance (ESG) disclosures, responsible sourcing of raw materials including “conflict minerals” and forest products, as well as human rights and labor issues in corporate operations and supply chains. She advises on issues including interpretation and implementation of the U.S. Securities and Exchange Commission’s conflict minerals rule, supply chain due diligence, and the...

K. Russell LaMotte Environmental Attorney Beveridge & Diamond Washington, DC

Russ helps global companies navigate international environmental regulatory regimes and develop product compliance and market-access strategies.

He served for over ten years as an international lawyer at the United States Department of State, representing the U.S. Government in designing, negotiating, or implementing most of the major multilateral environmental and oceans agreements. His experience and representative matters include: 

Chemicals, Substances in Articles, and Product-Related Environmental Compliance

  • Advising chemicals, pesticides,...