United States: Conflict Minerals Disclosure For Calendar Year 2015: "Conflict Undeterminable" Generally No Longer Permitted

Last Updated: October 8 2015
Article by Harry L. Clark and Brett Cooper

​The "DRC Conflict Undeterminable" determination, widely employed in conflict minerals reports to date, will not be permitted for issuers (other than small companies1) reporting in 2016 on activities in calendar year 2015.  At the same time, court decisions result in issuers also not needing to characterize their products vis-ŕ-vis conflict minerals in other ways ("DRC conflict free," "not been found to be "DRC conflict free"). If an issuer voluntarily elects to describe a product as "DRC conflict free" in its Conflict Minerals Report ("CMR"), the issuer must ensure that it has completed an independent private sector audit ("IPSA") of the CMR.  Unless the SEC issues contrary guidance in coming months, no other issuers will be required to go through an IPSA.

An IPSA is to opine on whether the design of an issuer's conflict minerals due diligence measures conforms materially to criteria of a recognized due diligence framework used by the registrant, such as the due diligence guidance approved by the Organization for Economic Co-operation and Development, and whether the issuer's description of its due diligence measures is consistent with the due diligence process that the registrant undertook.

Conflict Minerals Reporting

SEC rules for conflict minerals require that public companies disclose specified types of information relating to conflict minerals used in their products. First, each issuer must determine whether conflict minerals are necessary to the functionality or production of a product that an issuer manufactures or contracts to manufacture.  Second, issuers that determine that they are subject to the conflict minerals rules must conduct, in good faith, a country of origin inquiry to determine whether their conflict minerals originated in the Democratic Republic of the Congo or an adjoining country ("Covered Countries") or are from recycled or scrap sources.  They must report the results of their inquiry on a Form SD filed with the SEC and on their website.  Third, an issuer that has reason to believe that its conflict minerals originated in one or more Covered Country and are not from recycled or scrap sources must exercise due diligence on the source and chain of custody of the conflict minerals.  If the conflict minerals originated in Covered Countries and did not come from recycled or scrap sources, the issuer must file a CMR with the SEC and publish the CMR on its website.

Conflict Minerals Reporting Requirements During Grace Period

SEC rules include transition requirements for all issuers' reporting on conflict minerals usage in calendar years 2013 and 2014 and transition requirements for smaller issuers' reporting on conflict minerals usage in 2015 and 2016.  If transition requirements apply, issuers are permitted to describe their products as "DRC conflict undeterminable" if they were unable to determine the source and chain of custody of conflict minerals in a product (including whether or not such conflict minerals came from a Covered Country), or whether conflict minerals in the product financed or benefitted armed groups in that region. Also, such issuers are not required to obtain an IPSA regarding their CMR, but they are required to file a CMR as an exhibit to Form SD describing their due diligence.  They are also required to describe the steps they have taken or will take, if any, since the end of the period covered by their most recent prior CMR, to mitigate the risk that their necessary conflict minerals may benefit armed groups, including any steps to improve their due diligence. These requirements seem to preclude an issuer from simply deciding to file as "DRC conflict undeterminable" without expending some level of due diligence effort.

Post-Grace Period Reporting Requirements

For purposes of reporting in 2016 on events in 2015, issuers must file a CMR as an exhibit to Form SD if they are not smaller reporting companies that are unable to determine that their conflict minerals did not originate in the Covered Countries, or if they are unable to determine that their conflict minerals that originated in the Covered Countries did not directly or indirectly finance or benefit armed groups.  The CMR is to include a description of the products, facilities used to process the necessary conflict minerals in those products, the country of origin of the necessary conflict minerals in those products, and efforts to determine the mine or location of origin with the greatest possible specificity.

In light of a recently confirmed court decision, 2 the SEC has advised that issuers generally must continue to comply with conflict minerals reporting requirements, except that they need not observe rules that mandate an express characterization of products' status vis-ŕ-vis conflict minerals.  Specifically, the SEC advised that:

  • No company is required to describe its products as being "DRC conflict free" or having "not been found to be 'DRC conflict free'" (again, the "DRC conflict undeterminable" generally may no longer be used), and
  • An IPSA will not be required unless a company voluntarily elects to describe a product as being "DRC conflict free" in its CMR (of the 1,267 filers in 2015 on activity in 2014, only six companies had IPSA performed).

Orrick continues to monitor guidance from the SEC as we move closer to the May 2016 deadline for conflict minerals reporting regarding activity in 2015. Issuers are well-advised to prepare far in advance for the breadth of work that goes into investigating their supply chains and obtaining an IPSA, if needed, and to start preparation for reporting in 2016 early. Even though an IPSA is currently not required unless issuers voluntarily elect to describe their products as "DRC conflict free," it may be wise to consider instituting an auditing process to improve due diligence practices. 


1 "Smaller reporting companies" are generally defined as those having a public equity float of less than $75 million as of the last business day of the most recently completed second fiscal quarter or, for companies without a calculable public float, those whose revenues were below $50 million for their most recently completed fiscal year.

2 On August 18, 2015, a three-judge panel of the D.C. Circuit Court of Appeals affirmed that it would adhere to its original decision that portions of the Dodd-Frank Act, under which the SEC rule was promulgated, and the SEC's final rule "violate the First Amendment to the extent the statute and rule require regulated entities to report to the Commission and to state on their website that any of their products have 'not been found to be "DRC conflict free."'" At the time of this alert, the SEC has not yet responded to this decision or issued any guidance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.