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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.''.
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