The Securities and Exchange Commission (SEC) has adopted a final rule which requires US and foreign resource extraction issuers to disclose any payments made to the US federal government or foreign governments for the commercial development of:

  • oil;
  • natural gas; or
  • minerals.(1)

The rule adopts Rule 13q-1 and amends Form SD to implement Section 13(q) of the Securities Exchange Act 1934. It will come into effect 60 days after its publication in the Federal Register.

This new rule implements the resource payment disclosure requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 and follows the SEC's effort in 2018 to modernise its disclosure requirements for mining company issuers, which came into effect for many issuers on 1 January 2021.(2)

The SEC also created an alternative reporting regime which enables issuers subject to certain foreign reporting regimes to comply with the new rules by providing copies of those foreign reports (see "Alternative reporting regimes" below).

Application to resource extraction issuers

The new disclosure rules apply to all 'resource extraction issuers', including all US and foreign issuers (including Canadian companies reporting through the multijurisdictional disclosure system) that:

  • are required to file an annual report with the SEC on Form 10-K, 20-F or 40-F; and
  • engage in the commercial development of oil, natural gas or minerals. 'Commercial development' includes the exploration, extraction, processing and export of oil, natural gas or minerals or the acquisition of a licence for any of these activities.

Applicable payments

Resource extraction issuers must disclose payments made to the US federal government or a foreign government that:

  • are made to further the commercial development of oil, natural gas or minerals;
  • are more than the minimum amount (any payment or series of related payments that equals or exceeds $100,000 or equivalent is applicable); and
  • include any of the types of payment specified in the rules – namely:
    • taxes;
    • royalties;
    • fees, including licence fees;
    • production entitlements;
    • bonuses;
    • dividends;
    • payment for infrastructure improvements; and
    • community and social responsibility payments that are required by law or contract.

Issuers must report payments made by any subsidiary or entity under their control.(3) They must identify the particular recipient of payments at each government level, but can aggregate payments by type when disclosing payments rather than disclosing each payment individually.

Project-level disclosure

The new rules require payments made by resource extraction issuers to governments to be reported by type and total amount per project. Under the new rules, a 'project' is defined by three criteria:

  • the type of resource being commercially developed (ie, oil, natural gas or a specified type of mineral);
  • the method of extraction (ie, use of a well or open pit or underground mining); and
  • the major subnational political jurisdiction in which the commercial development of the resource is taking place (or, for offshore projects, the nearest such jurisdiction and the body of water in which the project is located).

Commercial development activities using multiple resource types or extraction methods can be treated as a single project if they are in the same major subnational political jurisdiction.

Form and timing of disclosure

Issuers must furnish to the SEC the required disclosure annually on Form SD no later than 270 days after the end of their most recently completed fiscal year. The required disclosure must be submitted on the Electronic Data Gathering and Retrieval System in an extensible business reporting language (XBRL) exhibit to Form SD.

The SEC also adopted provisions that permit delayed reporting of payments relating to exploratory activities to mitigate potential competitive harm. Issuers will not be required to report payments relating to exploratory activities until they submit a Form SD for the fiscal year following the fiscal year in which the payments were made.

Exemptions from compliance and transitional relief

The SEC adopted three exemptions from the reporting requirements of Section 13(q):

  • if the disclosure is prohibited by foreign law;(4)
  • if the required disclosure would violate one or more pre-existing contract terms;(5) and
  • if the resource extraction issuer is a smaller reporting company(6) or an emerging growth company.(7)

The SEC also adopted transitional relief that will permit:

  • recently acquired issuers that were not obliged to disclose resource extraction payment information to begin reporting payment information starting with the Form SD submission for the first full fiscal year immediately following the effective date of the acquisition (for which payment information would be reported during the second full fiscal year); and
  • resource extraction issuers that have completed their initial public offering in the United States in their last full fiscal year to delay reporting payment information until the first full fiscal year immediately after they completed their initial public offering (for which payment information would be reported during the second full fiscal year).

Issuers may also apply for an exemption on a case-by-case basis by submitting a written request for exemptive relief to the SEC.

Alternative reporting regimes

The SEC adopted provisions within the new rules that will allow issuers to meet the requirements of the Section 13(q) rules, in certain circumstances, by providing disclosures that comply with a foreign jurisdiction's reporting regime. To qualify, the SEC must have determined that the foreign jurisdiction requires disclosure that satisfies the transparency objectives of Section 13(q). In conjunction with the adoption of the new rules, the SEC issued an order which recognises the following alternative reporting regimes as satisfying these objectives:

  • Canada's Extractive Sector Transparency Measures Act;
  • the EU Accounting Directive 2013/34/EU and the EU Transparency Directive 2013/50/EU;
  • the United Kingdom's Reports on Payment to Governments Regulations 2014; and
  • Norway's regulation on country-by-country reporting.

Issuers using alternative reports must submit the alternative report as an exhibit to Form SD, translated to English (if applicable) and tagged using XBRL.

Transition period

The SEC has adopted the new rules with a two-year transition period. As a result, issuers must comply with the new annual reporting requirement starting with their fiscal year ending no earlier than two years after the effective date of the final rules. For issuers with a 31 December fiscal year end, this is expected to be 30 September 2024 in respect of payments made in 2023.

Richard Alsop and Lona Nallengara, partners, and Iain Sneddon, associate, assisted in the preparation of this article.


(1) The new rules are the SEC's third attempt to adopt rules under Section 13(q). The SEC's initial rules, adopted in August 2012, were vacated by the US District Court for the District of Columbia in July 2013. The SEC's next set of rules, adopted in 2016, were subsequently disapproved under the Congressional Review Act, which ultimately required the SEC to draft new rules not "substantially the same" as the disapproved rules.

(2) For further details please see "SEC overhauls disclosure requirements for mining companies".

(3) Subsidiary and control for this purpose are aligned with the issuer's accounting principles.

(4) To be eligible to claim this exemption, an issuer must take reasonable steps to seek and use any other available exemption or relief. Failing this, the issuer must disclose:

  • the foreign jurisdiction for which it has excluded disclosure;
  • the law preventing disclosure;
  • its efforts to seek and use exemptions or other relief under such law; and
  • the results of those efforts in the body of Form SD.

The issuer must also furnish as an exhibit to Form SD a legal opinion from counsel opining on the issuer's inability to provide the required disclosure without violating the foreign jurisdiction's law.

(5) The exemption will apply only to contracts in which such terms are expressly included in writing prior to the effective date of the final rules. Similar to the requirements to avail themselves of the conflict of laws exemption, issuers must provide specific disclosures about their eligibility for the exemption, including identifying the jurisdiction and furnishing a legal opinion.

(6) Issuers with a public float of less than $250 million or with annual revenues of less than $100 million for the previous year and either no public float or a public float of less than $700 million.

(7) Generally, issuers that had total annual gross revenues of less than $1.07 billion during their most recently completed fiscal year.