OREANDA-NEWS. December 15, 2015. Securities and Exchange Commission today voted to propose rules that would require resource extraction issuers to disclose payments made to the U.S. federal government or foreign governments for the commercial development of oil, natural gas or minerals.  The proposed rules, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, are intended to further the statutory objective to advance U.S. policy interests by promoting greater transparency about payments related to resource extraction.

Under the proposed rules, an issuer would be required to disclose payments made to the U.S. federal government or a foreign government if the issuer is required to file annual reports with the Commission under the Securities Exchange Act.  The issuer would also be required to disclose payments made by a subsidiary or entity controlled by the issuer.

“These proposed rules would implement a statutory mandate and require disclosure consistent with other payment transparency disclosure regimes around the world,” said SEC Chair Mary Jo White.  “We appreciate the valuable input that we have received from companies, industry groups, civil society organizations, foreign governments, and other federal agencies that helped inform the Commission and shape these proposed rules.”

The disclosure would be made at the project level similar to the approach adopted in the European Union and proposed in Canada.  The disclosure required by the proposed rules would be filed publicly with the Commission annually on Form SD.

Initial public comments on the proposed rules are due by January 25, 2016.  Reply comments, which may respond only to issues raised in the initial comment period, are due on February 16, 2016. 

subsidiary of the resource extraction issuer, or an entity under the control of the resource extraction issuer to a foreign government or the federal government for the purpose of the commercial development of oil, natural gas, or minerals.  Among other things, Section 13(q) specifies that to the extent practicable, the rules shall support the commitment of the federal government to international transparency promotion efforts relating to the commercial development of oil, natural gas, or minerals.

Rule 13q-1 was initially adopted by the Commission on August 22, 2012, but it was subsequently vacated by the U.S. District Court for the District of Columbia.  Since then, the European Union and Canada have adopted transparency initiatives similar to the rules the Commission previously adopted. 

What’s Next?

If approved for publication by the Commission, the proposed rules will be published on the Commission’s website and in the Federal Register.  Initial comments will be due on January 25, 2016.  Reply comments, which may respond only to issues raised in the initial comment period, will be due on February 16, 2016.