Audit, Compliance and Risk Blog

Resource Extractors’ Payments – New SEC Rules Increase Transparency

Posted by Jon Elliott on Thu, Sep 20, 2012

Jon ElliottThis month the Securities and Exchange Commission (SEC) published new environmental compliance rules (Rule 13q-1 and associated Form SD), requiring annual disclosures by publicly listed “resource extraction issuers” of payments they make to the U.S. federal government, or foreign governments, related to commercial development of oil, natural gas or minerals. SEC’s rules implement a Congressional mandate contained in 2010’s massive Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

The primary thrust of this Dodd-Frank provision is to provide public reporting to “empower citizens of those resource-rich countries to hold their governments accountable for the wealth generated by those resources.”  This is in support of U.S. and international efforts to expand transparency in commercial-governmental relations (Dodd-Frank makes specific reference to the Extractive Industries Transparency Initiative). Depending on the political frameworks within each of these countries, the expectation is that transparency about government revenues will tend to encourage better use of those revenues on behalf of the citizenry.

SEC’s reporting requirements apply to worldwide resource extraction activities, and associated payments to national governments and to sub-national governments (i.e. state or provincial, regional and local). Within the U.S. itself, however, these requirements apply to payments to the U.S. federal government but not to state and local governments.

Who reports what, starting when?

Rule 13q-1 applies to every “resource extraction issuer,” which means a company:

  • with securities registered on a national securities exchange;

  • required to file an annual report (usually on Form 10-K) with SEC; and

  • that engages in “commercial development of oil, natural gas, or minerals,” which SEC further defines to include exploration, extraction, processing, and export of oil, natural gas, or minerals, or the acquisition of a license for any such activity.”

Each resource extraction issuer must provide information about each payment, or series of payments, totaling $100,000 or more. These include taxes, royalties, fees (including license fees), production entitlements, bonuses, dividends, and payments for infrastructure improvements. Cash payments and in-kind payments are covered. Reports must be filed within 150 days after the end of each fiscal year, beginning with the issuer’s first fiscal year ending after September 30, 2013.

Implementation Checklist

Public companies must now be getting ready to comply with these new requirements, and investors should be starting to think about whether their reports will influence their investment decisions. Questions to ask include:

  • Is the organization publicly listed in the United States – the company itself, and/or a subsidiary, or a parent or holding company? 

  • Does the company engage in “commercial development of oil, natural gas, or minerals” anywhere in the world? 

  • Does the company already report payments made to national and sub-national governments in each country (perhaps through voluntary participation in EITI)? 

  • Does the company have internal procedures for itemization and reporting of payments to governments related to commercial development of oil, natural gas and/or minerals? 

Where can I go for more information?

SEC’s final rule was adopted on August 22, and published in the September 12 Federal Register. It’s available at

EITI’s website contains a variety of information about the Initiative’s activities, and more generally about global efforts to increase transparency in commercial-governmental relations. See


About the Author

Jon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 25 years. He was involved in developing 16 existing products, including Hazardous Materials Program Commentary: California and U.S Federal Mandatory Greenhouse Gas Emssions Reporting Audit Protocol.

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).

You may contact Mr. Elliott directly at:











Tags: SEC, Environmental risks, Environmental, EPA