As noted in this Law 360 article and in this thecorporatecounsel.net blog , on Friday, the SEC filed a Notice of Proposed Rulemaking in the U.S. District Court for the District of Massachusetts in connection with Oxfam America v. SEC, the case on the resource extraction disclosure rule. The Notice is in response to a decision by that Court in early September compelling the SEC to move expeditiously to issue a proposal and finalize a rule for the resource extraction disclosure required under Dodd-Frank (Section 1504). (See this PubCo post.) In its Notice, the SEC proposed to hold a vote on the adoption of a final rule on or before June 27, 2016 (i.e.,within 270 days of submission of its Notice). A rule proposal is expected to be issued before the end of 2015, to be followed by a 45-day public comment period.
You might recall that the resource extraction rule, which was adopted by the SEC in 2012 at the same time as the conflict minerals rule, requires resource extraction issuers to disclose, on Form SD, payments to foreign governments in connection with oil, gas and mineral rights. In litigation brought in 2012 by the American Petroleum Institute and the Chamber of Commerce, the U.S. District Court, in a fairly scathing opinion, tossed out the SEC’s rule, contending, among other things, that the SEC fundamentally misread the requirements of the statute and that, in rejecting companies’ request for an exemption from disclosing payments to countries that prohibited disclosure of payment information, the SEC was “arbitrary and capricious.” The SEC declined to appeal the ruling, accepting the conclusion that it would need to rewrite the rule. However, the timetable for a new rule proposal was delayed several times, with the latest projection for a proposal being April 2016. Last year, Oxfam America sued the SEC in the U.S. District Court for the District of Massachusetts to compel the SEC to complete the rulemaking. Oxfam succeeded.
In its Notice, the SEC advises the Court that the proposed timetable for rulemaking is “extremely expedited,” especially in light of the current demands on the SEC, the difficult policy issues surrounding Section 1504 (which “have consistently involved sharp disagreement among members of the public”), anticipated changes in the composition of the SEC itself, and the potential for “exigencies” to “arise during the rulemaking (e.g., a government shut-down, further relevant international developments, unexpected relevant legal developments) that may make it impracticable” for the SEC to complete the rulemaking on a timely basis. Any of these factors may require the SEC to seek an extension of time.
In a press release, Oxfam indicated that it was “very pleased to see the SEC make a concrete, time bound commitment to this crucial rulemaking, and we are eager to work with the SEC to help finalize a strong rule…. This new schedule provides a roadmap for the US to rejoin other countries that are leading the fight against secrecy and helping to ensure that government revenues support the fight against poverty.”