SEC Adopts Final Rules Governing Payment Disclosure by Resource Extraction Issuers

The rules will require resource extraction issuers to file a Form SD on an annual basis that includes information about payments related to the commercial development of oil, natural gas, or minerals that are made to the U.S. federal government or a foreign government.

On December 16, 2020, the U.S. Securities and Exchange Commission ("SEC") voted to adopt final rules requiring domestic or foreign reporting issuers engaged in the commercial development of oil, natural gas, or minerals to disclose payments made by the issuer or a subsidiary or entity controlled by the issuer to the U.S. federal government or a foreign government. 

The rules implement Section 13(q) of the United States Securities Exchange Act of 1934, as amended, and they are mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act as a means of improving transparency and preventing bribery. The SEC adopted rules on resource extraction payments disclosure in 2012, which were vacated by the U.S. District Court for the District of Columbia, and in 2016, which were disapproved pursuant to the Congressional Review Act by a joint resolution of Congress. The new rules ease the requirements in the prior rules. 

The final rules, among other things, (i) will require public disclosure of company-specific, project-level payment information, which will require disclosure at the national and major subnational political jurisdiction, as opposed to a contract-by-contract basis; (ii) limit the liability for the required disclosure by deeming the payment information to be furnished to, but not filed with, the SEC; (iii) contain a conditional exemption for smaller reporting companies and emerging growth companies; and (iv) add relief for issuers that have recently completed their U.S. initial public offerings. 

The types of payments that will need to be disclosed on Form SD include taxes, royalties, license fees, community and social responsibility payments that are required by law or contract, payments of certain dividends, payments for infrastructure improvements, and in-kind payments. Companies must report payments equal to or exceeding $100,000, whether made as a single payment or a series of related payments to a government.

The final rules will be effective 60 days after publication in the Federal Register. Issuers will have a two-year transition period to comply. 

Insights by Jones Day should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request permission to reprint or reuse any of our Insights, please use our “Contact Us” form, which can be found on our website at This Insight is not intended to create, and neither publication nor receipt of it constitutes, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.