Memorandum
Congress Disapproves the SEC’s Resource Extraction Rule
February 14, 2017

The U.S. House of Representatives and U.S. Senate recently passed a joint resolution disapproving the“resource extraction rule” of the Securities and Exchange Commission (“SEC”). 1 The final rule, adopted by
the SEC on June 27, 2016, implemented the Dodd-Frank requirement that issuers that engage in thecommercial development of oil, natural gas, or minerals (“resource extraction issuers”) disclose annually
payments made to the U.S. federal government or any foreign government for the purpose of the commercial
development of oil, natural gas, or minerals by such resource extraction issuers, their subsidiaries and otherentities under their control. Under the final rule, resource extraction issuers would have been required tocomply with the rule commencing with their fiscal year ending on or after September 30, 2018.
Congress disapproved the resource extraction rule pursuant to the Congressional Review Act, which allows
Congress to repeal any rule finalized in the past 60 legislative days through a simple majority vote in each ofthe House and the Senate. The joint resolution declares that the resource extraction rule “shall have no force
or effect.” Notably, the joint resolution did not repeal the Dodd-Frank provision mandating that the SEC
adopt a rule requiring the disclosure of payments by resource extraction issuers.
The joint resolution has been presented to President Donald J. Trump, who is expected to approve themeasure. In a policy statement issued on February 1, 2017, the Trump administration expressed its support
for Congress’s actions “to begin to nullify unnecessary regulations imposed on America’s businesses” via theCongressional Review Act.2 With regard to the resource extraction rule in particular, the administration
opined that “[t]he rule would impose unreasonable compliance costs on American energy companies that are
not justified by quantifiable benefits. Moreover, American businesses could face a competitive disadvantage

1 See H.J. Res. 41.
2 H.J. Res. 38, H.J. Res. 36, H.J. Res. 41, H.J. Res. 40, H.J. Res. 37 – Statement of Administration Policy (Feb. 1, 2017).

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Memorandum – February 14, 2017

2in cases where their foreign competitors are not subject to similar rules.”Assuming that President Trump signs the joint resolution, resource extraction issuers will not need tocomply with the final rule previously adopted by the SEC. While it remains to be seen whether Congress will
overturn the Dodd-Frank provision requiring the SEC to adopt a resource extraction rule, as soon asPresident Trump signs the joint resolution, there will be no resource extraction disclosure requirement ineffect with which resource extraction issuers must comply.

If you have any questions or would like additional information, please do not hesitate to contact Yafit Cohnat +1-212-455-3815 or yafit.cohn@stblaw.com or any other member of the Firm’s Public Company Advisory
Practice.

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Memorandum – February 14, 2017

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