SEC Final Rule: Disclosure of Payments by Resource Extraction Issuers, 2012 (VACATED BY COURT ORDER 2013)
|FINAL RULE: approved by the SEC on August 22, 2012; entered Federal Register September 12, 2012 VACATED BY COURT ORDER, July 2, 2013 Reproposed December 2015|
|Final Rule Issue||VACATED BY COURT ORDER||Rule Reproposed||Comment Deadline|
|September 12, 2012||July 2, 2013||December 11, 2015||March 8, 2016|
On August 22, 2012, the SEC approved a final rule requiring resource extraction issuers to disclose certain payments made to the U.S. government or foreign governments. The rule was mandated by Title XV of the Dodd-Frank Act. Under the rule, any domestic issuer issuer of resource extraction must disclose payments made to gvernments if the issuer is an SEC filer and engages in the commercial development of oil, natural gas, or minerals.<ref>SEC Adopts Rules Requiring Payment Disclosures by Resource Extraction Issuers. SEC. Retrieved on September 12, 2012.</ref> The rule appeared in the Federal Register on September 12, 2012, and became effective on November 13, 2012. Under the rule, companies would have been required to submit a disclosure for fiscal years ending after September 30, 2013.
However, on July 2, 2013, a U.S. District Court judge threw out the ruling in a suit filed by trade groups such as the American Petroleum Institute and U.S. Chamber of Commerce. The groups alleged the SEC misinterpreted the law by forcing the public disclosure of detailed data on payments, and failed to include common-sense exemptions by forcing disclosure of payments to countries like China and Angola, where such disclosures are illegal.<ref>U.S. judge tosses SEC's resource payment disclosure rule. Reuters. Retrieved on September 4, 2013.</ref>
On September 4, 2013, the SEC said that, rather than contest the ruling, it would re-propose the rule.<ref>U.S. SEC won't appeal ruling vs disclosing payments abroad. Reuters. Retrieved on September 4, 2013.</ref>
Summary of the Rule
Under the rule, resource extraction issuers must disclose any payment made to a government that exceeds $100,000 in a fiscal year, that is intended to "further the commercial development of oil, natural gas, or minerals." This includes exploration, extraction, processing, and export, or the acquisition of a license for any such activity. Disclosable activities include:
- Fees (including license fees)
- Production Entitlements
- Infrastructure Improvements
The disclosure filing must include:
- Type and total amount of payments made for each project.
- Type and total amount of payments made to each government.
- Total amounts of the payments, by category.
- Currency used to make the payments.
- Financial period in which the payments were made.
- Business segment of the resource extraction issuer that made the payments.
- The government that received the payments, and the country in which the government is located.
- The project of the resource extraction issuer to which the payments relate.
Related Document: Final Rule as it Appeared in the Federal Register