Thursday, December 17, 2020
Yesterday, the Securities and Alternate Fee adopted closing guidelines for the disclosure of funds by “useful resource extraction issuers”. These guidelines implement Part 13(q) of the Securities Alternate Act of 1934. Part 13(q) was added by the Dodd-Frank Wall Road Reform and Client Safety Act. In a remark letter to the SEC, I really useful that the SEC outline “mineral”. See Useful resource Extraction Funds Disclosure: “I’ve Data Vegetable, Animal, and Mineral”. The SEC, nevertheless, has resolutely refused to outline the time period:
‘We decline to comply with the advice of the commenter [yours truly] who steered that we outline the time period ‘mineral.'”
The SEC’s rationalization, nevertheless, is revealing:
“On this regard, we notice that, in response to the 2019 proposed rulemaking, in addition to to the 2016 rulemaking, no trade commenter has requested that we present a definition of ‘minerals.'”
The takeaway seems to be that the SEC responds favorably solely to trade requests. The SEC additionally doubled down on its assertion that the time period is “generally understood”:
“This reinforces our perception that the time period “minerals” is often understood.”
As I identified in my remark letter, nevertheless, the U.S. Supreme Court docket has reached the other conclusion:
“The phrase ‘mineral’ is utilized in so many senses, dependent upon the context, that the peculiar definitions of the dictionary throw however little mild upon its signification in a given case.”
Northern Pacific R. Co. v. Soderberg, 188 U. S. 526, 530 (1903). Additional, as I identified in my remark letter, the SEC’s declare to a “frequent understanding” is belied by the multiplicity of definitions that may present in federal laws, together with the next:
“Minerals embody oil, fuel, sulphur, geopressured-geothermal and related sources, and all different minerals that are licensed by an Act of Congress to be produced from ‘public lands’ as outlined in part 103 of the Federal Land Coverage and Administration Act of 1976.” 30 C.F.R. § 282.3.
“Mineral means clay, stone, sand, gravel, metalliferous ore, non-metalliferous ore, or every other strong materials or different matter of economic worth.” 15 C.F.R. § 922.3.
“Mineral means oil, fuel, and sulfur; it additionally contains sand, gravel, and salt used to facilitate the event and manufacturing of oil, fuel, and sulfur.” 30 C.F.R. § 556.105(b).
The SEC did settle for considered one of my recommendations (“In response to a suggestion by one commenter, the ultimate guidelines use the disjunctive ‘or’ within the definition of extraction.”). Oddly, the SEC ignored my remark that defining “extraction” as “extraction” is round.
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