[Federal Register Volume 81, Number 144 (Wednesday, July 27, 2016)]
[Rules and Regulations]
[Pages 49359-49430]
[FR Doc No: 2016-15676]

Vol. 81

Wednesday,

No. 144

July 27, 2016

Part II

Securities and Exchange Commission

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17 CFR Parts 240 and 249b

Disclosure of Payments by Resource Extraction Issuers; Final Rule

Federal Register / Vol. 81 , No. 144 / Wednesday, July 27, 2016 /
Rules and Regulations

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 240 and 249b

[Release No. 34-78167; File No. S7-25-15]
RIN 3235-AL53

Disclosure of Payments by Resource Extraction Issuers

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting Rule 13q-1 and an amendment to Form SD to
implement Section 1504 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act relating to the disclosure of payments by
resource extraction issuers. Rule 13q-1 was initially adopted by the
Commission on August 22, 2012, but it was subsequently vacated by the
U.S. District Court for the District of Columbia. Section 1504 of the
Dodd-Frank Act added Section 13(q) to the Securities Exchange Act of
1934, which directs the Commission to issue rules requiring resource
extraction issuers to include in an annual report information relating
to any payment made by the issuer, a subsidiary of the issuer, or an
entity under the control of the issuer, to a foreign government or the
Federal Government for the purpose of the commercial development of
oil, natural gas, or minerals. Section 13(q) requires a resource
extraction issuer to provide information about the type and total
amount of such payments made for each project related to the commercial
development of oil, natural gas, or minerals, and the type and total
amount of payments made to each government. In addition, Section 13(q)
requires a resource extraction issuer to provide information about
those payments in an interactive data format.

DATES: Effective date: The final rule and form amendment are effective
September 26, 2016.
    Compliance date: A resource extraction issuer must comply with the
final rule and form for fiscal years ending on or after September 30,
2018.

FOR FURTHER INFORMATION CONTACT: Shehzad K. Niazi, Special Counsel;
Office of Rulemaking, Division of Corporation Finance, at (202) 551-
3430; or Elliot Staffin, Special Counsel; Office of International
Corporate Finance, Division of Corporation Finance, at<PHONE_NUMBER>,
U.S. Securities and Exchange Commission, 100 F Street NE., Washington,
DC 20549.

SUPPLEMENTARY INFORMATION: We are adopting Rule 13q-1 \1\ and an
amendment to Form SD \2\ under the Securities Exchange Act of 1934
(``Exchange Act'').\3\
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    \1\ 17 CFR 240.13q-1.
    \2\ 17 CFR 249.448.
    \3\ 15 U.S.C. 78a et seq.
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Table of Contents

I. Introduction and Background
    A. Section 13(q) of the Exchange Act
    B. The 2012 Rules and Litigation
    C. International Transparency Efforts
    1. European Economic Area
    2. Canada
    3. EITI
    D. Summary of the Final Rules
II. Final Rules Under Section 13(q)
    A. Definition of ``Resource Extraction Issuer''
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    B. Definition of ``Commercial Development of Oil, Natural Gas,
or Minerals''
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    C. Definition of ``Payment''
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    D. Definition of ``Subsidiary'' and ``Control''
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    E. Definition of ``Project''
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    F. Definition of ``Foreign Government'' and ``Federal
Government''
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    G. Annual Report Requirement
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    H. Public Filing
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    I. Exemption From Compliance
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    J. Alternative Reporting
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    K. Exhibits and Interactive Data Format Requirements
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    L. Treatment for Purposes of Securities Act and Exchange Act
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
    M. Compliance Date
    1. Proposed Rules
    2. Comments on the Proposed Rules
    3. Final Rules
III. Economic Analysis
    A. Introduction and Baseline
    B. Potential Effects Resulting From the Payment Reporting
Requirement
    1. Benefits
    2. Costs
    C. Potential Effects Resulting From Specific Implementation
Choices
    1. Exemption From Compliance
    2. Alternative Reporting
    3. Definition of Control
    4. Definition of ``Commercial Development of Oil, Natural Gas,
or Minerals''
    5. Types of Payments
    6. Definition of ``Not De Minimis''
    7. Definition of ``Project''
    8. Annual Report Requirement
    9. Exhibit and Interactive Data Requirement
IV. Paperwork Reduction Act
    A. Background
    B. Estimate of Issuers
    C. Estimate of Issuer Burdens
    V. Final Regulatory Flexibility Act Analysis
    A. Need for the Rules
    B. Significant Issues Raised by Public Comments
    C. Small Entities Subject to the Rules
    D. Reporting, Recordkeeping, and Other Compliance Requirements
    E. Agency Action To Minimize Effect on Small Entities
VI. Statutory Authority

I. Introduction and Background

    On December 11, 2015, we re-proposed a rule and form amendments-\4\
to implement Section 13(q) of the Exchange Act (the ``Proposing
Release''). Rules implementing Section 13(q) were previously adopted by
the Commission on August 22, 2012 (the ``2012 Rules''),\5\ but were
vacated by the U.S. District Court for the District of Columbia by
order dated July 2, 2013.\6\
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    \4\ Exchange Act Release No. 34-76620 (Dec. 11, 2015), 80 FR
80057 (Dec. 23, 2015) available at http://www.sec.gov/rules/proposed/2015/34-76620.pdf.
    \5\ See Exchange Act Release No. 67717 (Aug. 22, 2012), 77 FR
56365 (Sept. 12, 2012) available at http://www.sec.gov/rules/final/2012/34-67717.pdf (the ``2012 Adopting Release''). See also Exchange
Act Release No. 63549 (Dec. 15, 2010), 75 FR 80978 (Dec. 23, 2010)
available at http://www.sec.gov/rules/proposed/2010/34-63549.pdf
(the ``2010 Proposing Release'').
    \6\ API v. SEC, 953 F. Supp. 2d 5 (D.D.C., 2013) (``API
Lawsuit'').
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A. Section 13(q) of the Exchange Act

    Section 13(q) was added in 2010 by Section 1504 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (``the Act'').\7\ It
directs the Commission to ``issue final rules that require each
resource extraction issuer to include in an annual report . . .
information relating to any payment

made by the resource extraction issuer, a subsidiary of the resource
extraction issuer, or an entity under the control of the resource
extraction issuer to a foreign government or the Federal Government for
the purpose of the commercial development of oil, natural gas, or
minerals, including--(i) the type and total amount of such payments
made for each project of the resource extraction issuer relating to the
commercial development of oil, natural gas, or minerals, and (ii) the
type and total amount of such payments made to each government.'' \8\
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    \7\ Public Law 111-203 (July 21, 2010).
    \8\ 15 U.S.C. 78m(q)(2)(A). As discussed below, Section 13(q)
also specifies that the Commission's rules must require certain
information to be provided in interactive data format.
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    Based on the statutory text and the legislative history, we
understand that Congress enacted Section 1504 to increase the
transparency of payments made by oil, natural gas, and mining companies
to governments for the purpose of the commercial development of their
oil, natural gas, and minerals. As discussed in more detail below, the
legislation reflects U.S. foreign policy interests in supporting global
efforts to improve transparency in the extractive industries.\9\ The
goal of such transparency is to help combat global corruption and
empower citizens of resource-rich countries to hold their governments
accountable for the wealth generated by those resources.\10\ Section
13(q) also defines several key terms, such as ``resource extraction
issuer,'' \11\ ``commercial development of oil, natural gas, or
minerals,'' \12\ ``foreign government,'' \13\ and ``payment,'' \14\
each of which is addressed in detail below.
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    \9\ See Section I.C below.
    \10\ See, e.g., 156 Cong. Rec. S3816 (daily ed. May 17, 2010)
(Statement of Senator Lugar, one of the sponsors of Section 1504)
(``Adoption of the Cardin-Lugar amendment would bring a major step
in favor of increased transparency at home and abroad. . . . More
importantly, it would help empower citizens to hold their
governments to account for the decisions made by their governments
in the management of valuable oil, gas, and mineral resources and
revenues. . . . The essential issue at stake is a citizen's right to
hold its government to account. Americans would not tolerate the
Congress denying them access to revenues our Treasury collects. We
cannot force foreign governments to treat their citizens as we would
hope, but this amendment would make it much more difficult to hide
the truth.''); id. at S3817-18 (May 17, 2010) (Statement of Senator
Dodd) (``[C]ountries with huge revenue flows from energy development
also frequently have some of the highest rates of poverty,
corruption and violence. Where is all that money going? [Section
13(q)] is a first step toward addressing that issue by setting a new
international standard for disclosure.'').
    \11\ 15 U.S.C. 78m(q)(1)(D).
    \12\ 15 U.S.C. 78m(q)(1)(A).
    \13\ 15 U.S.C. 78m(q)(1)(B).
    \14\ 15 U.S.C. 78m(q)(1)(C).
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    Section 13(q) provides that ``[t]o the extent practicable, the
rules . . . shall support the commitment of the Federal Government to
international transparency promotion efforts relating to the commercial
development of oil, natural gas, or minerals.'' \15\ In light of this
directive, we have considered significant international initiatives in
connection with the final rules, such as the Extractive Industries
Transparency Initiative (``EITI'') and the regulations enacted by the
European Union and Canada.\16\
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    \15\ 15 U.S.C. 78m(q)(2)(E).
    \16\ See Section I.C below for a discussion of these disclosure
regimes, including why they are significant. See also Proposing
Release, nn.13-18 and accompanying text.
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    Pursuant to Section 13(q), the rules we adopt must require a
resource extraction issuer to submit the payment information included
in an annual report in an electronic data format in which the
information is identified using a standardized list of electronic
tags.\17\ Section 13(q) lists certain electronic tags that must be
included in the rules to identify specified information \18\ while also
authorizing the Commission to require additional electronic tags for
other information that it determines is necessary or appropriate in the
public interest or for the protection of investors.\19\
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    \17\ 15 U.S.C. 78m(q)(1)(E), (1)(F), (2)(C), (2)(D).
    \18\ These tags include: (I) the total amounts of the payments,
by category; (II) the currency used to make the payments; (III) the
financial period in which the payments were made; (IV) the business
segment of the resource extraction issuer that made the payments;
(V) the government that received the payments and the country in
which the government is located; (VI) and the project of the
resource extraction issuer to which the payments relate. 15 U.S.C.
78m(q)(2)(D)(ii).
    \19\ 15 U.S.C. 78m(q)(2)(D)(ii)(VII).
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    Section 13(q) further requires, to the extent practicable, that the
Commission make publicly available online a compilation of the
information required to be submitted by resource extraction issuers
under the new rules.\20\ The statute does not define the term
compilation or describe how it should be generated.
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    \20\ 15 U.S.C. 78m(q)(3).
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    Finally, Section 13(q) provides that the final rules ``shall take
effect on the date on which the resource extraction issuer is required
to submit an annual report relating to the fiscal year . . . that ends
not earlier than one year after the date on which the Commission issues
final rules . . . .'' \21\
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    \21\ 15 U.S.C. 78m(q)(2)(F).
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B. The 2012 Rules and Litigation

    We adopted final rules implementing Section 13(q) on August 22,
2012.\22\ Subsequently, in October 2012, the American Petroleum
Institute (``API''), the U.S. Chamber of Commerce, and two other
industry groups challenged the 2012 Rules.\23\ On July 2, 2013, the
U.S. District Court for the District of Columbia vacated the rules.\24\
The court based its decision on two findings: first, that the
Commission misread Section 13(q) to compel the public disclosure of the
issuers' reports; and second, the Commission's explanation for not
granting an exemption for when disclosure is prohibited by foreign
governments was arbitrary and capricious. On September 18, 2014, Oxfam
America, Inc. filed suit in the U.S. District Court for the District of
Massachusetts to compel the Commission to promulgate a final rule
implementing Section 1504. On September 2, 2015, the court issued an
order holding that the Commission unlawfully withheld agency action by
not promulgating a final rule.\25\ The Commission filed an expedited
schedule for promulgating the final rule with the court on October 2,
2015. Consistent with that schedule, the Commission re-proposed rules
and form amendments on December 11, 2015. The comment period for the
re-proposal was divided into an initial comment period and a reply
comment period. These comment periods were subsequently extended in
response to a request by the API.\26\ The Commission received 369

letters (including one form letter submitted 308 times and a petition
with 116,923 signatures) responding to the requests for comment in the
Proposing Release.\27\
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    \22\ We received over 150 unique comment letters on the 2010
Proposing Release, as well as over 149,000 form letters (including a
petition with 143,000 signatures). The letters, including the form
letters designated as Type A, Type B, and Type C, are available at
http://www.sec.gov/comments/s7-42-10/s74210.shtml. In addition, to
facilitate public input on the Act before the comment periods for
specific rulemakings opened, the Commission provided a series of
email links, organized by topic, on its Web site at http://www.sec.gov/spotlight/regreformcomments.shtml. The public comments
we received on Section 1504 of the Act, which were submitted prior
to the 2010 Proposing Release, are available on our Web site at
http://www.sec.gov/comments/df-title-xv/specialized-disclosures/specialized-disclosures.shtml. Many comments were also received
between the issuance of the 2012 Adopting Release and the recent
Proposing Release and are available at https://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resource-extraction-issuers.shtml.
    \23\ See API et al. v. SEC, No. 12-1668 (D.D.C. Oct. 10, 2012).
Petitioners also filed suit in the U.S. Court of Appeals for the DC
Circuit, which subsequently dismissed the suit for lack of
jurisdiction. See API v. SEC, 714 F. 3d 1329 (D.C. Cir. 2013).
    \24\ API v. SEC, 953 F. Supp. 2d 5 (D.D.C., 2013) (``API
Lawsuit'').
    \25\ Oxfam America, Inc. v. United States Securities and
Exchange Commission, 126 F. Supp. 3d 168 (D. Mass. 2015).
    \26\ In response to API's request, the Commission extended the
initial comment period from January 25, 2016 to February 16, 2016
and the reply comment period from February 16, 2016 to March 8,
2016. See letter from API (Jan. 7, 2016) and Exchange Act Release
No. 34-76958 (Jan. 21, 2016), 81 FR 4598 (Jan. 27, 2016), available
at http://www.sec.gov/rules/proposed/2016/34-76958.pdf.
    \27\ These letters, including the form letters designated as
Type A and B, are available at http://www.sec.gov/comments/s7-25-15/s72515.shtml.
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C. International Transparency Efforts

    As discussed at length in the Proposing Release, Section 13(q)
reflects the U.S. foreign policy interest in supporting global efforts
to improve the transparency of payments made in the extractive
industries in order to help combat global corruption and promote
accountability.\28\ We formulated the proposed rules with the purpose
of furthering these interests, and federal agencies with specific
expertise in this area submitted comments affirming that the proposed
rules would accomplish that purpose.\29\ Notably, the U.S. Department
of State expressed the view that, if adopted, the proposed rule would
be a ``strong tool to increase transparency and combat corruption'' and
stated that it would advance ``the United States' strong foreign policy
interests in promoting transparency and combatting corruption
globally.'' \30\ In addition, the U.S. Agency for International
Development (``USAID'') stated that the proposed rule, if adopted,
would be ``a significant step toward greater energy and mineral
industry transparency and, correspondingly, strengthened governance and
civil society anti-corruption efforts.'' \31\ According to USAID,
``enforcement of the proposed rule would contribute towards U.S.
Government foreign policy goals of supporting stable and democratic
governments, and in particular towards USAID's goal of providing
assistance to resource-rich countries in support of economic growth,
good governance, transparency, and building civil society.'' \32\
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    \28\ See Section I.E of the Proposing Release, which we hereby
expressly incorporate by reference. See also 156 Cong. Rec. S3976
(May 19, 2010) (Sen. Feingold) (explaining that Section 13(q) is
intended to ``empower[] citizens in resource-rich countries in their
efforts to combat corruption and hold their governments
accountable''). The importance placed by the United States and other
members of the international community on reducing global corruption
was recently illustrated through the international anti-corruption
summit that British Prime Minister David Cameron hosted in London on
May 12, 2016. The summit brought together world leaders, business,
and civil society to agree to a package of steps to, among other
things, promote transparency measures that expose corruption. The
summit adopted a Global Declaration Against Corruption that
specifically endorsed the promotion of transparency and governance
in the resource extraction sector. See Global Declaration Against
Corruption (May 12, 2016), available at https://www.gov.uk/government/publications/global-declaration-against-corruption/global-declaration-against-corruption (last visited June 16, 2016).
President Obama and the other leaders of the G7 nations in Japan
during their annual conference similarly emphasized the importance
of combatting global corruption. See G7 Ise-Shima Leaders'
Declaration (May 26, 2016), available at http://www.mofa.go.jp/files/000160266.pdf (last visited June 16, 2016) (``[r]ecognizing
the magnitude of the global problem of corruption'' and
``reiterat[ing] that our collective and individual action to fight
corruption is critical for economic growth, sustainable development
and maintaining peace and security'').
    \29\ We note that the legislative history also indicates that
Congress intended for the Section 13(q) disclosures to serve as an
informational tool for investors. See, e.g., 156 Cong. Rec. S3815
(May 17, 2010) (Sen. Cardin) (``Investors need to know the full
extent of a company's exposure''); id. at S3816 (May 17, 2010) (Sen.
Lugar) (``[the disclosures] would empower investors to have a more
complete view of the value of their holdings'').
    \30\ Letter from the United States Department of State (Jan. 21,
2016) (``State Department'').
    \31\ Letter from U.S. Agency for International Development (Feb.
16, 2016) (``USAID''). According to its Web site, USAID ``carries
out U.S. foreign policy by promoting broad-scale human progress at
the same time it expands stable, free societies, creates markets and
trade partners for the United States, and fosters good will
abroad.'' USAID, Who We Are, available at https://www.usaid.gov/who-we-are (last visited June 16, 2016). USAID is particularly committed
to transparency, such as the President's Open Government Initiative.
See USAID, Our Commitment to Transparency, available at https://www.usaid.gov/results-and-data/progress-data/transparency (last
visited June 16, 2016).
    \32\ Id.
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    Other commenters, including individuals and non-governmental
organizations, supported the view that Section 13(q) was enacted to
further the U.S. Government's interest in improving transparency in an
effort to help combat global corruption and promote accountability.\33\
For example, one commenter stated that ``the governmental interest of
reducing corruption and potentially enhancing governmental
accountability . . . underpins [Section 13(q)].'' \34\ Another
commenter stated that ``[p]romoting revenue transparency in the
extractives sector with a robust implementation of Section 1504 would
provide civil society the necessary tools to prevent and combat
corruption worldwide'' and that since ``natural resource extraction
accounts for at least 10% of GDP in 61 countries, the potential
benefits of strong rules under Section 1504 are significant in terms of
healthier and better educated populations, creating more productive
societies and higher economic growth rates.'' \35\ Comments we received
on the Proposing Release from former and current members of the U.S.
Congress supported our interpretation of the transparency and anti-
corruption goals of Section 13(q).\36\ These current and former U.S.
senators stated that ``transparency is a critical tool to ensure that
citizens in resource rich countries can monitor the economic
performance of oil, gas and mining projects and ensure that revenues,
especially if more meager than hoped, are used responsibly.'' \37\
Significantly, this view was not limited to government, civil society,
and individual commenters. Industry commenters also attested to a link
between Section 13(q)'s promotion of increased transparency and
reducing corruption.\38\
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    \33\ See, e.g., letters from American Security Project (Jan. 21,
2016) (``ASP''); Elise J. Bean (Feb. 16, 2016) (``Bean''); BHP
Billiton (Jan. 25, 2016) (``BHP''); Pietro Poretti (Feb. 15, 2016)
(``Poretti''); Publish What You Pay--US (Feb. 16, 2016) (``PWYP-US
1''); and Transparency International--USA (Feb. 16, 2016) (``TI-
USA'').
    \34\ See letter from Poretti.
    \35\ See letter from TI-USA.
    \36\ See letter from Senators Cardin, Baldwin, Brown, Coons,
Durbin, Leahy, Markey, Menendez, Markley, Shaheen, Warren, and
Whitehouse (Feb. 5, 2016) (``Sen. Cardin et al.'') and letter from
retired Senators Lugar, Dodd, and Levin (Feb. 4, 2016) (``Sen. Lugar
et al.'').
    \37\ Id.
    \38\ See letters from BHP (``Transparency by governments and
companies alike regarding revenue flows from the extraction of
natural resources in a manner which is meaningful, practical and
easily understood by stakeholders reduces the opportunity for
corruption'') and Total S.A. (Jan. 13, 2016) (``Total'') (``Total
considers that the re-introduction of Rule 13q-1 under the Dodd
Frank Act should both restore a level playing field among major
publicly-listed oil and gas companies and improve transparency to
help combat global corruption and increase accountability.'').
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    To determine how best to achieve the policy objectives of Section
13(q) and to meet the statutory directive to ``support the commitment
of the Federal Government to international transparency promotion
efforts'' to the extent practicable, we also have considered the
current state of international transparency efforts. The following
discussion addresses the global transparency initiatives that have
developed since the 2012 Adopting Release was issued, including in the
European Union, Canada, and through the EITI.\39\ As discussed below,
these initiatives govern a significant percentage of the companies that
will be impacted by the final rules.\40\
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    \39\ We look to the EITI because it is a significant
international transparency framework, it was mentioned in the
legislative history of Section 13(q), and the definition of
``payment'' in Section 13(q)(1)(C)(ii) [15 U.S.C. 78m(q)(1)(C)(ii)]
specifically refers to the EITI. See, e.g., 156 Cong. Rec. S3816
(daily ed. May 17, 2010) (Statement of Senator Lugar) (``This
domestic action will complement multilateral transparency efforts
such as the Extractive Industries Transparency Initiative--the
EITI--under which some countries are beginning to require all
extractive companies operating in their territories to publicly
report their payments.'').
    \40\ See Section III.B.2.b below for our estimates regarding the
number of resource extraction issuers that are already subject to
other disclosure regimes. We estimate that approximately 25% of
resource extraction issuers are already subject to the EU Directives
or ESTMA, but this percentage does not include resource extraction
issuers subject to the EITI.

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1. European Economic Area
    The European Parliament and Council of the European Union adopted
two directives that include payment disclosure rules.\41\ The EU
Accounting Directive and the EU Transparency Directive (the ``EU
Directives'') are very similar to each other in content. They determine
the applicability and scope of the disclosure requirements and set the
baseline in each EU member state and European Economic Area (``EEA'')
\42\ country for annual disclosure requirements for oil, gas, mining,
and logging companies concerning the payments they make to governments
on a per country and per project basis.\43\ The EU Accounting Directive
regulates the provision of financial information by all ``large''
companies \44\ incorporated under the laws of an EU member state or
those of an EEA country, even if the company is privately held. It
requires covered oil, gas, mining, and logging companies to disclose
specified payments to governments. The EU Transparency Directive
applies these disclosure requirements to all companies listed on EU-
regulated markets \45\ even if they are not registered in the EEA or
are incorporated in other countries.\46\ The EU Directives also apply
to payments made by entities that are part of a company's consolidated
report.\47\
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    \41\ Directive 2013/34/EU of the European Parliament and of the
Council of 26 June 2013 on the annual financial statements,
consolidated financial statements and related reports of certain
types of undertakings (``EU Accounting Directive''); and Directive
2013/50/EU of the European Parliament and of the Council of 22
October 2013 amending Directive 2004/109/EC on transparency
requirements in relation to information about issuers whose
securities are admitted to trading on a regulated market, Directive
2003/71/EC of the European Parliament and of the Council on the
prospectus to be published when securities are offered to the public
or admitted to trading and Commission Directive 2007/14/EC on the
implementation of certain provisions of Directive 2004/109/EC (``EU
Transparency Directive'').
    \42\ See European Commission Memo (June 12, 2013)
(``Commissioner Barnier welcomes European Parliament vote on the
Accounting and Transparency Directives (including country by country
reporting)''). The EEA is composed of the EU member states plus
Iceland, Liechtenstein, and Norway.
    \43\ Unlike the proposed rules and the rules we are adopting
today, the EU Directives also apply to companies active in the
logging of primary forests.
    \44\ See Article 3(4) of the EU Accounting Directive, which
defines large companies (i.e., ``large undertakings'') to mean those
which on their balance sheet dates exceed at least two of the three
following criteria: (a) Balance sheet totaling [euro]20 million
(approximately $22.5 million (USD) as of June 16, 2016); (b) net
turnover of [euro]40 million (approximately $44.9 million (USD) as
of June 16, 2016); and (c) average number of employees of 250.
    \45\ The term ``regulated market'' is defined in the EU's
Markets in Financial Instruments Directive 2004/39/EC (``MiFID''),
as amended by 2010/78/EU. The list of regulated markets can be found
on the European Securities and Markets Authority's Web site at
http://registers.esma.europa.eu/publication/searchRegister?core=esma_registers_mifid_rma (last visited June 16,
2016).
    \46\ See EU Transparency Directive, Art. 2(1)(d) and Art. 6.
    \47\ See, e.g., EU Accounting Directive, Art. 44.
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    The EU Directives generally cover the following activities:
``exploration, prospection, discovery, development, and extraction of
minerals, oil, natural gas deposits or other materials.'' \48\ The
types of payments that must be disclosed when made in connection with
those activities include: (a) Production entitlements; (b) taxes levied
on the income, production, or profits of companies, excluding taxes
levied on consumption such as value added taxes, personal income taxes,
or sales taxes; (c) royalties; (d) dividends; (e) signature, discovery,
and production bonuses; (f) license fees, rental fees, entry fees, and
other considerations for licenses and/or concessions; and (g) payments
for infrastructure improvements.\49\ These payments are covered whether
made ``in money or in kind.'' \50\
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    \48\ EU Accounting Directive, Art. 41(1).
    \49\ See, e.g., EU Accounting Directive, Art. 41(5).
    \50\ Id.
---------------------------------------------------------------------------

    Disclosure of payments is made on a per project and per government
basis. ``Project'' is defined as ``the operational activities that are
governed by a single contract, license, lease, concession or similar
legal agreements and form the basis for payment liabilities with a
government.'' \51\ The definition goes on to state that ``if multiple
such agreements are substantially interconnected, this shall be
considered a project.'' \52\ ``Substantially interconnected'' under the
EU Directives means ``a set of operationally and geographically
integrated contracts, licenses, leases or concessions or related
agreements with substantially similar terms that are signed with a
government, giving rise to payment liabilities.'' \53\
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    \51\ See, e.g., EU Accounting Directive, Art. 41(4).
    \52\ Id. Contrary to the proposed rules and those we are
adopting today, the EU Directives appear to require aggregation of
``substantially interconnected'' agreements rather than providing
such aggregation as an option.
    \53\ See, e.g., EU Accounting Directive, Recital 45.
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    The EU Directives require public disclosure of the payment
information, including the issuer's identity.\54\ Further, the EU
Directives do not provide any exemptions unique to the resource
extraction payment disclosure requirements. They do, however, allow
issuers to use reports prepared for foreign regulatory purposes to
satisfy their disclosure obligations under EU law if those reports are
deemed equivalent pursuant to specified criteria.\55\ These criteria
include: (i) Target undertakings; (ii) target recipients of payments;
(iii) payments captured; (iv) attribution of payments captured; (v)
breakdown of payments captured; (vi) triggers for reporting on a
consolidated basis; (vii) reporting medium; (viii) frequency of
reporting; and (ix) anti-evasion measures. No equivalency
determinations have been made to-date in the EEA.
---------------------------------------------------------------------------

    \54\ See, e.g., EU Accounting Directive, Arts. 43, 45.
    \55\ See, e.g., EU Accounting Directive, Arts. 46, 47.
---------------------------------------------------------------------------

    Member states are granted some leeway for when the report is due
and what penalties will result from violations of the regulations.\56\
Required public disclosure of payments in an annual report by companies
has begun in the European Union \57\ and will occur in all European
Union and EEA member countries once the essential provisions have been
transposed into domestic law in each country.\58\
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    \56\ See, e.g., EU Accounting Directive, Art. 45 (``The report .
. . on payments to governments shall be published as laid down by
the laws of each Member State . . . .''); Id. at Article 51
(``Member States shall provide for penalties applicable to
infringements of the national provisions adopted in accordance with
this Directive . . . .'').
    \57\ See, e.g., RDS Report discussed in note 302 below.
    \58\ The requirements of the EU Directives are implemented
through the enacting legislation of each EEA member country. The
deadlines for implementing the EU Accounting Directive and the EU
Transparency Directive were July 20, 2015 and November 26, 2015
respectively. It is our understanding that as of the date of this
release, 24 countries have implemented the EU Accounting Directive
and 15 countries have implemented the EU Transparency Directive. In
general, non-EU EEA countries enact implementing legislation after
an EU Directive is adopted into the EEA by Joint Committee decision.
The EEA Joint Committee adopted the Accounting Directive on October
30, 2015. As of the date of this release, it is our understanding
that the EEA Joint Committee has not yet adopted a decision on the
Transparency Directive. As of June 16, 2016, Austria, Belgium,
Croatia, the Czech Republic, Denmark, Estonia, Finland, France,
Germany, Hungary, Italy, Latvia, Lithuania, Lithuania, Luxembourg,
Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Spain,
Slovenia, Spain, Sweden, and the United Kingdom have filed
notifications of full transposition (i.e., implementation) of the
Accounting Directive with the European Commission. As of June 16,
2016, Austria, Croatia, Cyprus, Estonia, Finland, France, Germany,
Greece, Hungary, Italy, Lithuania, The Netherlands, Slovakia,
Sweden, and the United Kingdom have filed notifications of full
transposition of the Transparency Directive with the European
Commission. Norway, a non-EU member of the EEA, adopted legislation
that complies with both the Accounting and Transparency Directives,
effective for fiscal years beginning on or after January 1, 2014.
Other EU and EEA member countries are working towards
implementation. Updates about member country progress towards full
transposition can be found at: http://ec.europa.eu/finance/enforcement/directives/index_en.htm#accounting. See also letter from
Arlene McCarthy OBE (Mar. 8, 2016) (``McCarthy'') (stating that
``most Member States have transposed the EU Directives'').

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2. Canada
    Canada also adopted a federal resource extraction disclosure law,
the Extractive Sector Transparency Measures Act (``ESTMA'') after the
2012 Adopting Release was issued.\59\ Since the Proposing Release,
Canada finalized, substantially as proposed, its previously issued
ESTMA Guidance \60\ and the ESTMA Technical Reporting Specifications
(``ESTMA Specifications'').\61\ ESTMA covers entities that are engaged
in the commercial development of oil, gas, or minerals or that control
another entity that is engaged in those activities, subject to certain
limitations.\62\ ESTMA defines ``control'' as being controlled by
another entity ``directly or indirectly, in any manner,'' including
those entities in a chain of control.\63\ The ESTMA Guidance also
addresses issues related to how payments are reported in situations of
joint control.\64\
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    \59\ See ESTMA, 2014 S.C., ch. 39, s. 376 (Can.), which came
into force on June 1, 2015.
    \60\ ESTMA Guidance, available at http://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/mining-materials//ESTMA-Guidance_e.pdf.
    \61\ ESTMA Specifications, available at http://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/mining-materials//ESTMA-Technical_e.pdf.
    \62\ ESTMA, Section 2. The reporting obligation applies to (a)
an entity that is listed on a stock exchange in Canada; (b) an
entity that has a place of business in Canada, does business in
Canada or has assets in Canada and that, based on its consolidated
financial statements, meets at least two of the following conditions
for at least one of its two most recent financial years: (i) It has
at least[thinsp]$20 million (CAD) in assets (approximately $15.4
million (USD) as of June 16, 2016), (ii) it has generated at
least[thinsp]$40 million (CAD) in revenue (approximately $30.8
million (USD) as of June 16, 2016), (iii) it employs an average of
at least 250 employees; and (c) any other prescribed entity. ESTMA,
Section 8.
    \63\ ESTMA, Section 4(1)-(2). For example, in the statute's
words an ``entity that controls another entity is deemed to control
any entity that is controlled, or deemed to be controlled, by the
other entity.'' ESTMA, Section 4(2).
    \64\ ESTMA Guidance, Section 3.6 clarifies that if a Reporting
Entity makes a payment, it must report it, whether made as an
operator of a joint arrangement or as a member of a joint
arrangement. Also, if a payment is made by an entity that is not
subject to ESTMA but is controlled by a Reporting Entity, the
Reporting Entity must report it. Payment attribution rules set out
in ESTMA may apply in situations of joint control. The ESTMA
Guidance goes on to say that Reporting Entities should consider the
facts and circumstances of payments when determining whether to
report and which payments to report in situations of joint control.
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    ESTMA defines ``commercial development of oil, gas or minerals'' as
the exploration or extraction of oil, gas, or minerals; the acquisition
of a permit, license, lease, or any other authorization to carry out
the exploration or extraction of oil, gas, or minerals; or any other
prescribed activities in relation to oil, gas, or minerals.\65\ The
ESTMA Guidance clarifies that exploration or extraction refers to ``the
key phases of commercial activity which occur during the life cycle of
an oil, gas or mineral project'' and extend to prospecting,
remediation, and reclamation.\66\ The ESTMA Guidance also states that
these terms are not limited to ``active phases of operations on the
ground, but also captures temporary periods of inactivity.'' \67\ The
definition is not meant to cover ancillary or preparatory activities
such as manufacturing equipment or the construction of extraction
sites.\68\ The definition also generally does not cover post-extraction
activities, such as refining, smelting, processing, marketing,
distribution, transportation, or export.\69\ Nevertheless, certain
initial processing activities that are integrated with extraction
operations may be considered commercial development of oil, gas, or
minerals.\70\
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    \65\ ESTMA, Section 2. Canada does not appear to have prescribed
any additional activities at this time. See ESTMA Guidance, Section
1, which only refers to the first two prongs of ESTMA's definition
of ``commercial development of oil, gas and minerals.''
    \66\ ESTMA Guidance, Section 1.
    \67\ Id.
    \68\ Id.
    \69\ Id.
    \70\ Id.
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    Canada's regulations capture the following payment types: Taxes
(other than consumption taxes and personal income taxes); royalties;
fees (including rental fees, entry fees and regulatory charges, as well
as fees or other consideration for licenses, permits or concessions);
production entitlements; bonuses (including signature, discovery and
production bonuses); dividends (other than dividends paid to payees as
ordinary shareholders); and infrastructure improvement payments.\71\
The ESTMA Guidance also includes a provision similar to the anti-
evasion provision included in the Proposing Release. It states that
entities should look to the substance, rather than the form, of
payments in determining which category is applicable, and that in
certain circumstances a philanthropic or voluntary contribution made in
lieu of one of the payment categories would need to be reported.\72\
---------------------------------------------------------------------------

    \71\ ESTMA Guidance, Section 3.1.
    \72\ ESTMA Guidance, Section 3.5.
---------------------------------------------------------------------------

    Unlike the EU Directives, which do not provide for any exemptions
unique to resource extraction payment disclosure, ESTMA authorizes the
adoption of regulations respecting, among other matters, ``the
circumstances in which any provisions of this Act do not apply to
entities, payments or payees.'' \73\ As of the date of this release,
the Minister of Natural Resources Canada has not authorized any
regulations pursuant to that provision that provide for exemptions
under ESTMA. ESTMA did, however, defer the requirement for issuers to
report payments made to Aboriginal governments in Canada until June 1,
2017.\74\
---------------------------------------------------------------------------

    \73\ See ESTMA, Section 23(1).
    \74\ ESTMA Guidelines, Section 3.3.
---------------------------------------------------------------------------

    Canada has adopted project-level reporting, and the definition of
``project'' used in the ESTMA Specifications is identical to the
definition of that term in the EU Directives.\75\ Reports prepared
under ESTMA must be published on the internet ``so they are available
to the public'' and a link to the report must be provided to the
Canadian government.\76\
---------------------------------------------------------------------------

    \75\ See ESTMA Specifications, Section 2.3.2.
    \76\ ESTMA Specifications, Section 2.4.
---------------------------------------------------------------------------

    Like the EU Directives, ESTMA allows for the Minister of Natural
Resources Canada to determine that the requirements of another
jurisdiction are an acceptable substitute for the domestic
requirements.\77\ As noted in the Proposing Release, on July 31, 2015
the Minister determined that the reporting requirements set forth in
the EU Directives were an acceptable substitute for Canada's
requirements under ESTMA.\78\ Canada's current substitution policy
makes an assessment based on whether a jurisdiction's reporting
requirements (1) achieve the purposes of the reporting requirements
under ESTMA (as stated, to ``deter corruption through public
transparency'') and (2) address a similar scope of the reporting
requirements under ESTMA.\79\ Canada requires that an issuer must be
subject to the reporting requirements of the other jurisdiction and
must have provided the report to the other jurisdiction's competent
authority. Although it has adopted a reporting deadline of 150 days
after the end of an issuer's financial (i.e., fiscal) year, Canada

allows for substituted reports to be filed according to the other
jurisdiction's deadline if the Department of Natural Resources Canada
is notified by email within the 150 day period.\80\ If the other
jurisdiction's deadline is shorter than 150 days, the issuer may still
follow the 150 day deadline when submitting the report in Canada.\81\
---------------------------------------------------------------------------

    \77\ See ESTMA, Section 10(1) (``If, in the Minister's opinion,
and taking into account any additional conditions that he or she may
impose, the payment reporting requirements of another jurisdiction
achieve the purposes of the reporting requirements under this Act,
the Minister may determine that the requirements of the other
jurisdiction are an acceptable substitute . . . .'').
    \78\ Substitution Process and Determination, available at http://www.nrcan.gc.ca/mining-materials/estma/18196 (last visited June 16,
2016).
    \79\ See id.
    \80\ Id.
    \81\ Id.
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3. EITI
    The EITI is a voluntary coalition of oil, natural gas, and mining
companies, foreign governments, investor groups, and other
international organizations. The coalition was formed to foster and
improve transparency and accountability in resource-rich countries
through the publication and verification of company payments and
government revenues from oil, natural gas, and mining.\82\ A country
volunteers to become an EITI candidate and must complete an EITI
validation process to become a compliant member.\83\ Currently 51
countries are EITI implementing countries.\84\ Furthermore, several
countries not currently a part of the EITI have indicated their
intention to implement the EITI.\85\ We analyze the EITI using the
guidance in the EITI Standard and the EITI Handbook on what should be
included in a country's EITI plan, as well as reports made by EITI
member countries.\86\ The U.S. Extractive Industries Transparency
Initiative (``USEITI'') issued its first report in December 2015.\87\
The report covered payments made to the U.S. Federal Government in
2013, including $12.6 billion for extraction on federal lands and $11.8
billion in corporate income tax receipts from mining and petroleum and
coal products manufacturing industries.\88\
---------------------------------------------------------------------------

    \82\ See Implementing EITI for Impact-A Handbook for
Policymakers and Stakeholders (2011) (``EITI Handbook''), at xii.
    \83\ Notably, in enacting Section 13(q)'s mandatory disclosure
requirement, Congress sought to complement the EITI's existing
voluntary transparency efforts that too many countries and too many
companies either had not joined or would not. 156 Cong. Rec. S3815
(May 17, 2010) (Sen. Lugar). See also id. S3815 (May 17, 2010) (Sen.
Cardin) (stating that ``We currently have a voluntary international
standard for promoting transparency. A number of countries and
companies have joined [EITI], an excellent initiative that has made
tremendous strides in changing the cultural secrecy that surrounds
extractive industries. But too many countries and too many companies
remain outside this voluntary system.''); id. S3818 (May 17, 2010)
(Sen. Dodd) (stating that ``broad new requirements for greater
disclosure by resource extractive companies operating around the
world . . . would be an important step'' to complement EITI's
``voluntary program'').
    \84\ See https://eiti.org/countries/ (last visited June 16,
2016). Of those, 31 have achieved ``EITI compliant'' status, two
have had their EITI status temporarily suspended, and the rest are
implementing the EITI requirements but are not yet compliant. Id.
When becoming an EITI candidate, a country must establish a multi-
stakeholder group, including representatives of civil society,
industry, and government, to oversee implementation of the EITI. The
stakeholder group for a particular country agrees to the terms of
that country's EITI plan, including the requirements for what
information will be provided by the governments and by the companies
operating in that country. Generally, under the EITI, companies and
the host country's government submit payment information
confidentially to an independent administrator selected by the
country's multi-stakeholder group, which is frequently an
independent auditor. The auditor reconciles the information provided
to it by the government and by the companies and produces a report.
While the information provided in the reports varies among
countries, the reports must adhere to the EITI requirements provided
in the EITI Standard (2016). See the EITI's Web site at http://eiti.org (last visited June 16, 2016).
    \85\ See https://eiti.org/countries/other (last visited June 16,
2016).
    \86\ The EITI Standard encompasses several documents fundamental
to the EITI: (1) The ``EITI Principles,'' which set forth the
general aims and commitments of EITI participants; (2) the ``EITI
Requirements,'' which must be followed by countries implementing the
EITI; (3) the ``Validation Guide,'' which provides guidance on the
EITI validation process; (4) the ``Protocol: Participation of Civil
Society,'' which provides guidance regarding the role of civil
society in the EITI; and (5) documents relevant to the governance
and management of the EITI (e.g., the EITI Articles of Association,
the EITI Openness Policy, and the EITI Code of Conduct). The EITI
Handbook provides guidance on implementing the EITI, including
overcoming common challenges to EITI implementation. All references
to the EITI Standard are to the 2016 edition.
    \87\ The Executive Summary and other aspects of the USEITI 2015
Report are available at https://useiti.doi.gov/about/report/. In
December 2012, the U.S. Government established a multi-stakeholder
group, the USEITI Advisory Committee, headed by the Department of
the Interior (``Department of Interior'') and including the
Departments of Energy and Treasury, as well as members of industry
and civil society. See Multi-Stakeholder Group List of Members, at
http://www.doi.gov/eiti/FACA/upload/List-of-Members_03-16-15.pdf. On
March 19, 2014, the United States completed the process of becoming
an EITI candidate country.
    \88\ Revenues reported to the federal government were for the
fiscal year ended September 30, 2013. Corporate income taxes and
most other payments were reported as of the calendar year ended
December 31, 2013. See the 2015 USEITI Executive Summary at 2.
---------------------------------------------------------------------------

    At a minimum, the EITI requires the disclosure of material payment
and revenue information related to the upstream activities of
exploration and production, but permits each country's multi-
stakeholder group to broaden the scope of the EITI report to include
revenue streams (i.e., payments made in cash or in kind) related to
other natural resource sectors, such as forestry, or to those related
to non-upstream activities, such as export.\89\ Revenue streams
required to be disclosed under the EITI include production entitlements
to the host government and to its national, state-owned company;
profits taxes; royalties; dividends; bonuses, such as signature,
discovery and production bonuses; and license fees, including rental
fees, entry fees and other considerations for licenses or
concessions.\90\ The EITI also requires the disclosure of any other
``significant payment'' and ``material benefit'' to the host
government.\91\ These include material infrastructure works,\92\ as
well as material social expenditures if mandated by law or
contract.\93\
---------------------------------------------------------------------------

    \89\ See EITI Standard at 22-23 and EITI Handbook at 31 and 33.
As an initial matter, each country's multi-stakeholder group is
required to establish the thresholds for materiality and to
determine which payments and revenues are material. While the EITI
Standard requires each implementing country to provide export data
for the fiscal year covered by the EITI Report, including total
export volumes and the value of exports by commodity, the reporting
of export payments by individual companies is not required and is at
the option of the multi-stakeholder group.
    \90\ See EITI Standard at 23.
    \91\ See EITI Standard at 23.
    \92\ See EITI Standard at 24.
    \93\ See EITI Standard at 28. In addition, if the multi-
stakeholder group determines that revenues from the transportation
of oil, gas and minerals are material, the EITI expects governments
and state-owned enterprises to disclose the revenues received. See
EITI Standard at 24.
---------------------------------------------------------------------------

    The EITI has long required the disclosure of the particular type of
revenue stream and government entity that received each payment in the
EITI Report.\94\ Since 2013, the EITI has also required the public
reporting of these revenue streams by individual company, rather than
as aggregated data, and by project, provided that such project level
disclosure is consistent with the European Union and Commission
rules.\95\
---------------------------------------------------------------------------

    \94\ See, e.g., the EITI Source Book (2005) at 26.
    \95\ See EITI Standard at 25.
---------------------------------------------------------------------------

    Currently each implementing country's multi-stakeholder group
determines which companies should be included in the EITI Report. Out
of concern that developing countries have lost significant revenues
``as a result of corrupt or illegal deals'' involving ``anonymous
companies'' that have ``hidden behind a structure of complex and secret
company ownership,'' \96\ the EITI has recently commenced a process
that, by January 2020, will require individual companies that bid for,
operate or invest in the extractive assets of an EITI implementing
country to identify their beneficial owners, disclose the level of
ownership, and describe how ownership or control is exerted in the EITI
Report.\97\
---------------------------------------------------------------------------

    \96\ See EITI Beneficial Ownership Fact Sheet (2016) available
at https://eiti.org/files/eiti_bo_factsheet_en_final_may_2016.pdf.
    \97\ See EITI Standard at 19-21; see also EITI Beneficial
Ownership Fact Sheet. Currently the EITI requires that, by January
1, 2017, each multi-stakeholder group publish a roadmap for
disclosing the beneficial ownership information mandated in 2020.
The EITI also recommends that each implementing country establish a
public register of beneficial ownership to the extent none exists.
See EITI Standard at 19-21. The EITI defines ``beneficial
ownership'' to mean ``the natural person(s) who directly or
indirectly ultimately owns or controls the corporate entity.'' EITI
Standard at 20. We note that, in these ways, the EITI is concerned
with more than just the actual revenue flows that result after a
deal is entered, but is also concerned with providing transparency
so that citizens and civil society can help ensure that the deals
themselves do not involve corrupt or suspect arrangements. As we
discuss below in Section II.E, we similarly believe that Section
13(q) is concerned not just with corruption after a deal is entered,
but also with exposing potential corruption that may surround the
underlying deal and the resulting payment flows.

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D. Summary of the Final Rules

    The final rules, which are described in more detail in Part II
below, are being adopted mostly as proposed, with a few significant
changes based on feedback from commenters and other developments since
the Proposing Release was issued. The final rules 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 governments. The
following are key provisions of the final rules:

     The term ``resource extraction issuer'' means all U.S.
companies and foreign companies that are required to file annual
reports pursuant to Section 13 or 15(d) of the Exchange Act \98\ and
are engaged in the commercial development of oil, natural gas, or
minerals.
---------------------------------------------------------------------------

    \98\ 15 U.S.C. 78m and 78o(d).
---------------------------------------------------------------------------

     The term ``commercial development of oil, natural gas,
or minerals'' means, consistent with Section 13(q), exploration,
extraction, processing, and export, or the acquisition of a license
for any such activity.
     The term ``payment'' means payments that are made to
further the commercial development of oil, natural gas, or minerals,
are ``not de minimis,'' and includes taxes, royalties, fees
(including license fees), production entitlements, and bonuses,
consistent with Section 13(q), as well as community and social
responsibility payments (``CSR payments'') that are required by law
or contract, dividends, and payments for infrastructure
improvements.
     ``Not de minimis'' means any payment, whether a single
payment or a series of related payments, that equals or exceeds
$100,000 during the most recent fiscal year.
     A resource extraction issuer is required to disclose
payments made by its subsidiaries and other entities under its
control. Under the final rules, an issuer must disclose the payments
made by entities that are consolidated, or its proportionate amount
of the payments made by entities or operations that are
proportionately consolidated, in its consolidated financial
statements as determined by applicable accounting principles.\99\
---------------------------------------------------------------------------

    \99\ We note that Exchange Act Rule 12b-21 provides that
required information need be given only insofar as it is known or
reasonably available to the registrant, subject to certain
conditions. 17 CFR 240.12b-21.
---------------------------------------------------------------------------

     The term ``project'' means operational activities that
are governed by a single contract, license, lease, concession, or
similar legal agreement, which form the basis for payment
liabilities with a government. Agreements that are both
operationally and geographically interconnected may be treated by
the resource extraction issuer as a single project.
     The term ``foreign government'' means a foreign
government, a department, agency, or instrumentality of a foreign
government, or a company at least majority owned by a foreign
government. It includes a foreign national government as well as a
foreign subnational government, such as the government of a state,
province, county, district, municipality, or territory under a
foreign national government.
     The term ``Federal Government'' means the United States
Federal Government.
     A resource extraction issuer must file its payment
disclosure on Form SD using the Commission's Electronic Data
Gathering, Analysis, and Retrieval System (``EDGAR''), no later than
150 days after the end of its fiscal year. In addition to this EDGAR
compilation of Form SD filings, a separate public compilation of the
payment information submitted in the Form SD filings will be made
available online by the Commission's staff.
     A resource extraction issuer must disclose the payment
information and its identity publicly.
     The final rules include two exemptions that provide for
transitional relief or delayed reporting in limited circumstances.
These exemptions provide a longer transition period for recently
acquired companies that were not previously subject to reporting
under the final rules and a one-year delay in reporting payments
related to exploratory activities. In addition, resource extraction
issuers may apply for, and the Commission will consider, exemptive
relief for other situations on a case-by-case basis pursuant to Rule
0-12 of the Exchange Act.\100\
---------------------------------------------------------------------------

    \100\ 17 CFR 240.0-12.
---------------------------------------------------------------------------

     Resource extraction issuers may use alternative reports
to comply with the final rules if the Commission determines that the
requirements applicable to those reports are substantially similar
to our own.\101\
---------------------------------------------------------------------------

    \101\ See Item 2.01(c) of Form SD.
---------------------------------------------------------------------------

     The Commission has determined that the current
reporting requirements of the EU Directives, Canada's ESTMA, and the
USEITI are substantially similar to the final rules, subject to the
conditions specified below in Section II.J. Applications for
additional alternative reporting determinations may be submitted
under Rule 0-13 by issuers, governments, industry groups, and trade
associations.
     Resource extraction issuers, including those using
alternative reports, must present the payment disclosure using the
eXtensible Business Reporting Language (``XBRL'') electronic format
and the electronic tags identified in Form SD. The tags listed in
Form SD include those specified in Section 13(q), as well as tags
for the type and total amount of payments made for each project, the
type and total amount of payments made to each government, the
particular resource that is the subject of commercial development,
and the subnational geographic location of the project.
     Resource extraction issuers are required to comply with
the rules starting with their fiscal year ending no earlier than
September 30, 2018.
    As we discuss more fully throughout the remainder of this release,
in developing the final rules we have sought to balance the various
statutory interests at issue in this rulemaking: On the one hand,
providing transparency to help combat corruption and promote
accountability, and on the other hand, doing so in ways that reflect a
consideration of competition, efficiency, capital formation, and
costs.\102\ For example, with regard to the appropriate definition of
project and the public disclosure of each issuer's annual reports--two
discretionary decisions that, in many respects, are central to the
transparency regime being adopted--we determined that the anti-
corruption and accountability concerns underlying Section 13(q) will be
significantly advanced by the public disclosure of each issuer's
contract-based payment data. In making these discretionary decisions,
we were mindful of the potential economic consequences that issuers
might experience. As another example of our consideration of the
various policy interests at stake, given the potential for competitive
harm to issuers, we are adopting a targeted exemption to permit issuers
to delay reporting payment information in connection with certain
exploratory activities for one year. Further, we intend to consider
using our existing authority under the Exchange Act to afford resource
extraction issuers exemptive relief when other circumstances warrant.
For example, issuers may seek exemptive relief when foreign laws may
prohibit the Section 13(q) disclosures. This exemptive process should
help mitigate the final rules' potential adverse effects on issuers
while still preserving the transparency objectives of the statute.
Similarly, we have adopted a revised definition of control and allowed
for issuers to satisfy the rules' requirements by providing reports
prepared in compliance with other jurisdictions' reporting
requirements, which should

help lower direct compliance costs for issuers.
---------------------------------------------------------------------------

    \102\ See letter from API 1 (Feb. 16, 2016) (``API 1'')
(asserting that Congress intended that the Commission consider
investor protection, as well as competition, efficiency, and cost
concerns, when issuing the final rules under Section 13(q)).
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II. Final Rules Under Section 13(q)

A. Definition of ``Resource Extraction Issuer''

1. Proposed Rules
    Section 13(q) defines a ``resource extraction issuer'' as an issuer
that is ``required to file an annual report with the Commission'' and
``engages in the commercial development of oil, natural gas, or
minerals.'' \103\ The proposed definition followed the statute without
providing any exemptions based on size, ownership, foreign private
issuer status,\104\ or the extent of business operations constituting
commercial development of oil, natural gas, or minerals.
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    \103\ Section 13(q)(1)(D).
    \104\ We did not, however, propose to extend the disclosure
requirements to foreign private issuers that are exempt from
Exchange Act registration and reporting obligations pursuant to
Exchange Act Rule 12g3-2(b).
---------------------------------------------------------------------------

    We proposed to cover only issuers filing annual reports on Forms
10-K, 20-F, or 40-F.\105\ Specifically, the proposed rules defined the
term ``resource extraction issuer'' to mean an issuer that is required
to file an annual report with the Commission pursuant to Section 13 or
15(d) of the Exchange Act and that engages in the commercial
development of oil, natural gas, or minerals. The proposed definition
excluded issuers subject to Tier 2 reporting requirements under
Regulation A or subject to Regulation Crowdfunding's reporting
requirements. In addition, we did not subject investment companies
registered under the Investment Company Act of 1940 (``Investment
Company Act'') to the proposed rules.
---------------------------------------------------------------------------

    \105\ See Section II.A of the Proposing Release.
---------------------------------------------------------------------------

2. Comments on the Proposed Rules
    In the Proposing Release we solicited comment on whether certain
categories of issuers should be exempt from the rules, such as smaller
reporting companies, emerging growth companies, or foreign private
issuers.\106\ In addition to these categories addressed in existing
Commission rules, we asked whether the Commission should exempt issuers
based on a financial test that would measure the likelihood of the
issuer making resource extraction payments above the proposed de
minimis threshold. We offered the example of using annual revenues and
net cash flows from investing activities to make this measurement. We
also solicited comment on whether, instead of an exemption, the rules
should provide for different disclosure and reporting obligations for
certain types of issuers. Finally, we solicited comment on whether we
should provide for a delayed implementation date for certain categories
or types of issuers in order to provide them additional time to prepare
for the disclosure requirements and the benefit of observing how other
companies comply.\107\
---------------------------------------------------------------------------

    \106\ See the definition of ``smaller reporting company'' in
Exchange Act Rule 12b-2 [17 CFR 240.12b-2], the definition of
``emerging growth company'' in Exchange Act Section 3(a)(80) [15
U.S.C. 78c(a)(80)], and the definition of ``foreign private issuer''
in Exchange Act Rule 3b-4 [17 CFR 240.3b-4].
    \107\ For a discussion of this request for comment, see Section
II.G below.
---------------------------------------------------------------------------

    Only one commenter on the Proposing Release recommended changing
the scope of the definition of resource extraction issuer to add an
exemption based on the type of issuer.\108\ This commenter sought an
exemption for foreign private issuers on the grounds that issuers
should only bear the compliance burden associated with their home
jurisdiction. Other commenters on the Proposing Release that addressed
this topic were generally supportive of the proposed definition of
``resource extraction issuer'' and opposed excluding any category of
issuer from the definition.\109\ No commenter specifically addressed
our exclusion of investment companies and companies required to file
annual reports other than pursuant to Section 13 or 15(d) of the
Exchange Act.
---------------------------------------------------------------------------

    \108\ See letter from BP p.l.c. (Feb. 16, 2016) (``BP'').
    \109\ See letters from Africa Centre for Energy Policy (Feb. 16,
2016) (``ACEP''); Calvert Investments (Feb. 16, 2016) (``Calvert'');
U.S. Department of Interior, Office of Natural Resources Revenue
(Feb. 17, 2016) (``Department of Interior''); Form Letter A; Form
Letter B; Global Witness (Feb. 16, 2016) (``Global Witness 1'');
Oxfam America (Feb. 16, 2016) (``Oxfam 1''); Natural Resource
Governance Institute (First of two letters on Feb. 16, 2016) (``NRGI
1''); Sarah Peck and Sarah Chayes (Feb. 16, 2016) (``Peck &
Chayes''); PWYP-US 1; Jacqueline Quinones (Feb. 4, 2016)
(``Quinones''); Sen. Cardin et al.; Sen. Lugar et al.; TI-USA; and
US SIF: The Forum for Sustainable and Responsible Investment (Mar.
8, 2016) (``USSIF'').
---------------------------------------------------------------------------

    Of the commenters that expressed support for the proposed
definition, several indicated that the proposed rules did not present
unique challenges for particular categories of issuers and thus no
exemptions were necessary.\110\ One of these commenters stated that
because smaller reporting companies and foreign private issuers were
exposed to significant political regulatory risks, excluding them would
undermine the value of the rules to investors.\111\ The Department of
Interior noted that the USEITI covers all companies that conduct
extractive activities on public and tribal lands in the United States,
without exemption.\112\ It also recommended not providing an exemption
that would allow an issuer to avoid reporting in a subsequent year
based on financial metrics due to the ``cyclical nature of extractive
commodity prices.''
---------------------------------------------------------------------------

    \110\ See letter from PWYP-US 1. See also letters from ACEP;
Global Witness 1; and Oxfam 1.
    \111\ See letter from USSIF.
    \112\ Letter from Department of Interior.
---------------------------------------------------------------------------

3. Final Rules
    We are adopting the proposed definition of ``resource extraction
issuer.'' Under the final rules, resource extraction issuers are
issuers that are required to file an annual report with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act and engage in the
commercial development of oil, natural gas, or minerals.\113\
---------------------------------------------------------------------------

    \113\ We continue to interpret ``engages'' as used in Section
13(q) and Rule 13q-1 to include indirectly engaging in the specified
commercial development activities through an entity under a
company's control. See Section II.D below for a discussion of
``control'' as used in the final rules. See also Proposing Release,
n. 101.
---------------------------------------------------------------------------

    As discussed above, almost all of the commenters on the Proposing
Release supported the proposed definition or called for the rules to
cover all companies without exemptions. We disagree with the commenter
that suggested foreign private issuers should be excluded from the
definition of ``resource extraction issuer.'' \114\ This commenter
stated that an exemption for all foreign private issuers was
justifiable so that issuers only bear the compliance burden associated
with one set of transparency rules. We note, however, that not all
foreign private issuers will be required to report in other
jurisdictions. Further, even if the issuer is required to file reports
in another jurisdiction, an exemption for all foreign private issuers
leaves open the possibility that the foreign private issuer's reporting
could be pursuant to a jurisdiction's requirements that are
significantly different than the Commission's rules. Instead, we
believe that it is more appropriate to address concerns over
duplicative reporting through the alternative reporting provisions we
are adopting today.\115\
---------------------------------------------------------------------------

    \114\ See letter from BP.
    \115\ See Section II.J below. We note that the commenter that
raised these concerns indicated that if the Commission did not adopt
an exemption for foreign private issuers, it would support an
alternative reporting provision. See letter from BP.
---------------------------------------------------------------------------

    No commenters on the Proposing Release specifically requested that
the Commission extend the disclosure requirements to foreign private
issuers that are exempt from Exchange Act registration and reporting
obligations

pursuant to Exchange Act Rule 12g3-2(b). As we discussed in the
Proposing Release,\116\ we continue to believe that expanding the
statutory definition to include such issuers is not appropriate because
it would discourage reliance on Rule 12g3-2(b) and would be
inconsistent with the effect, and we believe the purpose, of that
rule.\117\
---------------------------------------------------------------------------

    \116\ See Section II.A. of Proposing Release.
    \117\ As we discussed in the Proposing Release, Rule 12g3-2(b)
provides relief to foreign private issuers that are not currently
Exchange Act reporting companies (i.e., they are neither listed nor
have made a registered offering in the United States) and whose
primary trading market is located outside the United States. In
these circumstances, we do not believe it would be appropriate to
require foreign private issuers whose connections with the U.S.
markets do not otherwise require them to make reports with the
Commission to undertake such an obligation solely for the purpose of
providing the required payment information. Moreover, imposing a
reporting obligation on such issuers would seem to go beyond what is
contemplated by Section 13(q), which defines a ``resource extraction
issuer'' as an issuer that is ``required to file an annual report
with the Commission.''
---------------------------------------------------------------------------

    Although, as we stated in the Proposing Release, we believe that
the statutory language could reasonably be read either to cover or to
exclude issuers that file annual reports on forms other than Forms 10-
K, 20-F, and 40-F, we also continue to believe that covering other
issuers would do little to further the transparency objectives of
Section 13(q). It would, however, add costs and burdens to the existing
disclosure regimes governing those categories of issuers. For example,
and as noted in the Proposing Release, none of the Regulation A issuers
with qualified offering statements between 2009 and 2014 appear to have
been resource extraction issuers at the time of those filings.\118\
That remains the case for Regulation A issuers that qualified offering
statements in 2015. We also continue to believe that it is unlikely
that an entity that fits within the definition of an ``investment
company'' \119\ would be one that is ``engag[ing] in the commercial
development of oil, natural gas, or minerals.'' Accordingly, the final
rules we are adopting will not apply to such issuers.\120\
---------------------------------------------------------------------------

    \118\ Based on a review of their assigned Standard Industrial
Classification (SIC) codes. We recognize that Tier 2 of Regulation
A, with a maximum offering amount of $50 million, is still
relatively new and that the types of companies previously or
currently using Regulation A may not be representative of its future
use. In addition, since Regulation A issuers were not required to
file annual reports when Section 13(q) was enacted, it seems
unlikely that Congress contemplated Regulation A issuers having to
comply with Section 13(q). Given the added costs and burdens
discussed in the Proposing Release, we continue to believe that it
is not prudent to extend the rule to Regulation A issuers at this
time. See Proposing Release, Section II.A.
    \119\ See Section 3(a)(1) of the Investment Company Act (15
U.S.C. 80a-3(a)(1)).
    \120\ See Proposing Release, Section II.A for a discussion of
the factors we considered.
---------------------------------------------------------------------------

B. Definition of ``Commercial Development of Oil, Natural Gas, or
Minerals''

1. Proposed Rules
    Section 13(q) defines ``commercial development of oil, natural gas,
or minerals.'' Consistent with the statute, we proposed defining
``commercial development of oil, natural gas, or minerals'' as
exploration, extraction, processing, and export of oil, natural gas, or
minerals, or the acquisition of a license for any such activity.
Although we have discretionary authority to include other significant
activities relating to oil, natural gas, or minerals,\121\ we did not
propose expanding the definition beyond the explicit terms of Section
13(q).
---------------------------------------------------------------------------

    \121\ See Section 13(q)(1)(A).
---------------------------------------------------------------------------

    As discussed in the Proposing Release, the proposed definition of
``commercial development'' was intended to capture only activities that
are directly related to the commercial development of oil, natural gas,
or minerals, and not activities ancillary or preparatory to such
commercial development.\122\ We also proposed additional guidance on
several terms contained within the definition of ``commercial
development of oil, natural gas, or minerals.'' \123\ For example, we
identified activities that would be covered by the terms ``extraction''
and ``export,'' and we provided examples of the activities that would
be covered by the term ``processing.'' \124\
---------------------------------------------------------------------------

    \122\ See Proposing Release, at Section II.B.
    \123\ Id.
    \124\ Id. See also Section II.B.1.3 below for a discussion of
this guidance.
---------------------------------------------------------------------------

2. Comments on the Proposed Rules
a. Scope of the Definition
    In the Proposing Release we solicited comment on how we should
define ``commercial development of oil, natural gas, or minerals.'' For
example, we asked whether the definition should include any activities
that were not expressly identified in the statute and what definition
would further the U.S. Government's foreign policy objective of
battling corruption through improved transparency. In light of the
Commission's general exemptive authority, we solicited comment on
whether certain activities listed in the statute should be excluded
from the definition. We also sought input on whether activities that
are ancillary or preparatory to resource extraction should be included
in the activities covered by the rules and whether the Commission
should provide additional guidance on the types of activities that
would be considered ``directly related'' to the ``commercial
development of oil, natural gas, or minerals.''
    All but one of the commenters that addressed this aspect of the
Proposing Release supported the proposed definition,\125\ stating that
it was consistent with established international transparency
standards.\126\ An industry commenter disputed that view, but otherwise
generally supported the proposed definition.\127\ The Department of
Interior also supported the definition despite noting that the USEITI
does not cover revenues from processing, exporting, or the acquisition
of licenses to engage in those activities.\128\
---------------------------------------------------------------------------

    \125\ See letters from ACEP; Department of Interior; Exxon Mobil
Corp. (Mar. 8, 2016) (``ExxonMobil 2''); Global Witness 1; Oxfam 1;
and PWYP-US 1. One commenter, Encana Corporation, did not expressly
support or object to our definition of commercial development of
oil, natural gas, or minerals, but rather requested that the
Commission provide additional guidance ``to clarify the activities
covered by the proposed terms used to define `commercial development
of oil, natural gas, or minerals.' '' See letter from Encana
Corporation (Jan. 25, 2016) (``Encana''). Specifically, Encana
requested guidance that would ``reflect consistency with the
definition of ``Oil and Gas Producing Activities'' in Rule 4-10 of
Regulation S-X and ``exclude post-extraction activities such as
refining, smelting, processing, marketing, distribution,
transportation, or export.''
    \126\ See, e.g., letter from PWYP-US 1.
    \127\ See letter from ExxonMobil 2.
    \128\ See letter from Department of Interior.
---------------------------------------------------------------------------

b. Guidance on ``Extraction,'' ``Processing,'' and ``Export''
    In the Proposing Release we solicited comment on whether additional
guidance should be provided on the activities covered by the terms
``extraction,'' ``processing,'' or ``export'' and whether the proposed
definitions and guidance were too narrow or too broad. For the term
``export,'' we specifically asked whether the definition should be
broadened to include all transportation from one country to another,
regardless of ownership interest or whether the resource originated in
the country from which it is being transported.
    Several commenters supported the proposed definition of
``extraction'' and the proposed guidance on ``processing.'' \129\
Certain commenters, however, recommended providing additional guidance
on ``processing.'' \130\

For example, one commenter requested clarification that ``processing''
only includes ``initial processing activities that are integrated with
extraction operations'' and ``does not extend to ancillary or
preparatory activities such as manufacturing equipment or construction
of extraction sites.'' \131\ Another commenter requested additional
guidance on the scope of ``midstream'' activities that would be covered
by ``processing.'' \132\
---------------------------------------------------------------------------

    \129\ See letter from PWYP-US 1. See also letters from ACEP;
Global Witness 1; and Oxfam 1.
    \130\ See letters from Encana and Petr[oacute]leo Brasileiro
S.A. (Feb. 16, 2016) (``Petrobras'').
    \131\ See letter from Encana.
    \132\ See letter from Petrobras.
---------------------------------------------------------------------------

    As for the definition of ``export,'' one commenter requested
clarification on whether that term covers commodity trading-related
activities and situations such as when an issuer exports oil, natural
gas, or minerals purchased from a government or from a state-owned
company.\133\ Another commenter requested clarification of the term
``mineral,'' stating that it could have a variety of meanings, such as
homogeneous crystalline substances (which would exclude gravel or non-
crystalline rocks) or naturally occurring inorganic solids (which would
exclude coa1).\134\
---------------------------------------------------------------------------

    \133\ See letter from Poretti.
    \134\ See letter from Keith Bishop (Jan. 5, 2016) (``Bishop'').
---------------------------------------------------------------------------

3. Final Rules
    We are adopting the proposed definition of ``commercial development
of oil, natural gas, or minerals'' but with additional guidance on its
application. Although commenters pointed out that both the statutory
definition and the proposed definition are broader than the activities
typically covered by the EITI \135\ and, in some respects, other
comparable disclosure regimes,\136\ most commenters supported the
proposal.
---------------------------------------------------------------------------

    \135\ An EITI plan typically covers the ``upstream activities''
of exploration and production but not ``downstream activities,''
such as processing or export. The relevant multi-stakeholder group
does, however, have the option of expanding the scope of its EITI
program by including some downstream activities. See the EITI
Handbook, at 35.
    \136\ For example, as discussed in Section I.C.1-2 above,
processing, export, and the acquisition of licenses are not
specifically mentioned by the EU Directives, and ESTMA generally
does not include processing or export.
---------------------------------------------------------------------------

    Despite one commenter's recommendation that the final rules exclude
``processing'' and ``export,'' both terms are expressly included in the
statutory definition, and we believe that these are important aspects
of the commercial development of oil, natural gas, or minerals.\137\
Although there are differences between the definition we are adopting
today and that used in other transparency regimes, we believe our
approach enhances international transparency by covering activities
similar to those covered by the EU Directives, Canada's ESTMA, and the
EITI, while remaining consistent with Section 13(q).\138\ In this
regard, the final rules focus only on issuers engaged in the extraction
or production of oil, natural gas, or minerals. Where a service
provider makes a payment to a government on behalf of a resource
extraction issuer that meets the definition of ``payment,'' the
resource extraction issuer will be required to disclose such payment.
---------------------------------------------------------------------------

    \137\ See letter from Encana. In light of the statutory
definition and the purpose of Section 13(q), we are not narrowing
the definition of ``commercial development'' to make it consistent
with the definition of ``Oil and Gas Producing Activities'' in Rule
4-10 of Regulation S-X. The definition of ``Oil and Gas Producing
Activities'' in Rule 4-10 of Regulation S-X excludes all natural
resources other than oil and gas. Using that definition would
exclude minerals and be contrary to the plain language of Section
13(q). Moreover, narrowing the definition in that manner would limit
the level of transparency provided by the final rules and would be
significantly different from the approach taken in the EU
Directives, ESTMA, and the EITI. In the 2012 Adopting Release we
took the same approach in response to similar suggestions from
commenters. See 2012 Adopting Release, Section II.C.3
    \138\ The EU Directives cover ``exploration, prospection,
discovery, development, and extraction of minerals, oil, natural gas
deposits or other materials.'' See, e.g., EU Accounting Directive,
Art. 41(1). ESTMA defines ``commercial development of oil, gas or
minerals'' as ``(a) the exploration or extraction of oil, gas or
minerals; (b) the acquisition or holding of a permit, licence, lease
or any other authorization to carry out any of the activities
referred to in paragraph (a); or (c) any other prescribed activities
in relation to oil, gas or minerals.''
---------------------------------------------------------------------------

    Although we are adopting the general definition of ``commercial
development of oil, natural gas, or minerals'' as proposed, as well as
reiterating much of the related guidance, we are revising certain key
terms found in that definition in response to commenters' concerns. We
note, however, that whether an issuer is a resource extraction issuer
ultimately depends on the specific facts and circumstances. We are
adopting the definition of ``extraction'' as proposed. Thus,
``extraction'' means the production of oil and natural gas as well as
the extraction of minerals.\139\ Also as proposed, ``processing''
includes, but is not limited to, midstream activities such as the
processing of gas to remove liquid hydrocarbons, the removal of
impurities from natural gas prior to its transport through a pipeline,
and the upgrading of bitumen and heavy oil, through the earlier of the
point at which oil, gas, or gas liquids (natural or synthetic) are
either sold to an unrelated third party or delivered to a main
pipeline, a common carrier, or a marine terminal. It also includes the
crushing and processing of raw ore prior to the smelting phase.\140\
``Processing'' does not include downstream activities, such as refining
or smelting. As we noted in the Proposing Release, the focus of the
disclosures required by Section 13(q) is on transparency in connection
with the payments that resource extraction issuers make to governments.
Those payments are primarily generated by ``upstream'' activities like
exploration and extraction and not in connection with refining or
smelting.\141\ Finally, we note that including refining or smelting
within the rules under Section 13(q) would go beyond what is
contemplated by the statute, EITI, EU Directives, and ESTMA.\142\
---------------------------------------------------------------------------

    \139\ Proposed Item 2.01(c)(5) of Form SD.
    \140\ See proposed Instruction 7 to Item 2.01 of Form SD.
    \141\ We also noted in the Proposing Release that in other
contexts Congress has treated midstream activities like
``processing'' and downstream activities like ``refining'' as
separate activities, which further supports our view that Congress
did not intend to include ``refining'' and ``smelting'' as
``processing'' activities. For example, the Sudan Accountability and
Divestment Act of 2007 (``SADA''), which also relates to resource
extraction activities, specifically includes ``processing'' and
``refining'' as two distinct activities in its list of ``mineral
extraction activities'' and ``oil-related activities . . .'' See 110
P.L. No. 174 (2007). Similarly, the Commission's oil and gas
disclosure rules exclude refining and processing from the definition
of ``oil and gas producing activities'' (other than field processing
of gas to extract liquid hydrocarbons by the company and the
upgrading of natural resources extracted by the company other than
oil or gas into synthetic oil or gas). See Rule 4-10(a)(16)(ii) of
Regulation S-X [17 CFR 210.4-10(a)(16)(ii)] and 2012 Adopting
Release, n. 108.
    \142\ See, e.g., the EITI Handbook, at 35; EU Accounting
Directive, Art. 41(1) (including ``exploration, prospection,
discovery, development, and extraction'' in the definition of an
``undertaking active in the extractive industry,'' but not including
refining or smelting). See also ESTMA Guidance at Section 1
(``Commercial development generally does not include post-extraction
activities. Refining, smelting or processing of oil, gas or
minerals, as well as the marketing, distribution, transportation or
export, is generally not captured as commercial development for the
purposes of the Act. However, certain initial processing activities
are often integrated with extraction operations and may comprise
commercial development of oil, gas or minerals.'')
---------------------------------------------------------------------------

    The final rules define ``export'' as the transportation of a
resource from its country of origin to another country by an issuer
with an ownership interest in the resource, with certain exceptions
described below.\143\ This definition of the term ``export'' reflects
the significance of the relationship between upstream activities such
as exploration and extraction and the categories of payments to
governments identified in the statute. In contrast, we do not believe
that Section 13(q) was intended to capture payments related to
transportation on a fee-for-service basis

across an international border by a service provider with no ownership
interest in the resource.\144\ Nor do we believe that ``export'' was
intended to capture activities with little relationship to upstream or
midstream activities, such as commodity trading-related activities.
Accordingly, the definition of ``export'' we are adopting does not
cover the movement of a resource across an international border by a
company that (a) is not engaged in the exploration, extraction, or
processing of oil, natural gas, or minerals and (b) acquired its
ownership interest in the resource directly or indirectly from a
foreign government or the Federal Government.\145\ The definition does
cover, however, the purchase of such government-owned resources by a
company otherwise engaged in resource extraction due to the stronger
link between the movement of the resource across an international
border and the upstream development activities. This link would be
particularly strong in instances where the company is repurchasing
government production entitlements that were originally extracted by
that issuer.\146\
---------------------------------------------------------------------------

    \143\ See Item 2.01(d)(4) of Form SD.
    \144\ It is noteworthy that Section 13(q) includes export, but
not transportation, in the list of covered activities. In contrast,
SADA specifically includes ``transporting'' in the definition of
``oil and gas activities'' and ``mineral extraction activities.''
The inclusion of ``transporting'' in SADA, in contrast to the
language of Section 13(q), suggests that the term export means
something different than transportation.
    \145\ See Item 2.01(d)(4) of Form SD. See also letter from
Poretti (seeking clarification of the scope of ``export'' under the
rules).
    \146\ See Section C below for a more detailed discussion of when
and how such payments must be reported.
---------------------------------------------------------------------------

    Contrary to the recommendation of one commenter, we have not
defined ``minerals'' in the final rules.\147\ Although ESTMA defines
minerals as ``all naturally occurring metallic and non-metallic
minerals, including coal, salt, quarry and pit material, and all rare
and precious minerals and metals,'' the EU Directives do not provide a
definition.\148\ We believe that this term is commonly understood in
the industry,\149\ as are the terms ``oil'' and ``natural gas,'' and is
not ``indefinite'' as claimed by this commenter.\150\ We also believe
that the commonly understood meaning of ``mineral'' is consistent with
the definition of that term in ESTMA described above.
---------------------------------------------------------------------------

    \147\ See letter from Bishop.
    \148\ ESTMA, Section 2.
    \149\ In this regard, we note that none of the industry
commenters, or for that matter any commenters other than Bishop,
indicated a need to define this term. We believe that this also
supports our view that, as commonly used when referring to mineral
resources, ``mineral'' refers to the broader, non-technical meaning,
which is any organic or inorganic natural resource extracted from
the earth for human use.
    \150\ We do note, however, that we consider the commonly
understood meaning of ``mineral'' to include, at a minimum, any
solid material for which an issuer with mining operations would
provide disclosure under the Commission's existing disclosure
requirements and policies, including Industry Guide 7, or any
successor requirements or policies. The Commission's staff has
previously provided similar guidance. See Disclosure of Payments by
Resource Extraction Issuers FAQ 3 (May 30, 2013), available at
https://www.sec.gov/divisions/corpfin/guidance/resourceextraction-faq.htm.
---------------------------------------------------------------------------

    The definition of ``commercial development of oil, natural gas, or
minerals'' in the final rules does not capture activities that are
ancillary or preparatory to such commercial development.\151\ We do not
consider an issuer that is only providing products or services that
support the exploration, extraction, processing, or export of such
resources to be a ``resource extraction issuer,'' such as an issuer
that manufactures drill bits or provides hardware to help companies
explore and extract.\152\ Similarly, an issuer engaged by an operator
to provide hydraulic fracturing or drilling services, thus enabling the
operator to extract resources, is not a resource extraction issuer.
Nevertheless, a resource extraction issuer must disclose payments when
a service provider makes a payment to a government on its behalf that
meets the definition of ``payment'' in the final rules.\153\
---------------------------------------------------------------------------

    \151\ This is consistent with Canada's ESTMA. See ESTMA Guidance
at Section 1 (``Commercial development is not intended to extend to
ancillary or preparatory activities for the exploration or
extraction of oil, gas or minerals. For example, activities such as
manufacturing equipment or construction of extraction sites would
not be included.'')
    \152\ Marketing activities would also not be included. Section
13(q) does not include marketing in the list of activities covered
by the definition of ``commercial development.'' In addition,
including marketing activities within the final rules under Section
13(q) would go beyond what is covered by the EITI and other
international regimes. See, e.g., the EITI Handbook, at 35. For
similar reasons, the definition of ``commercial development'' does
not include activities relating to security support. See 2012
Adopting Release at Section II.D for a related discussion of
payments for security support.
    \153\ As we discuss in Section II.I.3 below, we are providing
for delayed reporting for payments related to exploratory
activities. See Item 2.01(b) of Form SD.
---------------------------------------------------------------------------

C. Definition of ``Payment''

1. Proposed Rules
    Section 13(q) defines ``payment'' to mean a payment that:
     Is made to further the commercial development of oil,
natural gas, or minerals;
     is not de minimis; and
     includes taxes, royalties, fees (including license fees),
production entitlements, bonuses, and other material benefits, that the
Commission, consistent with the EITI's guidelines (to the extent
practicable), determines are part of the commonly recognized revenue
stream for the commercial development of oil, natural gas, or minerals.
    The proposed definition of ``payment'' included the specific types
of payments identified in the statute, as well as payments of certain
dividends and infrastructure payments.
    Consistent with Section 13(q), the proposed rules required a
resource extraction issuer to disclose taxes. In addition, the proposed
rules included an instruction stating that a resource extraction issuer
would be required to disclose payments for taxes levied on corporate
profits, corporate income, and production, but would not be required to
disclose payments for taxes levied on consumption, such as value added
taxes, personal income taxes, or sales taxes.\154\ In response to
earlier concerns expressed about the difficulty of allocating certain
payments that are made for obligations levied at the entity level, such
as corporate taxes, to the project level,\155\ the proposed rules
provided that issuers could disclose those payments at the entity
level.\156\
---------------------------------------------------------------------------

    \154\ See proposed Instruction 8 to Item 2.01 of Form SD.
    \155\ See 2012 Adopting Release, n.155 and accompanying text.
    \156\ See proposed Instruction 4 to Item 2.01 of Form SD.
---------------------------------------------------------------------------

    Also consistent with Section 13(q), the proposed rules required a
resource extraction issuer to disclose fees, including license fees,
and bonuses paid to further the commercial development of oil, natural
gas, or minerals. The proposed rules included an instruction stating
that fees include rental fees, entry fees, and concession fees, and
that bonuses include signature, discovery, and production bonuses.\157\
The fees and bonuses identified, however, were not an exclusive list,
and under the proposed rules, the issuer could have been required to
disclose other fees and bonuses as well.
---------------------------------------------------------------------------

    \157\ See proposed Instruction 9 to Item 2.01 of Form SD.
---------------------------------------------------------------------------

    For payments of dividends, which, along with infrastructure
payments, is not specified in the statute, an instruction in the
proposed rules stated that an issuer generally would not need to
disclose dividends paid to a government as a common or ordinary
shareholder of the issuer as long as the dividend is paid to the
government under the same terms as other shareholders.\158\ Under the
proposed

rules, the issuer would, however, have been required to disclose any
dividends paid to a government in lieu of production entitlements or
royalties. Under the proposed approach, ordinary dividend payments were
not considered part of the commonly recognized revenue stream, because
they are not made to further the commercial development of oil, natural
gas, or minerals.\159\ We also proposed requiring a resource extraction
issuer to disclose in-kind payments.\160\ The proposed rules specified
that an issuer must report in-kind payments at cost, or if cost was not
determinable, fair market value, and required the issuer to provide a
brief description of how the monetary value was calculated.\161\
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    \158\ See proposed Instruction 10 to Item 2.01 of Form SD.
    \159\ See Proposing Release, at Section II.C.1.
    \160\ See proposed Instruction 11 to Item 2.01 of Form SD.
    \161\ See proposed Instruction 11 to Item 2.01 of Form SD. See
also Section 3(e) of ESTMA (``[T]he value of a payment in kind is
the cost to the entity--or, if the cost cannot be determined, the
fair market value--of the goods and services that it provided.'').
The EU Directives do not specify how in-kind payments should be
calculated, but require ``supporting notes . . . to explain how
their value has been determined.'' See, e.g., Section 43(3) of the
EU Accounting Directive.
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    The proposed rules defined a ``not de minimis'' payment as one that
equals or exceeds $100,000, or its equivalent in the issuer's reporting
currency, whether made as a single payment or series of related
payments.\162\ Finally, the proposed rules required disclosure of
activities or payments that, although not within the categories
included in the proposed rules, are part of a plan or scheme to evade
the disclosure requirements under Section 13(q).\163\
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    \162\ See proposed Item 2.01(c)(8)(ii) of Form SD. For example,
a resource extraction issuer that paid a $150,000 signature bonus
would be required to disclose that payment. The proposed definition
also clarified that disclosure would be required for related
periodic payments (e.g., rental fees) when the aggregate amount of
such payments exceeds the payment threshold. This is similar to
other instructions in our rules requiring disclosure of a series of
payments. See, e.g., Instructions 2 and 3 to Item 404(a) of
Regulation S-K (17 CFR 229.404(a)). Therefore, under the proposed
rules, a resource extraction issuer obligated to pay royalties to a
government annually and that paid $10,000 in royalties on a monthly
basis to satisfy its obligation would be required to disclose
$120,000 in royalties.
    \163\ See proposed Rule 13q-1(b).
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2. Comments on the Proposed Rules
a. Types of Payments
    In the Proposing Release we solicited comment on whether we should
add other payment types, such as CSR payments, or remove certain
payment types from the proposed list. In particular, we asked whether
other types of payments should be considered part of the commonly
recognized revenue stream for the commercial development of oil,
natural gas, or minerals. We also asked whether the Commission should
provide additional guidance on how to interpret the proposed list of
covered payment types, particularly whether additional guidance should
be provided on the types of fees or bonuses that would be covered by
the rules and how to distinguish CSR payments from infrastructure
payments. Finally, we also included a request for comment on whether
the rules should prescribe a specific method for determining the fair
market value of in-kind payments.
    Several commenters supported the proposed definition of
``payment,'' \164\ while others recommended adding additional payment
types or changing our approach to particular payment types. A number of
commenters, including one industry commenter, recommended adding CSR
payments to the definition.\165\ These commenters stated that CSR
payments are common in the industry and should be considered part of
the commonly recognized revenue stream for resource extraction.\166\
One of these commenters also questioned the characterization in the
Proposing Release that the European Union and Canada are consistent in
not requiring CSR payments.\167\ An industry commenter was particularly
concerned with distinguishing between CSR payments and infrastructure
payments and recommended requiring both types of payments when required
by contract with the host government.\168\ Another industry commenter,
however, opposed including CSR payments, stating that those payments
were not part of the commonly recognized revenue stream due to their
``philanthropic or voluntary . . . nature.'' \169\
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    \164\ See letters from ACEP; Encana; Department of Interior;
Global Witness 1; Oxfam 1; PWYP-US 1; and USAID.
    \165\ See letters from ACEP; Prof. Harry G. Broadman and Bruce
H. Searby (Jan. 25, 2016) (``Broadman & Searby''); Exxon Mobil Corp.
(Feb. 16, 2016) (``ExxonMobil 1''); Eugen Falik (Mar. 7, 2016)
(``Falik''); Global Witness 1; Oxfam 1; PWYP-US 1; and USAID.
    \166\ See, e.g., Broadman & Searby and ExxonMobil 1.
    \167\ See Broadman & Searby (stating that ``there is no
consistency after all between Europe's and Canada's regimes to which
the Commission should adhere for the sake of equalizing standards
and reporting burdens.''). See note 212 below and accompanying text.
    \168\ See letter from ExxonMobil 1.
    \169\ See letter from Encana.
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    Several commenters recommended adding commodity trading-related
payments to the definition of ``payment.'' \170\ These commenters
stated that purchases of resources sold by a government or a state-
owned company are prone to corruption and are part of the commonly
recognized revenue stream for the commercial development of oil,
natural gas, or minerals. They also stated that in many countries
commodity trading-related payments constitute the largest revenue
stream to the government. Another commenter expressed uncertainty as to
whether such payments were covered by the proposed rules and noted that
confusion may arise for others as well since the current EITI Standard
leaves it to the discretion of a country's multi-stakeholder group
whether to require the reporting of payments to governments for the
purchase of natural resources by buying companies.\171\ Other
commenters stated that covering commodity trading-related payments
would inappropriately expand the reach of the rules beyond payments
associated with in-country extractive development and would
substantially increase the cost of reporting without apparent
benefit.\172\ These commenters stated that such an approach would
double-count government revenues given that the government's share of
production is already required to be disclosed under the rules.
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    \170\ See letters from PWYP-US 1; NRGI 1. See also letters from
ACEP; Global Witness 1; and Oxfam 1.
    \171\ See letter from Poretti (noting that some EITI reports
(e.g., Iraq's EITI Reports for the years 2011, 2012, and 2013)
contain information about payments reported by buyers of exported
crude oil).
    \172\ See letters from API (Mar. 8, 2016) (``API 2'') and
ExxonMobil 2.
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    Beyond CSR payments and commodity trading-related payments,
commenters recommended that the rules cover other types of payments,
such as when an issuer covers government expenses, provides jobs to
persons related to government officials, or invests in companies
created by officials or related persons.\173\ For example, one
commenter recommended that guidance be added to either the discussion
of reportable payments or the proposed anti-evasion provision
indicating that payments in excess of the de minimis threshold should
be disclosed if: (1) The payments were subtracted from or substituted
for otherwise reportable payments; (2) the payments were requested by
or associated with a government official suspected of corruption; or
(3) the payments raise corruption concerns, including by creating an
appearance of possible corruption, and those payments would otherwise
be undisclosed to the public.\174\ Another commenter recommended
including fines and

penalties in the definition.\175\ This commenter also stated that the
EITI standard requires ``any other significant payments and material
benefit to government'' to be reported and that the USEITI's multi-
stakeholder group has interpreted that to include penalties.\176\ This
commenter noted that fines and penalties represent significant payments
to governments and that Section 13(q) instructs the Commission to
define payment consistently with the EITI standard.
---------------------------------------------------------------------------

    \173\ See letters from Bean and USAID.
    \174\ See letter from Bean.
    \175\ See letter from TI-USA.
    \176\ Section 4.1(b) of EITI Standard.
---------------------------------------------------------------------------

    Commenters supported the proposed requirement for issuers to
disclose the method they used to calculate the value of in-kind
payments.\177\ One commenter recommend that in-kind payments be
reported at cost or fair market value, as determined by the issuer,
rather than allowing only the use of fair market value if cost is not
determinable.\178\ This commenter also noted that, under ESTMA, in-kind
payments are reported at the cash value of the production entitlements
that the payee takes possession of during the relevant financial
period. Several other commenters supported requiring issuers to
disclose the volume of resources associated with the in-kind
payments.\179\ These commenters noted that the EU Directives require
disclosure of volume and that such a requirement would enhance
government accountability and understanding of an issuer's
methodology.\180\ Another commenter, however, stated that adding a
requirement for issuers to report the volume of in-kind payments is
unnecessary and could cause competitive harm by effectively disclosing
contractual selling prices.\181\ This commenter stated that reporting
fair market value of in-kind payment types was sufficient.\182\ Another
commenter requested that the Commission provide examples for
determining fair market value for in-kind payments.\183\
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    \177\ See letters from Encana and PWYP-US 1. See also letters
from ACEP; Global Witness 1; and Oxfam 1.
    \178\ See letter from Encana.
    \179\ See letter from PWYP-US 1. See also letters from ACEP;
Global Witness 1; and Oxfam 1.
    \180\ See EU Accounting Directive, Art. 43(3) (``Where payments
in kind are made to a government, they shall be reported in value
and, where applicable, in volume.'')
    \181\ See letter from ExxonMobil 2.
    \182\ Although ExxonMobil only mentions using fair market value
and not cost, from the context it does not appear to be recommending
a change to our proposed approach that calls for cost reporting, or
if cost is not determinable, fair market value.
    \183\ See letter from Petrobras.
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    A number of commenters also requested additional guidance on the
types of payments covered by the rules.\184\ Several commenters
supported including a non-exclusive list of the types of royalties in a
manner similar to what was proposed for fees and bonuses.\185\ The
recommended instruction would further clarify that the examples of
fees, bonuses, and royalties are non-exclusive and the list of
royalties would include unit based, value-based, and profit-based
royalties. One commenter requested additional guidance on how to
isolate the corporate income tax payments made on income generated from
the commercial development of oil, natural gas, or minerals given that
income earned from business activities beyond resource extraction would
be taxed as well.\186\ Another commenter recommended clarifying in Form
SD that payments may be reported either on a cash basis or on an
accrual basis.\187\ This commenter noted the contrast between the
Proposing Release, which seems to leave open the question as to whether
an issuer may elect to present payments on either basis, and prior
staff guidance, which indicates that payment information is required to
be presented on an unaudited, cash basis for the year in which the
payments are made.\188\
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    \184\ See letters from Encana; ExxonMobil 1; Petrobras; and
PWYP-US 1. See also letters from ACEP; Global Witness 1; and Oxfam
1.
    \185\ See letter from PWYP-US 1. See also letters from ACEP;
Global Witness 1; and Oxfam 1.
    \186\ See letter from Petrobras.
    \187\ See letter from Cleary.
    \188\ See Dodd-Frank Wall Street Reform and Consumer Protect Act
FAQs: Disclosure of Payments by Resource Extraction Issuers (May 30,
2013) (``Resource Extraction FAQs''), FAQ 7, available at https://www.sec.gov/divisions/corpfin/guidance/faq.htm.
---------------------------------------------------------------------------

b. The ``Not De Minimis'' Requirement
    A key component of the definition of ``payment'' is how ``not de
minimis'' should be defined. In the Proposing Release, we solicited
comment on various aspects of this definition. For example, we
requested comment on whether a $100,000 threshold is too low or too
high, whether a different threshold should apply to smaller reporting
companies or other categories of issuers, and whether we should provide
additional guidance on how and when an issuer would have to aggregate a
series of related payments. If commenters thought a different threshold
should apply, we asked for their input on how that threshold would
interact with the thresholds established by other countries. We also
asked whether the final rules should include a mechanism to adjust
periodically the de minimis threshold to reflect the effects of
inflation.
    Most commenters supported the proposed definition of ``not de
minimis.'' \189\ For example, the Department of Interior noted that it
was the same standard that is used in its disclosure of revenue
data.\190\ It also recommended not including an automatic adjustment
mechanism because a stable threshold would allow the USEITI and
industry to plan better for making ongoing disclosures. Several
commenters also noted the similarity of the proposed threshold to those
used in the European Union and Canada.\191\ Another commenter stated
that the threshold was ``unreasonably low for companies working on
massive scale projects'' and would thus be too costly.\192\ Finally,
one commenter requested clarification on whether the de minimis
threshold is meant to be calculated based on the currency conversion in
effect at the time of payment, or at the end of the period covered by
the report.\193\
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    \189\ See letters from Department of Interior; Form Letter A;
PWYP-US 1; and Quinones. See also letters from ACEP; Global Witness
1; and Oxfam 1.
    \190\ See letter from Department of Interior.
    \191\ See letter from PWYP-US 1. See also letters from ACEP;
Global Witness 1; and Oxfam 1.
    \192\ See letter from Nouveau (Feb. 16, 2016) (``Nouveau'').
    \193\ See letter from Bishop.
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c. Anti-Evasion Provision
    In the Proposing Release we also solicited comment on whether the
proposed anti-evasion provision would promote compliance with the
disclosure requirements and whether we should provide additional
guidance on when the anti-evasion provision would apply. Several
commenters supported this provision.\194\ As described above, one
commenter recommended that guidance be added to either the discussion
of reportable payments or the proposed anti-evasion provision
indicating that payments in excess of the de minimis threshold should
be disclosed if: (1) The payments were subtracted from or substituted
for otherwise reportable payments; (2) the payments were requested by
or associated with a government official suspected of corruption; or
(3) the payments raise corruption concerns, including by creating an
appearance of possible corruption, and those payments would otherwise
be undisclosed to the public.\195\ Several other commenters endorsed
the proposed anti-evasion provision, but recommended adding language
stating that ``activities and payments must not be artificially

structured, split or aggregated to avoid application of the rules.''
\196\
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    \194\ See letters from Bean; PWYP-US 1; Sen. Cardin et al.; and
Sen. Lugar et al. See also letters from ACEP; Global Witness 1; and
Oxfam 1.
    \195\ See letter from Bean.
    \196\ See letter from PWYP-US 1. See also letters from ACEP;
Global Witness 1; and Oxfam 1.
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3. Final Rules
    We are adopting the proposed definition of ``payment'' with certain
changes to the rule and related guidance. The definition we are
adopting includes the specific types of payments identified in the
statute as well as CSR payments that are required by law or contract,
payments of certain dividends, and payments for infrastructure. As we
noted in the Proposing Release, the statute and the EITI guidelines
include most of the types of payments included in the definition.\197\
Most of the components of our definition of ``payment'' are also used
in the EU Directives and ESTMA. Thus, including them is consistent with
the statutory directive for our rules to support international
transparency promotion efforts.
---------------------------------------------------------------------------

    \197\ See EITI Standard, at 23.
---------------------------------------------------------------------------

    In addition to the types of payments expressly included in the
definition of payment in the statute, Section 13(q) provides that the
Commission include within the definition ``other material benefits''
that it determines are ``part of the commonly recognized revenue stream
for the commercial development of oil, natural gas, or minerals.''
According to Section 13(q), these ``other material benefits'' must be
consistent with the EITI's guidelines ``to the extent practicable.''
\198\ The other material benefits we have included in the final rules--
CSR payments required by law or contract, dividends, and infrastructure
payments--are all found in the EITI guidelines as well.\199\
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    \198\ 15 U.S.C. 78m(q)(1)(C)(ii).
    \199\ See the EITI Standard at Sections 4.1(b) (dividends), 4.3
(infrastructure payments), and 6.1 (social expenditures).
---------------------------------------------------------------------------

    Unlike with the 2012 Proposing Release, none of the commenters on
the Proposing Release suggested a broad, non-exhaustive list of payment
types or a category of ``other material benefits.'' In light of this,
and because we continue to believe that Section 13(q) directs us to
make an affirmative determination that the other ``material benefits''
are part of the commonly recognized revenue stream, we are not adopting
such a non-exclusive list or category. Accordingly, under the final
rules, resource extraction issuers will be required to disclose only
those payments that fall within the specified list of payment types in
the rules.
    We have determined that the payment types specified in the rules
represent material benefits that are part of the commonly recognized
revenue stream and that otherwise meet the definition of ``payment.''
In support of this determination, we note that the EU Directives and
ESTMA also require most of these payment types to be disclosed.\200\ In
this regard, we also looked to the EITI and determined that it would be
appropriate to add some of the types of payments included under the
EITI that are not explicitly mentioned under Section 13(q). As such,
the final rules require disclosure of CSR payments that are required by
law or contract, dividend, and infrastructure payments. We note that
none of the commenters on the Proposing Release objected to the
inclusion of dividend and infrastructure payment, while views were
mixed on CSR payments. We also note that payments for infrastructure
improvements have been required under the EITI since at least
2011,\201\ payments for dividends since at least 2005,\202\ and CSR
payments that are required by law or contract since 2013.\203\
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    \200\ See, e.g., EU Accounting Directive, Art. 41(5) and Section
2 of ESTMA (both including, as discussed in Section I.C above, the
following payment types: Production entitlements, taxes, royalties,
dividends, bonuses, fees, and infrastructure payments).
    \201\ In February 2011, the EITI Board issued revised EITI rules
that require participants to develop a process to disclose
infrastructure payments under an EITI program. See EITI Rules 2011,
available at http://eiti.org/document/rules. See also EITI
Requirement 9(f) in EITI Rules 2011, at 22 (``Where agreements based
on in-kind payments, infrastructure provision or other barter-type
arrangements play a significant role in the oil, gas or mining
sectors, the multi-stakeholder group is required to agree [to] a
mechanism for incorporating benefit streams under these agreements
in to its EITI reporting process. . . .'') and EITI Standard, at 24
(``The multi-stakeholder group and the independent administrator are
required to consider whether there are any agreements, or sets of
agreements, involving the provision of goods and services, including
loans, grants and infrastructure works, in full or partial exchange
for oil, gas or mining exploration or production concessions or
physical delivery of such commodities. . . Where the
multistakeholder group concludes that these agreements are material,
the multistakeholder group and the Independent Administrator are
required to ensure that the EITI Report addresses these agreements,
providing a level of detail and transparency commensurate with the
disclosure and reconciliation of other payments and revenues
streams.'').
    \202\ See EITI, Source book, Chapter 2, Section D (Mar. 2005).
    \203\ As is currently the case under the 2016 EITI Standard, the