On December 11 2015 the Securities and Exchange Commission (SEC) re-proposed rules requiring resource extraction issuers to disclose payments made to the US federal government or foreign governments for the commercial development of oil, natural gas and minerals. The proposed rules are mandated by Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) and the SEC states that they are intended to advance "U.S. foreign policy interests in supporting global efforts to improve transparency in the extractive industries".(1)

The SEC had originally adopted disclosure rules regarding payments to governments by resource extraction issuers in 2012. However, in 2013 the rules were struck down by the US District Court for the District of Columbia.(2) In September 2014 Oxfam filed an action to compel the SEC to issue revised proposed rules. In responding to the action, a federal court judge found that "the Commission unlawfully withheld agency action by not promulgating a final rule"(3) as mandated under the Dodd-Frank Act and, in September 2015, ordered the SEC to file an expedited schedule for re-proposing and finalising the rules.

Parties obliged to disclose

Under the proposed rules, a domestic or foreign resource extraction issuer must disclose payments made to the US federal government and foreign governments if it:

  • is required to file an annual report with the SEC under the Securities Exchange Act of 1934; and
  • engages in the commercial development of oil, natural gas or minerals.

The proposed rules will require a resource extraction issuer to disclose payments made by its subsidiaries and other entities under its control, including those payments included in its consolidated financial statements made by entities that are consolidated or proportionately consolidated, as determined by applicable accounting principles.

Important terms are defined as follows:

  • 'resource extraction issuers' are all US companies and foreign companies (including foreign private issuers and Canada-US multi-jurisdictional disclosure system companies) that are required to file annual reports pursuant to Section 13 or 15(d) of the Securities Exchange Act and are engaged in the commercial development of oil, natural gas or minerals;
  • 'commercial development of oil, natural gas, or minerals' means exploration, extraction, processing and export; or the acquisition of a licence for any such activity; and
  • 'foreign government' means non-US national government or sub-national government (ie, the government of a state, province, county, district, municipality, or territory under a foreign national government).

Form SD and types of payment to be disclosed

The proposed rules will require resource extraction issuers to disclose payments on a Form SD specialised disclosure report and include information relating to payments made to the US federal government and foreign governments during the fiscal year. The resource extraction issuer will have to file the Form SD on the SEC's Electronic Data Gathering, Analysis, and Retrieval system no later than 150 days after the end of its fiscal year (Form SD is also used for conflict mineral disclosures required under separate and unrelated rules).

The term 'payment' means payments that are made to further the commercial development of oil, natural gas or minerals and are not de minimis ('not de minimis' encompasses any payment, whether a single payment or a series of related payments, that equals or exceeds $100,000 during the most recent fiscal year) and include:

  • taxes;
  • royalties;
  • fees (including licence fees);
  • production entitlements;
  • bonuses;
  • dividends; and
  • payments for infrastructure improvements.

Specifically, the following information will have to be filed by the issuer as an exhibit to Form SD using the eXtensible Business Reporting Language electronic format and the electronic tags identified in Item 2.01 of Form SD:

  • the type and total amount of payments made for each project;
  • the type and total amount of payments for all projects made to each government;
  • the total amounts of the payments, by category;
  • the currency used to make the payments;
  • the financial period in which the payments were made;
  • the 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;
  • the particular resource that is the subject of commercial development; and
  • the sub-national geographic location of the project.

The term 'project' will be defined in a manner similar to the relevant EU directives, using an approach focused on the legal agreement that forms the basis for payment liabilities with a government. In certain circumstances, this definition will also include operational activities governed by multiple legal agreements.

Exemptive relief

The proposed rules do not include any express exemptions. Instead, resource extraction issuers will apply to the SEC for exemptive relief on a case-by-case basis.

Reliance on foreign-filed regulatory reports

In light of recent developments abroad, as well as developments with the US Extractive Industries Transparency Initiative (USEITI), resource extraction issuers will be able to use reports prepared for foreign regulatory purposes or for the USEITI to comply with the proposed rules, provided that the SEC deems the foreign jurisdiction's applicable requirements or the USEITI reporting regime to be substantially similar to those of the SEC.

Comment periods

Initial comments on the proposed rules were due on January 25 2016. Reply comments, responding to issues raised in the initial comment period, are due on February 16 2016. A vote on the final rules is intended to take place by June 27 2016. Under the proposed rules, resource extraction issuers will be required to comply with the rules starting with their fiscal year ending no earlier than one year after the effective date of the adopted rules.

For further information on this topic please contact Steven I Suzzan, Chris Hilbert or Trevor Zeyl at Norton Rose Fulbright by telephone (+1 212 318 3000) or email (, or The Norton Rose Fulbright website is accessible at


(1) SEC Release 34-76620.

(2) The court vacated the rules because they contained two "substantial errors":

  • the rules compelled the public disclosure of the payments; and
  • the rules failed to provide exemptions for countries where such payment disclosure is illegal.

(3) See Oxfam America Inc v United States Securities and Exchange Commission, Civil Action 14-13648 (DJC), 2015 WL 5156554 (D Mass September 2 2015).

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