The U.S. Securities and Exchange Commission voted to propose rules requiring resource extraction issuers to disclose payments made to a foreign or the U.S. government pertaining to commercial oil, natural gas and mineral development.
The SEC adopted similar rules in 2012 under the Dodd-Frank Wall Street Reform and Consumer Protection Act, but those rules were vacated by the U.S. District Court for the District of Columbia, according to a Dec. 18 commission release. The SEC adopted new rules in 2016, which Congress vacated with a joint resolution.
However, the commission is still obligated to issue a rule due to a remaining statutory mandate. That new rule must differ from the prior ones.
The proposed rules would require extraction issuers to file a form annually that includes details about payments made to the U.S. or a foreign government related to the commercial development of oil, gas or minerals. The issuer would also have to disclose payments made by its subsidiaries or other entities it controls.
Issuers would have to publicly produce their "company-specific, project-level payment information," according to the release. The new rules would require entities to disclose payments made to governments of at least $150,000 when the total of the individual payments related to the project meets or exceeds $750,000.
Among other changes from the 2016 rules, the proposal includes an exemption for smaller and emerging growth companies as well as relief for issuers that recently completed their public offerings. It also would extend the deadline on the payment disclosures and require disclosure nationally and subnationally rather than disclosure at the contract level.
"I commend the staff for expertly navigating legal and regulatory questions when crafting this proposal," SEC Chairman Jay Clayton said in the release. "The proposal is designed to address the statutory mandate in a manner that does not result in undue compliance burdens or competitive harm."
Once the proposed rules are published in the Federal Register, the clock starts on a 60-day public comment period.