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CALIFORNIA CORPORATE & SECURITIES LAW

Will Congress Deep Six The SEC’s Resource Extraction Rule?

In December of last year, I wrote about how the Securities and Exchange Commission’s Resource Extraction Rule might meet an untimely end.  See There’s Still Time For Congress To Void The SEC’s Resource Extraction Rule (Dec. 14, 2016).  The rule, Rule 13q-1 and an amendment to Form SD, had an extraordinarily difficult birth:

Congress had ordered the SEC to adopt a rule by April 17, 2011.  After belatedly adopting a rule, the U.S. District Court vacated the rule and sent it back to the SEC.  American Petroleum Institute v. SEC, 953 F. Supp. 2d 5 (D. D.C. 2013).  Oxfam America then successfully sued the SEC to force it to do what Congress had long ago ordered it to do. Oxfam Am., Inc. v. United States SEC, 2015 U.S. Dist. LEXIS 116982 (D. Mass. Sept. 2, 2015).  The SEC then promised to have a vote on a proposed rule by June 27, 2016.  Whether from petulance, chagrin or expediency, the SEC adopted the rule on the very last day without holding a public meeting.  For the record, the SEC missed Congress’ deadline by five years, two months and ten days.

SEC Declines To Define “Mineral” In Resource Extraction Rule But Then Defines It Anyway (June 29, 2016).  Although the rule took effect on September 26, 2016, resource extraction issuers must comply with the final rule and form for fiscal years ending on or after September 30, 2018.

I don’t know whether House Majority Leader Kevin McCarthy reads this blog.  I’m guessing that he most likely doesn’t.  Nonetheless, Congressman McCarthy last week echoed the possibility, if not likelihood, that Congress will vitiate the SEC’s resource extraction rule:

The House will also take the ax to the Securities and Exchange Commission’s disclosure rule for resource extraction, which adds an unreasonable compliance burden on American energy companies that isn’t applied to their foreign competitors. This rule, which closely mimics a regulation already struck down by the courts, would put American businesses at a competitive disadvantage.

How the House Will Roll Back Washington’s Rule by Bureaucrat, The Wall Street Journal., Jan. 24, 2017.

Did this presidential spokeswoman miss this blog?

Yesterday, President Trump issued this executive order requiring, among other things:

Unless prohibited by law, whenever an executive department or agency (agency) publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.

After the order was issued, Reuters reported the following clarification:

The White House confirmed on Monday that a new executive order to slash regulations will not apply to independent regulatory agencies such as the Securities and Exchange Commission, a spokeswoman said.

Evidently, the spokeswoman answered before reading my post, How Independent Is The SEC And How Independent Should It Be?

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