Better Late than Never: SEC Reproposes Resource Extractive Industries Rule Pursuant to Dodd-Frank Section 1504
After long delay, on December 11 the SEC reproposed the resource extractive industries rule that was first adopted in 2012 but was struck down by down by a D.C. federal district court in July 2013 after the American Petroleum Institute and other industry groups sued to block it. (The court said the SEC rule improperly required public disclosure and failed to allow any exemptions from the disclosure requirements when payments were made in countries where such disclosures would be illegal.
The SEC’s hand was forced by Oxfam who won a suit in Massachusetts in September compelling the “SEC to file with the Court in 30 days an expedited schedule for promulgating the final rule. The court will make further orders as necessary. As such, the Court shall retain jurisdiction to monitor the schedule and “to ensure compliance” with its order.”
Details of the proposed rule are here. Interestingly, the public filing requirement that caused the first rendition of the rule such trouble remains in place. The SEC did provide for a “case-by-case” exemption although SEC staff indicated that the exact process for an issuer to get an exemption hasn't yet been determined. The reproposed rule will put the US in line with Canada and the EU, each of which have adopted similar rules. The reproposed rule will allow reporting companies to submit to the SEC their disclosures from other jurisdictions, provided those jurisdictions have substantially similar rules to the SEC's. The proposal is “consistent with the emerging global consensus to fight corruption through enhanced disclosure of resource extraction payments to governments,” Commissioner Luis Aguilar said.
The substituted compliance could allow many companies to file only one disclosure report, rather than having to prepare several for multiple jurisdictions, Anderson said.
“That drastically cuts back on some compliance concerns and I think it's a welcome change,” she added.
Initial comments on the proposal are due by January 25th and reply comments are due by February 16th.