Date: Jan 05, 2012
Summary of New Rule
The Securities and Exchange Commission ("SEC") issued a final rule on December 21, adopting new disclosure requirements for mining companies. The rule implements the Mine Safety section of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("the Dodd-Frank Act"). Section 1503(a) requires operators of mines to file periodic reports with the SEC regarding various health and safety violations. Section 1503(b) mandates the filing of Form 8-K to further disclose orders and notices received from the Mine Safety and Health Administration ("MSHA"). These rules take effect on January 27, 2012.
Under the Federal Mine Safety and Health Act of 1977 ("the Mine Act"), MSHA is required to inspect surface mines at least twice a year and underground mines at least four times a year. Spot inspections are also done periodically or in response to a complaint. If the MSHA inspectors find a condition they view as a violation, they will issue a citation or order to the mine operators. Although some MSHA-related disclosures were already required by the provisions of the Dodd-Frank Act, this rule codifies, clarifies and expands on those obligations.
Section 1503(a) mandates that every mine operator or subsidiary that is a mine operator disclose mine-by-mine totals of following information:
The SEC has also amended Form 8-K to require filing the form within four business days of the receipt of an imminent danger notice or notice of a pattern of violations or the potential of such patterns.
Impact on Mine Operators
Mine operators should review their internal record-keeping systems to ensure that each of the items listed for disclosure are tracked. Also, mine operators should develop a method to ensure that Form 8-K is filed in a timely manner after each imminent danger or pattern of violation notice. Although late filing of the form will not prevent a company from using the Form S-3 short-form registration, the forms should be sent in as soon as possible.
Fortunately, successful lobbying by the Chamber of Commerce, the National Association of Manufacturers and others with our technical assistance persuaded Congress not to include a similar requirement under the Occupational Safety Health Act that applies to employers in the rest of the economy.
This rule was not heavily contested, with the SEC receiving only thirty comments on the proposed amendments. However, there are two other, more controversial disclosure rules that have not yet been adopted by the SEC. Thus far, the SEC has delayed passing final rules for disclosures of conflict minerals and disclosures of payments made by resource extraction companies. We will continue to monitor these developments.