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SEC disclosure of government payments, taxes by resource extraction sector

SEC disclosure of government payments

The U.S. Securities and Exchange Commission (SEC) announced it adopted rules to require resource extraction issuers to disclose payments made to governments for the commercial development of oil, natural gas or minerals.


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According to an SEC release, the rules, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, are intended to further the statutory objective to advance U.S. foreign policy interests by promoting greater transparency about payments related to resource extraction.

Disclosure of payments

The final rules require an issuer to disclose payments made to the U.S. federal government or a foreign government if the issuer engages in the commercial development of oil, natural gas, or minerals and is required to file annual reports with the SEC under the Securities Exchange Act.  The issuer must also disclose payments made by a subsidiary or entity controlled by the issuer. Under the final rules, resource extraction issuers must disclose payments that are:  

  • Made to further the commercial development of oil, natural gas, or minerals
  • “Not de minimis”
  • Within the types of payments specified in the rules

The final rules define commercial development of oil, natural gas, or minerals as exploration, extraction, processing, and export, or the acquisition of a license for any such activity. 

Types of payments to be disclosed

The rules also define “not de minimis” as any payment, whether a single payment or a series of related payments, that equals or exceeds $100,000 during the same fiscal year. Payments that must be disclosed are:  

  • Taxes
  • Royalties
  • Fees (including license fees)
  • Production entitlements
  • Bonuses
  • Dividends
  • Payments for infrastructure improvements
  • Community and social responsibility payments (if required by law or contract)

The disclosure must be made at the project level, similar to the approach adopted in the European Union and Canada.


The final rules include two targeted exemptions to the reporting obligations.  

  • One exemption provides that a resource extraction issuer that has acquired a company not previously subject to the final rules will not be required to report payment information for the acquired company until the filing of a Form SD for the first fiscal year following the acquisition. 
  • A second exemption provides a one-year delay in reporting payments related to exploratory activities. 
  • The SEC also could exercise its existing Exchange Act authority to provide exemptive relief from the requirements of the rules on a case-by-case basis. 

Annual disclosure

The required disclosure will be filed publicly with the SEC annually on Form SD no later than 150 days after the end of its fiscal year.  The information must be included in an exhibit and electronically tagged using the extensible Business Reporting Language (XBRL) format.  Resource extraction issuers are required to comply with the rules starting with their fiscal year ending no earlier than September 30, 2018.

A resource extraction issuer may use a report prepared for other disclosure regimes to comply with the rules if the SEC determines that the requirements applicable to those reports are substantially similar.  In a separate order, the SEC determined that the current reporting requirements of the European Union Accounting and Transparency Directives (as implemented in a European Union or European Economic Area member country), Canada’s Extractive Sector Transparency Measures Act, and the U.S. Extractive Industries Transparency Initiative (USEITI) are substantially similar to the SEC’s rules, subject to certain conditions specified in the order and in the final rules.

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