“Resource Payments” Disclosure: SEC Adopts Final Rules on Disclosure of Payments to Governments for Commercial Development of Oil, Natural Gas or Minerals

Sullivan & Cromwell LLP - July 7, 2016

The Securities and Exchange Commission has adopted final rules that implement the “resource payments” disclosure provisions of Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules require reporting companies engaged in the commercial development of oil, natural gas or minerals to make detailed disclosure, in an annual report on Form SD, of payments to foreign governments or the U.S. Federal Government related to the commercial development of oil, natural gas or minerals.

The SEC re-proposed resource extraction payment disclosure rules in December 2015 following a 2013 court ruling vacating the rules adopted by the SEC in 2012. The final rules largely track the December 2015 proposal, and are designed to harmonize the SEC’s approach with those taken by the European Union and Canada on such disclosure. In addition, pursuant to a separate order issued on the same day as the final rules, issuers may use reports prepared pursuant to reporting requirements of the EU, Canada and, to some extent, the U.S. Extractive Industries Transparency Initiative (USEITI) to comply with the SEC disclosure requirements.

Resource extraction issuers are required to comply with the final rules with respect to fiscal years ending on or after September 30, 2018.