On February 3rd, Congress voted to kill the controversial anti-corruption disclosure rule related to reporting requirements for publicly traded commercial oil, natural gas or mineral companies. This rule (Rule 13q-1) would have required all gas, oil, and mineral companies that are publicly traded to disclose the use of conflict minerals and any payments to foreign governments for resource rights via an XBRL exhibit on EDGAR Form SD.
Friday, February 03. 2017
Congress Votes to Stop SEC Anti-corruption Disclosure Rule
The rule, which was sponsored by Senators Ben Cardin and Richard Lugar, was finally published by the SEC on June 27, 2016 after years of legal delays. This measure was passed as part of the Dodd-Frank Act in 2010 and was intended to help citizens of the foreign countries hold their government accountable for the wealth generated by those resources. After the original rule was vacated in August 2012 by the U.S. District Court for the District of Columbia, the SEC proposed it again in December of last year and adopted it in June. The rule was set to go into effect in 2018.
The House of Representatives had already voted to kill the recently enacted rule. Republican Majority Leader Kevin McCarthy stated that the rule would put American businesses at a disadvantage. The Senate vote on February 3, 2017 (52-47) further solidifies that the SEC rule will not go into effect. President Trump is expected to sign it shortly.
Because Congress is prohibiting agencies from revisiting rules killed this way, the SEC may be placed in a difficult position as it is compelled by the Dodd-Frank act to enact payment regulation.
The reporting of conflict mineral sources on Form SD (Section 13(p) to the Securities Exchange Act of 1934) is not affected by this ruling.
Sources:
SEC Release No. 34-78167: Disclosure of Payments by Resource Extraction Issuers (www.sec.gov)
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