II 118th CONGRESS 2d Session S. 5416 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.

1. Short title This Act may be cited as the 1504 Modernization Act . 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. 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. .