SEC Proposes Specialized Disclosure of Mine Safety Information Under Dodd-Frank Act
FOR IMMEDIATE RELEASE
Washington, D.C., Dec. 15, 2010 — The Securities and Exchange Commission today voted to propose rules outlining the way in which mining companies must disclose to investors certain information about mine safety and health standards.
The proposed rules would implement Section 1503 of the Dodd-Frank Act, which requires mining companies to include information about mine safety and health standards in their annual and quarterly reports filed with the SEC. Mining companies also would be required to file a Form 8-K with the SEC when they receive certain notices from the Mine Safety and Health Administration.
“Congress has determined that investors will benefit from disclosure of the health and safety records of mining companies,” said SEC Chairman Mary L. Schapiro. “We look forward to hearing from commenters as to whether these rules address the informational needs of investors.”
Public comments on the proposed rules should be received by the Commission by Jan. 31, 2011.
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Section 1503 of the Dodd-Frank Act requires mining companies to include mine safety and health information in their annual and quarterly reports filed with the Commission. It also requires mining companies to file a Form 8-K when they receive certain notices from the Mine Safety and Health Administration (MSHA). The disclosure requirements in the Act are based on the safety and health requirements that apply to mines under the Federal Mine Safety and Health Act of 1977 (Mine Act).
The mine safety disclosure requirements are currently in effect. However, the Commission is proposing to add the requirements to its rules and forms and address the scope and application of the requirements.
Requirements of the Proposed Rules
Periodic Reporting Requirements
Under the proposed rules, mining companies would be required to provide, as an exhibit to their annual and quarterly reports, mine safety information listed in Section 1503 of the Dodd-Frank Act and certain additional disclosure designed to provide context to such information. The Dodd-Frank Act requires companies to disclose:
- The total number of significant and substantial violations of mandatory health or safety standards under section 104 of the Mine Act for which the operator received a citation from MSHA.
- The total number of orders issued under section 104(b) of the Mine Act.
- The total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health and safety standards under section 104(d) of the Mine Act.
- The total number of flagrant violations under section 110(b)(2) of the Mine Act.
- The total number of imminent danger orders issued under section 107(a) of the Mine Act.
- The total dollar value of proposed assessments from MSHA.
- A list of the mines that have been notified by MSHA of a pattern of violations or a potential to have a pattern of violations under section 104(e) of the Mine Act.
- Pending legal actions before the Federal Mine Safety and Health Review Commission.
- The total number of mining-related fatalities.
The proposed rules would use the language used in Section 1503 of the Dodd-Frank Act to set forth the disclosure requirements, and also provide instructions to mining companies about the information required to be disclosed about penalty assessments and pending legal actions.
For example, in a quarterly report, mining companies would need to report the total amount of penalty assessments proposed during the quarter, and also the total of all assessments outstanding on the last day of the quarter, even if the company is contesting the assessment. Similarly, under the proposal, mining companies would report a pending legal action in the report for the quarter when the legal action began, and also update the information in later reports if there were material developments.
In addition to the Dodd-Frank Act required disclosure, the Commission is proposing that mining companies provide a brief description of each category of violations, orders and citations they are reporting, so that investors can understand the information provided without having to research the Mine Act and MSHA’s rules.
As proposed, the periodic reporting requirements would apply to both U.S. companies and foreign private issuers.
Form 8-K Reporting Requirement
The Commission is also proposing to add a new item to Form 8-K, which would require domestic mining companies to file Form 8-K within four business days after receiving from MSHA three types of notices specified by the Dodd-Frank Act:
- An imminent danger order under section 107(a) of the Mine Act.
- Written notice of a pattern of violations under section 104(e) of the Mine Act.
- Written notice of the potential to have a pattern of such violations.
The proposed Form 8-K item would require a mining company to report the date it received the notice, the type of notice, and the name and location of the mine involved. Foreign private issuers would not be required to file current reports under the proposal. Finally, under the proposal a late filing of the Form 8-K would not affect a company’s eligibility to use Form S-3 short-form registration.
The Commission is seeking public comments on the proposed rules that should be received by Jan. 31, 2011. The Commission will review the comments it receives and consider those comments in determining whether to adopt the proposed rules.
Bad news for Pan American Silver (PAAS)
This may be why Ross Beaty sold some of his PAAS shares this week. Here’s the link, here’s the text, thanks for the headsup, Setty