Congress Nullifies SEC’s Resource Extraction Issuer Payment Disclosure Rule

In a joint resolution, the House of Representatives and the Senate nullified the resource extraction issuer payment disclosure rule of the US Securities and Exchange Commission (SEC). President Donald Trump signed the resolution on February 14, 2017.¹

The nullification occurred pursuant to the Congressional Review Act (CRA), which permits Congress to overturn certain recently issued federal agency rules. Because the resource extraction issuer payment disclosure rule was adopted by the SEC on June 27, 2016, and published in the Federal Register on July 27, 2016, it was subject to the Congressional Review Act.²

As a result of the nullification under the CRA, the resource extraction issuer payment disclosure rule will not go into effect. In addition, the CRA prohibits the SEC from reissuing the rule, or adopting a new rule in substantially the same form as the disapproved rule, unless that action is authorized by a law enacted after the date of the joint resolution disapproving the original rule.³

The resource extraction issuer payment disclosure rule was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The nullified rule would have required resource extraction issuers to disclose on Form SD payments made to governments for the commercial development of oil, natural gas or minerals beginning with fiscal years ending on or after September 30, 2018, with the first such disclosure required by late May 2019.

The SEC originally adopted a resource extraction issuer payment disclosure rule in August 2012 but that rule was vacated in July 2013 by the US District Court for the District of Columbia. In September 2015, the US District Court for the District of Massachusetts ordered the SEC to file an expedited schedule for promulgating final rules. When the SEC adopted its now overturned rule in June 2016, it was adhering to the expedited schedule that it had filed with the district court.

¹ The text of the resolution, H.J.Res.41, is available at https://www.congress.gov/bill/115th-congress/house-joint-resolution/41/text.
² See Congressional Research Service, Memorandum (November 17, 2016), available at https://www.hsdl.org/?view&did=797044.
³ See Congressional Research Service, The Congressional Review Act: Frequently Asked Questions (November 17, 2016), available at https://fas.org/sgp/crs/misc/R43992.pdf.