The Securities and Exchange Commission (SEC) has promulgated its final rule on mine safety disclosures that must be included in quarterly and annual reports filed by publicly-traded companies involved in mining operations. It also specifies the types of MSHA enforcement actions that will trigger a four-day filing requirement for 8-K reports by mining companies. The rule implements the requirements added by the Dodd-Frank Wall Street Reform and Consumer Protection Act and will appear in 17 C.F.R. Parts 229, 239, 249.
Mine operators had already been filing such reports in compliance with the Dodd-Frank Act, and were somewhat guided in doing this by the language of the Act itself and by the SEC’s proposed rule. The final rule now solidifies what is required for these reports. The requirements are mostly identical to what appeared in the proposed rule, but there are some differences.
The following summarizes reporting requirements now in effect.
- Disclosure must be made on a mine-by-mine basis, based on an MSHA mine identification number.
- The mine operator does not have to disclose citations or orders issued to independent contractors (who are not subsidiaries of the mine operator).
- Independent contractors that are required to file SEC reports must follow the mine safety disclosure rules and disclose their citations and orders.
- There is no exemption to the reporting requirements for small companies or for “foreign private issuers” (the latter term is defined in the SEC’s regulations).
- Form 10-Q must include the required disclosure for the quarter covered by the report.
- Forms 20-F and 40-F must include the required disclosure for the issuer’s fiscal year.
- Form 10-K must disclose the information for the fiscal year only, not also for the fourth quarter.
- Orders and citations must be disclosed, even if they were reduced or vacated.
- Orders and citations that are under contest must still be disclosed.
Required Disclosures in Reports: 10-K, 10-Q, 20-F, 40-F
- Total number of significant and substantial citations and orders issued during the relevant time period of the report
- Total dollar value of civil penalty assessments proposed by MSHA during the relevant time period.There is no requirement to disclose the cumulative total of all assessments outstanding as of the last day of the reporting period.
Contested amounts may neither be omitted from the disclosure nor reported separately, but issuers are permitted to note the contested amounts and provide additional disclosure.
- Total number of mining-related fatalities for the reporting period.Only fatalities that MSHA determines are “chargeable” must be disclosed.
- Total number of legal actions pending before the Federal Mine Safety and Health Review Commission during the reporting period, listed according to the following categories:
- Pre-penalty contests;
- Penalty contests;
- Complaints for compensation filed by miners seeking pay for the period when their work was idled by a closure order;
- Mine Act discrimination cases;
- Applications for temporary relief from any modification or termination of an order; and
- Appeals of judge’s decisions to the Federal Mine Safety and Health Review Commission.
No additional information is required other than the totals for the foregoing categories.
5. Total number of legal actions initiated during the reporting period.
6. Total number of legal actions resolved during the reporting period.
7. Total number of 104(b) orders issued in the reporting period.
8. Total number of 104(d) citations and orders issued in the reporting period.
9. Total number of flagrant violations in the reporting period.
10. Total number of imminent danger orders issued in the reporting period.
11. A list of mines that received a pattern of violations notice in the reporting period.
12. A list of mines that received a notice of a potential pattern of violations in the reporting period.
Form 8-K Filing Requirement
(Not Applicable to Foreign Private Issuers)
1. A form 8-K must be filed within four business days after receipt of one of the following:
a. Section 107(a) imminent danger order;
b. Pattern of violations notice; or
c. Potential pattern of violations notice.
2. The disclosure must include the date of receipt of the order or notice, the type of order or notice, and the name and location of the mine.
3. The disclosure must be made even if MSHA vacates the order or notice within the four-day period, but additional information noting that may be included.