SEC Adopts Final Rules for the Disclosure of Payments

Washington, DC (STL.News) The Securities and Exchange Commission today voted to adopt final rules that will require resource extraction issuers that are required to file reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 to disclose payments made to the U.S. federal government or foreign governments for the commercial development of oil, natural gas, or minerals.  The rules implement Section 13(q) of the Exchange Act, which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The rules are intended both (1) to achieve the statutory objective of increasing the transparency of payments to governments for the purpose of the commercial development of their oil, natural gas, and minerals and (2) to comply with the Congressional Review Act (CRA).

The adopted rules will require a domestic or foreign reporting issuer to disclose payments made by the issuer or a subsidiary or entity controlled by the issuer to the U.S. federal government or a foreign government if the issuer engages in the commercial development of oil, natural gas, or minerals.

The Commission adopted rules to implement Section 13(q) in 2016, but the 2016 Rules were disapproved pursuant to the CRA by a joint resolution of Congress. Although the 2016 Rules were disapproved under the CRA, the statutory mandate in Section 13(q) of the Exchange Act has remained in effect.  As a result, the Commission remains statutorily obligated to issue a new rule, however, pursuant to the CRA the Commission may not reissue the disapproved rule in “substantially the same form” or issue a new rule that is “substantially the same” as the disapproved rule.  Today’s action completes a rulemaking process commenced in 2019 that was designed to address both requirements.

“The final rules represent another step in the Commission’s continued efforts to implement Section 1504 of the Dodd-Frank Act,” said SEC Chairman Jay Clayton.  “The final rules are designed to achieve the statutory objective of promoting the transparency of resource extraction issuers’ payments to governments while adhering to the CRA’s limitation that the new rule not be substantially the same as the disapproved rule.  Achieving this was not a straightforward task, and I applaud the staff for their considerable efforts in these unique circumstances.”

The final rules will be effective 60 days following publication in the Federal Register.

NOTE: this is NOT the complete release.