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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5416 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
2d Session
S. 5416
To amend the Securities Exchange Act of 1934 to address the disclosure
of payments by resource extraction issuers, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 3, 2024
Mr. Cardin introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Securities Exchange Act of 1934 to address the disclosure
of payments by resource extraction issuers, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``1504 Modernization Act''.
SEC. 2. SENSE OF CONGRESS; PURPOSE.
(a) Definitions.--In this section:
(1) Amended provision.--The term ``amended provision''
means section 13(q) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(q)), as amended by this Act.
(2) Commercial extractive industry activity; foreign
government; payment; resource extraction issuer.--The terms
``commercial extractive industry activity'', ``foreign
government'', ``payment'', and ``resource extraction issuer''
have the meanings given those terms in the amended provision.
(3) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(4) Existing provision.--The term ``existing provision''
means section 13(q) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(q)), as in effect on the day before the date of
enactment of this Act.
(b) Sense of Congress.--It is the sense of Congress that--
(1) the United States should be a global leader with
respect to the principles of transparency, good governance, and
fighting corruption;
(2) increased transparency with respect to payments by
resource extraction issuers reduces risks for investors in the
United States and allows citizens in resource-rich countries to
hold their leaders accountable;
(3) under the existing provision, the Commission--
(A) has the authority to promulgate highly
effective rules; and
(B) should require resource extraction issuers to
disclose payments and other information that would be
most useful to combating corruption abroad;
(4) the Commission should enforce the intent behind the
existing provision to cover all commercial extractive industry
activities and not only activities relating to oil and natural
gas;
(5) this Act, and the amendments made by this Act, serve
only to clarify, for the avoidance of doubt, the intent of the
existing provision and to broaden compliance requirements under
the amended provision to include all commercial extractive
industry activities;
(6) even if this Act, and the amendments made by this Act,
were not enacted into law, the Commission would have the
ability to exercise the rulemaking authority of the Commission
to achieve the intent behind the existing provision, including,
in particular, to promulgate rules requiring project-by-project
reporting while prohibiting reporting based on the aggregation
of contracts; and
(7) the Commission should ensure that investors, and the
public at-large, have the most detailed, complete, and timely
information disaggregated for each commercial extractive
industry activity carried out by a resource extraction issuer
for which a payment has been made to a foreign government in a
given fiscal year.
(c) Purposes.--The purposes of this Act, and the amendments made by
this Act, are to--
(1) clarify that the authorities provided by, and the scope
of, the existing provision include requiring the disclosure of
disaggregated payments, information, or contracts on a project-
by-project basis;
(2) under the amended provision--
(A) broaden the scope of resource extraction
issuers and forms of payment that are subject to the
requirements of the amended provision; and
(B) require the disclosure of payments made to
criminal networks or other illicit actors that do not
have legitimate governance claims over the resources
resulting from, or with respect to the regulation of,
commercial extractive industry activities that are
conducted outside the United States; and
(3) improve the security of critical supply chains, provide
investor confidence in the foreign business operations of all
resource extraction issuers, and support the ability of
stakeholders in the United States, and citizens of the United
States, to understand the revenues received by foreign
governments so as to increase accountability and ensure that
the public in foreign countries receives benefits from those
payments for the exploitation of the natural resources of those
foreign countries.
SEC. 3. DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION ISSUERS.
Section 13(q) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(q)) is amended to read as follows:
``(q) Disclosure of Payments by Resource Extraction Issuers.--
``(1) Definitions.--In this subsection:
``(A) Commercial extractive industry activity.--The
term `commercial extractive industry activity' includes
commercial development, exploration, extraction,
processing, exporting, and any other significant action
relating to oil, natural gas, minerals, logging and
timber harvesting, or the conversion of natural
forested lands for agricultural production (including
livestock forage), or the acquisition of a license for
any such activity, as determined by the Commission.
``(B) Foreign government.--The term `foreign
government' means, as determined by the Commission--
``(i) a foreign central government,
including any department, agency,
instrumentality, State-owned enterprise or
company that is wholly or partially State-
owned, central bank, or financial institution
under the control of a foreign central
government; or
``(ii) a subnational government or regional
authority, including any instrumentality,
department, agency, or authority operated and
controlled by a subnational government or
regional authority.
``(C) Interactive data format.--The term
`interactive data format' means an electronic data
format in which pieces of information are identified
using an interactive data standard.
``(D) Interactive data standard.--The term
`interactive data standard' means a standardized list
of electronic tags that mark information included in
the annual report of a resource extraction issuer.
``(E) Payment.--The term `payment'--
``(i) means a payment that is--
``(I) made to further a commercial
extractive industry activity; and
``(II) not de minimis; and
``(ii) includes--
``(I) taxes, royalties, fees
(including license fees), production
entitlements, bonuses, inducements,
services, securities, and other
material benefits that the Commission,
consistent with the guidelines of the
Extractive Industries Transparency
Initiative (to the extent practicable),
determines are part of the commonly
recognized revenue stream for a
commercial extractive industry
activity;
``(II) a payment processed in
cryptocurrency; and
``(III) in-kind services or other
non-monetary exchanges between a
resource extraction issuer and a
foreign government.
``(F) Resource extraction issuer.--The term
`resource extraction issuer' means an issuer that--
``(i) is required to file an annual report
with the Commission; and
``(ii) engages in a commercial extractive
industry activity.
``(2) Disclosure.--
``(A) Information required.--
``(i) In general.--Not later than 270 days
after the date of enactment of the 1504
Modernization Act, and subject to the other
provisions of this paragraph, the Commission
shall issue final rules that require each
resource extraction issuer to include in an
annual report of the resource extraction issuer
information relating to any payment made by the
resource extraction issuer, a subsidiary of the
resource extraction issuer, or an entity under
the control of the resource extraction issuer
to a foreign government, the Federal
Government, or any other recipient, including
any bribe, ransom, or other payment paid to a
foreign criminal network, local warlord, or
chief that may not have legitimate governance
claims, for the purpose of carrying out a
commercial extractive industry activity,
including--
``(I) the type and total amount of
such payments made for each project of
the resource extraction issuer relating
to those commercial extractive industry
activities; and
``(II) the type and total amount of
such payments made to each such entity
or person.
``(ii) Elements.--
``(I) Definition.--In this clause,
the term `project' means as a contract,
lease, or license that forms the basis
of liability for a payment, consistent
with the definition for that term used
in other markets and by the Extractive
Industries Transparency Initiative.
``(II) Requirement.--The final
rules issued under clause (i) shall--
``(aa) require disclosures
to be made on a per commercial
extractive industry activity
basis for a given fiscal year;
``(bb) require the
disaggregation of payments made
by a resource extraction issuer
on a per-commercial extractive
industry activity basis, for
the period covered by the
report in which the applicable
disclosure is made; and
``(cc) require that reports
be filed and that furnished
reports shall not be
sufficient.
``(iii) Limited exemptions.--The final
rules issued under clause (i) shall only permit
limited exemptions from those rules, each of
which--
``(I) shall be justified and
notified to Congress before any
exemption is granted with respect to
any such rule; and
``(II) may not permit the exclusion
of the disclosure of--
``(aa) any conflict of a
resource extraction issuer with
foreign laws or contract terms;
or
``(bb) the commercial
extractive industry activities
of smaller reporting companies
or emerging growth companies.
``(B) Consultation in rulemaking.--In issuing rules
under subparagraph (A), the Commission may consult with
any agency or entity that the Commission determines is
relevant.
``(C) Interactive data format.--The rules issued
under subparagraph (A) shall require that the
information included in the annual report of a resource
extraction issuer be submitted in an interactive data
format.
``(D) Interactive data standard.--
``(i) In general.--The rules issued under
subparagraph (A) shall establish an interactive
data standard for the information included in
the annual report of a resource extraction
issuer.
``(ii) Electronic tags.--The interactive
data standard described in clause (i) shall
include electronic tags that identify, for any
payments made by a resource extraction issuer
to a foreign government or the Federal
Government--
``(I) the total amounts of the
payments, by category;
``(II) the currency, which may
include cryptocurrencies, used to make
the payments;
``(III) the financial period in
which the payments were made;
``(IV) the business segment of the
resource extraction issuer that made
the payments;
``(V) the recipient of the
payments, and the country in which the
recipient is located;
``(VI) the project of the resource
extraction issuer to which the payments
relate; and
``(VII) such other information as
the Commission may determine is
necessary or appropriate in the public
interest or for the protection of
investors.
``(E) International transparency efforts.--To the
extent practicable, the rules issued under subparagraph
(A) shall support the commitment of the Federal
Government to international transparency promotion
efforts relating to commercial extractive industry
activities.
``(F) Effective date.--With respect to each
resource extraction issuer, the final rules issued
under subparagraph (A) shall take effect on the date on
which the resource extraction issuer is required to
submit an annual report relating to the fiscal year of
the resource extraction issuer that ends not earlier
than 1 year after the date on which the Commission
issues final rules under subparagraph (A).
``(3) Public availability of information.--
``(A) In general.--To the extent practicable, the
Commission shall make available online, to the public,
a compilation of the information required to be
submitted under the rules issued under paragraph
(2)(A).
``(B) Other information.--Nothing in this paragraph
shall require the Commission to make available online
information other than the information required to be
submitted under the rules issued under paragraph
(2)(A).
``(4) Authorization of appropriations.--There are
authorized to be appropriated to the Commission such sums as
may be necessary to carry out this subsection.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
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