made for a purpose other than export and ``export'' would mean
transportation from the resource's country of origin to another by a
person with an ownership interest in the resource. Are the
activities covered too narrow or too broad? Why or why not? For
example, should the definition be broadened to include
``transportation'' more generally? Should ``export'' 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?

C. Definition of ``Payment''

    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.
1. Types of Payments
    Consistent with the 2012 Rules, the proposed rules define payments
to include the specific types of payments identified in the statute. In
addition to the statutory mandate to include these types of payments,
we note that these payments are identified in the EITI's
guidelines,\134\ as well as the EU Directives and other regulations.
Thus, including them is also consistent with the Congressional mandate
for our rules to support international transparency promotion efforts.
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,''
subject to the requirement that it determines they 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.'' \135\
---------------------------------------------------------------------------

    \134\ See EITI Standard, at 26.
    \135\ 15 U.S.C. 78m(q)(1)(C)(ii).
---------------------------------------------------------------------------

    Some commenters suggested that we include a broad, non-exhaustive
list of payment types or category of ``other material benefits.'' \136\
That approach, however, would be inconsistent with our view that
Section 13(q) directs us to make an affirmative determination that the
other ``material benefits'' are part of the commonly recognized revenue
stream. Thus, under the proposed rules, resource extraction issuers
would be required to disclose only those payments that fall within the
specified list of payment types in the statute, as well as payments of
certain dividends and for infrastructure payments (discussed below). We
have determined that these payment types 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 other recent
international transparency promotion efforts also require only these
payment types to be disclosed.\137\
---------------------------------------------------------------------------

    \136\ See 2012 Adopting Release, n.175 and accompanying text.
    \137\ See, e.g., Article 41(5) of the EU Accounting Directive
and Section 2 of ESTMA.
---------------------------------------------------------------------------

    We agree with certain commenters who stated 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).\138\
Accordingly, we propose adding dividends to the list of payment types
required to be disclosed. The proposed rules clarify in an instruction
that a resource extraction 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.\139\ The issuer would, however, be
required to disclose any dividends paid to a government in lieu of
production entitlements or royalties. Under this approach, ordinary
dividend payments would not be part of the commonly recognized revenue
stream, because they are not made to further the commercial development
of oil, natural gas, or minerals.\140\
---------------------------------------------------------------------------

    \138\ See, e.g., letter from AngloGold Ashanti (Jan. 31, 2011)
(``AngloGold'').
    \139\ See proposed Instruction 10 to Item 2.01 of Form SD.
    \140\ See letters from Cleary Gottlieb Steen & Hamilton (Mar. 2,
2011) (``Cleary'') and Statoil.
---------------------------------------------------------------------------

    The proposed list of payment types subject to disclosure would also
include payments for infrastructure improvements, such as building a
road or railway to further the development of oil, natural gas, or
minerals. Several commenters stated that, because resource extraction
issuers often make payments for infrastructure improvements either as
required by contract or voluntarily, those payments constitute ``other
material benefits'' that are part of the commonly recognized revenue
stream for the commercial development of oil, natural gas, or
minerals.\141\ For example, if an issuer is obligated to build a road
rather than paying the host country government to build the road, the
issuer would be required to disclose the cost of building the road as a
payment to the government.\142\ We further note that payments for
infrastructure improvements have been required under the EITI since
2011.\143\
---------------------------------------------------------------------------

    \141\ See letters from AngloGold; Barrick Gold Corporation (Feb.
28, 2011) (``Barrick Gold''); EarthRights International (Jan. 26,
2011) (``ERI 1''); Earthworks (Mar. 2, 2011) (``Earthworks''); EG
Justice (Mar. 29, 2011) (``EG Justice 1''); Global Witness 1; ONE
(Mar. 2, 2011) (``ONE''); and PWYP 1.
    \142\ For additional discussion of our proposed approach to in-
kind payments, see note 156 below and the accompanying text. See
also 2012 Adopting Release, n.212 and accompanying text. Some
commenters suggested infrastructure payments are usually not
material compared to the other types of payments required to be
disclosed under Section 13(q) and that infrastructure payments are
of a de minimis nature compared to the overall costs of commercial
development. See API 1; ExxonMobil 1; RDS 2; and Statoil. To the
extent that such payments are de minimis, however, they would be
excluded under the proposed definition.
    \143\ 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 24 (``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 27
(``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.'').
---------------------------------------------------------------------------

    In sum, the comments described above and the EITI's inclusion of
dividend and infrastructure payments provide substantial support for
our determination that that they are part of the commonly recognized
revenue stream for the commercial development of oil, natural gas, or
minerals. Moreover, including payment types in the proposed rules that
are required to be disclosed under the EITI would be consistent with
the statute's directive.\144\
---------------------------------------------------------------------------

    \144\ 15 U.S.C. 78m(q)(1)(C)(ii).
---------------------------------------------------------------------------

    The proposed rules do not require a resource extraction issuer to
disclose social or community payments, such as payments to build a
hospital or school, because it remains unclear whether these types of
payments are part of the commonly recognized revenue stream. In this
regard, we note that other recently enacted international transparency
promotion efforts, such as the EU Directives and ESTMA, do not include
social or community payments.\145\ Although we acknowledge that the
EITI's current requirement includes the disclosure of material ``social
expenditures'' in an EITI report when those expenditures are required
by law or contract,\146\ we note that the

disclosure of social payments is outside of the scope of the more
recent international efforts in the European Union and Canada.\147\ In
addition, there was no clear consensus among the commenters on whether
the proposed rules should include social or community payments as part
of identified payments that are required to be disclosed.\148\ In light
of that, and taking into account our statutory mandate to support
international transparency promotion efforts and our desire to minimize
the additional compliance costs to issuers that would result from
having to track and disaggregate such payments, we are proposing to
follow the approach of the European Union and Canada in not proposing
to require the disclosure of social or community payments.
---------------------------------------------------------------------------

    \145\ See, e.g., the EU Directives, the U.K. regulations
implementing the EU Directives, and Canada's ESTMA.
    \146\ See EITI Standard, at 27 (``Where material social
expenditures by companies are mandated by law or the contract with
the government that governs the extractive investment, the EITI
Report must disclose and, where possible, reconcile these
transactions.'').
    \147\ See EU Accounting Directive, Article 41(5) and ESTMA,
Section 2, both of which list types of payments covered by the
disclosure regulations without including social payments. But see
ESTMA Guidance, Section 3.4 (outlining that ``payments made for
corporate social responsibility purposes'' may be required to be
disclosed if ``made in lieu of one of the payment categories that
would need to be reported under [ESTMA]'').
    \148\ See, e.g., letters from AngloGold; API 1; Barrick Gold;
Earthworks; EG Justice 1; ERI 1; ExxonMobil 1; Global Witness 1; NMA
2; ONE; PetroChina Company Limited (Feb. 28, 2011) (``PetroChina'');
PWYP 1, RDS 2, Sen. Levin 1; Statoil; and U.S. Agency for
International Development (July 15, 2011) (``USAID'').
---------------------------------------------------------------------------

    Consistent with Section 13(q), the proposed rules would require a
resource extraction issuer to disclose fees, including license fees,
and bonuses paid to further the commercial development of oil, natural
gas, or minerals. In response to requests by some commenters,\149\ the
proposed rules clarify that fees include rental fees, entry fees, and
concession fees, and that bonuses include signature, discovery, and
production bonuses.\150\ As commenters noted,\151\ the EITI also
specifically mentions these types of fees and bonuses as payments that
should be disclosed by EITI participants.\152\ This supports our view
that these types of fees and bonuses are part of the commonly
recognized revenue stream. The fees and bonuses identified are not an
exclusive list, and there may be other fees and bonuses a resource
extraction issuer would be required to disclose. A resource extraction
issuer would need to consider whether payments it makes fall within the
payment types that would be covered by the proposed rules.
---------------------------------------------------------------------------

    \149\ See 2012 Adopting Release, n.160 and accompanying text.
    \150\ See proposed Instruction 9 to Item 2.01 of Form SD.
    \151\ See, e.g., letters from API 1 and ExxonMobil 1.
    \152\ See EITI Standard, at 26.
---------------------------------------------------------------------------

    Consistent with Section 13(q), the proposed rules would require a
resource extraction issuer to disclose taxes. In addition, the proposed
rules include an instruction to clarify 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.\153\ 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,\154\ the
proposed rules would provide that issuers may disclose those payments
at the entity level rather than the project level.\155\
---------------------------------------------------------------------------

    \153\ See proposed Instruction 8 to Item 2.01 of Form SD.
    \154\ See 2012 Adopting Release, n.155 and accompanying text.
    \155\ See proposed Instruction 4 to Item 2.01 of Form SD.
---------------------------------------------------------------------------

    Many commenters supported the inclusion of in-kind payments,
particularly in connection with production entitlements.\156\ We also
note that the EU Directives and ESTMA require disclosure of in-kind
payments.\157\ Under the proposed rules, resource extraction issuers
must disclose payments of the types identified in the rules that are
made in-kind.\158\ Since Section 13(q) specifies that the rules require
the disclosure of the type and total amount of payments made for each
project and to each government, issuers would need to determine the
monetary value of in-kind payments.\159\ Consistent with suggestions we
received on disclosing these types of payments,\160\ the proposed rules
specify that issuers may report in-kind payments at cost, or if cost is
not determinable, fair market value, and provide a brief description of
how the monetary value was calculated.\161\
---------------------------------------------------------------------------

    \156\ See 2012 Adopting Release, nn.170, 211 and accompanying
text. In-kind payments include, for example, making a payment to a
government in oil rather than a monetary payment.
    \157\ Article 41 of the EU Accounting Directive and Section 2 of
ESTMA specifically include ``in kind'' payments in their definitions
of ``payment.''
    \158\ This would be consistent with the reporting of production
entitlements under the EITI. See EITI Standard, at 27.
    \159\ In addition, in light of the requirement in Section 13(q)
to tag the information to identify the currency in which the
payments were made, the proposed rules would instruct issuers
providing a monetary value for in-kind payments to tag the
information as ``in-kind'' for purposes of the currency tag.
    \160\ See 2012 Adopting Release, n.173 and accompanying text.
    \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.
---------------------------------------------------------------------------

    Finally, as mentioned above,\162\ the proposed rules would also
require 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\
In other words, and as suggested by one commenter,\164\ a resource
extraction issuer may not conceal the true nature of payments or
activities that otherwise would fall within the scope of the final
rules, or create a false impression of the manner in which it makes
payments, in order to circumvent the disclosure requirements. For
example, a resource extraction issuer that typically makes payments
related to an activity covered under the definition of commercial
development of oil, natural gas, or minerals would not be able to evade
the disclosure requirements by changing the way it makes payments or by
re-categorizing the same activity.
---------------------------------------------------------------------------

    \162\ See Section II.B above.
    \163\ See proposed Rule 13q-1(b).
    \164\ See letter from Sen. Levin (Feb. 17, 2012) (``Sen. Levin
2'').
---------------------------------------------------------------------------

    Request for Comment

13. Should we add other payment types, such as social or community
payments, or remove certain payment types from the proposed list of
covered payment types? If so, please explain which payment types
should or should not be considered part of the commonly recognized
revenue stream for resource extraction issuers and why. If we
exclude social or community payments from the list of covered
payment types, as proposed, should we provide additional guidance
concerning how an issuer would distinguish social or community
payments from infrastructure payments? Why or why not?
14. Should we provide different or additional guidance on how to
interpret the proposed list of covered payment types? For example,
should we specify additional types of fees or bonuses in Instruction
8 to Form SD or should we clarify what other types of payment mean,
such as royalties?
15. Should we prescribe a specific method for determining the fair
market value of in-kind payments? If so, please explain how fair
market value should be determined for such payments. Should we
provide guidance concerning

appropriate methods for determining fair market value for in-kind
payments?
16. Will the proposed anti-evasion provision promote compliance with
the disclosure requirements? Should additional guidance be provided
about when the anti-evasion provision would apply?
2. The ``Not De Minimis'' Requirement
    The proposed rules would define a ``not de minimis'' payment in the
same way as the 2012 Rules. A ``not de minimis'' payment would be 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.\165\ This definition would provide a clear standard
for determining which payments a resource extraction issuer must
disclose. Furthermore, we note that after the 2012 Rules were adopted,
several countries established payment thresholds that approximate the
proposed $100,000 standard.\166\ We believe that the establishment of a
similar payment threshold by these countries diminishes any potential
additional compliance burden and potential competitive harm that
otherwise could be caused by disclosure rules that include a payment
threshold that varies significantly from the standard used in other
jurisdictions.
---------------------------------------------------------------------------

    \165\ 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 clarifies 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, 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.
    \166\ See EU Accounting Directive, Article 43(1) and Recital 46
(using [euro]100,000, or approximately $107,000 (USD) as of Nov. 10,
2015); UK Reports on Payments to Governments Regulations 2014 (2014
Statutory Instrument No. 3209), Part 1, 5.-(3) (using [pound]86,000,
or approximately $129,860 (USD) as of Nov. 10, 2015); Norwegian
Regulations, Section 3 (using 800,000 kr, or approximately $92,480
(USD) as of Nov. 10, 2015); and ESTMA, Section 9(2) (using $100,000
(CAD), or approximately $75,400 (USD) as of Nov. 10, 2015).
---------------------------------------------------------------------------

    We considered whether to define the term using a standard based on
the materiality of the payment to the issuer, as some commenters
recommended.\167\ As we previously noted, however, the use of the
phrase ``not de minimis'' in Section 13(q), rather than the use of a
materiality standard, which is used elsewhere in the federal securities
laws and in the EITI,\168\ suggests that ``not de minimis'' should not
be interpreted to equate to a materiality standard. More fundamentally,
for purposes of Section 13(q), we do not believe that the relevant
point of reference for assessing whether a payment is ``not de
minimis'' is its financial significance for the particular issuer.
Rather, because the disclosure is designed to further international
transparency initiatives regarding payments to governments for the
commercial development of oil, natural gas, or minerals, the more
appropriate focal point for determining whether a payment is ``not de
minimis'' is in relation to host countries. We recognize, however, that
issuers may have difficulty assessing the significance of particular
payments for particular countries or recipient governments. Thus, as
discussed above, we are proposing a $100,000 threshold that is
consistent with the developing international consensus for payment
reporting thresholds.
---------------------------------------------------------------------------

    \167\ See 2012 Adopting Release, n.224 and accompanying text.
    \168\ See 2012 Adopting Release, n.218 and accompanying text.
---------------------------------------------------------------------------

    Among the suggested approaches for defining ``not de minimis,''
\169\ we believe that a standard based on an absolute dollar amount is
the most appropriate because it would be easier to apply than a
qualitative standard or a relative quantitative standard based on some
fluctuating measure, such as a percentage of expenses or revenues of
the issuer \170\ or a percentage of the host government's or issuer's
estimated total production value in the host country for the reporting
period. Using an absolute dollar amount threshold for disclosure
purposes should help reduce compliance costs and may also promote
consistency and comparability.\171\ In the 2012 Adopting Release, the
Commission considered other specific dollar thresholds,\172\ but we
believe that those thresholds are not appropriate, particularly in
light of international developments.\173\
---------------------------------------------------------------------------

    \169\ See 2012 Adopting Release at Section II.D.2.
    \170\ See 2012 Adopting Release, nn.231-233 and accompanying
text.
    \171\ See 2012 Adopting Release, n.233 and accompanying text.
    \172\ See 2012 Adopting Release at Section II.D.2.b for a
discussion of commenters' recommendations of a $15,000 or $1,000,000
threshold.
    \173\ See note 166 above and accompanying text.
---------------------------------------------------------------------------

    Although some commenters thought a $100,000 threshold was too
high,\174\ we believe this threshold would strike an appropriate
balance between concerns about the potential compliance burdens of a
lower threshold and the need to fulfill the statutory directive that
payments greater than a ``de minimis'' amount be covered. A ``not de
minimis'' definition based on a materiality standard, or a much higher
amount, such as $1,000,000, could lessen commenters' concerns about the
compliance burden and the potential for competitive harm. Nevertheless,
as discussed above, these concerns are mitigated by the use of a
threshold consistent with international standards, and the term ``not
de minimis'' indicates that a threshold significantly less than
$1,000,000, is necessary to further the transparency goals of the
statute.
---------------------------------------------------------------------------

    \174\ See, e.g., letters from Catholic Relief Services and
Committee on International Justice and Peace (Feb. 9, 2011)
(``CRS'') (supporting a threshold that is significantly less than
$100,000); EarthRights International (Feb. 3, 2012) (``ERI 3'')
(pointing to the $15,000 threshold used by the London Stock
Exchange's Alternative Investment Market).
---------------------------------------------------------------------------

Request for Comment
17. Should we define ``not de minimis'' differently than as
proposed? For example, are there any data or have there been any
recent developments suggesting that a $100,000 threshold is too low
or too high? What would be the effect if we adopted a threshold
significantly different from those established by other countries
for their payment disclosure regimes? Should we include a mechanism
to adjust periodically the de minimis threshold to reflect the
effects of inflation? If so, what is an appropriate interval for
such adjustments and what should the basis be for making any such
adjustments in light of our understanding that the appropriate focal
point for determining whether a payment is ``not de minimis'' is in
relation to host countries?
18. Should we provide additional guidance on when or how a resource
extraction issuer would have to aggregate a series of related
payments for purposes of determining whether the $100,000 threshold
has been met? If so, what specific guidance should we provide?
19. Should we include any provisions to lessen the potential
reporting costs for smaller reporting companies or emerging growth
companies? For example, should we provide a higher ``de minimis''
threshold for certain categories of issuers generally or for a
certain length of time? Would doing so be consistent with Section
13(q)?

D. Payments by ``a Subsidiary . . . or an Entity Under the Control of .
. .''

    In addition to requiring an issuer to disclose its own payments,
Section 13(q) also requires a resource extraction issuer to disclose
payments by a subsidiary or an entity under the control of the issuer
made to a foreign government or the Federal Government relating to the
commercial development of oil, natural gas, or minerals. In a change
from the 2012 Rules, however, the proposed rules would define the terms
``subsidiary'' and ``control'' based on accounting principles rather
than using the definitions of those terms

provided in Rule 12b-2.\175\ We believe that this change is appropriate
in light of the significant international developments since the 2012
Rules were vacated. Specifically, the proposed approach would
complement two major international transparency regimes, the EU
Directives and ESTMA, neither of which were in place when the 2012
Rules were adopted.\176\ The proposed approach should therefore support
international transparency promotion efforts by fostering greater
consistency and comparability of payments disclosed by resource
extraction issuers. As such, we believe it is consistent with our
statutory mandate to support the commitment of the Federal Government
to international transparency promotion efforts, to the extent
practicable.\177\
---------------------------------------------------------------------------

    \175\ Under Exchange Act Rule 12b-2 [17 CFR 240.12b-2],
``control'' (including the terms ``controlling,'' ``controlled by''
and ``under common control with'') is defined to mean ``the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether
through the ownership of voting shares, by contract, or otherwise.''
Rule 12b-2 also defines ``subsidiary'' (``A `subsidiary' of a
specified person is an affiliate controlled by such person directly,
or indirectly through one or more intermediaries). See also the
definitions of ``majority-owned subsidiary,'' ``significant
subsidiary,'' and ``totally-held subsidiary'' in Rule 12b-2.
    \176\ See, e.g., EU Accounting Directive, Article 44 (providing
for the preparation of consolidated reports, subject to limited
exceptions). ESTMA provides that ``control'' includes both direct
and indirect control, but Section 2.1 of the ESTMA Guidance states
that ``[w]here one business controls another enterprise under the
accounting standards applicable to it . . . that will generally be
sufficient evidence of control for purposes of the Act.''
    \177\ In light of the changes in the international landscape, we
have also given further consideration to commenters' concerns with
the potential compliance impact of the 2012 Rules as proposed. See
letters from API 1, API (Nov. 7, 2013) (``API 6''); Barrick Gold,
British Petroleum p.l.c. (Feb. 11, 2011) (``BP 1''); Cleary;
ExxonMobil 1; General Electric (Mar. 4, 2011) (``GE''); NMA 2; NYSBA
Committee; Petroleo Brasileiro S.A. (Feb. 21, 2011) (``Petrobras'');
RDS 2; Rio Tinto plc (Mar. 2, 2011) (``Rio Tinto''); and Statoil.
See also 2012 Adopting Release at Section II.D.4.b (discussing
comments related to the definition of ``control'' proposed in the
2010 Proposing Release).
---------------------------------------------------------------------------

    Under the proposed approach, a resource extraction issuer would
have ``control'' of another entity when the issuer consolidates that
entity or proportionately consolidates an interest in an entity or
operation under the accounting principles applicable to its financial
statements included in the periodic reports filed pursuant to Section
13(a) or 15(d) of the Exchange Act. Thus, for purposes of determining
control, the resource extraction issuer would follow the consolidation
requirements under generally accepted accounting principles in the
United States (``U.S. GAAP'') or under the International Financial
Reporting Standards as issued by the International Accounting Standards
Board (``IFRS''), as applicable.\178\ The extent to which the
controlled entity is consolidated would determine the extent to which
payments made by that entity would need to be disclosed. For example, a
resource extraction issuer that proportionately consolidates an entity
would have to report that entity's eligible payments on a proportionate
basis, listing the proportionate interest.
---------------------------------------------------------------------------

    \178\ See Accounting Standards Codification (``ASC'') 810,
Consolidation, IFRS 10, Consolidated Financial Statements and IFRS
11, Joint Arrangements for guidance. A foreign private issuer that
prepares financial statements according to a comprehensive set of
accounting principles, other than U.S. GAAP or IFRS, and files with
the Commission a reconciliation to U.S. GAAP would be required to
determine whether or not an entity is under its control using U.S.
GAAP.
---------------------------------------------------------------------------

    In addition, as commenters have noted, using this definition would
be more transparent for investors and less costly for issuers, because
issuers already apply the definition for financial reporting
purposes.\179\ As such, it would facilitate compliance with the
proposed rules. It also would have the benefit of limiting the
potential overlap of the disclosed payments because under applicable
financial reporting principles, generally only one party can control an
entity, and therefore consolidate, that entity. Further, the proposed
approach may enhance the quality of the reported data since each
resource extraction issuer is required to provide audited financial
statement disclosure of its significant consolidation accounting
policies in the notes to the audited financial statements included in
its existing Exchange Act annual reports.\180\ The disclosure of these
accounting policies would provide greater transparency about how the
issuer determined which entities and payments should be included within
the scope of the required disclosures. Finally, a resource extraction
issuer's determination of control under the proposed rules would be
subject to the audit process as well as to the internal accounting
controls that issuers are required to have in place with respect to
reporting audited financial statements filed with the Commission.\181\
---------------------------------------------------------------------------

    \179\ See letter from API 6 (supporting this approach). But see
letters from BHP Billiton Limited (Oct. 15, 2015) (``BHP''); Global
Witness 2; Publish What You Pay (Mar. 14, 2014) (``PWYP 4'');
Resource Revenue Transparency Working Group (Jan. 16, 2014)
(``RRTWG'') supporting alternative definitions.
    \180\ See ASC 235-10-50; IFRS 8. See also Rules 1-01, 3-01, and
4-01 of Regulation S-X [17 CFR 210.1-01, 2-01 and 4-01].
    \181\ See Exchange Act Section 13(b)(2)(B) [15 U.S.C.
78m(b)(2)(B)]. See also Rules 13a-15 [17 CFR 240.13a-15] and 15d-15
[17 CFR 240.15d-15]. We note, however, that the proposed rules would
not create a new auditing requirement.
---------------------------------------------------------------------------

    In the 2012 Rules, we stated that ``determinations made pursuant to
the relevant accounting standards applicable for financial reporting
may be indicative of whether control exists, [but] we do not believe it
is determinative in all cases.'' \182\ While the determination of
control under applicable accounting principles is not identical to the
determination under Rule 12b-2, we believe that there is significant
overlap between the entities that an issuer would consolidate under the
applicable accounting standards and the entities that an issuer would
have control over under Rule 12b-2. Taking into account the various
considerations discussed above, we believe that defining the term
``control'' using accounting principles strikes the appropriate balance
between providing reliable and accurate disclosure to support
international transparency promotion efforts and reducing potential
compliance costs for resource extraction issuers.
---------------------------------------------------------------------------

    \182\ 2012 Adopting Release at 95 [77 FR 56387].
---------------------------------------------------------------------------

Request for Comment

20. Should we define the term ``control'' based on applicable
accounting principles, rather than using Rule 12b-2 of the Exchange
Act? Why or why not? If so, should we allow resource extraction
issuers to report eligible payments made by proportionately
consolidated entities on a proportionate basis, as proposed, or
modify this requirement? Please provide your supporting rationale.
Is there some other definition we should use? If so, why?
21. Are there significant differences between the scope of the
entities that would be covered by our proposed rules and by Rule
12b-2? If so, please identify the potential differences and the
types of entities and payments that would be affected. Are there
certain industries, jurisdictions, or project types that may be more
impacted by using the proposed rules' definition of ``control''
rather than the Rule 12b-2 definition?
22. Is there an alternative approach to what we have proposed, other
than using Rule 12b-2, that would better achieve the transparency
objectives of Section 13(q) while minimizing the cost of compliance?
For example, are there any aspects of the EU Directives, ESTMA or
other international transparency initiatives that should be
considered so as to enhance the comparability and consistency of the
disclosed payments? If so, which aspects and why.
23. Are there significant differences between the consolidation
principles in U.S. GAAP and IFRS that could affect the comparability
of the disclosure that would be required by the proposed rules? If
so, is there a way to modify the

definition of ``control'' to enhance the comparability of the
disclosure?

E. Definition of ``Project''

1. General
    Consistent with Section 13(q), the proposed rules would require a
resource extraction issuer to disclose payments made to governments
relating to the commercial development of oil, natural gas, or minerals
by type and total amount per project.\183\ In the 2012 Adopting
Release, the Commission declined to define ``project'' and stated its
belief that not adopting a definition had the benefit of giving issuers
flexibility in applying the term to different business contexts
depending on factors such as the particular industry or business in
which the issuer operates, or the issuer's size.\184\ After further
consideration of the objectives of the statute and in light of
international transparency developments since adoption of the 2012
Rules, we are proposing to define the term ``project.'' Specifically,
we are proposing a definition modeled on the definition found in the EU
Directives and the ESTMA Specifications; the difference being that the
proposed definition would afford resource extraction issuers additional
flexibility on how to treat operations involving multiple, related
contracts.\185\
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    \183\ For commenters supporting project level disclosure, see,
e.g., letters from NACE; PWYP-ZIM; PWYP-IND. These letters provide
examples of situations in which either project-level reporting has
achieved beneficial effects or are necessary to achieving such
effects.
    \184\ See the 2012 Adopting Release at 85 [77 FR 56385].
    \185\ A number of commenters expressed support for international
consistency and the use of the EU Directives' definition of
``project.'' See letters from Allianz Global Investors (Apr. 28,
2014) (``Allianz 1''); Allianz Global Investors (Aug. 8, 2014)
(``Allianz 2''); Arachnys Information Services (May 28, 2014
(``Arachnys''); Global Witness 2; PWYP 4; and Third Swedish National
Pension Fund (Apr. 28, 2014) (``TSNPF'').
---------------------------------------------------------------------------

    The EU Directives and ESTMA Specifications both state that a
``project'' means ``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.
Nonetheless, if multiple such agreements are substantially
interconnected, this shall be considered a project.'' \186\ The EU
Directives and ESTMA Specifications go on to define ``substantially
interconnected'' as ``a set of operationally and geographically
integrated contracts, licenses, leases or concessions or related
agreements with substantially similar terms that are signed with the
government and give rise to payment liabilities.'' \187\
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    \186\ Article 41(4) of the EU Accounting Directive; ESTMA
Specifications, Section 2.2.2. ESTMA Specifications defining
``project'' would be promulgated pursuant to Section 9(5) of ESTMA,
which authorizes the Minister to specify the ``way in which payments
are to be organized or broken down in the report--including on a
project basis--and the form and manner in which a report is to be
provided.''
    \187\ Recital 45 of the EU Accounting Directive.
---------------------------------------------------------------------------

    Similar to the EU Directives and the draft Canadian definitions, we
are proposing to define ``project'' as 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.\188\ Our proposed definition, also similar to the EU
Directives and the draft Canadian definitions, would allow issuers to
treat multiple agreements that are both operationally and
geographically interconnected as a single project.\189\ Unlike the EU
Directives and draft Canadian definitions, our proposed definition of
``project'' would not include the requirement that the agreements have
``substantially similar terms.'' In that regard, we understand that
operations under one agreement may lead to the parties entering into a
second agreement for operations in a geographically contiguous area. If
a change in market conditions or other circumstances compels a
government to insist on different terms for the second agreement, then
under our proposed definition the use of those different terms by
themselves would not preclude treating the second agreement as the same
project when, operationally and geographically, work under the second
agreement is a continuation of work under the first.
---------------------------------------------------------------------------

    \188\ See proposed Item 2.01(c)(10) of Form SD.
    \189\ Id.
---------------------------------------------------------------------------

    In order to assist resource extraction issuers in determining
whether two or more agreements may be treated as a single project, we
are proposing an instruction that provides a non-exclusive list of
factors to consider when determining whether agreements are
``operationally and geographically interconnected'' for purposes of the
definition of project, no single one of which would necessarily be
determinative. Those factors include whether the agreements relate to
the same resource and the same or contiguous part of a field, mineral
district, or other geographic area, whether they will be performed by
shared key personnel or with shared equipment, and whether they are
part of the same operating budget.\190\ Furthermore, we are preserving
the approach taken in the 2012 Rules by proposing an instruction
clarifying that issuers would not be required to disaggregate payments
that are made for obligations levied on the issuer at the entity level
rather than the project level.\191\
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    \190\ See proposed Instruction 12 to Item 2.01 of Form SD.
    \191\ See proposed Instruction 4 to Item 2.01 of Form SD. Thus,
if an issuer has more than one project in a host country, and that
country's government levies corporate income taxes on the issuer
with respect to the issuer's income in the country as a whole, and
not with respect to a particular project or operation within the
country, the issuer would be permitted to disclose the resulting
income tax payment or payments without specifying a particular
project associated with the payment. See also Section II.C.1 above.
---------------------------------------------------------------------------

    In proposing this approach, we have considered the wide variety of
recommendations provided by commenters, both before and after the 2012
Adopting Release, including defining ``project'' as a reporting unit or
by reference to a materiality standard.\192\ Nevertheless, we see
several advantages to our proposed approach over the alternatives. Our
proposed definition of the term project has the advantage of providing
clarity by stipulating that a project is contract-based.\193\ Also,
taking an approach that shares certain core elements with the
definition used in the EU Directives and the ESTMA Specifications would
further international transparency promotion efforts.\194\ Such an
approach should also reduce costs for companies listed in both the
United States and those jurisdictions by not requiring different
disaggregation of project-related costs due to different definitions of
the term ``project.'' In addition, a definition having substantial
similarities might enable companies to take advantage of equivalency
provisions available in

other jurisdictions.\195\ We also note that DOI supports a definition
of project at the contract level.\196\
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    \192\ For a more extensive discussion of comments received on
the definition of ``project'' prior to the 2012 Adopting Release,
please see Section II.D.3 of the 2012 Adopting Release.
    \193\ See 2012 Adopting Release at 85-86 [77 FR 56385].
    \194\ See letter from Transparency International-USA (June 9,
2014) (``TI-USA 1''). See also letter from State Department
(``applaud[ing] the EU's enactment of its Accounting and
Transparency Directives and Canada's enactment of its Extractive
Sector Transparency Measure Act'' and explaining that a Commission
rule requiring disclosure ``compatible with these transparency
measures would further advance the United States' foreign policy
interests''). We also note that the EITI's project reporting
disclosure requirements are tied to the European Union and U.S.
definition of project. See EITI Standard, at 31 (``Reporting at
project level is required, provided that it is consistent with the
United States Securities and Exchange Commission rules and the
forthcoming European Union requirements.''). Thus, adopting a
definition of ``project'' similar to that in the EU Directives would
also promote international transparency by aligning EITI compliance
with our proposed rules, the EU Directives, and, if adopted in their
current form, Canada's ESTMA Specifications.
    \195\ See, e.g., Article 46 of the EU Accounting Directive;
Section 10(1) of ESTMA.
    \196\ See letter from DOI 1. In this regard, DOI noted that it
``interpret[s] this definition to mean that for oil, gas, and
renewables a project is at either the lease or the agreement level
and for coal and other hardrock mining, it would mean that a project
was at the permit, claim, or plan of operation level.''
---------------------------------------------------------------------------

    While substantially consistent with other international disclosure
regimes in its overall approach, our proposed definition would differ
in one aspect. Specifically, it would provide additional flexibility
compared to those regimes by allowing for aggregation of payments made
for activities that relate to multiple agreements that are both
operationally and geographically interconnected without requiring the
terms of the agreements to be substantially similar. In that respect,
it should reduce the burdens associated with disaggregating payments.
It may also reduce the risk of sensitive information being released,
which should help alleviate concerns about competitive harm and the
security of personnel and assets, while also providing payment
information that is useful to citizens in resource-rich countries.
    We also found it significant that several of the alternative
definitions of ``project'' suggested previously by commenters would
likely result in disclosure of payment information that is more greatly
aggregated and less granular than what would be provided by the
definition we are proposing. For example, commenters suggested defining
``project'' at the country level; \197\ defining ``project'' as a
reporting unit; \198\ defining ``project'' in relation to a particular
geologic resource, such as a ``geologic basin'' or ``mineral
district;'' \199\ or defining ``project'' by reference to a materiality
standard.\200\ Each of these approaches, however, would likely result
in disclosure that is more aggregated (and therefore less detailed) on
a geographical basis, and potentially less useful for purposes of
serving the statute's objective of promoting payment transparency to
combat global corruption. As described above, disaggregated information
provides greater transparency to local communities that may seek to
verify that they are receiving payments to which they are
entitled.\201\
---------------------------------------------------------------------------

    \197\ See letters from API 1; ExxonMobil 1; Petrobras; and Royal
Dutch Shell (Oct. 25, 2010) (``RDS 1'').
    \198\ See 2012 Adopting Release, n.283 and accompanying text.
    \199\ See 2012 Adopting Release, n.286 and accompanying text.
    \200\ See 2012 Adopting Release, n.291 and accompanying text.
    \201\ See Section I.E.2.
---------------------------------------------------------------------------

2. The API Proposal
    In a comment submitted after the 2012 Rules were vacated, and in
subsequent presentations to the staff, API has advanced a proposal that
would ``defin[e] projects according to subnational political
jurisdictions.'' \202\ Under API's proposal, all of an issuer's
resource extraction activities within a subnational political
jurisdiction would be treated as a single ``project'' to the extent
that these activities involve the same resource (e.g., oil, natural
gas, coal) and to the extent that they are extracted in a generally
similar fashion (e.g., onshore or offshore extraction, or surface or
underground mining). To illustrate how its proposed definition would
work, API indicates that all of an issuer's extraction activities
``producing natural gas in Aceh, Indonesia would be identified as
`Natural Gas/Onshore/Indonesia/Aceh.' '' Similarly, API indicates that
``[o]nshore development in the Niger River delta area would be `Oil/
Onshore/Nigeria/Delta.' '' API contends that this approach would be
preferable to a contract-based definition of project, such as the
definition used in the EU Directives or in the proposed rules, because
its proposed definition would provide sufficiently localized
information to help citizens hold their leaders accountable for the
resource wealth generated in their region while also minimizing
competitive harm to resource extraction issuers.
---------------------------------------------------------------------------

    \202\ See letters from API 6 and American Petroleum Institute
(Apr. 15, 2014) (``API 7'').
---------------------------------------------------------------------------

    For several reasons, we are not proposing such a definition of
``project.'' First, we do not agree that engaging in similar extraction
activities across a single subnational political jurisdiction provides
the type of defining feature to justify aggregating those various
activities together as a solitary project. To put this in perspective
using API's own illustrations, API's proposed definition would treat
every natural gas extraction well that an issuer may have drilled
across the 22,500 square miles of Aceh, Indonesia--a territory that is
slightly larger than the total land area of the States of Massachusetts
and Maryland--as a solitary project, primarily because those wells have
been drilled in the same subnational political jurisdiction. Similarly,
under API's proposed definition, every oil well that an issuer drills
across the approximately 27,000 square miles of the Niger Delta--a
territory that is slightly larger than the total land area of the
States of West Virginia and Delaware--would be a single project.\203\
---------------------------------------------------------------------------

    \203\ For a visual representation of how the disclosure under
the API Proposal would contrast with the more localized, granular
disclosure under our proposed rules, compare, for example, this map
of the entire Niger Delta (https://www.stratfor.com/image/niger-delta-oil-fields (last visited Dec. 8, 2015)) with this map of Niger
Delta oil concessions (http://www.nigeria-oil-gas.com/nigeria_oil_&_gas_concessions_map_&_licenses-34-1-2-c.html (last
visited Dec. 8, 2015)).
---------------------------------------------------------------------------

    Although a resource extraction issuer could enter into a contract
that covers an entire country or subnational political jurisdiction, it
is our understanding that this is not common industry practice.\204\
Rather, the typical contract area for oil and gas exploration is
between approximately 400 to 2000 square miles.\205\ Indeed, a typical
U.S. oil and gas offshore federal lease covers approximately three
square miles.\206\ Also, a variety of oil and gas concessions maps show
that such concessions are generally significantly smaller than major
subnational political jurisdictions.\207\ Similarly, mining concessions
are generally significantly smaller than major subnational
jurisdictions. In fact, we understand that development and production
contracts, which are generally entered into only after successful
exploration and which generate the majority of revenue payments,\208\
will typically cover only a single mine.\209\ Accordingly, we believe

that for oil, gas and minerals, a contract-based definition of
``project'' would provide more granular disclosure than API's proposed
definition and similar definitions focusing on national or subnational
political jurisdictions.\210\
---------------------------------------------------------------------------

    \204\ See Center for Economic and Management, Oil and Gas
Exploration and Production, Reserves, Costs, and Contracts, Institut
Francais Du Petrole Publications (2004), Ch. 5 (``Oil and Gas
Exploration''). The oil and gas and mining engineers on the
Commission's staff, based on their collective industry experience,
also confirm their understanding of industry practice.
    \205\ Oil and Gas Exploration, 183-84.
    \206\ See, e.g., U.S. Outer Continental Shelf Lease Blocks
available at http://www.arcgis.com/home/.html?id=0d6b1a589b814fa58ba66aadcc0b1c65 (last visited Dec. 8,
2015).
    \207\ See, e.g., letter from Oxfam America (Dec. 3, 2015)
(``Oxfam 3'') (including a Sonangol map of Angola Concession and a
2014 West Africa Offshore Oil and Gas Concession Map); Brazil 2011
Oil and Gas Concession Map, Offshore Magazine available at http://www.offshore-mag.com/content/dam/etc/medialib/platform-7/offshore/maps-and_posters/BrazilMap2011-062111Ads.pdf (last visited Dec. 8,
2015).
    \208\ While mineral exploration rights are subject to government
leases, they do not yield significant payments to governments. See
generally Diana Dalton, A Global Perspective on Mining Legislation,
in 1 SME Mining Engineering Handbook 331-337 (P. Darling ed.) (2011)
and A. Nunan, Understanding Overlaps--Mining Tenure Versus the Rest
of the World, The AusIMM New Leaders' Conference Brisbane, QLD (May
2007).
    \209\ Although the size of a mining project can vary, and a
single mining project can cover several contiguous exploration
blocks, even large mining projects are still significantly smaller
than a major subnational jurisdiction or a mining district. For
example, Vulcan Materials Company's McCook Quarry in Chicago,
Illinois, a large limestone quarry, covers approximately one square
mile. See NPDES Permit No. ILG840200 available at http://www.epa.state.il.us/water/permits/non-coal-mines/show-file.php?recordID=137. Freeport-McMoRan Inc.'s Morenci copper mine
in Morenci, Arizona, a large copper mine, covers approximately 102
square miles. Freeport-McMoRan Inc., Form 10-K (FYE Dec. 31, 2014)
at 8. AngloGold Ashanti's Iduapriem Mine, a small to medium gold
mine, covers approximately 13 square miles. AngloGold Ashanti
Limited, Form 20-F (FYE Dec. 31, 2014) at 59.
    \210\ Although contract areas are often larger during the
exploration phase when the presence of economically viable resources
is less certain, such areas are significantly reduced when the
exploration contract is extended or when the contract holder enters
the exploitation phase of a project. Oil & Gas Exploration, 183-86.
---------------------------------------------------------------------------

    Moreover, by so heavily focusing on subnational political
jurisdictions as a defining consideration, API's definition appears to
disregard the economic and operational considerations that we believe
would more typically--and more appropriately--be relevant to
determining whether an issuer's various extraction operations should be
treated together as one project. This stands in contrast to the
definition of ``project'' under the EU Directives and the ESTMA
Specifications. Second, API's proposal would not generate the level of
transparency that, as discussed above in Section I.E, we believe would
be necessary and appropriate to achieve the U.S. Government's
anticorruption and transparency objectives.\211\ By permitting
companies to aggregate their oil, natural gas, and other extraction
activities over large territories, API's definition would not provide
local communities with payment information at the level of granularity
necessary to enable them to know what funds are being generated from
the extraction activities in their particular areas.\212\ Again, to put
this in context using API's illustrations, in Aceh there are eight
separate regions and five autonomous cities; the approximately 4
million residents of these areas within Aceh would not be able to
distinguish which revenues came from their local projects versus
projects in other areas of Aceh. Much the same would be true for the
nearly 30 million people that occupy the nine separate states within
the Niger River Delta. As a result, the local residents in Aceh and the
Niger Delta would be unable to ensure that they are receiving the funds
from the national and subnational government that they might be
entitled to, either under law or other governing arrangements.\213\
---------------------------------------------------------------------------

    \211\ See Letter from Global Witness 2. See also, e.g., Natural
Resource Governance Institute (Sept. 23, 2015) (``NRGI'') (stating
that API's approach ``would prevent investors or citizens from using
disclosed project-level data in conjunction with annual reports or
other publicly available information'' and ``make it difficult for
citizens to identify the payments related to an actual project, . .
. preventing stakeholders from using such disclosures to inform risk
analyses or carry our monitoring and oversight activities.'')
(emphasis in original); Iraqi Transparency Alliance (``We recommend
that the definition of project align with the August 2012 SEC rule
or the EU Accounting and Transparency Directives, and that the SEC
rejects the American Petroleum Institute's reporting proposal,
which, in particular by failing to identify which companies made
which payments, would render such obscure information useless.'');
PWYP-IND (``The American Petroleum Institute proposes to report at
the first tier below the central government. In my country, that
would mean that companies would report how much they paid for access
to resources in each province. Clearly, such a reporting scheme
would prove completely unsatisfactory in Indonesia, as it would
leave citizens in producing and adjacent districts with no way to
know whether their district governments received the money they were
owed.'').
    \212\ See letter from NACE (``Project level payment data is also
necessary to enable communities to conduct an informed cost-benefit
analysis of the projects in their backyards. . . . For local
communities affected by extractives projects, knowledge of the
total, combined amount a company has paid the government for all
extractives projects is of little value; what matters most to a
community is the revenue generated from the specific projects in its
backyard. When a single company operates multiple projects, as
commonly occurs in Sierra Leone, community oversight becomes nearly
impossible without data on each specific project.'').
    \213\ See also letter from PWYP-CAM (``The Cameroonian Mining
Code states that the municipality and local communities are entitled
to 25 percent of the Ad Valorem tax and Extraction tax paid by
companies for the projects located in their jurisdiction. These
payments are collected by the central tax authorities and then
transferred to the municipal councils. Of the 25 percent of these
payments allocated to the municipal councils, 15 percent is for the
municipal council and 10 percent is for the local populations
directly affected by the extractive operations. However, without
project-level fiscal data, local populations will not be able to
cross-check whether or not they are receiving the share of revenues
they are legally entitled to.'').
---------------------------------------------------------------------------

    Similarly, local communities (and others assisting them) would be
unable to assess certain costs and benefits of particular licenses and
leases to help ensure that the national government or the subnational
government had not struck a corrupt or otherwise inappropriate
arrangement, and these local residents would be unable to meaningfully
compare the revenues from the individual extraction efforts within the
subnational jurisdiction to potentially verify that companies were
paying a fair price for the concessions. Further, aggregating the
extraction activities into a single project could undercut the
deterrent effect that governmental officials and companies would
experience; as discussed above, the more detailed and disaggregated the
project-level disclosures, the greater likelihood that unlawful misuse
of those funds may be deterred or detected.\214\
---------------------------------------------------------------------------

    \214\ We note that API's proposal suffers from an additional
substantial defect in our view. Under API's proposal, the project-
level disclosures that companies would make in their filings to the
Commission would not be publicly released. Instead, these
disclosures would be electronically aggregated and anonymized, and
only then made publicly available. This would further undermine the
effectiveness of the public disclosures in promoting the U.S.
Government's foreign policy goals. See generally letter from NRGI
(noting that in the East Kalimantan Province of Indonesia there are
five U.S. listed companies with as many as 11 different production
sharing contracts that could all be identified as ``Indonesia/
Offshore/Oil/East Kalimantan.'').
---------------------------------------------------------------------------

    We acknowledge that API's definition of ``project'' could lower the
potential for competitive harm when compared to our proposed approach,
which requires public disclosure of contract-level data. Nevertheless,
as we discuss below,\215\ we believe that the potential for competitive
harm resulting from our proposed disclosure requirements is
significantly reduced due to the recent adoption of a similar
definition of ``project'' in the European Union and the recent proposal
of a similar definition in Canada. As discussed above, we also believe
that a disclosure requirement that is in accordance with the emerging
international transparency regime is consistent with Section 13(q) and
its legislative history. Thus, we believe that the definition of
project that we are proposing is, on balance, necessary and appropriate
notwithstanding the potential competitive concerns that may result in
some instances.\216\
---------------------------------------------------------------------------

    \215\ See Section III.B.2.c below.
    \216\ In this regard, and as we discuss in Section II.G.3 below,
we will consider using our existing authority under the Exchange Act
to provide exemptive relief at the request of a resource extraction
issuer, if and when warranted. We believe that this case-by-case
approach to exemptive relief would permit us to tailor any relief to
the particular facts and circumstances presented, which could
include facts related to potential competitive harm.
---------------------------------------------------------------------------

Request for Comment

    24. Should we, as proposed, define ``project'' as 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? Why or why not? Given the
U.S. foreign policy interests reflected in Section 13(q), does our
proposed definition advance the governmental interests in promoting
transparency and combatting global corruption? Should we define
``project'' in a different manner? If yes, how should we define the
term? For example, should we adopt a definition of ``project'' that
is identical to that found in the EU Directives and the ESTMA
Specifications?
    25. Is there an alternative to using a contract based definition
of ``project'' that

would promote international transparency while mitigating compliance
costs to resource extraction issuers?
    26. Would our proposed contract-based definition of ``project''
lead to more granular disclosure than API's suggested definition?
What is the typical geopolitical and geographic scope of contracts
in the resource extraction industry? Are the examples discussed
above representative of current industry practice?
    27. Should we permit two or more agreements that are both
operationally and geographically interconnected to be treated by the
issuer as a single project, as proposed? What are the advantages or
disadvantages of such a treatment? Should we instead require that
these agreements have substantially similar terms as in the EU
Directives and the ESTMA Specifications?
    28. Should we use another jurisdiction's definition of
``project'' or one suggested by commenters, such as API? If so,
which definition and why?
    29. Would defining ``project'' in the manner we are proposing,
or a similar manner, allow for comparability of data among issuers?
How could the proposed rules be changed to improve such
comparability?
    30. Should we adopt the approach we took in the 2012 Rules and
not define ``project?'' If so, please explain why.

F. Definition of ``Foreign Government'' and ``Federal Government''

    In Section 13(q), Congress defined ``foreign government'' to mean a
foreign government, a department, agency, or instrumentality of a
foreign government, or a company owned by a foreign government, while
granting the Commission the authority to determine the scope of the
definition.\217\ Consistent with the 2012 Rules, we are proposing a
definition of ``foreign government'' that would include 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.\218\ Although we
acknowledge the concerns of commenters who suggested limiting the
definition of foreign government to foreign national governments,\219\
we believe that the definition also should include foreign subnational
governments. The proposed definition is consistent with Section 13(q),
which requires an issuer to identify, for each disclosed payment, the
government that received the payment and the country in which the
government is located.\220\ It is also consistent with the EU
Directives, ESTMA Guidance, and the EITI.\221\
---------------------------------------------------------------------------

    \217\ 15 U.S.C. 78m(q)(1)(B).
    \218\ See proposed Item 2.01(c)(7) of Form SD.
    \219\ See, e.g., letter from Statoil (stating that requiring
disclosure of payments to national governments only would be more
fair and consistent with other international transparency
initiatives).
    \220\ See 15 U.S.C. 78m(q)(2)(D)(ii)(V).
    \221\ See EU Accounting Directive, Article 41(3) (``Government
means any national, regional or local authority . . .''); ESTMA
Guidance, Section 3.2 (``[A] Payee is . . . any government . . . at
a national, regional, state/provincial or local/municipal level . .
.''); EITI Standard, at 29 (requiring the disclosure and
reconciliation of material payments to subnational government
entities in an EITI Report).
---------------------------------------------------------------------------

    For purposes of identifying the foreign governments (as defined in
proposed Item 2.01(c) of Form SD) that received the payments, as
required by proposed Item 2.01(a)(7) of Form SD, we believe that an
issuer should identify the administrative or political level of
subnational government that is entitled to a payment under the relevant
contract or foreign law. As noted in the 2012 Adopting Release, if a
resource extraction issuer makes a payment that meets the definition of
payment to a third party to be paid to the government on its behalf,
disclosure of that payment would be covered under the proposed rules.
    Additionally, the proposed rules clarify that a company owned by a
foreign government means a company that is at least majority-owned by a
foreign government.\222\ This clarification should address the concerns
that some commenters had about when an issuer would be required to
disclose payments made to a foreign government-owned company.
---------------------------------------------------------------------------

    \222\ See proposed Item 2.01(c)(7) of Form SD.
---------------------------------------------------------------------------

    The proposed rules also clarify that ``Federal Government'' means
the United States Federal Government.\223\ Although we acknowledge that
the European Union and Canada have taken different approaches by
requiring or proposing to require the disclosure of payments to
domestic subnational governments, we believe that Section 13(q) is
clear in only requiring disclosure of payments made to the Federal
Government in the United States and not to state and local governments.
As we noted in our previous releases, typically the term ``Federal
Government'' refers only to the U.S. national government and not the
states or other subnational governments in the United States.\224\
---------------------------------------------------------------------------

    \223\ See proposed Item 2.01(a) of Form SD.
    \224\ 2012 Adopting Release at 101 [77 FR 56389]; 2010 Proposing
Release at 44 [75 FR 80988].
---------------------------------------------------------------------------

Request for Comment

    31. Should the definition of ``foreign government'' include a
foreign government, a department, agency, or instrumentality of a
foreign government, or a company owned by a foreign government, as
proposed? If not, why not? Should it include anything else?
    32. Under Section 13(q) and the proposal, the definition of
``foreign government'' includes ``a company owned by a foreign
government.'' We are proposing to include an instruction in the
rules clarifying that a company owned by a foreign government is a
company that is at least majority-owned by a foreign government.
Should we provide this clarification in the rules? Should a company
be considered to be owned by a foreign government if government
ownership is less than majority-ownership? Should the rules provide
that a company is owned by a foreign government if government
ownership is greater than majority-ownership? If so, what level of
ownership would be appropriate and why? Are there some levels of
ownership of companies by a foreign government that should be
included in or excluded from the proposed definition of ``foreign
government?''
    33. Are there some levels of subnational government that should
be excluded from the proposed definition of foreign government? If
so, please explain why and provide specific examples of those levels
of subnational government that should be excluded.
    34. Should we provide any additional guidance on the statutory
terms ``foreign government'' and ``Federal Government?'' If so, what
guidance would be helpful?

G. Disclosure Required and Form of Disclosure

1. Annual Report Requirement
    Section 13(q) mandates that a resource extraction issuer provide
the payment disclosure required by that section in an annual report but
otherwise does not specify the location of the disclosure, either in
terms of a specific form or in terms of location within a form.
Consistent with the approach in the 2012 Rules, we believe that
resource extraction issuers should provide the required disclosure
about payments on Form SD.
    Form SD is already used for specialized disclosure not included
within an issuer's periodic or current reports, such as the disclosure
required by the rule implementing Section 1502 of the Act.\225\ We also
believe that using Form SD would facilitate interested parties' ability
to locate the disclosure and address issuers' concerns about providing
the disclosure in their Exchange Act annual reports on Forms 10-K, 20-
F, or 40-F.\226\ For example,

requiring the disclosure in a separate form, rather than in issuers'
Exchange Act annual reports, should alleviate concerns about the
disclosure being subject to the officer certifications required by
Exchange Act Rules 13a-14 and 15d-14 \227\ and would allow the
Commission, as discussed below, to adjust the timing of the submission
without directly affecting the broader Exchange Act disclosure
framework.\228\ As proposed, Form SD would require issuers to include a
brief statement in the body of the form in an item entitled,
``Disclosure of Payments By Resource Extraction Issuers,'' directing
readers to the detailed payment information provided in the exhibits to
the form.
---------------------------------------------------------------------------

    \225\ Rule 13p-1 [17 CFR 240.13p-1]. See also Exchange Act
Release No. 34-67716 (Aug. 22, 2012), 77 FR 56273 (Sept. 12, 2012)
(``Conflict Minerals Release'').
    \226\ See also 2012 Adopting Release, nn.366-370 and
accompanying text. Under the rules proposed in the 2010 Proposing
Release, a resource extraction issuer would have been required to
furnish the payment information in its annual report on Form 10-K,
Form 20-F, or Form 40-F. Certain commenters continue to support this
approach. See letter from Susan Rose-Ackerman (Mar. 28, 2014)
(``Ackerman'') (``[t]here is no need for the cost of a separate
report.'').
    \227\ See 2012 Adopting Release, n.369.
    \228\ In this regard, we considered permitting the resource
extraction payment disclosure to be filed in an amendment to Form
10-K, 20-F, or 40-F, as applicable, but we are concerned that this
might give the false impression that a correction had been made to a
previous filing. See also 2012 Adopting Release, n.379 and
accompanying text.
---------------------------------------------------------------------------

    In addition to considering allowing issuers to use Forms 10-K, 20-
F, or 40-F, we also considered commenters' suggestions that we require
the disclosure on Form 8-K or Form 6-K.\229\ We are not proposing that
approach, however, because we agree with those commenters who observed
that the resource extraction payment disclosure differs from the
disclosure required by Form 8-K or 6-K.\230\ In this regard, we note
that Section 13(q) requires that the disclosure be provided in an
annual report rather than on a more rapid basis, unlike the disclosure
of material corporate events, which must be filed on a ``current''
basis using Form 8-K or 6-K.\231\
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    \229\ See 2012 Adopting Release, n.371 and accompanying text.
    \230\ See, e.g., letter from Calvert 1.
    \231\ A Form 8-K report is required to be filed or furnished
within four business days after the occurrence of one or more of the
events required to be disclosed on the form, unless the form
specifies a different deadline (e.g., for disclosures submitted to
satisfy obligations under Regulation FD [17 CFR 243.100 et seq]).
See General Instruction B.1 of Form 8-K [17 CFR 249.308].
---------------------------------------------------------------------------

    While Section 13(q) mandates that a resource extraction issuer
include the relevant payment disclosure in an ``annual report,'' it
does not specifically mandate the time period in which a resource
extraction issuer must provide the disclosure. Although two commenters
on the 2010 Proposing Release believed that the reporting period for
the resource extraction disclosure should be the calendar year,\232\
two other commenters suggested that the reporting period for Form SD
should be the fiscal year.\233\ We also considered the possibility that
certain resource extraction issuers may be required to file two reports
on Form SD every year if we use a reporting period based on the fiscal
year and they are also subject to the May 31st conflict minerals
disclosure deadline.\234\ Despite the suggestions of certain commenters
and our consideration of the conflict minerals disclosure requirements,
we believe that the fiscal year is the more appropriate reporting
period for the payment disclosure. We believe it would reduce resource
extraction issuers' compliance costs when compared to a fixed, annual
reporting requirement by allowing them to use their existing tracking
and reporting systems for their public reports to also track and report
payments under Section 13(q). Also, although minimizing the number of
Form SD filings an issuer would need to make if it was also subject to
the conflict minerals disclosure rules could have benefits, we do not
believe that those benefits outweigh those arising from a reporting
regime tailored to a resource extraction issuer's fiscal year.\235\
Finally, we note that ESTMA and the EU Directives also require
reporting based on the fiscal year, with ESTMA using the same deadline
contained in the proposed rules.\236\
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    \232\ See letters from API 1 and ExxonMobil 1.
    \233\ See letters from AngloGold and RDS 2.
    \234\ General Instruction B.1 of Form SD. See also Exchange Act
Rule 13p-1.
    \235\ Of the 877 companies that we estimate would be subject to
the proposed rules, only 56 filed a Form SD pursuant to Rule 13p-1
in 2014. Out of those, all but two have a fiscal year end of
December 31, which would mean that the filing deadline under the
proposed rules would be very similar to the deadline under Rule 13p-
1, increasing the likelihood that one report could be filed each
year. Finally, we note that the conflict minerals reporting regime
adopted a uniform reporting period, in part, because such a period
allows component suppliers that are part of a manufacturer's supply
chain to provide reports to their upstream purchasers only once a
year. See Conflict Minerals Release, n.351 and accompanying text.
The same reasoning would not apply to the issuer-driven disclosure
under the proposed rules.
    \236\ See ESTMA, Section 9(1) (``Every entity must, not later
than 150 days after the end of each of its financial years, provide
the Minister with a report that discloses, in accordance with this
section, the payments that it has made during that year.''); EU
Accounting Directive, Article 43(2) (``The report shall disclose the
following information . . . in respect of the relevant financial
year.''); EU Transparency Directive, Article 6 (``The report shall
be made public at the latest six months after the end of each
financial year. . . .'').
---------------------------------------------------------------------------

    After considering the comments expressing concern over the
difficulty of providing the payment disclosure within the current
annual reporting cycle,\237\ we believe it is reasonable to provide a
filing deadline for Form SD that is later than the filing deadline for
an issuer's annual report under the Exchange Act. Therefore, consistent
with the approach under ESTMA and some commenters' suggestions,\238\
the proposed rules would require resource extraction issuers to file
Form SD on EDGAR no later than 150 days after the end of the issuer's
most recent fiscal year.\239\
---------------------------------------------------------------------------

    \237\ See 2012 Adopting Release, n.367 and accompanying text.
    \238\ See 2012 Adopting Release, nn.375-377 and accompanying
text.
    \239\ See proposed General Instruction B.2 to Form SD.
---------------------------------------------------------------------------

Request for Comment

    35. Section 13(q) requires disclosure of the payment information
in an annual report but does not specify the type of annual report.
Should we require resource extraction issuers to provide the payment
disclosure mandated under Section 13(q) on Form SD, as proposed?
Should we require, or permit, resource extraction issuers to provide
the payment information in an annual report on Forms 10-K, 20-F, or
40-F or on a different form? What would be the costs and benefits of
each approach for users of the information or resource extraction
issuers?
    36. Should the proposed disclosure be subject to the officer
certifications required by Exchange Act Rules 13a-14 and 15d-14 or a
similar requirement? Why or why not?
    37. As noted above, Section 13(q) mandates that a resource
extraction issuer provide the required payment disclosure in an
annual report, but it does not specifically mandate the time period
for which a resource extraction issuer must provide the disclosure.
Is it reasonable to require resource extraction issuers to provide
the mandated payment information for the fiscal year covered by the
applicable annual report, as proposed? Why or why not? Should the
rules instead require disclosure of payments made by resource
extraction issuers during the most recent calendar year?
    38. Should the filing deadline for Form SD be 150 days after the
end of the most recent fiscal year as proposed? Should it be longer
or shorter? Should issuers be able to apply for an extension on a
case-by-case basis? Or should there be a provision for an automatic
extension with or without a showing of cause? Should we amend
Exchange Act Rule 12b-25 \240\ to allow it to be used for an
extension for Form SD filings?
---------------------------------------------------------------------------

    \240\ 17 CFR 240.12b-25.
---------------------------------------------------------------------------

    39. Should the proposed rules provide an accommodation to filers
that are subject to both Rules 13p-1 and 13q-1, such as an
alternative filing deadline, to minimize the possibility that a
resource extraction issuer would be required to file two Form SD
filings in the same year? If so, how should that deadline be
structured?

2. Public Filing
    As noted in the U.S. District Court for the District of Columbia's
opinion discussed above, Section 13(q) provides us with the discretion
to determine whether or not we should require public

disclosure of payments by resource extraction issuers or permit
confidential filings and provide a public aggregation of this
disclosure. Consistent with the 2012 Rules, we believe that requiring
public disclosure would best accomplish the purpose of the statute.
Therefore, as supported by numerous commenters, the proposed rules
would require issuers to disclose the full payment information
publicly, including the identity of the issuer.\241\
---------------------------------------------------------------------------

    \241\ See letters from Allianz 1; Allianz 2; Africa Faith and
Justice Network (Aug. 8. 2014) (``AFJN''); Calvert Investment
Management (Nov. 25, 2013) (``Calvert 2''); CSCU; EarthRights
International (Dec. 12, 2012) (``ERI 4''); First Swedish National
Pension Fund (May 9, 2015) (``FSNPF''); Francine Cronshaw (Mar. 27,
2015) (``Cronshaw''); Global Witness 2; Global Witness (June 27,
2014) (``Global Witness 4''); Kathlein Reimer (June 10, 2014)
(``Reimer''); Michael Ross (May 21, 2014) (``Ross''); OSISA-A; Oxfam
America (Sep. 26, 2013) (``Oxfam 2''); PWYP 4; Publish What You Pay
Coalition (``PWYP 5'') (Apr. 14, 2014); PWYP-CAM; Publish What You
Pay Canada (Jan. 8, 2014) (``PWYP-CAN''); PWYP-IND; Publish What You
Pay United States (Feb 13, 2015) (``PWYP-US''); PWYP-ZIM; Rep. Water
and 58 other members of congress (June 11, 2014) (``Rep. Waters et
al.''); Senators Cardin, Leaky, Lugar, Levin, Markey (Aug. 2, 2013)
(``Sen. Cardin et al. 2''); Senators Cardin, Levin, Leahy, Markey,
Sanders, Durbin, Johnson, Whitehouse, Merkley, Boxer, Blumenthal,
Shumer (May 1, 2015) (``Sen. Cardin et al. 3''); SNS Asset
Management (July 31, 2013) (``SNS''); TI-USA 1; TSNPF.
---------------------------------------------------------------------------

    In response to the 2010 Proposing Release and the court's order to
vacate the 2012 Rules, several commenters suggested permitting issuers
to submit the payment disclosure confidentially.\242\ According to
these commenters, the statute does not expressly require the submitted
information itself to be publicly available. Instead, they asserted
that Section 13(q)(3), which is entitled ``Public Availability of
Information,'' requires us, to the extent practicable, to make public a
compilation of the information that is required to be submitted. These
commenters stated that the Commission could permit the required
information to be submitted confidentially and then prepare a public
compilation aggregating that information on a per-country or similarly
high-level basis, which they contend would both satisfy the specific
text of the statute and fulfill the underlying goal of promoting the
international transparency regime of the EITI.\243\ Other commenters
disagreed with that interpretation of Section 13(q). One stated that
any aggregated compilation ``would be in addition to the public
availability of the original company data and in no way is expected to
replace the availability of that data.'' \244\ Other commenters felt
that a compilation with aggregated data would provide little value to
those seeking to use the information.\245\
---------------------------------------------------------------------------

    \242\ See letters from API 1; API 6; API 7; Chevron Corporation
(Jan. 28, 2011) (``Chevron 1''); ExxonMobil 1; Nexen Inc. (Mar. 2,
2011) (``Nexen''); and RDS 2.
    \243\ See id.
    \244\ Letter from Sen. Cardin et al. 1.
    \245\ See, e.g., letters from Oxfam 2 (``A compilation that
presents data a high level of aggregation . . . would be largely
worthless to . . . citizens seeking to use the information. . . .'')
and Global Witness 2 (``The Commission should justify detailed
public disclosure by looking to the needs of the users of this data,
including . . . transparency advocates.'').
---------------------------------------------------------------------------

    Recognizing the purposes of Section 13(q) and the discretion
provided in the statute, and taking into account the views expressed by
various commenters, we are proposing to require resource extraction
issuers to provide the required disclosure publicly. Several factors
support this approach. First, the statute requires us to adopt rules
that further the interests of international transparency promotion
efforts, to the extent practicable.\246\ We note, in this regard, that
several existing transparency regimes require public disclosure,
including the identity of the issuer, without exception.\247\ A public
disclosure requirement under Section 13(q) would further the U.S.
foreign policy interest in supporting international transparency
promotion efforts by enhancing comparability among companies, as it
would increase the total number of companies that provide project-level
public disclosure. It would also be consistent with the objective of
ensuring that the United States is a global ``leader in creating a new
standard for revenue transparency in the extractive industries.'' \248\
In addition, the United States is currently a candidate country under
the EITI, which requires candidate countries to provide a framework for
public, company-by-company disclosure in the EITI report. Permitting
issuers to provide the required payment disclosure on a confidential
basis could undermine the efforts of the USEITI to establish a
voluntary payment disclosure regime for domestic operations. Moreover,
the fact that issuers would be required by these other transparency
promotion efforts to disclose publicly substantially the same payment
information reduces the likelihood that the payment information would
be confidential or that its disclosure would cause competitive harm.
---------------------------------------------------------------------------

    \246\ Section 13(q)(2)(E).
    \247\ See, e.g., the EU Directives.
    \248\ 156 CONG. REC. S5873 (July 15, 2010) (Statement of Senator
Cardin); id. at S3815 (May 17, 2010) (Statement of Senator Cardin)
(describing Congress's intention to create ``a historic transparency
standard that will pierce the veil of secrecy that fosters so much
corruption and instability in resource-rich countries'').
---------------------------------------------------------------------------

    Furthermore, we believe that requiring public disclosure of the
information required to be submitted under the statute is supported by
the text, structure, and legislative history of Section 13(q). In our
view, our exercise of discretion in this manner is consistent with the
statute's use of the term ``annual report,'' which is typically a
publicly filed document, and Congress's inclusion of the statute in the
Exchange Act, which generally operates through a mechanism of public
disclosure.\249\ We also observe that Section 13(q) requires issuers to
disclose detailed information in a number of categories, marked by
electronic data tags, without specifying any particular role for the
Commission in using that information or those data tags. We believe
that this is a further indication that Congress intended for the
information to be made publicly available. In addition, we believe that
providing an issuer's Form SD filings to the public through the
searchable, online EDGAR system, which would enable users of the
information to produce their own up-to-date compilations in real time,
is both consistent with the goals of the statute and the Commission's
obligation, to the extent practicable, to ``make available online, to
the public, a compilation of the information required to be submitted''
by issuers. Finally, neither the statute's text nor legislative history
includes any suggestion that the required payment disclosure should be
confidential. In fact, the legislative history supports our view that
the information submitted under the statute should be publicly
disclosed.\250\
---------------------------------------------------------------------------

    \249\ The Exchange Act is fundamentally a public disclosure
statute. See generally Schreiber v. Burlington Northern, Inc., 472
U.S. 1, 12 (1985) (``the core mechanism'' is ``sweeping disclosure
requirements'' that allow ``shareholder choice''); Longman v. Food
Lion, Inc., 197 F.3d 675, 682 (4th Cir. 1999) (embodies a
``philosophy of public disclosure''); Franklin v. Kaypro Corp., 884
F.2d 1222, 1227 (9th Cir. 1987) (``forc[es] public disclosure of
facts''). Accordingly, the reports that public companies are
required to submit under the Act--such as the annual report on Form
10-K giving a comprehensive description of a public company's
performance--have always been made public. Adding a new disclosure
requirement to the Exchange Act, and doing so for the clear purpose
of fostering increased transparency and public awareness, is a
strong indication that Congress intended for the disclosed
information to be made public.
    \250\ See, e.g., 156 CONG. REC. S3976 (May 19, 2010) (Statement
of Senator Feingold) (``This amendment would require companies
listed on U.S. stock exchanges to disclose in their SEC filings
extractive payments made to foreign governments for oil, gas, and
mining. This information would then be made public, empowering
citizens in resource-rich countries in their efforts to combat
corruption and hold their governments accountable.''); id. at S5872
(July 15, 2010) (Sen. Cardin) (``This [amendment] will require
public disclosure of those payments.''); see also id. at S3649 (May
12, 2010) (proposed ``sense of Congress'' accompanying amendment
that became Section 13(q)) (encouraging the President to ``work with
foreign governments'' to establish their own ``domestic requirements
that companies under [their jurisdiction] publicly disclose any
payments made to a government'' for resource extraction) (emphasis
added); id. at H5199 (June 29, 2010) (Joint Explanatory Statement of
the Committee of Conference) (the amendment ``requires public
disclosure to the SEC of any payment relating to the commercial
development of oil, natural gas, and minerals'') (emphasis added).

---------------------------------------------------------------------------

    We note that some commenters sought an exemption from public
disclosure for circumstances in which an issuer believes that
disclosure might jeopardize the safety and security of its employees
and operations.\251\ Other commenters opposed such an exemption and
noted their belief that increased transparency would instead increase
safety for employees.\252\ Several commenters also supported an
exemption from public disclosure for situations where a resource
extraction issuer is subject to a contractual confidentiality clause,
or when such disclosure would jeopardize competitively sensitive
information.\253\
---------------------------------------------------------------------------

    \251\ See 2012 Adopting Release, n.69 and accompanying text.
    \252\ See 2012 Adopting Release, n.70 and accompanying text.
    \253\ See letters from American Exploration and Production
Council (Jan. 31, 2011) (``AXPC''); API 1; Chamber of Commerce
Institute for 21st Century Energy (Mar. 2, 2011) (``Chamber Energy
Institute''); Chevron 1; ExxonMobil 1; International Association of
Oil and Gas Producers (Jan. 27, 2011) (``IAOGP''); Local Authority
Pension Fund Forum (Jan. 31, 2011) (``LAPFF''); NMA 2; Rio Tinto;
RDS 2; and United States Council for International Business (Feb. 4,
2011) (``USCIB'').
---------------------------------------------------------------------------

    As more fully discussed in the 2012 Adopting Release, we are
unpersuaded that these concerns warrant a blanket or per se
exemption.\254\ We emphasize, however, that existing exemptive
authority under Section 12(h) or 36(a) of the Exchange Act provide us
with the ability to address, on a case by case basis, any situations
where confidential treatment may be warranted based upon the specific
facts and circumstances, as discussed below.
---------------------------------------------------------------------------

    \254\ See, e.g., 2012 Adopting Release at Section II.B. See also
letter from OpenOil UG (Oct. 26, 2015) (``OpenOil'').
---------------------------------------------------------------------------

    In sum, we believe that the purpose of Section 13(q) is best served
when public disclosure is provided that enables citizens in resource-
rich countries to hold their governments accountable for the wealth
generated by those resources.\255\ Permitting issuers to submit payment
information confidentially would not support, and in fact could
undercut, that statutory purpose.
---------------------------------------------------------------------------

    \255\ See 156 CONG. REC. at S3816 (Statement of Senator Lugar).
---------------------------------------------------------------------------

Request for Comment

    40. Should the rules permit an issuer to submit the required
payment disclosure on a confidential basis? Why or why not?
    41. Should the rules provide an exemption from public disclosure
for existing or future agreements that contain confidentiality
provisions? Would such an exemption be consistent with the purpose
of Section 13(q) or would it frustrate it? Would it be necessary or
appropriate in the public interest and consistent with the
protection of investors?
    42. Are there circumstances in which the disclosure of the
required payment information would jeopardize the safety and
security of a resource extraction issuer's operations or employees?
If so, should the rules provide an exemption for those
circumstances?
    43. Are there any other circumstances in which we should provide
an exemption from the public disclosure requirement? For instance,
should we provide an exemption for competitively sensitive
information, or when disclosure would cause a resource extraction
issuer to breach a contractual obligation?
    44. If issuers are permitted to provide certain information on a
confidential basis, should such issuers also be required to publicly
file certain aggregate information? Should the Commission consider
such an approach? What would be the costs and benefits of this
approach?

3. Exemption From Compliance
    Many commenters supported an exemption from the disclosure
requirements when the required payment disclosure is prohibited under
the host country's laws.\256\ Some commenters stated that the laws of
China, Cameroon, Qatar, and Angola would prohibit disclosure required
under Section 13(q) and expressed concern that other countries would
enact similar laws,\257\ although other commenters challenged those
statements.\258\ Two commenters maintained that the comity principles
of international law require the Commission to construe the disclosure
requirements of Section 13(q) in a manner that avoids conflicts with
foreign law.\259\ One commenter suggested that an exemption would be
consistent with Executive Order 13609, which directs federal agencies
to take certain steps to ``reduce, eliminate, or prevent unnecessary
differences in [international] regulatory requirements.'' \260\ Some
commenters further suggested that failure to adopt such an exemption
could encourage foreign issuers to deregister from the U.S. market
\261\ and would adversely affect investors, efficiency, competition,
and capital formation.\262\
---------------------------------------------------------------------------

    \256\ See letters from API 1; API (Aug. 11, 2011) (``API 2'');
API (May 18, 2012) (``API 5''); AngloGold; Spencer Bachus, Chairman
of the U.S. House of Representatives Committee on Financial
Services, and Gary Miller, Chairman of the U.S. House of
Representatives Subcommittee on International Monetary Policy,
Committee on Financial Services (Mar. 4, 2011) (``Chairman Bachus
and Chairman Miller''); Barrick Gold; BP 1; Chamber Energy
Institute; Chevron 1; Cleary; ExxonMobil 1; ExxonMobil (Mar. 15,
2011) (``ExxonMobil 2''); IAOGP; NMA 2; NYSBA Committee; Nexen;
PetroChina; Petrobras; PricewaterhouseCoopers LLP (Mar. 2, 2011)
(``PWC''); Rio Tinto; RDS 2; Royal Dutch Shell (May 17, 2011) (``RDS
3''); Royal Dutch Shell (Aug. 1, 2011) (``RDS 4''); Senator Lisa
Murkowski and Senator John Cornyn (Feb. 28, 2012) (``Sen. Murkowski
and Sen. Cornyn''); Split Rock International, Inc. (Mar. 1, 2011)
(``Split Rock''); Statoil; Talisman Energy Inc. (June 23, 2011)
(``Talisman''); and Vale S.A. (Mar. 2, 2011) (``Vale''). See also
letter from Cravath, Swaine & Moore LLP, Cleary Gottlieb Steen &
Hamilton LLP, Davis Polk & Wardwell LLP, Shearman & Sterling LLP,
Simpson Thacher & Bartlett LLP, Skadden, Arps, Slate, Meagher & Flom
LLP, Sullivan & Cromwell LLP, and Wilmer Cutler Pickering Hale and
Dorr LLP (Nov. 5, 2010) (``Cravath et al.'').
    \257\ See letters from API 1 and ExxonMobil 1. See also letter
from RDS 2 (mentioning China, Cameroon, and Qatar).
    \258\ See note 263 below.
    \259\ See letters from API 5 and NMA 2.
    \260\ See letter from API 5. We note that the responsibilities
of federal agencies under Executive Order 13609 are to be carried
out ``[t]o the extent permitted by law'' and that foreign regulatory
approaches are to be considered ``to the extent feasible,
appropriate, and consistent with law.'' See Proclamation No. 13609,
77 FR 26413 (May 4, 2012).
    \261\ See letters from Cleary; RDS 1; Split Rock; and Statoil.
See also letter from Branden Carl Berns (Dec. 7, 2011) (``Berns'')
(maintaining that some foreign issuers subject to Section 13(q) with
modest capitalizations on U.S. exchanges might choose to delist in
response to competitive advantages enjoyed by issuers not subject to
Section 13(q)).
    \262\ See, e.g., letters from API 1; ExxonMobil 1; and RDS 2.
See also letter from API 5. Several commenters noted that we have a
statutory duty to consider efficiency, competition, and capital
formation when adopting rules. See letter from API (Jan. 19, 2012)
(``API 3''); Cravath et al.; Senator Mary L. Landrieu (Mar. 6, 2012)
(``Sen. Landrieu''); and Sen. Murkowski and Sen. Cornyn.
---------------------------------------------------------------------------

    Other commenters opposed an exemption for foreign laws that
prohibits disclosure of payment information.\263\ Some commenters
believed it would undermine the purpose of Section 13(q) and create an
incentive for foreign countries that want to prevent transparency to
pass such laws, thereby creating a loophole for companies to avoid
disclosure.\264\

Commenters also disputed the assertion that there are foreign laws that
specifically prohibit disclosure of payment information.\265\ Those
commenters noted that most confidentiality laws in the extractive
industry sector relate to the confidentiality of geological and other
technical data, and in any event, most resource extraction agreements
contain specific provisions that allow for disclosure when required by
law or stock exchange rules.
---------------------------------------------------------------------------

    \263\ See letters from OpenOil; OxFam 2; PWYP 5; PWYP-CAM;
Senator Cardin et al. 2; SNS; Reimer; Rep. Waters et al.; The Carter
Center (Apr. 21, 2014) (``Carter'').
    \264\ See, e.g., letters from Allianz 2; Cambodians for Resource
Revenue Transparency (Feb. 7, 2012) (``Cambodians''); EG Justice
(Feb. 7, 2012) (``EG Justice 2''); FSNPF; Global Witness 1; Global
Witness 2; Grupo FARO (Feb. 13, 2012) (``Grupo Faro''); Human Rights
Foundation of Monland (Mar. 8, 2011 and July 15, 2011)
(respectively, ``HURFOM 1'' and ``HURFOM 2''); National Civil
Society Coalition on Mineral Resource Governance of Senegal (Feb.
14, 2012) (``National Coalition of Senegal''); OSISA-A; PWYP 1;
Representatives Barney Frank, Jose Serrano, Norman Dicks, Henry
Waxman, Maxine Waters, Donald Payne, Nita Lowey, Betty McCollum,
Barbara Lee, Jesse Jackson, Jr., Alcee Hastings, Gregory Meeks, Rosa
DeLauro, and Marcy Kaptur (Feb. 15, 2012) (``Rep. Frank et al.'');
Sen. Cardin et al. 1; Sen. Cardin et al. 2; Sen. Levin 1; George
Soros (Feb. 21, 2012) (``Soros''); USAID; and letter from WACAM
(Feb. 2, 2012) (``WACAM''). But see letter from API 6 (stating that
the Commission's experience with Rule 1202 of Regulation S-K
indicates that similar exemptions do not incentivize foreign
governments to pass prohibitions on disclosure).
    \265\ See, e.g., letters from Calvert 2; ERI 3; Global Witness
1; Global Witness 2; OpenOil; PWYP 1; Publish What You Pay (Dec. 20,
2011) (``PWYP 3''); PWYP 4; and Rep. Frank et al. For a lengthier
discussion of previous comments, see Section II.B.2.b of the 2012
Adopting Release.
---------------------------------------------------------------------------

    Given these conflicting positions and representations, and
consistent with the EU Directives and ESTMA, we are not proposing an
exemption when the required disclosure is prohibited by host country
law. Instead, we will consider using our existing authority under the
Exchange Act to provide exemptive relief at the request of a resource
extraction issuer, if and when warranted.\266\ We believe that a case-
by-case approach to exemptive relief using our existing authority is
preferable to either adopting a blanket exemption for a foreign law
prohibition (or for any other reason) or providing no exemptions and no
avenue for exemptive relief under this or other circumstances. Among
other things, such an approach would permit us to tailor the exemptive
relief to the particular facts and circumstances presented, such as by
permitting alternative disclosure or by phasing out the exemption over
an appropriate period of time.\267\
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    \266\ See Sections 12(h) and 36(a) of the Exchange Act (15
U.S.C. 78l(h) and 78mm(a)).
    \267\ For example, if a resource extraction issuer were
operating in a country that enacted a law that prohibited the
detailed public disclosures required under our proposal, the
Commission could potentially issue a limited exemptive order (in
substance and/or duration). The order could be tailored to either
require some form of disclosure that would not conflict with the
host country's law and/or provide the issuer with time to address
the factors resulting in non-compliance.
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    This approach would allow us to determine if and when exemptive
relief may be warranted based on the issuer's specific facts and
circumstances.\268\ For example, an issuer claiming that a foreign law
prohibits the required payment disclosure under Section 13(q) would be
able to make its case, based on its own particular circumstances, that
it would suffer substantial commercial or financial harm if relief is
not granted. Issuers seeking an exemption would be required to submit a
written request for exemptive relief to the Commission, describing the
particular payment disclosures it seeks to omit (e.g., signature
bonuses in Country X or production entitlement payments in Country Y)
and the specific facts and circumstances that warrant an exemption,
including the particular costs and burdens it faces if it discloses the
information. The Commission would be able to consider all appropriate
factors in making a determination whether to grant requests, including,
for example, any legal analysis necessary to support the issuer's
request,\269\ whether the disclosure is already publicly available, and
whether (and how frequently) similar information has been disclosed by
other companies, under the same or similar circumstances.\270\ If an
issuer is already making the disclosures under another regulatory
disclosure regime, we anticipate that the applicant would have a heavy
burden to demonstrate that an exemption is necessary from the reporting
required by our proposed rules.\271\
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    \268\ See letters from Oxfam 2 and PWYP 4 (each supporting a
case by case exemption).
    \269\ For example, we would expect an opinion of counsel in
support of any claim that a foreign law prohibits the disclosure of
the information in question.
    \270\ See PWYP 4 (recommending criteria to consider in granting
exemptions).
    \271\ The Commission would generally expect to provide public
notice of the exemptive request and an opportunity for public
comment.
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Request for Comment

    45. As noted above, we will consider using our existing
exemptive authority, where appropriate, to exempt issuers from the
resource payment disclosure requirements. This could include, for
example, situations where host country laws prohibit the disclosure
called for by the rules. Is a case-by-case exemptive process a
better alternative than providing a rule-based blanket exemption for
specific countries or other circumstances, or providing no
exemptions?
    46. What are the advantages and disadvantages, if any, of
relying on our existing exemptive authority under the Exchange Act?
    47. Do any foreign laws prohibit the disclosure that would be
required by the proposed rules? Is there any information that has
not been previously provided by commenters to support an assertion
that such prohibitions exist and are not limited in application? If
so, please provide such information and identify the specific law
and the corresponding country.
    48. We note that the EU Directives and ESTMA do not provide an
exemption for situations when disclosure is prohibited under host
country law. Has this presented any problems for resource extraction
issuers subject to these reporting regimes? If so, please identify
specific problems that have arisen and explain how companies are
managing those situations.

4. Alternative Reporting
    As noted above, several countries have implemented resource
extraction payment disclosure laws since the 2012 Rules.\272\ We also
note that in 2014, the United States became an EITI candidate country.
In light of these developments and with a view towards reducing
compliance costs, we are proposing a provision that would allow issuers
to meet the requirements of the proposed rules, in certain
circumstances, by providing disclosures that comply with a foreign
jurisdiction's rules or that meet the USEITI reporting requirements, if
the Commission has determined that those rules or requirements are
substantially similar to the rules adopted under Section 13(q).\273\
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    \272\ See Section I above.
    \273\ Proposed Item 2.01(b) of Form SD. See also letters from
Chevron (May 7, 2014) (``Chevron 2'') and Exxon & Royal Dutch Shell
(May 1, 2014) (``Exxon'') (supporting substituted compliance
provisions).
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    More specifically, the proposed provision would allow, in certain
circumstances, issuers subject to resource extraction payment
disclosure requirements in a foreign jurisdiction to file the report it
prepared under those foreign requirements in lieu of the report that
would otherwise be required by our disclosure rules. The proposed rules
would permit compliance under this framework only after the Commission
has determined that the foreign disclosure requirements are
substantially similar to the requirements in its rules.\274\ We note
that the Commission has, in other circumstances, recognized that steps
taken to satisfy foreign regulatory

requirements could, in certain circumstances, also satisfy U.S.
regulatory obligations.\275\
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    \274\ In this regard, we could rely on Rule 0-13 [17 CFR 240.0-
13] which permits an application to be filed with the Commission to
request a ``substituted compliance order'' under the Exchange Act.
Pursuant to Rule 0-13, the application must include supporting
documents and will be referred to the Commission's staff for review.
The Commission must publish a notice in the Federal Register that a
complete application has been submitted and allow for public
comment. The Commission may also, in its sole discretion, schedule a
hearing on the matter addressed by the application.
    \275\ See, e.g., the Commission's recently adopted rules on
cross-border security-based swaps, which allow for substituted
compliance when market participants are subject to comparable
regulations in other jurisdictions. Release No. 34-75611 (Aug. 5,
2015), 80 FR 48963 (Aug. 14, 2015) (Registration Process for
Security-Based Swap Dealers and Major Security-Based Swap
Participants); Release No. 34-74244 (Feb. 11, 2015), 80 FR 14563
(Mar. 19, 2015) (Regulation SBSR-Reporting and Dissemination of
Security-Based Swap Information); and Release No. 34-72472 (June 25,
2014), 79 FR 47277 (Aug. 12, 2014) (Application of ``Security-Based
Swap Dealer'' and ``Major Security-Based Swap Participant''
Definitions to Cross-Border Security-Based Swap Activities).
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    The alternative reporting provision would also be extended, to the
extent appropriate,\276\ to reports submitted in full compliance with
the USEITI reporting standards, provided that the Commission has
determined that the disclosures required thereunder are substantially
similar to the final rules under Section 13(q).
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    \276\ The USEITI only requires disclosure of payments made to
the U.S. federal government. As such, any future determination that
the USEITI reporting standards are ``substantially similar'' to the
requirements of the proposed rules could only apply to the
disclosures required by the proposed rules concerning payments made
by resource extraction issuers to the Federal Government. In these
circumstances, an extraction issuer that made payments to a foreign
government would still need to report those payments in accordance
with Form SD and could not rely on its USEITI reports to satisfy
this component of its Rule 13q-1 reporting obligation.
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    This framework for alternative reporting would allow a resource
extraction issuer to avoid the costs of having to prepare a separate
report meeting the requirements of our proposed disclosure rules when
it already files a substantially similar report in another jurisdiction
or under USEITI. Adoption of such a provision would also be consistent
with the approach taken in the EU Directives and ESTMA.\277\ In
addition, we believe that adoption of such a provision would promote
international transparency efforts by providing an incentive to a
foreign country that is considering adoption of resource extraction
payment disclosure laws to provide a level of disclosure that is
consistent with our rules.
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    \277\ As we noted in Section I above, Canada's Minister of
Natural Resources has already determined that the EU Directives are
equivalent to Canada's requirements. Extractive Sector Transparency
Measures Act--Substitution Determination, available at http://www.nrcan.gc.ca/acts-regulations/17754 (last visited Dec. 8, 2015).
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    We are proposing to require resource extraction issuers to file the
substantially similar report as an exhibit to Form SD. A resource
extraction issuer would also be required to state in the body of its
Form SD filing that it is relying on our accommodation and identify the
alternative reporting regime for which the report was prepared (e.g., a
foreign jurisdiction or the USEITI).
    We anticipate that we would make determinations about the
similarity of a foreign jurisdiction's disclosure requirements either
unilaterally or pursuant to an application submitted by an issuer or a
jurisdiction. We anticipate following the same process in determining
whether USEITI disclosures are substantially similar. We would then
publish the determinations in the form of a Commission order. We would
consider, among others, the following criteria in making a
determination whether USEITI or a foreign jurisdiction's reporting
requirements are substantially similar to ours: (1) The types of
activities that trigger disclosure; (2) the types of payments that are
required to be disclosed; (3) whether project-level disclosure is
required and, if so, the definition of ``project;'' (4) whether the
disclosure must be publicly filed and whether it includes the identity
of the issuer; and (5) whether the disclosure must be provided using an
interactive data format that includes electronic tags. When considering
whether to allow substituted reporting based on a foreign
jurisdiction's reporting requirements, we would also consider whether
disclosure of payments to subnational governments is required and
whether there are any exemptions allowed and, if so, whether there are
any conditions that would limit the grant or scope of the exemptions.
Request for Comment

    49. Should we include a provision in the rules that would allow
for issuers subject to reporting requirements in certain foreign
jurisdictions or under the USEITI to submit those reports in
satisfaction of our requirements? Why or why not? If so, what
criteria should we apply when making a determination that the
alternative disclosure requirements are substantially similar to the
disclosure requirements under Rule 13q-1? Are there additional
criteria, other than those identified above, that we should apply in
making such a determination? Are there criteria identified above
that we should not apply? Should we align our criteria with criteria
used in foreign jurisdictions, such as the EU Directives?
    50. We propose to base our determination on a finding that the
foreign jurisdiction's or the USEITI's requirements are
substantially similar to our own. Is this the standard we should
use? Should we consider other standards, for example, a
determination that a foreign jurisdiction's or the USEITI's
requirements are ``equivalent'' or ``comparable?''
    51. Given the specificity of the disclosures required, should we
consider a stricter or more flexible standard? Are there other
standards for determining when reliance on foreign or USEITI
requirements is appropriate that we should consider? If so, please
describe the standard and why it should be used.
    52. In making the determination that a foreign jurisdiction's or
the EITI's disclosure requirements are substantially similar to our
own, should we make the determination unilaterally on our own
initiative, require an issuer to submit an application prior to
making the determinations, allow jurisdictions to submit an
application, or allow all of these methods? If we should require an
application, what supporting evidence should we require? For
example, should we require a legal opinion that the disclosure
requirements are substantially similar?
    53. Under Exchange Act Rule 0-13, we could consider requests for
substituted compliance upon application by an applicant or the
jurisdiction itself and after notice and an opportunity for public
comment.\278\ Does Rule 0-13 provide an appropriate structure for
the Commission to make decisions regarding the similarity of
resource extraction payment disclosure requirements in foreign
jurisdictions or under the USEITI's reporting regime for purposes of
Rule 13q-1?
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    \278\ See note 274 above.
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    54. Is there another process for the Commission to use to
consider substituted compliance requests other than the Rule 0-13
process? For example, should the Commission use the process set
forth in Rule 0-12? Should the Commission permit someone other than
a resource extraction issuer or a foreign or domestic authority to
submit an application for substituted compliance?
    55. As noted above, in making a determination about the
similarity of a foreign jurisdiction's disclosure requirement, the
Commission would consider, among other things, whether the
disclosure must be provided using an interactive data format that
includes electronic tags. If a foreign jurisdiction requires an
interactive data format other than XBRL, but otherwise calls for
disclosure substantially similar to our own, should we nonetheless
require resource extraction issuers to file these disclosures in
XBRL? Would having the payment data tagged using different
interactive formats adversely affect the ability of users to compile
and analyze the data? In these circumstances, are there other
alternatives we should consider?
    56. Given the progress in the development of resource extraction
payment disclosure rules in certain jurisdictions, should we
consider making a determination regarding the similarity of certain
foreign reporting requirements when the final rule is adopted?
Currently, payment disclosure rules are in place in the United
Kingdom, Norway, and Canada. Should we determine whether rules in
all of these jurisdictions are substantially similar for purposes of
the final rule? Are there other jurisdictions that also have payment
disclosure rules in place that we should consider for purposes of
compliance with Rule 13q-1?

    57. The USEITI reporting framework only requires disclosure of
payments made to the U.S. federal government while the proposed
rules would require disclosure of payments to foreign governments
and the Federal Government. Thus, as proposed, if the Commission
were to find that the USEITI reporting standards are ``substantially
similar'' to the requirements of the proposed rules, the Commission
would permit issuers to file reports submitted in full compliance
with the USEITI in lieu of the disclosure required by the proposed
rules concerning payments made by resource extraction issuers to the
Federal Government. In these circumstances, any payments made to
foreign governments would still need to be reported in accordance
with Form SD. In light of the reporting differences between the
USEITI and our proposed rules, however, should the Commission
preclude the use of USEITI reports under the alternative reporting
provision when a resource extraction issuer would also have to
disclose payments made to foreign governments pursuant to the
proposed rules?
5. Exhibits and Interactive Data Format Requirements
    We are proposing requirements for the presentation of the mandated
payment information similar to those set forth in the 2012 Rules. The
proposed rules would require a resource extraction issuer to file the
required disclosure on EDGAR in an XBRL exhibit to Form SD. Providing
the required disclosure elements in a machine readable (electronically-
tagged) format would enable users easily to extract, aggregate, and
analyze the information in a manner that is most useful to them. For
example, it would allow the information received from the issuers to be
converted by EDGAR and other commonly used software and services into
an easily-readable tabular format.\279\
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    \279\ Another possible alternative for providing the information
in interactive data format would be Inline XBRL. Commission rules
and the EDGAR system do not currently allow for the use of Inline
XBRL. To the extent that a determination is made in the future to
accept Inline XBRL submissions, we expect to revisit the format in
which this disclosure requirement is provided.
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    Section 13(q) requires the submission of certain information in
interactive data format.\280\ Under the proposed rules, consistent with
the 2012 Rules and the statutory language, a resource extraction issuer
would be required to submit the payment information in XBRL using
electronic tags--a taxonomy of defined reporting elements--that
identify, for any payment required to be disclosed:
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    \280\ 15 U.S.C. 78m(q)(2)(C) and 15 U.S.C. 78m(q)(2)(D)(ii). The
Commission has defined an ``interactive data file'' to be the
interactive data submitted in a machine-readable format. See 17 CFR
232.11; Release No. 33-9002 (Jan. 14, 2009), 74 FR 6776, 6778 n.50
(Feb. 10, 2009).
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     The total amounts of the payments, by category; \281\
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    \281\ For example, categories of payments could be bonuses,
taxes, or fees.
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     The currency used to make the payments;
     The financial period in which the payments were made;
     The business segment of the resource extraction issuer
that made the payments;
     The government that received the payments, and the country
in which the government is located; and
     the project of the resource extraction issuer to which the
payments relate.\282\
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    \282\ See proposed Item 2.01(a) of Form SD.
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    In addition to the electronic tags specifically required by the
statute, a resource extraction issuer would also be required to provide
and tag the type and total amount of payments made for each project and
the type and total amount of payments for all projects made to each
government. These additional tags relate to information that is
specifically required to be included in the resource extraction
issuer's annual report by Section 13(q).\283\ Unlike the 2012 Rules,
however, which included those additional tags, the proposed rules would
also require resource extraction issuers to tag the particular resource
that is the subject of commercial development, and the subnational
geographic location of the project.\284\ We believe that these
additional tags would further enhance the usefulness of the data with
an insignificant corresponding increase in compliance costs.\285\
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    \283\ See Section 13(q)(2)(A)(i)-(ii).
    \284\ API has similarly suggested requiring electronic tags for