Press Release

SEC Adopts Rules for Resource Extraction Issuers Under Dodd-Frank Act

For Immediate Release


Washington D.C., June 27, 2016 —

The Securities and Exchange Commission today announced it adopted rules to require resource extraction issuers to disclose payments made to governments for the commercial development of oil, natural gas or minerals.  The rules, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, are intended to further the statutory objective to advance U.S. foreign policy interests by promoting greater transparency about payments related to resource extraction.

The final rules require an issuer to disclose payments made to the U.S. federal government or a foreign government if the issuer engages in the commercial development of oil, natural gas, or minerals and is required to file annual reports with the Commission under the Securities Exchange Act.  The issuer must also disclose payments made by a subsidiary or entity controlled by the issuer. 

“I am pleased that the Commission has completed these final rules, which will provide enhanced transparency to further the statutory goal,” said SEC Chair Mary Jo White.

Under the final rules, resource extraction issuers must disclose payments that are:  made to further the commercial development of oil, natural gas, or minerals; “not de minimis”; and within the types of payments specified in the rules. The final rules define commercial development of oil, natural gas, or minerals as exploration, extraction, processing, and export, or the acquisition of a license for any such activity. 

The rules define “not de minimis” as any payment, whether a single payment or a series of related payments, which equals or exceeds $100,000 during the same fiscal year.  Payments that must be disclosed are:  taxes; royalties; fees (including license fees); production entitlements; bonuses; dividends; payments for infrastructure improvements; and, if required by law or contract, community and social responsibility payments.  The disclosure must be made at the project level, similar to the approach adopted in the European Union and Canada. 

The final rules include two targeted exemptions to the reporting obligations.  One exemption provides that a resource extraction issuer that has acquired a company not previously subject to the final rules will not be required to report payment information for the acquired company until the filing of a Form SD for the first fiscal year following the acquisition. Another exemption provides a one-year delay in reporting payments related to exploratory activities. The Commission also could exercise its existing Exchange Act authority to provide exemptive relief from the requirements of the rules on a case-by-case basis. 

The required disclosure will be filed publicly with the Commission annually on Form SD no later than 150 days after the end of its fiscal year.  The information must be included in an exhibit and electronically tagged using the eXtensible Business Reporting Language (XBRL) format.  Resource extraction issuers are required to comply with the rules starting with their fiscal year ending no earlier than September 30, 2018.

A resource extraction issuer may use a report prepared for other disclosure regimes to comply with the rules if the Commission determines that the requirements applicable to those reports are substantially similar.  In a separate order issued today, the Commission determined that the current reporting requirements of the European Union Accounting and Transparency Directives (as implemented in a European Union or European Economic Area member country), Canada’s Extractive Sector Transparency Measures Act, and the U.S. Extractive Industries Transparency Initiative (USEITI) are substantially similar to the Commission’s rules, subject to certain conditions specified in the order and in the final rules. 


Section 13(q) was added to the Exchange Act in 2010 by Section 1504 of the Dodd Frank Act.  It directs the Commission to issue final rules that require each resource extraction issuer to include, in an annual report, information relating to any payment made by the resource extraction issuer, a subsidiary of the resource extraction issuer, or an entity under the control of the resource extraction issuer to a foreign government or the federal government for the purpose of the commercial development of oil, natural gas, or minerals.  Among other things, Section 13(q) specifies that, to the extent practicable, the rules shall support the commitment of the federal government to international transparency promotion efforts relating to the commercial development of oil, natural gas, or minerals.

Rule 13q-1 was initially adopted by the Commission on August 22, 2012, but it was subsequently vacated by the U.S. District Court for the District of Columbia.  Since then, the European Union and Canada have adopted transparency initiatives similar to the rules the Commission previously adopted and the USEITI has issued its first annual report.  The re-proposed rules were issued on December 11, 2015.


Last Reviewed or Updated: June 27, 2016