II 

110TH CONGRESS 

2D SESSION S. 3389 

To require, for the benefit of shareholders, the disclosure of payments to 

foreign governments for the extraction of natural resources, to allow 

such shareholders more appropriately to determine associated risks. 

IN THE SENATE OF THE UNITED STATES 

JULY 31, 2008 

Mr. SCHUMER (for himself and Ms. CANTWELL) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To require, for the benefit of shareholders, the disclosure 

of payments to foreign governments for the extraction 

of natural resources, to allow such shareholders more 

appropriately to determine associated risks. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Extractive Industries 

5 Transparency Disclosure Act’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 


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1 (1) Each year corporations pay billions of dol2 lars to foreign governments and their affiliates for 

3 natural resources, such as oil, gas, coal, copper, dia4 monds, and other extracted minerals. 

5 (2) Developing countries that derive a signifi6 cant portion of their revenues from natural resource 

7 extraction tend to have higher poverty rates, weaker 

8 governance, higher rates of conflict, and poorer de9 velopment records than those countries that do not 

10 rely on resource revenues. Since revenues derived 

11 from natural resource extraction are often a singular 

12 opportunity for some developing countries to struc13 ture programs and institutions to broaden the collec14 tive and individual wealth of their citizens, it is im15 perative that the uses of such funds are closely mon16 itored. 

17 (3) There is a growing consensus among oil, 

18 gas, and mining companies that transparency is 

19 good for business, since it improves the business cli20 mate in which they work and fosters good govern21 ance and accountability. 

22 (4) Transparency benefits shareholders because 

23 of their desire to know the amount of such payments 

24 in order to assess financial risk, compare payments 

25 from country to country, and assess whether such 


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1 payments help to create a more stable investment 

2 climate; moreover, undisclosed payments may be per3 ceived as corrupt and to the detriment of the image 

4 of the corporation. 

5 (5) It is in the United States best interest to 

6 promote transparency, since transparency contrib7 utes to a better investment climate, a more stable 

8 commodity supply, and greater energy security. 

9 SEC. 3. ADDITIONAL ANNUAL REPORT DISCLOSURES RE10 QUIRED. 

11 (a) AMENDMENT.—Section 13 of the Securities Ex12 change Act of 1934 (15 U.S.C. 78m) is amended by add13 ing at the end the following new subsection: 

14 ‘‘(m) DISCLOSURE OF PAYMENT FOR RESOURCE EX15 TRACTION.— 

16 ‘‘(1) DISCLOSURES REQUIRED.—The Commis17 sion shall modify the rules prescribed under sub18 section (b) to require that each issuer required to 

19 file an annual report with the Commission shall dis20 close in such report the total amounts, for each for21 eign country and for each category of payment for 

22 each foreign country, of any and all payments made, 

23 directly or indirectly, by the issuer or any of its sub24 sidiaries, to an agency or instrumentality of a for25 eign government— 


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1 ‘‘(A) for natural resources in a foreign 

2 country; or 

3 ‘‘(B) in any connection with the extraction 

4 of natural resources from a foreign country. 

5 ‘‘(2) DEFINITIONS.—For purposes of this sub6 section, the following definitions shall apply: 

7 ‘‘(A) AGENCY OR INSTRUMENTALITY OF A

8 FOREIGN GOVERNMENT.—The term ‘agency or 

9 instrumentality of a foreign government’ 

10 means— 

11 ‘‘(i) a foreign government; 

12 ‘‘(ii) a department, ministry, agency, 

13 office, officer, employee, legislator, rep14 resentative, subdivision, or agent of a for15 eign government; 

16 ‘‘(iii) a person that is directly or indi17 rectly owned, controlled, or employed by 

18 one or more of the persons or entities de19 scribed in clause (i) or (ii); 

20 ‘‘(iv) an account, trust, or other de21 vice held for the benefit of any of the per22 sons or entities described in clause (i), (ii), 

23 or (iii); or 


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1 ‘‘(v) an entity controlled by the state, 

2 such as a state-owned oil company, and its 

3 agents. 

4 ‘‘(B) CATEGORY OF PAYMENT.—The term 

5 ‘category of payment’, for any payment or 

6 transfer, means the category described in any of 

7 clauses (i) through (viii) of subparagraph (G) 

8 that most closely describes such payment or 

9 transfer. 

10 ‘‘(C) EXTRACTION.—The term ‘extraction’ 

11 means— 

12 ‘‘(i) the search for any natural re13 source, in its natural deposits and original 

14 locations; 

15 ‘‘(ii) the acquisition of property 

16 rights, licenses, or properties for the pur17 pose of further exploration or for the pur18 pose of removing any natural resource 

19 from existing deposits on those properties, 

20 or both; 

21 ‘‘(iii) the construction, drilling, and 

22 production activities necessary to retrieve 

23 any natural resource from its natural de24 posit, and the acquisition, construction, in25 stallation, and maintenance of field gathVerDate Aug 31 2005 19:54 Aug 02, 2008 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3389.IS S3389

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1 ering and storage systems, including lifting 

2 any other natural resource to the surface 

3 and gathering, treating, field processing, 

4 and field storage; 

5 ‘‘(iv) the transportation of any nat6 ural resource through the territory of any 

7 foreign country by any means; 

8 ‘‘(v) the export of any natural re9 source from an intermediary country; 

10 ‘‘(vi) the acquisition of any conces11 sion, permission, permit, right, or other 

12 authorization from a foreign government 

13 necessary or desirable to conduct any of 

14 the activities described in clauses (i) 

15 through (v); or 

16 ‘‘(vii) any combination of the activities 

17 described in clauses (i) through (vi). 

18 ‘‘(D) FOREIGN COUNTRY.—The term ‘for19 eign country’ means any country other than the 

20 United States. 

21 ‘‘(E) FOREIGN GOVERNMENT.—The term 

22 ‘foreign government’ means the government of 

23 any foreign country. 

24 ‘‘(F) NATURAL RESOURCES.—The term 

25 ‘natural resources’ means— 


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1 ‘‘(i) oil and gas reserves, metal ores, 

2 gemstones, industrial materials, and coal; 

3 and 

4 ‘‘(ii) any other commodity of commer5 cial value produced by the extraction of 

6 natural resources, in its natural or refined 

7 state, that the Commission shall, by regu8 lation, determine should be subject to the 

9 reporting requirements of this subsection 

10 in order to carry out the purposes of this 

11 subsection due to the significance of the 

12 amounts being paid therefor by one or 

13 more issuers. 

14 ‘‘(G) PAYMENTS.—The term ‘payments’ 

15 means any transfer or payment of any kind, ei16 ther direct or indirect, and irrespective of the 

17 amount, and in any form whatsoever, includ18 ing— 

19 ‘‘(i) host government’s production en20 titlements; 

21 ‘‘(ii) national state-owned company 

22 production entitlements; 

23 ‘‘(iii) profits taxes; 

24 ‘‘(iv) royalties; 

25 ‘‘(v) dividends; 


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1 ‘‘(vi) bonuses (such as signature, dis2 covery, or production bonuses); 

3 ‘‘(vii) license fees, rental fees, entry 

4 fees, and other considerations for licenses 

5 or concessions; and 

6 ‘‘(viii) other benefits to the foreign 

7 government or the agency or instrumen8 tality of the foreign government that have 

9 a value of not less that $100,000.’’. 

10 (b) DEADLINE.—The Securities and Exchange Com11 mission shall prescribe the modifications to its rules re12 quired by section 13(m) of the Securities Exchange Act 

13 of 1934 (as added by the amendment made by subsection 

14 (a) of this section) not later than 90 days after the date 

15 of enactment of this Act, and shall make such modifica16 tions effective with respect to the annual reports of issuers 

17 with respect to the fiscal years of issuers ending on or 

18 after January 1, 2009. 

19 (c) PUBLIC AVAILABILITY OF INFORMATION.—The 

20 Securities and Exchange Commission shall, by rule or reg21 ulation, provide that the information filed by all issuers 

22 pursuant to such section 13(m) be compiled so that it is 

23 accessible by the public directly, and in a compiled format, 

24 from the website of the Commission without separately acVerDate Aug 31 2005 19:54 Aug 02, 2008 Jkt 069200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3389.IS S3389

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1 cessing on the EDGAR system the annual reports of each 

2 issuer filing such information. 

Æ 


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