On December 16, 2020, the US Securities and Exchange Commission (SEC), by a 3-2 vote, adopted final rules requiring annual disclosure on Form SD of payments by SEC reporting companies engaged in the commercial development of oil, natural gas or minerals (resource extraction issuers) to certain governmental entities. The final rules implement Section 13(q) of the Securities Exchange Act of 1934 (Exchange Act), which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). Section 13(q) directs the SEC to issue rules requiring resource extraction issuers to submit an annual report containing information about payments “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…”

This is the third time the SEC has adopted rules under Section 13(q). The SEC initially adopted rules in August 2012, but the rules were challenged in court and vacated in July 2013 by the US District Court for the District of Columbia. The SEC again adopted rules in June 2016, but those rules were subsequently disapproved by Congress and the president under the Congressional Review Act (CRA), which had the effect of vacating the adopted rules and requiring the SEC to draft new rules not “substantially the same” as the disapproved rules. The SEC proposed new rules intended to address the concerns underlying Congress’s action under the CRA on December 19, 2019 (the proposed rules). The final rules adopted on December 16, 2020, are largely the same as the proposed rules.

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