[Federal Register Volume 75, Number 245 (Wednesday, December 22, 2010)]
[Proposed Rules]
[Pages 80374-80391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31941]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 229, 239 and 249
[Release Nos. 33-9164; 34-63548; File No. S7-41-10]
RIN 3235-AK83
Mine Safety Disclosure
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
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SUMMARY: We are proposing amendments to our rules to implement Section
1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Section 1503(a) of the Act requires issuers that are operators, or that
have a subsidiary that is an operator, of a coal or other mine to
disclose in their periodic reports filed with the Commission
information regarding specified health and safety violations, orders
and citations, related assessments and legal actions, and mining-
related fatalities. Section 1503(b) of the Act mandates the filing of a
Form 8-K disclosing the receipt of certain orders and notices from the
Mine Safety and Health Administration.
DATES: Comments should be received on or before January 31, 2011.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml);
Send an e-mail to [email protected]. Please include
File Number S7-41-10 on the subject line; or
Use the Federal Rulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number S7-41-10. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments
are also available for Web site viewing and copying in the Commission's
Public Reference Room, 100 F Street, NE., Washington, DC 20549, on
official business days between the hours of 10 a.m. and 3 p.m. All
comments received will be posted without change; we do not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT: Jennifer Zepralka, Senior Special
Counsel, or Jennifer Riegel, Attorney-Advisor, Division of Corporation
Finance at (202) 551-3300, at the U.S. Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549.
SUPPLEMENTARY INFORMATION: We are proposing to add new Item 106 to
Regulation S-K,\1\ amend Item 601 of Regulation S-K,\2\ and amend Forms
8-K,\3\ 10-Q,\4\ 10-K,\5\ 20-F \6\ and 40-F \7\ under the Securities
Exchange Act of 1934 (``Exchange Act'').\8\ In addition, we propose to
amend General Instruction
[[Page 80375]]
I.A.3(b) of Form S-3 \9\ under the Securities Act of 1933 (``Securities
Act'').\10\
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\1\ 17 CFR 229.10 et seq.
\2\ 17 CFR 229.601.
\3\ 17 CFR 249.308.
\4\ 17 CFR 249.308a.
\5\ 17 CFR 249.310.
\6\ 17 CFR 249.220f.
\7\ 17 CFR 249.240f.
\8\ 15 U.S.C. 78a et seq.
\9\ 17 CFR 239.13.
\10\ 15 U.S.C. 77a et seq.
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I. Background and Summary
Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the ``Act'') \11\ requires issuers that are required to
file reports with the Commission pursuant to sections 13(a) or 15(d) of
the Exchange Act and that are operators, or that have a subsidiary that
is an operator, of a coal or other mine to disclose specified
information about mine health and safety in their periodic reports
filed with the Commission.\12\ Section 1503(b) of the Act requires each
issuer that is an operator, or that has a subsidiary that is an
operator, of a coal or other mine to file a current report on Form 8-K
with the Commission reporting receipt of certain shutdown orders and
notices of patterns or potential patterns of violations.\13\
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\11\ Pub. L. 111-203 (July 21, 2010).
\12\ Section 1503(a) of the Act.
\13\ Section 1503(b) of the Act.
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The disclosure requirements set forth in Section 1503 of the Act
refer to and are based on the safety and health requirements applicable
to mines under the Federal Mine Safety and Health Act of 1977 (the
``Mine Act''),\14\ which is administered by the U.S. Labor Department's
Mine Safety and Health Administration (``MSHA''). Under the Mine Act,
MSHA is required to inspect surface mines at least twice a year and
underground mines at least four times a year \15\ to determine whether
there is compliance with health and safety standards or with any
citation, order or decision issued under the Mine Act and whether an
imminent danger exists. MSHA also conducts spot inspections \16\ and
inspections pursuant to miners' complaints.\17\ If violations of safety
or health standards are found, MSHA inspectors will issue citations to
the mine operators. Among other activities under the Mine Act, MSHA
also assesses and collects civil monetary penalties for violations of
mine safety and health standards.\18\
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\14\ 30 U.S.C. 801 et seq.
\15\ 30 U.S.C. 813(a). Seasonal or intermittent operations are
inspected less frequently. See Mine Safety and Health
Administration, Program Policy Manual, Volume I, Section 103,
available at http://www.msha.gov/REGS/COMPLIAN/PPM/PMMAINTC.HTM.
\16\ 30 U.S.C. 813(i).
\17\ 30 U.S.C. 813(g).
\18\ 30 U.S.C. 820. See also ``MSHA's Statutory Functions''
available at http://www.msha.gov/MSHAINFO/MSHAINF1.HTM.
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MSHA maintains a data retrieval system on its Web site that allows
users to examine data on inspections, violations, and accidents, as
well as information about dust samplings, at specific mines throughout
the United States.\19\ The information provided by the MSHA data
retrieval system is based on data gathered from various MSHA systems.
For example, when citations, orders or violations are issued by MSHA to
mine operators, the information about such citations, orders or
violations is entered by MSHA into MSHA's systems and subsequently
reflected in the data retrieval system within a short period of time.
The data retrieval system allows a user to search for information based
on the identification numbers assigned to specific mines or contractors
(MSHA Mine ID or Contractor ID), as well as by operator name, mine
name, contractor name or controller name.\20\ In all cases, the
information is displayed in the data retrieval system on a mine-by-mine
basis.\21\
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\19\ See http://www.msha.gov/DRS/DRSHOME.HTM.
\20\ The controller is the company or individual that MSHA's
Office of Assessments has determined to have ultimate control or
ownership of the operator.
\21\ When the disclosure requirements of Section 1503 of the Act
were introduced, Senator Rockefeller noted his concern that ``there
is no requirement to publicly disclose safety records'' of mining
companies. See SA 3886 (an amendment to SA 3739 to S. 3217, 111th
Cong. (May 6, 2010); Press Release: Rockefeller Requires Mining
Companies to Disclose Safety Records, May 7, 2010, available at
http://rockefeller.senate.gov/press/record.cfm?id=324768&.
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In addition, an independent adjudicative agency, the Federal Mine
Safety and Health Review Commission (the ``FMSHRC''), provides
administrative trial and appellate review of legal disputes arising
under the Mine Act.\22\ Most cases deal with civil penalties proposed
by MSHA to be assessed against mine operators and address whether the
alleged safety and health violations occurred, as well as the
appropriateness of proposed penalties.\23\ The FMSHRC's administrative
law judges decide cases at the trial level and the five-member FMSHRC
provides appellate review. Appeals from the FMSHRC's decisions are to
the U.S. courts of appeals.\24\
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\22\ 30 U.S.C. 815(d).
\23\ ``About FMSHRC'' on http://www.fmshrc.gov/fmshrc.html.
\24\ 30 U.S.C. 816.
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The disclosure requirements set forth in the Act are currently in
effect.\25\ However, the Act states that the Commission is ``authorized
to issue such rules or regulations as are necessary or appropriate for
the protection of investors and to carry out the purposes of [Section
1503].'' \26\ Accordingly, we are proposing to amend our rules to
implement and specify the scope and application of the disclosure
requirements set forth in the Act and to require a limited amount of
additional disclosure to provide context for certain items required by
the Act.
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\25\ See Section 1503(f) of the Act.
\26\ Section 1503(d)(2) of the Act.
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Specifically, we are proposing amendments to Form 10-K, Form 10-Q,
Form 20-F and Form 40-F to require the disclosure required by Section
1503(a) of the Act and certain additional disclosures. The disclosure
requirements for Forms 10-Q and 10-K would be set forth in new Item 106
of Regulation S-K. Because the information required to be disclosed
under proposed Item 106 of Regulation S-K would be set forth in an
exhibit to the filing, we are proposing to amend Item 601 of Regulation
S-K to add a new exhibit to Form 10-K and Form 10-Q. We are proposing
to amend Forms 20-F and 40-F to include the same disclosure
requirements as those proposed for issuers that are not foreign private
issuers. In addition, we are proposing to add a new item to Form 8-K to
implement the requirement imposed by Section 1503(b) of the Act, and to
amend Form S-3 to add the new Form 8-K item to the list of Form 8-K
items the untimely filing of which will not result in loss of Form S-3
eligibility.
II. Discussion of the Proposed Amendments
A. Required Disclosure in Periodic Reports
As noted above, the requirements in Section 1503(a) are already in
effect. We are proposing to codify the requirements into our disclosure
rules in order to facilitate consistent compliance with them by
reporting companies.
In order to implement the disclosure requirement set forth in
Section 1503(a) of the Act, we are proposing to add new Item 4 to Part
II of Form 10-Q and new Item 4(b) to Part I of Form 10-K, which would
require the information required by new Items 106 and 601(b)(95) of
Regulation S-K; new Item 16J to Form 20-F; and new Paragraph (18) of
General Instruction B of Form 40-F. These proposed items would be
identical in substance and entitled, ``Mine Safety Disclosure.'' As
discussed in detail below, the proposed items would require issuers to
provide in their periodic reports and in exhibits to their periodic
reports the information listed in Section 1503(a) of the Act and
certain
[[Page 80376]]
additional disclosure designed to provide context for such information.
1. Scope
Section 1503(a) of the Act mandates that specified disclosure be
provided in each periodic report filed with the Commission by every
issuer that is required to file reports with the Commission pursuant to
sections 13(a) or 15(d) of the Exchange Act and that is ``an operator,
or that has a subsidiary that is an operator, of a coal or other
mine.'' The Act specifies that the term ``operator'' is to have the
meaning given such term in section 3 of the Mine Act.\27\ The Act also
specifies that the term ``coal or other mine'' is to mean a coal or
other mine as defined in section 3 of the Mine Act,\28\ that is subject
to the provisions of the Mine Act.\29\
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\27\ Section 1503(e)(3) of the Act. Section 3(d) of the Mine Act
provides that an ``operator'' means any owner, lessee, or other
person who operates, controls, or supervises a coal or other mine or
any independent contractor performing services or construction at
such mine. 30 U.S.C. 802.
\28\ Section 3(h) of the Mine Act:
(1) ``Coal or other mine'' means (A) an area of land from which
minerals are extracted in nonliquid form or, if in liquid form, are
extracted with workers underground, (B) private ways and roads
appurtenant to such area, and (C) lands, excavations, underground
passageways, shafts, slopes, tunnels and workings, structures,
facilities, equipment, machines, tools, or other property including
impoundments, retention dams, and tailings ponds, on the surface or
underground, used in, or to be used in, or resulting from, the work
of extracting such minerals from their natural deposits in nonliquid
form, or if in liquid form, with workers underground, or used in, or
to be used in, the milling of such minerals, or the work of
preparing coal or other minerals, and includes custom coal
preparation facilities. In making a determination of what
constitutes mineral milling for purposes of this Act, the Secretary
shall give due consideration to the convenience of administration
resulting from the delegation to one Assistant Secretary of all
authority with respect to the health and safety of miners employed
at one physical establishment;
(2) For purposes of titles II, III, and IV, ``coal mine'' means
an area of land and all structures, facilities, machinery tools,
equipment, shafts, slopes, tunnels, excavations, and other property,
real or personal, placed upon, under, or above the surface of such
land by any person, used in, or to be used in, or resulting from,
the work of extracting in such area bituminous coal, lignite, or
anthracite from its natural deposits in the earth by any means or
method, and the work of preparing the coal so extracted, and
includes custom coal preparation facilities;
\29\ Section 1503(e)(2) of the Act.
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We are proposing to include references to these definitions in new
Item 106 \30\ and Item 601(b)(95) \31\ of Regulation S-K, the
instructions to new Item 16J of Form 20-F \32\ and the notes to new
Paragraph (18) of General Instruction B of Form 40-F.\33\ Because the
Act's definition of ``coal or other mine'' is limited to those mines
that are subject to the provisions of the Mine Act, and the Mine Act
applies only to mines located in the United States,\34\ we are
proposing that, for each required disclosure item discussed below,\35\
the information would be required only for coal or other mines (as
defined in the Mine Act) located in the United States. As a result,
issuers that operate (or have subsidiaries that operate) mines outside
the United States would not have to disclose information about such
mines under the proposal. Thus, for example, an issuer that operates
mines in both the United States and Canada would only be required to
include information about its U.S. mines. While our proposals are
limited to implementing the requirements of the Act and, therefore, do
not extend to foreign mines, to the extent mine safety issues are
material under our current rules, disclosure could be required pursuant
to the following items of Regulation S-K: Item 303 (Management's
Discussion and Analysis of Financial Condition and Results of
Operations), Item 503(c) (Risk Factors), Item 101 (Description of
Business) or Item 103 (Legal Proceedings).
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\30\ See proposed Item 106 of Regulation S-K (17 CFR 229.106).
\31\ See proposed Item 601(b)(95) of Regulation S-K (17 CFR
229.601(b)(95)).
\32\ See instructions to proposed Item 16J under Part II of Form
20-F.
\33\ See notes to proposed Paragraph (18) of General Instruction
B of Form 40-F.
\34\ The Mine Act covers each ``coal or other mine, the products
of which enter commerce, or the operations or products of which
affect commerce, and each operator of such mine, and every miner in
such mine * * *'' 30 U.S.C. 803. `` `Commerce' means trade, traffic,
commerce, transportation, or communication among the several States,
or between a place in a State and any place outside thereof, or
within the District of Columbia or a possession of the United
States, or between points in the same State but through a point
outside thereof.'' 30 U.S.C. 802(b). `` `State' includes a State of
the United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Virgin Islands, American Samoa, Guam, and the Trust
Territory of the Pacific Islands.'' 30 U.S.C. 802(c).
\35\ See Section II.A.4 below for a discussion of the proposed
disclosure requirements.
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As proposed, we would include smaller reporting companies and
foreign private issuers \36\ within the scope of the proposed rules
implementing Section 1503(a) of the Act. We believe their inclusion is
consistent with the plain language of Section 1503(a), which applies
broadly to issuers that are required to file reports under sections
13(a) or 15(d) of the Exchange Act. Because foreign private issuers are
not subject to Regulation S-K, we are proposing to amend Forms 20-F and
40-F to require the specified mine safety disclosure about mines
subject to the Mine Act operated by a foreign private issuer (or a
subsidiary of such foreign private issuer).\37\
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\36\ See the definition of ``smaller reporting company'' in 17
CFR 240.12b-2 and the definition of ``foreign private issuer'' in 17
CFR 240.3b-4.
\37\ See Section IX below for the text of proposed amendments.
As discussed in Section II.B.3 below, we are not proposing to
require foreign private issuers to comply with Section 1503(b) of
the Act by filing Forms 8-K.
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Finally, we believe that the language of the Act referring to
``each coal or other mine'' is intended to elicit disclosure of any
citations, orders or violations for each distinct mine covered by the
Mine Act, and is not intended to permit disclosure by grouping mines by
project or geographic region.\38\ Although this approach may result in
issuers reporting a significant volume of information in their periodic
reports, this approach accords with the plain language of the Act. As
noted above, information on a mine-by-mine basis is currently made
publicly available through MSHA's data retrieval system.
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\38\ To facilitate public input on implementation of the Act,
the Commission has provided a series of e-mail links, organized by
topic, on its website at http://www.sec.gov/spotlight/regreformcomments.shtml. The public comments we received on the
topic of mine safety disclosure are available on our website at
http://www.sec.gov/comments/df-title-xv/specialized-disclosures/specializeddisclosures.shtml. We received input from a commentator
suggesting that the Commission adopt a materiality standard for
reporting the matters under Section 1503(a) where an issuer has
numerous operations. See letter from Rio Tinto. However, because
Section 1503 does not appear to contemplate materiality thresholds,
we are not proposing to include such a threshold for the disclosure
requirement.
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Request for Comment
(1) Section 1503 of the Act provides definitions of the terms
``operator'' and ``coal or other mine'' but does not define the term
``subsidiary.'' Under Item 1-02(x) of Regulation S-X, a ``subsidiary''
of a specified person is ``an affiliate controlled by such person
directly, or indirectly through one or more intermediaries,'' which
would apply to this disclosure in the absence of another definition. Is
this definition appropriate for purposes of Section 1503, or should we
include a different definition for ``subsidiary'' for purposes of
Section 1503 disclosure? If so, how should we define that term?
(2) In conformity with the language of Section 1503(a), we are
proposing to apply the Act's periodic report disclosure requirement
only to mines that are subject to the Mine Act, and not to mines in
other jurisdictions. Is this approach appropriate? Will issuers that
operate (or have subsidiaries that operate) mines in the United States
be at a competitive advantage or disadvantage compared to issuers that
operate mines in other jurisdictions because of the lack of disclosure
about
[[Page 80377]]
non-U.S. mines? Should we instead expand the disclosure requirement to
cover mines in all jurisdictions? If so, how would we address
disclosure requirements for mines not subject to the Mine Act? How
would we address the disclosure requirements if a jurisdiction does not
have clear mine safety regulations?
(3) Section 1503 of the Act does not contemplate an exception from
disclosure for smaller reporting companies. Should the requirements
apply to smaller reporting companies, as proposed, or should we exempt
smaller reporting companies from the disclosure requirement or some
portion of the disclosure requirement? Are there alternative
accommodations we should consider for smaller reporting companies?
(4) Section 1503 of the Act also does not contemplate any exception
from disclosure for foreign private issuers. Should the requirements
apply to foreign private issuers, as proposed? If not, why not?
(5) As proposed, the required disclosure must be provided for each
mine for which the issuer or a subsidiary of the issuer is an operator.
How burdensome would such disclosure be for issuers to prepare? Could
this approach produce such a volume of information that investors will
be overwhelmed? Should we instead require disclosure by project or
geographic region? Would this approach be consistent with Section
1503(a) of the Act?
(6) General Instruction I to Form 10-K and General Instruction H to
Form 10-Q contain special provisions for the omission of certain
information by wholly-owned subsidiaries. General Instruction J to Form
10-K contains special provisions for the omission of certain
information by asset-backed issuers. Should either or both of these
types of registrants be permitted to omit the proposed mine safety
disclosure in the annual reports on Form 10-K and quarterly reports on
Form 10-Q?
2. Location of Disclosure
The Act states that companies must include the disclosure in their
periodic reports required pursuant to sections 13(a) or 15(d) of the
Exchange Act. We are proposing to require issuers that have matters to
report in accordance with Section 1503(a) to include brief disclosure
in Part II of Form 10-Q, Part I of Form 10-K and Forms 20-F and 40-F
noting that they have mine safety violations or other regulatory
matters to report in accordance with Section 1503(a), and that the
required information is included in an exhibit to the filing.\39\ The
exhibit would include the detailed disclosure about specific violations
and regulatory matters required by Section 1503(a) as implemented in
our new rules. We are proposing this approach in order to facilitate
access to the information about detailed mine safety matters without
overburdening the traditional Exchange Act reports with extensive new
disclosures. We note that in the event that mine safety matters raise
concerns that should be addressed in other parts of a periodic report,
such as risk factors, the business description, legal proceedings or
management's discussion and analysis, inclusion of this new disclosure
would not obviate the need to discuss mine safety matters as
appropriate.
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\39\ Proposed Item 4 under Part II of Form 10-Q, proposed Item
4(b) under Part I of Form 10-K, proposed Item 16J under Part II of
Form 20-F and proposed paragraph B.(18) under the General
Instructions to Form 40-F.
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We are not proposing any particular presentation requirements for
the new disclosure, although we encourage issuers to use tabular
presentations whenever possible if to do so would facilitate investor
understanding.
Request for Comment
(7) Because the Act states that issuers must include the mine
safety disclosure in each periodic report filed with the Commission, we
are proposing to require the disclosure in each filing on Forms 10-Q,
10-K, 20-F and 40-F. For issuers that file using the domestic forms
(Forms 10-Q and 10-K), should we, instead only require the disclosure
annually? Would such an approach be consistent with the Act?
(8) As proposed, we would not specify a particular presentation for
the disclosure. Should we require a specific presentation, tabular or
otherwise? If so, please provide details on an appropriate
presentation.
(9) We are proposing to require the information to be presented in
an exhibit to the periodic report, with brief disclosure in the body of
the report noting that the issuer has mine safety matters to report and
referring to the required exhibit. Is this approach appropriate? Should
we instead require the information to be presented in the body of the
periodic report?
(10) As noted above, Section 1503(a) requires the disclosure to be
included in periodic reports. Should we also require the information to
be included in registration statements?
(11) Should we require the disclosure to be provided in an
interactive data format? Why or why not? Would investors find
interactive data to be a useful tool to analyze the information
provided and generate statistics for their own use? If so, what format
would be most appropriate for providing standardized data disclosure--
for example, eXtensible Markup Language (XML) or eXtensible Business
Reporting Language (XBRL)? Could the use of interactive data make it
possible for issuers to reduce reporting costs by using the same data
that is already available through MSHA's data retrieval system?
3. Time Periods Covered
Section 1503(a) of the Act states that each periodic report must
include disclosure ``for the time period covered by such report.''
Accordingly, we are proposing that each Form 10-Q would include the
required disclosure for any orders, violations or citations received,
penalties assessed or legal actions initiated during the quarter
covered by the report.\40\ We are also proposing that each Form 10-K
would include disclosure covering both the fourth quarter of the
issuer's fiscal year, and cumulative information for the entire fiscal
year. We believe this is consistent with Section 1503(a), since a Form
10-K covers both the fourth quarter and the entire year. For each of
Forms 20-F and 40-F, the disclosure would be required for the issuer's
fiscal year.
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\40\ As noted in Sections II.A.4.f and j below, we are also
proposing to require disclosure of the total amounts of assessments
of penalties outstanding as of the last day of the quarter and of
any developments material to previously reported legal actions that
occur during the quarter.
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Because mine operators have the right to contest orders, violations
or citations they receive through the administrative process,\41\ there
is a possibility an operator's challenge would result in dismissal of
the order, violation or citation or in a reduction in the severity of
the order, violation or citation below the level that triggers
disclosure under Section 1503(a). One mining company \42\ has suggested
that we not require disclosure of citations that, prior to the periodic
filing, have been dismissed or resolved such that they fall below the
reportable level, or alternatively that the issuer be able to elaborate
its position with respect to citations, such as whether the citations
have been or will be challenged or if the issuer believes the severity
of the citation is unwarranted. Based on the language of Section
1503(a) of the Act, we are not proposing to allow issuers to exclude
information about orders, violations or citations that were received
during the time period covered by the report but
[[Page 80378]]
subsequently were dismissed or reduced. However, the proposal would not
prohibit the inclusion of additional information to provide context to
the required disclosure. We would expect that issuers will include
disclosure that complies with our existing disclosure requirements when
providing any such context.
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\41\ See 30 U.S.C. 815(d).
\42\ See letter from Rio Tinto.
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Request for Comment
(12) We are proposing to require the Form 10-K to include both
disclosure about orders, citations, violations, assessments and legal
actions received or initiated during the fourth quarter and the
aggregate data for the whole year. Is this approach consistent with
Section 1503(a)? Would it be consistent with Section 1503(a) to limit
the information to the fourth quarter data? Alternatively, should we
require the Form 10-K to include only fourth quarter information, or
only the full year information?
(13) As proposed, issuers would be required to report all orders,
violations or citations received during the period covered by the
report, regardless of whether such order, violation or citation was
subsequently dismissed or reduced below a reportable level prior to the
filing of the periodic report. Should we instead allow such orders,
violations or citations to be excluded from the disclosure?
4. Required Disclosure Items
Section 1503(a) of the Act includes a list of items to be disclosed
in periodic reports. We are reiterating those items in new proposed
Item 106 of Regulation S-K.\43\ In addition, we are proposing
instructions to certain of the disclosure items specified in Section
1503(a) to clarify the scope of the disclosure we would expect issuers
to provide in order to comply with the statute's requirements. In
addition, in order to provide context to investors, we are proposing
one additional disclosure item not required by the Act that would
require issuers to briefly describe the categories of violations,
orders or citations included in the other items required by Section
1503(a).
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\43\ In this release, we reference new Item 106 of Regulation S-
K when discussing the proposed disclosure requirements, but note
that the same analyses apply to the corresponding provisions in
proposed Item 16J of Form 20-F and proposed Paragraph (18) of
General Instruction B of Form 40-F.
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We discuss each disclosure item below. Under our proposal, each
issuer that is required under Section 1503(a) to provide this
disclosure \44\ would be required to provide the following for each
coal or other mine \45\ for the time period covered by the report (as
discussed above).\46\
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\44\ See Section II.A.1 above.
\45\ See Section II.A.1 above.
\46\ See Section II.A.3 above. Note that compliance with Section
1503 of the Act is currently required, regardless of whether we
adopt the proposed changes to our disclosure rules.
a. The total number of violations of mandatory health or safety
standards that could significantly and substantially contribute to
the cause and effect of a coal or other mine safety or health hazard
under section 104 of the Mine Act for which the operator received a
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citation from MSHA.
Section 104 of the Mine Act requires MSHA inspectors to issue
various citations or orders for violations of health or safety
standards.\47\ Violations are cited by MSHA inspectors, giving the
operator time for abatement of the violation. A violation of a
mandatory safety standard that is reasonably likely to result in a
reasonably serious injury or illness under the unique circumstance
contributed to by the violation is referred to by MSHA as a
``significant and substantial'' violation (commonly called a ``S&S''
violation).\48\ In writing each citation or order, the MSHA inspector
determines whether the violation is ``S&S'' or not.\49\ The MSHA data
retrieval system currently provides information about all citations and
orders issued and notes which of those citations or orders are ``S&S.''
\50\
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\47\ 30 U.S.C. 814.
\48\ Secretary of Labor v. Mathies Coal Company, 6 FMSHRC 1
(January 1984). See also MSHA Program Policy Manual February 2003
(Release I-13) Vol. 1, p.21, located at http://www.msha.gov/regs/complian/ppm/PDFVersion/PPM%20Vol%20I.pdf (``MSHA Program Policy
Manual Vol. 1'') which provides guidelines for interpreting Section
104(d)(1) and (e)(1) of the Mine Act [30 U.S.C. 814(d)(1) and
(e)(1)]. In determining whether conditions created by a violation
could significantly and substantially contribute to the cause and
effect of a mine safety or health hazard, inspectors must determine
whether there is an underlying violation of a mandatory health or
safety standard, whether there is a discrete safety or health hazard
contributed to by the violation, whether there is a reasonable
likelihood that the hazard contributed to will result in an injury
or illness, and whether there is a reasonable likelihood that the
injury or illness in question will be of a reasonably serious
nature. Id.
\49\ MSHA Program Policy Manual Vol. 1, p. 23.
\50\ The MSHA data retrieval system can be accessed at http://
www.msha.gov/drs/drshome.HTM.
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Because the language of Section 1503(a)(1)(A) references violations
that could ``significantly and substantially contribute to the cause
and effect of a coal or other mine safety or health hazard under
section 104'' of the Mine Act, we are proposing to require disclosure
under this item of all citations received under section 104 of the Mine
Act that note an S&S violation.
Request for Comment
(14) Is it appropriate to limit this disclosure item to only S&S
violations, or should we require disclosure of every violation under
section 104 of the Mine Act? \51\
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\51\ MSHA reports that in 2009 (preliminary), of the 175,079
citations and orders issued and not vacated, 33% were designated
S&S. In 2008, of the 174,473 citations and orders issued by MSHA and
not vacated, 30% were designated S&S. See U.S. Department of Labor,
Mine Safety and Health Administration, Mine Safety and Health at a
Glance (May 19, 2010), available at http://www.msha.gov/MSHAINFO/FactSheets/MSHAFCT10.HTM.
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b. The total number of orders issued under section 104(b) of the
Mine Act.
Section 104(b) of the Mine Act covers violations that had
previously been cited under section 104(a) that, upon follow-up
inspection by MSHA, are found not to have been totally abated within
the prescribed time period, which results in the issuance of an order
requiring the mine operator to immediately withdraw all persons (except
certain authorized persons) from the mine. The proposed rule would
implement the Act's requirement to disclose this information.
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.
Section 104(d) of the Mine Act covers similar violations as
discussed above, except that the standard is that the violation could
significantly and substantially contribute to the cause and effect of a
safety or health hazard, but the conditions do not cause imminent
danger, and the inspector finds that the violation is caused by an
unwarrantable failure of the operator to comply with the health and
safety standards. The proposed rule would implement the Act's
requirement to disclose this information.
c. The total number of flagrant violations under section 110(b)(2)
of the Mine Act.
Section 110(b)(2) of the Mine Act is a penalty provision that
provides that violations that are deemed to be ``flagrant'' may be
assessed a maximum civil penalty. The term ``flagrant'' with respect to
a violation means ``a reckless or repeated failure to make reasonable
efforts to eliminate a known violation of a mandatory health or safety
standard that substantially and proximately caused, or reasonably could
have been expected to cause, death or serious bodily injury.'' \52\ The
proposed rule would implement the Act's requirement to disclose this
information.
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\52\ 30 U.S.C. 820(b)(2).
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[[Page 80379]]
d. The total number of imminent danger orders issued under section
107(a) of the Mine Act.
An imminent danger order is issued under section 107(a) of the Mine
Act if the MSHA inspector determines there is an imminent danger in the
mine. The order requires the operator of the mine to cause all persons
(except certain authorized persons) to be withdrawn from the mine until
the imminent danger and the conditions that caused such imminent danger
cease to exist. This type of order does not preclude the issuance of a
citation under section 104 or a penalty under section 110. The proposed
rule would implement the Act's requirement to disclose this
information.
e. The total dollar value of proposed assessments from MSHA under
the Mine Act.
Each issuance of a citation or order by MSHA results in the
assessment of a civil penalty against the mine operator. Penalties are
assessed according to a formula that considers several factors,
including a history of previous violations, size of operator's
business, negligence by the operator, gravity of the violation,
operator's good faith in trying to correct the violation promptly and
the effect of the penalty on the operator's ability to stay in
business.\53\
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\53\ 30 U.S.C. 815(b)(1)(B).
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Because Section 1503(a) requires issuers to disclose the total
dollar value of proposed assessments ``for the time period covered by''
the periodic report, we are proposing to require that issuers disclose
the total dollar amount of assessments of penalties proposed by MSHA
during the time period covered by the report. We are also proposing
that the disclosure include the cumulative total of all proposed
assessments of penalties outstanding as of the last day of the period
covered by the report. We understand that proposed assessments may
remain outstanding for extended periods of time, and believe such
disclosure would provide a clearer picture of the most current health
and safety issues for the issuer, as well as information about the
magnitude of outstanding penalty assessments.
When any civil penalty is proposed to be assessed by MSHA, the mine
operator has 30 days following receipt of the notice of proposed
penalty to pay the penalty or file a contest and request a hearing
before a FMSHRC administrative law judge.\54\ Because Section
1503(a)(1)(F) of the Act references the total dollar amount of proposed
assessments from MSHA during the time period covered by the report, we
are proposing that this disclosure include any dollar amounts of
penalty assessments proposed during the time period that the issuer is
contesting with MSHA or the FMSHRC. However, the proposal would not
prohibit the inclusion of additional information noting that certain
proposed assessments of penalties are being contested to provide
context to the required disclosure. We would expect that issuers will
include disclosure that complies with our existing disclosure
requirements when providing any such context.
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\54\ See 30 CFR 100.7. If the proposed penalty is not paid or
contested within 30 days of receipt, the proposed penalty becomes a
final order of the FMSHRC and is not subject to review by any court
or agency.
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Request for Comment
(15) As proposed, the new rules would require disclosure of the
total dollar amounts of assessments of penalties proposed by MSHA
during the time period covered by the report, and also the cumulative
total of all proposed assessments of penalties outstanding as of the
date of the report. Is this approach appropriate?
(16) As proposed, issuers would be required to include in the total
dollar amount any proposed assessments of penalties that are being
contested. Should issuers be permitted to exclude proposed assessments
that are being contested? Should issuers be permitted to note the
contested amounts separately?
f. The total number of mining-related fatalities.
Section 1503(a)(1)(G) of the Act sets forth the requirement to
disclose the total number of mining-related fatalities, and our
proposed rule would set forth this requirement. We note that Section
1503(a)(1)(G) is the only provision of the Act that does not
specifically reference the Mine Act, a specific notice, order or
citation from MSHA, or the FMSHRC. However, because, as discussed
above,\55\ the application of Section 1503 is limited to mines that are
subject to the provisions of the Mine Act, we believe that this
disclosure requirement encompasses mining-related fatalities only at
mines that are subject to the Mine Act. MSHA regulations require the
reporting of all fatalities at a mine.\56\ MSHA has also established
policies and procedures for determining whether a fatality is unrelated
to mining activity (commonly referred to as ``non-chargeable'' to the
mining industry).\57\ Since the MSHA regulations provide a
comprehensive scheme of regulation, reporting and assessment for mine-
related fatalities, we believe the disclosure required by this section
is intended to include all fatalities that are required to be disclosed
under MSHA regulations, unless the fatality is determined to be ``non-
chargeable'' to the mining industry.
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\55\ See Section II.A.1 above.
\56\ See 30 CFR 50.10 and 50.20.
\57\ See MSHA Accident/Illness Investigation Handbook, Chapter 2
Release 2 (February 2004) p. 9 located at http://www.msha.gov/READROOM/HANDBOOK/PH00-I-5.pdf (``MSHA Accident/Illness Handbook'').
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MSHA regulations require the operator of a mine to contact MSHA at
once without delay and within 15 minutes at a toll-free number, once
the operator knows or should know that an accident has occurred
involving: (a) A death of an individual at the mine; (b) an injury of
an individual at the mine which has a reasonable potential to cause
death; (c) an entrapment of an individual at the mine which has a
reasonable potential to cause death; or (d) any other accident.\58\ In
addition, MSHA regulations require each operator to prepare and file a
report with MSHA of each accident, occupational injury, or occupational
illness occurring at each mine, indicating therein whether such injury
or illness resulted in death.\59\
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\58\ 30 CFR 50.10; see also Section 103(j) of the Mine Act [30
U.S.C. 813(j)].
\59\ 30 CFR 50.20. See also Item 18 of Section C of MSHA Form
7000-1 located at http://www.msha.gov/forms/70001inb.htm.
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MSHA investigates all deaths on mine property.\60\ Deaths that have
been determined to be ``non-chargeable'' are not counted in the
statistics MSHA uses to assess the safety performance of the mining
industry.\61\ These ``non-chargeable'' deaths include, among other
things, homicides, suicides, deaths due to natural causes, and deaths
involving trespassers.\62\ In cases where it is questionable whether a
death is chargeable to the mining industry, MSHA may refer the case to
its Fatality Review Committee.\63\ Each of the four members of the
Fatality Review Committee conducts an independent review of the facts
and circumstances surrounding the questionable death to determine
whether it is chargeable to the mining industry.\64\
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\60\ See MSHA Accident/Illness Handbook at p. 9.
\61\ Id at p. 10.
\62\ Id. See also MSHA Fatal Injury Guideline Matrix located at
http://www.msha.gov/Fatals/Chargeability/ChargeabilityMatrix.pdf.
\63\ MSHA Accident/Illness Handbook at p. 10.
\64\ Id.
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The proposed disclosure requirement encompasses all fatalities
required to be reported pursuant to MSHA regulations, unless the
fatality has been determined to be ``non-chargeable'' to the mining
industry. We believe that this interpretation of the statutory language
[[Page 80380]]
is appropriate because it will result in consistency among reporting
obligations.
Request for Comment
(17) As proposed, we would require disclosure of mining-related
fatalities only at mines that are subject to the Mine Act. However,
many foreign jurisdictions already require mine operators to report
mining-related fatalities.\65\ Would it be more appropriate to instead
require disclosure of mining-related fatalities at all mines operated
by companies that file periodic reports with the Commission, regardless
of the location of the mine? For example, under such an approach, a
foreign private issuer would have to disclose all mining-related
fatalities at mines in its home country or any other jurisdiction, and
domestic issuers would be required to disclose mining-related
fatalities at mines outside of the United States. Would this be
appropriate? How difficult would it be for issuers to compile and
report this information? Would such an approach impose significant
costs on issuers?
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\65\ See e.g., Mines Safety and Inspection Act 1994 (Western
Australia); Mine Health and Safety Act, 1996, Department of Mineral
Resources Regulations, Chapter 23--Reporting of Accidents and
Dangerous Occurences (Republic of South Africa).
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(18) Should we, as proposed, require disclosure of all fatalities
required to be reported pursuant to MSHA regulations, unless the
fatality has been determined to be ``non-chargeable'' to the mining
industry? Should we add an instruction to the rule specifying this
interpretation of the disclosure requirement? Would it be more
appropriate to instead require disclosure of all fatalities regardless
of the determination that it was ``non-chargeable''? Should we provide
further guidance as to the timing of reporting for fatalities that are
under review by MSHA's Fatality Review Committee?
(19) If we were to require disclosure of mining-related fatalities
regardless of the location of the mine, what standard, if any, should
we apply for determining whether a fatality is related or unrelated to
mining activity? For example, would it be appropriate to apply the MSHA
framework to non-U.S. jurisdictions, or to look to each non-U.S.
jurisdiction's mine safety regulatory scheme for guidance?
g. A list of mines for which the issuer or a subsidiary received
written notice from MHSA of a pattern of violations of mandatory health
or safety standards that are of such nature as could have significantly
and substantially contributed to the cause and effect of coal or other
mine health or safety hazards under section 104(e) of the Mine Act.
If MSHA determines that a mine has a ``pattern'' of violations of
mandatory health or safety standards that are of such nature as could
have significantly and substantially contributed to the cause and
effect of coal or other mine health or safety hazards, under section
104(e) of the Mine Act and MSHA regulations the agency is required to
notify the operator of the existence of such pattern. The proposed rule
would implement the Act's requirement to disclose this information.
h. A list of mines for which the issuer or a subsidiary received
written notice from MHSA of the potential to have such a pattern.
MSHA regulations state that MSHA will give the operator written
notice of the potential to have a pattern of violations of mandatory
health or safety standards that are of such nature as could have
significantly and substantially contributed to the cause and effect of
coal or other mine health or safety hazards under section 104(e) of the
Mine Act.\66\ The proposed rule would implement the Act's requirement
to disclose this information.
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\66\ See 30 CFR 104.4.
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i. Any pending legal action before the Federal Mine Safety and
Health Review Commission involving such coal or other mine.
The FMSHRC is an independent agency established by the Mine Act
that provides administrative trial and appellate review of legal
disputes arising under the Mine Act.\67\ We are proposing that any
legal actions before the FMSHRC involving a coal or other mine for
which the issuer or a subsidiary of the issuer is the operator be
disclosed in the periodic report covering the time period during which
the legal action was initiated. This disclosure would include, but not
be limited to, any actions brought by the issuer or a subsidiary of the
issuer before the FMSHRC to contest citations or penalties imposed by
MSHA.\68\ As proposed, the new rules would require the information
about pending legal actions to be updated in subsequent periodic
reports if there are developments material to the legal action that
occur during the time period covered by such report.\69\ Mine operators
frequently contest proposed assessments \70\ and we believe that
information about the resolution of pending legal actions would be
useful in this context.
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\67\ 30 U.S.C. 815(d).
\68\ Other types of cases that would be disclosed include, for
example, those relating to orders to close a mine, miners' charges
of safety related discrimination or miners' requests for
compensation after a mine is idled by a closure order. See ``About
FMSHRC'' at http://www.fmshrc.gov/fmshrc.html.
\69\ See Section IX below for the text of proposed amendments.
\70\ See Number of Penalties Assessed and Percent Contested,
January 2007--July 2010 (Graphs and Charts), as of 09/09/2010,
available at http://www.msha.gov/stats/ContestedCitations/Civil%20Penalties%20Assessed%20and%20Contested.pdf. The graphs
illustrate that during the time period between January 2007 through
July 2010, the percent of penalties contested ranged from
approximately 10% to approximately 30% of the number of penalties
assessed, and the percent of penalty dollars contested ranged from
approximately 30% to approximately 75% of the penalty dollars
assessed.
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As proposed, the disclosure required by this item would include the
date the pending legal action was instituted and by whom (e.g., MSHA or
the mine operator), the name and location of mine involved, and a brief
description of the category of violation, order or citation underlying
the proceeding. We believe this limited additional information is
necessary to make the information more useful to investors by putting
the disclosure in context.
Request for Comment
(20) As proposed, information about pending legal actions would be
disclosed in the periodic report covering the period in which the
action was initiated, with updates in subsequent reports for
developments material to the pending action. Is this appropriate?
Should we instead limit the disclosure to only those legal actions
initiated during the period covered by the periodic report? Should we
specifically require issuers to provide disclosure when a contested
assessment has been vacated during the time period covered by the
report?
(21) Is the contextual information we are proposing to require to
be included for each pending legal action appropriate? Should we
require any other information about pending legal actions to be
disclosed?
j. A brief description of each category of violations, orders and
citations reported
Although not required by Section 1503 of the Act, we are proposing
to require issuers to provide a brief description of each category of
violations, orders and citations reported under new Items 106(a)(1) and
106(a)(2) of Regulation S-K \71\ so that investors can understand the
basis for the violations, orders or citations
[[Page 80381]]
referenced. For example, we would expect that an issuer that reports
receipt of an order under section 107(a) of the Mine Act would include
disclosure stating that such orders are issued for situations in which
MSHA determines an imminent danger exists and result in orders of
immediate withdrawal from the area of the mine affected by the
condition. We believe this is appropriate to provide investors with
context to the disclosure required by Section 1503(a) of the Act. We
are concerned that without such a requirement, investors may be
presented with disclosure that simply references the various provisions
of the Mine Act, and would have to research the Mine Act and MSHA's
rules to be able to assess the information.
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\71\ This proposed requirement would also apply to the
corresponding categories of citations, orders and violations to be
reported under proposed Item 16J(a) and (b) of Form 20-F and
proposed Paragraph (18)(a) and (b) to General Instruction B of Form
40-F.
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Request for Comment
(22) Will the proposed disclosure providing a brief description of
each category of violations, orders and citations reported be useful
for investors, or would the information otherwise provided in the
proposed exhibit to the periodic report be sufficient? Is there any
other disclosure we should require in order to put the disclosures
required by Section 1503(a) of the Act in context for investors?
B. Form 8-K Filing Requirement
1. Triggering Events
Section 1503(b) of the Act requires each issuer that is an
operator, or has a subsidiary that is an operator, of a coal or other
mine to report on Form 8-K the receipt of certain notices from
MSHA.\72\ We are proposing to revise Form 8-K to add new Item 1.04,
which would require filing of Form 8-K within four business days of the
receipt by an issuer (or a subsidiary of the issuer) of:
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\72\ Section 1503(b) of the Act.
---------------------------------------------------------------------------
An imminent danger order under section 107(a) of the Mine
Act; \73\
---------------------------------------------------------------------------
\73\ See Section II.A.4.e. above for a description of an
imminent danger order issued under section 107(a) of the Mine Act
[30 U.S.C. 817(a)].
---------------------------------------------------------------------------
Written notice from MSHA of a pattern of violations of
mandatory health or safety standards that are of such nature as could
have significantly and substantially contributed to the cause and
effect of coal or other mine health or safety hazards under section
104(e) of the Mine Act; \74\ or
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\74\ See Section II.A.4.h. above for a description of the
written notice regarding a pattern of violations under section
104(e) of the Mine Act [30 U.S.C. 814(e)].
---------------------------------------------------------------------------
Written notice from MSHA of the potential to have a
pattern of such violations.\75\
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\75\ See Section II.A.4.i. above for a description of the
written notice from MSHA of the potential to have a pattern of
violations under section 104(e) of the Mine Act [30 U.S.C. 814(e)].
---------------------------------------------------------------------------
These orders and notices are also required to be disclosed under
Section 1503(a) of the Act in issuers' periodic reports. We believe the
plain language of Section 1503 of the Act requires such orders and
notices to be reported both in issuers' Forms 8-K and their periodic
reports. For example, if an issuer receives from MSHA one of the orders
or notices specified above during the second quarter of the year, the
issuer would file a Form 8-K reporting the receipt of the order or
notice within four business days of receipt, include information about
such order or notice in accordance with new Regulation S-K Item 106 in
its Form 10-Q for the second quarter and include information regarding
this violation in the annual cumulative total for the fiscal year in
its Form 10-K for that fiscal year.
Request for Comment
(23) The events that would trigger filing under proposed Item 1.04
are also events that are required to be disclosed in periodic reports
under Section 1503(a) of the Act and our proposed Item 106 of
Regulation S-K. Should we revise our proposal to minimize duplicative
disclosure such as by not requiring repetition of information
previously reported? Would such an approach be consistent with the Act?
Would our proposed disclosure approach be unduly burdensome for issuers
or confusing to investors?
2. Required Disclosure and Filing Deadline
Section 1503(b) of the Act does not specify the disclosure that
issuers should provide in the required Form 8-K filing. We are
proposing that new Item 1.04 of Form 8-K require, in each case,
disclosure of the date of receipt of the order or notice, the category
of order or notice, and the name and location of the mine involved.
In addition, Section 1503(b) of the Act does not specify a filing
deadline for the required Form 8-K. Consistent with our approach to
other Form 8-K items, we are proposing that the current report under
new Item 1.04 be required to be filed no later than four business days
after the triggering event. We believe that, because the triggering
events are clear and do not require management to make rapid
materiality judgments, the four business day deadline provides adequate
time for issuers to prepare accurate and complete information.
Request for Comment
(24) Is there any other information that should be required to be
disclosed under proposed Item 1.04 of Form 8-K? Will the information
that we are proposing to require in the Form 8-K be useful for
investors?
(25) Should the filing period for a Form 8-K under proposed Item
1.04 be four business days, as proposed, or should the filing period be
longer? What factors should we consider in deciding whether to make the
filing period longer?
3. Treatment of Foreign Private Issuers
Foreign private issuers are not required to file current reports on
Form 8-K.\76\ Instead, they are required to file under the cover of
Form 6-K \77\ copies of all information that the foreign private issuer
makes, or is required to make, public under the laws of its
jurisdiction of incorporation, files, or is required to file, under the
rules of any stock exchange, or otherwise distributes to its security
holders.\78\ We do not propose to change these reporting
requirements.\79\ As described above,\80\ we are proposing changes to
Forms 20-F and 40-F that would require a foreign private issuer to
disclose in each annual report the items described in Section 1503(a)
of the Act. The proposed amendments include the same information that
will be required of other issuers, including disclosure of the receipt
during the foreign private issuer's past fiscal year of any imminent
danger order issued under section 107(a) of the Mine Act,\81\ written
notice from MSHA of a pattern of violations of mandatory health or
safety standards that are of such a nature as could have significantly
and substantially contributed to the cause and effect of coal or other
mine health or safety hazards under section 104(e) of the Mine Act,\82\
or written notice from
[[Page 80382]]
MSHA of the potential to have a pattern of such violations.\83\
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\76\ See Exchange Act Rules 13a-11 and 15d-11 [17 CFR 240.13a-11
and 15d-11].
\77\ Referenced in 17 CFR 249.306.
\78\ See Exchange Act Rule 13a-6 [17 CFR 240.13a-16].
\79\ This approach is consistent with the manner in which the
Commission implemented Sections 306 and 406 of the Sarbanes-Oxley
Act of 2002. See Insider Trades During Pension Fund Blackout
Periods, SEC Release No. 34-47225 (Jan. 22, 2003) [68 FR 4338] and
Disclosure Required by Sections 406 and 407 of the Sarbanes-Oxley
Act of 2002, SEC Release No. 33-8177 (Jan. 23, 2003) [68 FR 5110].
See also letter from Rio Tinto.
\80\ See Section II.A. above for a description of all the
proposed disclosure requirements to Forms 20-F and 40-F.
\81\ See Section II.A.4.e. above.
\82\ See Section II.A.4.h. above.
\83\ See Section II.A.4.i. above.
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Request for Comment
(26) Should we require foreign private issuers to file disclosure
about the receipt of imminent danger orders or notices of a pattern or
potential pattern of violations within four days under cover of Form 8-
K, Form 6-K or a special report on Form 20-F? Should we otherwise
require a foreign private issuer to promptly disclose the receipt of
such order or notices? Does a divergent treatment of U.S. issuers and
foreign private issuers in connection with current reporting
disadvantage U.S. issuers? Should this be addressed in our rules, and
if so, how? To what extent, if any, would foreign private issuers have
additional burdens or costs associated with reporting these events on a
current basis?
C. Amendment to General Instruction I.A.3.(b) of Form S-3
We are proposing to amend General Instruction I.A.3.(b) of Form S-3
to provide that an untimely filing on Form 8-K regarding new Item 1.04
would not result in loss of Form S-3 eligibility. Under our existing
rules, the untimely filing on Form 8-K of certain items does not result
in loss of Form S-3 eligibility, so long as Form 8-K reporting is
current at the time the Form S-3 is filed. We believe that it is
appropriate to add proposed Item 1.04 to the list of Form 8-K items in
General Instruction I.A.3.(b) of Form S-3.
In the past, when we have adopted new disclosure requirements that
differed from the traditional periodic reporting obligations of
companies, we have acknowledged concerns about the potentially harsh
consequences of the loss of Form S-3 eligibility, and addressed such
concerns by specifying that untimely filing of Form 8-K relating to
certain topics would not result in the loss of Form S-3
eligibility.\84\ We note that Section 1503(b) of the Act does not
address the Securities Act implications of a failure to timely file a
Form 8-K. Therefore, we are proposing to provide that untimely filing
of the new Item 1.04 Form 8-K would not result in the loss of Form S-3
eligibility.
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\84\ See Selective Disclosure and Insider Trading, SEC Release
No. 33-7881 (Aug. 15, 2000) [65 FR 51715]; Additional Form 8-K
Disclosure Requirements and Acceleration of Filing Date, SEC Release
No. 33-8400 (March 16, 2004) [69 FR 15594] (the ``Additional Form 8-
K Disclosure Release'').
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We are not proposing to include new Item 1.04 in the list in Rules
13a-11(c) and 15d-11(c) under the Exchange Act of Form 8-K items
eligible for a limited safe harbor from liability under Section 10(b)
or Rule 10b-5 under the Exchange Act.\85\ In 2004, when we adopted the
limited safe harbor, we noted our view that the safe harbor is
appropriate if the triggering event for the Form 8-K requires
management to make a rapid materiality determination.\86\ The filing of
an Item 1.04 Form 8-K is triggered by an event that does not require
management to make a rapid materiality determination, and we believe
that it is not necessary to extend the safe harbor to this new item. We
solicit comment below on whether this treatment is appropriate for
proposed Item 1.04.
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\85\ Rules 13a-11(c) and 15d-11(c) each provides that ``[n]o
failure to file a report on Form 8-K that is required solely
pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05, 2.06, 4.02(a),
5.02(e) or 6.03 of Form 8-K shall be deemed a violation of'' Section
10(b) of the Exchange Act or Rule 10b-5 thereunder.
\86\ Additional Form 8-K Disclosure Release at 69 FR 15607.
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Request for Comment
(27) Should we, as proposed, amend General Instruction I.A.3(b) of
Form S-3 to add proposed Item 1.04 to the list of items on Form 8-K
with respect to which an issuer's failure timely to file the Form 8-K
will not result in the loss of Form S-3 eligibility? Why or why not? If
we were to adopt a current reporting requirement for foreign private
issuers for the information covered by Section 1503(b) of the Act,
should we approach Form F-3 eligibility in the same manner?
(28) As proposed, we would not include proposed Item 1.04 in the
list of items in Rules 13a-11(c) and 15d-11(c) with respect to which
the failure to file a report on Form 8-K will not be deemed to be a
violation of Section 10(b) or Rule 10b-5. Should we instead add
proposed Item 1.04 to the safe harbor? Why or why not?
III. General Request for Comment
We request and encourage any interested person to submit comments
on any aspect of our proposals, other matters that might have an impact
on the amendments, and any suggestions for additional changes. With
respect to any comments, we note that they are of greatest assistance
to our rulemaking initiative if accompanied by supporting data and
analysis of the issues addressed in those comments and by alternatives
to our proposals where appropriate.
IV. Paperwork Reduction Act
A. Background
Certain provisions of the proposed amendments contain ``collection
of information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (PRA).\87\ We are submitting the proposed
amendments to the Office of Management and Budget (OMB) for review in
accordance with the PRA.\88\ The titles for the collection of
information are:
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\87\ 44 U.S.C. 3501 et seq.
\88\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
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(A) ``Regulation S-K'' (OMB Control No. 3235-0071);
(B) ``Form 10-K'' (OMB Control No. 3235-0063);
(C) ``Form 10-Q'' (OMB Control No. 3235-0070);
(D) ``Form 8-K'' (OMB Control No. 3235-0060);
(E) ``Form 20-F'' (OMB Control No. 3235-0288); and
(F) ``Form 40-F'' (OMB Control No. 3235-0381).
These regulations and forms were adopted under the Securities Act
and the Exchange Act. They set forth the disclosure requirements for
periodic and current reports filed by companies to inform
investors.\89\ The hours and costs associated with preparing
disclosure, filing forms and retaining records constitute reporting and
cost burdens imposed by each collection of information. An agency may
not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number.
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\89\ Forms 20-F and 40-F may also be used by foreign private
issuers to register a class of securities under the Exchange Act. In
addition, Form 20-F sets forth many of the disclosure requirements
for registration statements filed by foreign private issuers under
the Securities Act.
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As discussed in more detail above, the proposed rule and form
amendments would implement Section 1503 of the Act. Section 1503(a)
requires issuers that are operators, or that have a subsidiary that is
an operator, of a coal or other mine to disclose in their periodic
reports filed with the Commission information regarding specified
health and safety violations, orders and citations, related assessments
and legal actions, and mining-related fatalities. Section 1503(b) of
the Act mandates the filing of a Form 8-K disclosing the receipt of
certain orders and notices from MSHA. We are proposing to add new Items
106 and 601(b)(95) to Regulation S-K and amend Forms 10-Q, 10-K, 20-F
and 40-F under the Exchange Act to implement and, to a limited degree,
enhance the
[[Page 80383]]
disclosure requirement set forth in Section 1503(a) of the Act. We are
also proposing to add new Item 1.04 to Form 8-K to implement the
requirement of Section 1503(b) of the Act. In addition, we are
proposing to amend General Instruction I.A.3(b) of Securities Act Form
S-3.
Issuers are currently required to comply with the provisions of
Section 1503 of the Act, therefore the Act has already increased the
burdens and costs for issuers by requiring the disclosure set forth in
Sections 1503(a) and (b) of the Act. Most of the information called for
by the new disclosure requirements is publicly disclosed by MSHA and
readily available to issuers, who receive the notices, orders and
citations directly from MSHA and can also access the information via
MSHA's data retrieval system. Further, the proposed disclosure item for
periodic reports requiring disclosure of mining-related fatalities is
already subject to a collection of information under MSHA
regulations.\90\ Our proposed amendments would incorporate the Act's
requirements into Regulation S-K and related forms, and would require
certain additional disclosure to provide context to the disclosure
items required by the Act.
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\90\ 30 CFR 50.10 and 50.20.
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We anticipate that the proposed new Items 106 and 601(b)(95) of
Regulation S-K would increase existing disclosure burdens for annual
reports on Form 10-K and quarterly reports on Form 10-Q by requiring
disclosure about certain mine health and safety violations designated
by the Act. Because Regulation S-K does not apply directly to Forms 20-
F and 40-F,\91\ we propose to amend those forms to include the same
disclosure requirements as those proposed for issuers that are not
foreign private issuers.\92\ We anticipate that new Item 1.04 of Form
8-K would increase the existing disclosure burden for current reports
on Form 8-K by requiring issuers to file a Form 8-K upon receipt of
three types of notices or orders from MSHA relating to mine health and
safety concerns and specifying the information required about the
orders or notices required to be disclosed.
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\91\ While Form 20-F may be used by any foreign private issuer,
Form 40-F is only available to a Canadian issuer that is eligible to
participate in the U.S.-Canadian Multijurisdictional Disclosure
System (``MJDS'').
\92\ Proposed Item 16J under Part II of Form 20-F and proposed
paragraph (18) to General Instruction B of Form 40-F.
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Compliance with the proposed amendments would be mandatory.
Responses to the information collections would not be kept
confidential, and there would be no mandatory retention period for the
information disclosed.
B. Burden and Cost Estimates Related to the Proposed Amendments
We anticipate that the proposed rule and form amendments, if
adopted, would increase the burdens and costs for issuers that would be
subject to the proposed amendments. For purposes of the PRA, we
estimate the total annual increase in paperwork burden for all affected
companies to comply with our proposed collection of information
requirements to be approximately 1,677 hours of company personnel time
and approximately $263,500 for the services of outside professionals.
These estimates include the time and the cost of implementing
disclosure controls and procedures, preparing and reviewing disclosure,
filing documents and retaining records. In deriving our estimates, we
assume that:
For Forms 10-K, 10-Q and 8-K, an issuer incurs 75% of the
annual burden required to produce each form, and outside firms,
including legal counsel, accountants and other advisors retained by the
issuer incur 25% of the annual burden required to produce the form at
an average cost of $400 per hour; \93\ and
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\93\ The $400 per hour cost for outside legal services is the
same estimate used by the Commission for these services in the
proposed consolidated audit trail rule: Exchange Act Release No.
62174 (May 26, 2010): 75 FR 32556 (June 8, 2010).
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For Forms 20-F and 40-F, a foreign private issuer incurs
25% of the annual burden required to produce each form, and outside
firms retained by the issuer incur 75% of the burden require to produce
each form at an average cost of $400 per hour.
The portion of the burden carried by outside professionals is reflected
as a cost, while the portion of the burden carried by the company
internally is reflected in hours.
We have based our estimates of the effect that the adopted rule and
form amendments would have on those collections of information
primarily on our understanding that the information required to be
disclosed is readily available to issuers, and that therefore the
burden imposed by the disclosure requirements is mainly in formatting
the information in order to comply with our disclosure requirements and
ensuring that appropriate disclosure controls and procedures are in
place to facilitate reporting of the information. In this regard, we
note that mine operators receive the relevant notices, citations and
similar information directly from MSHA, and that issuers could also
access the information via MSHA's publicly available data retrieval
system.
1. Regulation S-K
While the proposed rule and form amendments would make revisions to
Regulation S-K, the collection of information requirements for that
regulation are reflected in the burden hours estimated for Forms 10-K
and 10-Q. The rules in Regulation S-K do not impose any separate
burden. Consistent with historical practice, we are proposing to retain
an estimate of one burden hour to Regulation S-K for administrative
convenience.
2. Form 10-K
Based on a review of companies filing under certain SICs, as well
as a review of companies that are currently providing disclosure of
mine safety violations in Commission filings in accordance with Section
1503 of the Act, we estimate that, of the 13,545 Form 10-Ks filed
annually, approximately 95 are filed by companies that operate, or have
a subsidiary that operates, a mine subject to the Mine Act, and that
therefore would be affected by the proposed rule and form amendments.
For purposes of the PRA, we assume that each such filer would have
disclosures about mine safety violations to include in its Form 10-K.
We further estimate that the proposed rule and form amendments would
add 5 burden hours to the total burden hours required to produce each
Form 10-K.
3. Form 20-F
Based on a review of companies filing under certain SICs, as well
as a review of companies that are currently providing disclosure of
mine safety violations in Commission filings in accordance with Section
1503 of the Act, we currently estimate that of the 942 Form 20-F annual
reports filed annually by foreign private issuers, approximately 15 are
filed by companies that operate, or have a subsidiary that operates, a
mine subject to the Mine Act, and that therefore would be affected by
the proposed rule and form amendments. For purposes of the PRA, we
assume that each such filer would have disclosures about mine safety
violations to include in its Form 20-F. As with Form 10-K, we estimate
that the proposed rule and form amendments would add 5 burden hours to
the total burden hours required to produce each Form 20-F.
[[Page 80384]]
4. Form 40-F
Based on a review of companies filing under certain SICs, as well
as a review of companies that are currently providing disclosure of
mine safety violations in Commission filings in accordance with Section
1503 of the Act, we currently estimate that of the 205 Form 40-F annual
reports filed annually by foreign private issuers, approximately 15 are
filed by companies that operate, or have a subsidiary that operates, a
mine subject to the Mine Act, and that therefore would be affected by
the proposed rule and form amendments. For purposes of the PRA, we
assume that each such filer would have disclosures about mine safety
violations to include in its Form 40-F. As with Forms 10-K and 20-F, we
estimate that the proposed rule and form amendments would add 5 burden
hours to the total burden hours required to produce each Form 40-F
annual report.
5. Form 10-Q
Based on a review of companies filing under certain SICs, as well
as a review of companies that are currently providing disclosure of
mine safety violations in Commission filings in accordance with Section
1503 of the Act, we estimate that, of the 32,462 Form 10-Qs filed
annually, approximately 285 are filed by companies that operate, or
have a subsidiary that operates, a mine subject to the Mine Act, and
that therefore would be affected by the proposed rule and form
amendments.\94\ For purposes of the PRA, we assume that each such filer
would have disclosures about mine safety violations to include in each
Form 10-Q. We further estimate that the proposed rule and form
amendments would add 5 burden hours to the total burden hours required
to produce each Form 10-Q.
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\94\ We estimate that approximately 95 companies with a Form 10-
Q filing obligation would be affected by the proposed rule and form
amendments. Each such company would file three quarterly reports on
Form 10-Q per year. 95 companies x 3 Forms 10-Q per year = 285 Forms
10-Q.
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6. Form 8-K
We estimate that companies annually file 115,795 Form 8-Ks. Only
companies that are operators, or have subsidiaries that are operators,
of coal or other mines (as defined in the Mine Act, and subject to the
Mine Act) are required to comply with the proposed new Form 8-K
requirement. For purposes of the PRA, we estimate that there will be
approximately 95 Form 8-K filers under new Item 1.04, which is based on
our estimate of the number of Form 10-K filers that operate, or have a
subsidiary that operates, a mine subject to the Mine Act, and that
therefore would be affected by the proposed rule and form amendments.
In addition, we understand that the triggering events for Form 8-K
filing set forth in Section 1503(b)(2)--the receipt of written notice
from MSHA that the coal or other mine has a pattern of violations or
the potential to have such a pattern--are very rare, while the
triggering event set forth in Section 1503(b)(1)--the receipt of an
imminent danger order--is more common.\95\ For purposes of this
calculation, we assume that each potential filer under proposed Item
1.04 of Form 8-K would file three Forms 8-K per year under new Item
1.04 and we estimate that the proposed amendments to Form 8-K would add
1 burden hour to the total burden hours required to produce each Form
8-K.
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\95\ See U.S. Department of Labor, Office of Inspector General,
In 32 Years MSHA Has Never Successfully Exercised Its Pattern of
Violations Authority, Report Number 05-10-005-06-001 (Sept. 29,
2010). According to data available on MSHA's website, 631 and 562
imminent danger orders under Section 107(a) were issued during
fiscal 2010 and 2009, respectively. See Violations Data Set (as of
Nov. 12, 2010), available at http://www.msha.gov/OpenGovernmentData/OGIMSHA.asp (on file with the Division of Corporation Finance). Note
that this number includes all imminent danger orders issued to all
companies subject to MSHA's jurisdiction, not only to reporting
companies that are subject to the disclosure requirements of Section
1503 of the Act.
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C. Summary of Proposed Changes to Annual Compliance Burden in
Collection of Information
The table below illustrates the total incremental annual compliance
burden of the collection of information in hours and in cost under the
proposed amendments for annual reports, quarterly reports and current
reports on Form 8-K under the Exchange Act (Table 1). There is no
change to the estimated burden of the collection of information under
Regulation S-K because the burdens that Regulation S-K imposes are
reflected in our revised estimates for the forms. The burden estimates
were calculated by multiplying the estimated number of annual responses
by the estimated average number of hours it would take a company to
prepare and review the proposed disclosure requirements.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current Current Increase in Proposed
Form annual Current Increase in Proposed professional professional professional
response burden hours burden hours burden hours costs ($) costs ($) costs ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
10-K................................... 13,545 21,363,548 356 21,363,904 2,848,473,000 47,500 2,848,520,500
20-F................................... 942 622,907 19 622,926 743,089,980 22,500 743,112,480
40-F................................... 205 21,884 19 21,903 26,260,500 22,500 26,283,000
10-Q................................... 32,462 4,559,793 1,069 4,560,862 607,972,400 142,500 608,114,900
8-K.................................... 115,795 493,436 214 493,650 65,791,500 28,500 65,820,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Request for Comment
Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order
to:
Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
Commission, including whether the information would have practical
utility;
Evaluate the accuracy of our estimates of the burden of
the proposed collections of information;
Determine whether there are ways to enhance the quality,
utility, and clarity of the information to be collected;
Evaluate whether there are ways to minimize the burden of
the collections of information on those who respond, including through
the use of automated collection techniques or other forms of
information technology; and
Evaluate whether the proposed amendments would have any
effects on any other collections of information not previously
identified in this section.
Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
the burdens. Persons who desire to submit comments on the collection of
information requirements should direct their comments to the OMB,
Attention: Desk Officer for the Securities and Exchange Commission,
Office of
[[Page 80385]]
Information and Regulatory Affairs, Washington, DC 20503, and send a
copy of the comments to Elizabeth M. Murphy, Secretary, Securities and
Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090, with
reference to File No. S7-41-10. Requests for materials submitted to the
OMB by us with regard to these collections of information should be in
writing, refer to File No. S7-41-10 and be submitted to the Securities
and Exchange Commission, Office of Investor Education and Advocacy, 100
F Street NE., Washington DC 20549-0213. Because the OMB is required to
make a decision concerning the collections of information between 30
and 60 days after publication, your comments are best assured of having
their full effect if the OMB receives them within 30 days of
publication.
V. Cost-Benefit Analysis
A. Introduction and Objectives of Proposals
We are proposing the rule and form amendments discussed in this
release to implement the disclosure requirements set forth in Section
1503 of the Act and to require limited additional disclosure to provide
context for certain items required by that Section. Section 1503(a) of
the Act requires issuers that are operators, or that have a subsidiary
that is an operator, of a coal or other mine to disclose in their
periodic reports filed with the Commission information regarding
specified health and safety violations, orders and citations, related
assessments and legal actions, and mining-related fatalities. Section
1503(b) of the Act mandates the filing of a Form 8-K disclosing the
receipt of certain orders and notices from the Mine Safety and Health
Administration.
As discussed in detail above, the disclosure requirements set forth
in Section 1503 of the Act refer to and are based on the safety and
health requirements applicable to mines under the Mine Act and
administered by MSHA. MSHA inspectors issue citations, orders and
decisions directly to mine operators during the course of inspections
and MSHA assesses and collects civil monetary penalties for violations.
Information on a mine-by-mine basis about inspections, violations, and
accidents is publicly available on MSHA's data retrieval system on its
Web site.\96\ Therefore, we believe the information required to be
disclosed under Section 1503 of the Act and our proposed rules is
readily available to issuers. Further, because the disclosure
requirements set forth in Section 1503 are currently in effect, we
assume that issuers have already begun to develop the necessary
controls and procedures to review and prepare the information required
by Section 1503 of the Act for filing with the Commission, such that
the additional incremental disclosure we are proposing to provide
context for certain items required by that Section will not require
issuers to implement additional controls and procedures.
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\96\ See http://www.msha.gov/DRS/DRSHOME.HTM.
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We are proposing amendments to Form 10-K, Form 10-Q, Form 20-F and
Form 40-F to provide for the disclosure required by Section 1503(a) of
the Act and certain additional disclosures. New Item 106 of Regulation
S-K, new Item 16J of Form 20-F and new Paragraph (18) of General
Instruction B of Form 40-F would detail the information to be disclosed
in accordance with Section 1503(a) of the Act, and the proposed
amendment to Item 601 of Regulation S-K would set forth the exhibit
requirement for Form 10-K and Form 10-Q for the information required to
be disclosed under proposed Item 106 of Regulation S-K. We are also
proposing amendments to Form 8-K to add new Item 1.04 to implement the
requirement imposed by Section 1503(b) of the Act. Finally, we propose
to amend General Instruction I.A.3.(b) of Form S-3 to add new Form 8-K
Item 1.04 to the list of Form 8-K items the untimely filing of which
will not result in loss of Form S-3 eligibility.
The Commission is sensitive to the costs and benefits that would be
imposed by the proposed rule and form amendments. The discussion below
focuses on the costs and benefits of the decisions made by the
Commission to fulfill the mandates of the Act, rather than the cost and
benefits of the mandates of the Act itself. However, to the extent that
the Commission helps achieve the benefits intended by the Act, the two
types of benefits are not entirely separable.
B. Benefits
The proposed rulemaking is intended to implement the requirements
of Section 1503 of the Act. Our proposed Regulation S-K and form
amendments would implement the requirements of the Act by reiterating
the disclosure items listed in Section 1503, which are currently in
effect. We are also proposing to require limited additional disclosure
in periodic reports addressing:
Brief descriptions of the categories of violations, orders
or citations disclosed in response to the Section 1503(a) disclosure
requirement;
Total dollar values of proposed penalty assessments from
MSHA; and
Descriptions of legal actions pending before the FMSHRC
and developments material to previously reported pending legal actions.
In addition, our proposed amendment to Form 8-K would require
additional disclosure beyond that specifically designated by Section
1503(b) of the Act by specifying the information required about the
orders or notices required to be disclosed, and specifying a four
business day filing deadline for Forms 8-K filed under proposed Item
1.04.
We believe the enhanced disclosures in periodic reports about the
categories of violations will improve the ability of investors to
understand the statutorily required information about mine safety
violations without having extensive knowledge of the Mine Act and the
violations, orders and citations referenced therein. We believe that
investors would also benefit from the proposed disclosure in periodic
reports of the total dollar value of the assessments and the
description of legal actions and developments relating to legal actions
because it would place the required disclosures in context.
Our proposed amendment to Form 8-K specifying that the form is to
be filed within four business days of receipt of the order or notice
designated under Section 1503(b) of the Act would provide issuers and
investors with certainty about the timing of that disclosure
requirement.
Our proposed rule and form amendments also specify for issuers how,
in what form, and when to report the mine safety information required
by the Act. These rules are designed to facilitate compliance with the
new statutory requirements.
C. Costs
The vast majority of the costs resulting from the disclosures
required by Section 1503 of the Act arise whether or not we adopt rules
to implement the Section. Moreover, the information required to be
disclosed under Section 1503 is already subject to an extensive
recordkeeping regime under MSHA and is readily available to issuers via
MSHA's data retrieval system. The primary costs to result from this
rulemaking are costs associated with the formatting and filing of the
information and certain additional disclosures we are proposing: the
description of the incidents, total dollar value of the proposed
penalty assessments and the description of legal actions, as noted
above. Given that this information
[[Page 80386]]
should be readily available to issuers and the additional information
does not require a substantial amount of additional disclosure, we
believe that these costs would be small.\97\
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\97\ For purposes of the PRA, we estimate the total cost of the
disclosure to be approximately 1,677 hours of company personnel time
and approximately $263,500 for the services of outside
professionals. However, this amount includes the costs associated
with the disclosure requirement of Section 1503 of the Act, as well
as our proposed additional disclosure. As discussed above, the
proposed additional disclosure is only a small portion of the burden
of the disclosure requirement; therefore, we believe the costs of
the additional disclosure would be a small fraction of the total
amount disclosed for PRA purposes.
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D. Request for Comment
We request data to quantify the costs and the value of the benefits
described above. We seek estimates of these costs and benefits, as well
as any costs and benefits not already defined, that may result from the
adoption of these proposed amendments. We also request qualitative
feedback on the nature of the benefits and costs described above and
any benefits and costs we may have overlooked.
VI. Consideration of Impact on the Economy, Burden on Competition and
Promotion of Efficiency, Competition and Capital Formation
Section 23(a)(2) of the Exchange Act \98\ requires us, when
adopting rules under the Exchange Act, to consider the impact that any
new rule would have on competition. In addition, Section 23(a)(2)
prohibits us from adopting any rule that would impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Exchange Act.
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\98\ 15 U.S.C. 78w(a).
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Section 2(b) \99\ of the Securities Act and Section 3(f) \100\ of
the Exchange Act require us, when engaging in rulemaking where we are
required to consider or determine whether an action is necessary or
appropriate in the public interest, to consider, in addition to the
protection of investors, whether the action will promote efficiency,
competition, and capital formation.
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\99\ 15 U.S.C. 77b(b).
\100\ 15 U.S.C. 78c(f).
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Our proposed amendments would implement the requirements of Section
1503 of the Act. We have proposed a few additional disclosure
requirements to provide investors with context for the information
required to be disclosed under Section 1503. We believe the additional
disclosure will improve the ability of investors to understand the
statutorily required information about mine safety violations without
having extensive knowledge of the Mine Act and the orders, citations
and violations referenced therein.
We do not believe that the additional disclosure we have proposed
in our rulemaking would impose a burden on competition. Section 1503 of
the Act imposed the substance of the disclosure requirements set forth
in our proposals. The additional disclosure that we have proposed to
require is not substantial, but rather brief descriptions to place the
mine safety disclosures in context. In addition, we believe the
additional information should be readily available to issuers.
Accordingly, since the additional disclosure is designed to provide
context to the information required to be disclosed by Section 1503 of
the Act, and does not place a significant burden on the issuer, we
believe that it will not impose a burden on competition. Likewise, we
do not expect that the additional disclosure we are proposing to
require would have a significant impact on capital formation.
We believe that the proposed clarifications to the mine safety
information required by the Act will provide direction and consistency
as to how, in what form, and when to report the relevant information.
We believe that the specifications in the rulemaking will improve the
efficiency of the reporting process for issuers and provide for a more
efficient and effective review of the information by investors.
The loss of eligibility by an issuer to use Form S-3 could
significantly restrict the ability of a company to raise capital and
may be a disproportionately large negative consequence of an untimely
filing of a Form 8-K. To address this potential burden on capital
formation, we are proposing to revise the eligibility rules under Form
S-3 so that an untimely filing of a report under new Item 1.04 of Form
8-K would not result in a loss of eligibility to use that form.
We request comment on whether the proposed amendments would promote
efficiency, competition, and capital formation or have an impact or
burden on competition. Commentators are requested to provide empirical
data and other factual support for their view to the extent possible.
VII. Small Business Regulatory Enforcement Fairness Act
For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (SBREFA) \101\ we solicit data to determine whether the
proposed rule amendments constitute a ``major'' rule. Under SBREFA, a
rule is considered ``major'' where, if adopted, it results or is likely
to result in:
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\101\ 5 U.S.C. 603.
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An annual effect on the economy of $100 million or more
(either in the form of an increase or a decrease);
A major increase in costs or prices for consumers or
individual industries; or
Significant adverse effects on competition, investment or
innovation.
Commentators should provide empirical data on (a) the potential
annual effect on the economy; (b) any increase in costs or prices for
consumers or individual industries; and (c) any potential effect on
competition, investment or innovation.
VIII. Initial Regulatory Flexibility Act Analysis
This Initial Regulatory Flexibility Analysis has been prepared in
accordance with the Regulatory Flexibility Act.\102\ It relates to
proposed revisions to Regulation S-K and forms under the Securities Act
and the Exchange Act regarding disclosure about mine safety.
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\102\ 5 U.S.C. 601.
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A. Reasons for, and Objectives of, the Proposed Action
We are proposing rulemaking to implement the disclosure
requirements set forth in Section 1503 of the Act and to require
limited additional disclosure to provide context for certain items
required by the Act. Section 1503(a) of the Act requires issuers that
are operators, or that have a subsidiary that is an operator, of a coal
or other mine to disclose in their periodic reports filed with the
Commission information regarding specified health and safety
violations, orders and citations, related assessments and legal
actions, and mining-related fatalities. Section 1503(b) of the Act
mandates the filing of a Form 8-K disclosing the receipt of certain
orders and notices from MSHA.
B. Legal Basis
We are proposing the amendments pursuant to Sections 7, 10, and
19(a) of the Securities Act, Sections 12, 13, 15 and 23 of the Exchange
Act, and Section 1503 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act.
C. Small Entities Subject to the Proposed Action
The proposed amendments would affect some companies that are small
entities. The Regulatory Flexibility Act defines ``small entity'' to
mean ``small business,'' ``small organization,'' or ``small
governmental jurisdiction.'' \103\
[[Page 80387]]
The Commission's rules define ``small business'' and ``small
organization'' for purposes of the Regulatory Flexibility Act for each
of the types of entities regulated by the Commission. Securities Act
Rule 157 \104\ and Exchange Act Rule 0-10(a) \105\ define a company,
other than an investment company, to be a ``small business'' or ``small
organization'' if it had total assets of $5 million or less on the last
day of its most recent fiscal year. We believe that our proposals would
affect small entities that (i) are required to file reports under
Sections 13(a) or 15(d) of the Exchange Act and (ii) operate, or have a
subsidiary that operates, a coal or other mine, and therefore are
required to provide mine safety disclosure under Section 1503 of the
Act. We estimate that there are approximately 25 companies that would
currently be required to provide the Section 1503 disclosure and that
may be considered small entities. We note that there are a significant
number of small entities that are exploration stage mining companies
that would be required to provide the Section 1503 disclosure if such
companies were to become operators, or have subsidiaries that become
operators, of coal or other mines subject to the Mine Act.
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\103\ 5 U.S.C. 601(6).
\104\ 17 CFR 230.157.
\105\ 17 CFR 240.0-10(a).
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D. Reporting, Recordkeeping, and Other Compliance Requirements
The disclosure requirements we are proposing today are intended to
implement the disclosure requirements set forth in Section 1503 of the
Act and to require additional disclosure to provide context for certain
items required by the Act. These amendments would require small
entities that are required to file reports under Sections 13(a) or
15(d) of the Exchange Act and operate, or have a subsidiary that
operates, a coal or other mine to provide mine safety disclosure under
applicable rules and forms.
Small entities would be required to include the disclosure in their
annual report on Form 10-K, Form 20-F or Form 40-F and, if applicable,
quarterly report on Form 10-Q and current report on Form 8-K. We are
proposing amendments to Form 10-K, Form 10-Q, Form 20-F and Form 40-F
to require the disclosure required by Section 1503(a) of the Act and
certain additional disclosures. New Item 106 of Regulation S-K, new
Item 16J of Form 20-F and new Paragraph (18) of General Instruction B
of Form 40-F would detail the information to be disclosed in accordance
with Section 1503(a) of the Act, and the proposed amendment to Item 601
of Regulation S-K would set forth the exhibit requirement for Form 10-K
and Form 10-Q for the information required to be disclosed under
proposed Item 106 of Regulation S-K. We are also proposing amendments
to Form 8-K to add new Item 1.04 to implement the requirement imposed
by Section 1503(b) of the Act. Finally, we propose to amend General
Instruction I.A.3.(b) of Form S-3 to add new Form 8-K Item 1.04 to the
list of Form 8-K items the untimely filing of which will not result in
loss of Form S-3 eligibility.
E. Duplicative, Overlapping, or Conflicting Federal Rules
Section 1503 of the Act imposed the disclosure requirements set
forth in Sections 1503(a) and (b) of the Act, regardless of whether the
Commission adopts rules to implement those provisions. Our proposed
amendments incorporate the Act's requirements into Regulation S-K and
related forms. The disclosure requirement of Section 1503(a)(1)(G) of
the Act, which requires disclosure of mining-related fatalities,
overlaps to some extent with a disclosure requirement under MSHA rules.
MSHA requires companies to report immediately any death of an
individual at a mine,\106\ which MSHA then makes available to the
public through its data retrieval system on its Web site, http://www.msha.gov.
---------------------------------------------------------------------------
\106\ See 30 CFR 50.10.
---------------------------------------------------------------------------
F. Significant Alternatives
The Regulatory Flexibility Act directs us to consider alternatives
that would accomplish our stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed disclosure amendments, we considered the following
alternatives:
(1) Establishing differing compliance or reporting requirements or
timetables which take into account the resources available to smaller
entities;
(2) Exempting smaller entities from coverage of the disclosure
requirements, or any part thereof;
(3) The clarification, consolidation, or simplification of
disclosure for small entities; and
(4) Use of performance standards rather than design standards.
Section 1503 of the Act requires all entities, including small
entities, that are required to file reports under Sections 13(a) or
15(d) of the Exchange Act and operate, or have a subsidiary that
operates, a coal or other mine to provide mine safety disclosure under
applicable rules and forms. These requirements apply without regard to
whether we adopt rules to implement them. The proposed amendments
implement the disclosure requirements set forth in Section 1503 of the
Act, and require additional disclosure to provide context for certain
items required by the Act. Given the statutory disclosure requirements
in Section 1503 of the Act, the Act does not appear to contemplate
separate compliance or reporting requirements for smaller entities. We
nevertheless solicit comment on the propriety of a complete or partial
exemption from the requirements for smaller entities.
Our proposed amendments would require clear and straightforward
disclosure of the information required by Section 1503 of the Act. We
have used design rather than performance standards in connection with
the proposed amendments. By specifying in the Act the disclosure
required, Congress appears to have contemplated that consistent,
comparable disclosure would be provided. We believe that the specific
disclosure requirements in the proposed amendments would promote
consistent and comparable disclosure among all companies that operate,
or have a subsidiary that operates, a coal or other mine. Further,
based on our past experience, we believe that specific disclosure
requirements for this information would be more useful to investors
than would a performance standard.
Currently, small entities are subject to some different compliance
or reporting requirements under Regulation S-K and the proposed
amendments would not affect these requirements. The proposed disclosure
requirements would apply to small entities to the same extent as larger
issuers. We do not believe these disclosures will create a significant
new burden, and we believe this approach is consistent with the
requirements of the Act.
G. Solicitation of Comments
We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
How the proposed amendments can achieve their objective
while lowering the burden on small entities;
The number of small entities that may be affected by the
proposed amendments;
The existence or nature of the potential impact of the
proposed amendments on small entities discussed in the analysis; and
How to quantify the impact of the proposed amendments.
[[Page 80388]]
Respondents are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. Such
comments will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rule amendments are adopted, and
will be placed in the same public file as comments on the proposed
amendments themselves.
IX. Statutory Authority and Text of the Proposed Amendments
The amendments contained in this release are being adopted under
the authority set forth in Sections 7, 10, and 19(a) of the Securities
Act; Sections 12, 13, 15 and 23 of the Exchange Act and Section 1503 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act.
List of Subjects in 17 CFR Parts 229, 239 and 249
Reporting and recordkeeping requirements, Securities.
Text of the Amendments
For the reasons set out in the preamble, the Commission proposes to
amend title 17, chapter II, of the Code of Federal Regulations as
follows:
PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K
1. The authority citation for part 229 continues to read in part as
follows:
Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 777iii,
77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w,
78ll, 78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 80a-37,
80a-38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350,
unless otherwise noted.
* * * * *
2. Section 229.106 is added to read as follows:
Sec. 229.106 (Item 106) Mine safety disclosure.
(a) A registrant that is the operator, or that has a subsidiary
that is an operator, of a coal or other mine shall provide the
information specified below for the time period covered by the report:
(1) For each coal or other mine of which the registrant or a
subsidiary of the registrant is an operator, identify the mine and
disclose:
(i) The total number of violations of mandatory health or safety
standards that could significantly and substantially contribute to the
cause and effect of a coal or other mine safety or health hazard under
section 104 of the Federal Mine Safety and Health Act of 1977 (30
U.S.C. 814) for which the operator received a citation from the Mine
Safety and Health Administration.
(ii) The total number of orders issued under section 104(b) of such
Act (30 U.S.C. 814(b)).
(iii) The total number of citations and orders for unwarrantable
failure of the mine operator to comply with mandatory health or safety
standards under section 104(d) of such Act (30 U.S.C. 814(d)).
(iv) The total number of flagrant violations under section
110(b)(2) of such Act (30 U.S.C. 820(b)(2)).
(v) The total number of imminent danger orders issued under section
107(a) of such Act (30 U.S.C. 817(a)).
(vi) The total dollar value of proposed assessments from the Mine
Safety and Health Administration under such Act (30 U.S.C. 801 et
seq.).
Instruction to Item 106(a)(1)(vi): Registrants must provide the
total dollar value of assessments proposed by MSHA during the period
covered by the report, and also provide the total dollar value of all
outstanding assessments as of the last day of the period covered by the
report, regardless of whether the registrant has challenged or appealed
the assessment.
(vii) The total number of mining-related fatalities.
(2) A list of coal or other mines, of which the registrant or a
subsidiary of the registrant is an operator, that receive written
notice from the Mine Safety and Health Administration of:
(i) A pattern of violations of mandatory health or safety standards
that are of such nature as could have significantly and substantially
contributed to the cause and effect of coal or other mine health or
safety hazards under section 104(e) of such Act (30 U.S.C. 814(e)); or
(ii) The potential to have such a pattern.
(3) For each violation, order or citation disclosed in response to
(a)(1) and (a)(2) above, a brief description of category of violation,
order or citation.
(4) Any pending legal action before the Federal Mine Safety and
Health Review Commission involving such coal or other mine.
Instruction to Item 106(a)(4): The registrant must report any legal
actions commenced during the time period covered by the report, as well
as any developments material to a legal action previously reported
under this provision occurring during the period covered by the report.
Registrants must disclose the date the action was instituted, by whom,
the name and location of the mine involved, and a brief description of
the category of violation, order or citation underlying the proceeding.
(b) Definitions. For purposes of this Item:
(1) The term coal or other mine means a coal or other mine, as
defined in section 3 of the Federal Mine Safety and Health Act of 1977
(30 U.S.C. 802), that is subject to the provisions of such Act (30
U.S.C. 801 et seq.).
(2) The term operator has the meaning given the term in section 3
of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 802).
Instructions to Item 106:
1. The registrant must provide the information required by this
Item as specified by Sec. 229.601(b)(95) of this chapter. In addition,
the registrant must provide a statement, in an appropriately captioned
section of the periodic report, that the information concerning mine
safety violations or other regulatory matters required by Section
1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection
Act and this Item is included in exhibit 95 to the periodic report.
2. When the disclosure required by this item is included in an
exhibit to an annual report on Form 10-K, the information is to be
provided for the fourth quarter of the registrant's fiscal year, as
well as for the entire fiscal year.
3. Amend Sec. 229.601 by revising paragraphs (a)(36) through
(a)(98) in the exhibit table in paragraph (a), and adding paragraph
(b)(95), to read as follows:
Sec. 229.601 (Item 601) Exhibits.
(a) * * *
Exhibit Table
* * * * *
[[Page 80389]]
Exhibit Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
Securities Act forms Exchange Act forms
--------------------------------------------------------------------------------------------------------------------
S-1 S-3 S-4 \1\ S-8 S-11 F-1 F-3 F-4 \1\ 10 8-K \2\ 10-D 10-Q 10-K
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * * *
(36) through (94) [Reserved]....... N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
(95) Mine Safety Disclosure Exhibit ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... x x
(96) through (98) [Reserved]....... N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
* * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ An exhibit need not be provided about a company if: (1) With respect to such company an election has been made under Form S-4 or F-4 to provide
information about such company at a level prescribed by Form S-3 or F-3; and (2) the form, the level of which has been elected under Form S-4 or F-4,
would not require such company to provide such exhibit if it were registering a primary offering.
\2\ A Form 8-K exhibit is required only if relevant to the subject matter reported on the Form 8-K report. For example, if the Form 8-K pertains to the
departure of a director, only the exhibit described in paragraph (b)(17) of this section need be filed. A required exhibit may be incorporated by
reference from a previous filing.
* * * * *
(b) * * *
(95) Mine Safety Disclosure Exhibit. A registrant that is an
operator, or that has a subsidiary that is an operator, of a coal or
other mine must provide the information required by Item 106 of
Regulation S-K (Sec. 229.106 of this chapter) in an exhibit to its
Exchange Act annual or quarterly report. For purposes of this Item:
(1) The term coal or other mine means a coal or other mine, as
defined in section 3 of the Federal Mine Safety and Health Act of 1977
(30 U.S.C. 802), that is subject to the provisions of such Act (30
U.S.C. 801 et seq.).
(2) The term operator has the meaning given the term in section 3
of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 802).
* * * * *
PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933
4. The authority citation for part 239 continues to read in part as
follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77sss, 78c, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll(d), 77mm,
79e, 79f, 79g, 79j, 79l, 79m, 79n, 79q, 79t, 404 80a-2(a), 80a-3,
80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 80a-30, and
80a-37, unless otherwise noted.
* * * * *
5. Amend Form S-3 (referenced in Sec. 239.13) by revising General
Instruction I.A.3.(b) to read as follows:
Note: The text of Form S-3 does not, and this amendment will
not, appear in the Code of Federal Regulations.
FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
GENERAL INSTRUCTIONS
I. Eligibility Requirements for Use of Form S-3 * * *
A. Registrant Requirements. * * *
3. * * *
(b) has filed in a timely manner all reports required to be filed
during the twelve calendar months and any portion of a month
immediately preceding the filing of the registration statement, other
than a report that is required solely pursuant to Item 1.01, 1.02,
1.04, 2.03, 2.04, 2.05, 2.06, 4.02(a) or 5.02(e) of Form 8-K (Sec.
249.308 of this chapter). If the registrant has used (during the twelve
calendar months and any portion of a month immediately preceding the
filing of the registration statement) Rule 12b-25(b) (Sec. 240.12b-
25(b) of this chapter) under the Exchange Act with respect to a report
or a portion of a report, that report or portion thereof has actually
been filed within the time period prescribed by that rule.
* * * * *
PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934
6. The authority citation for part 249 continues to read in part as
follows:
Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C.
1350, unless otherwise noted.
* * * * *
7. Amend Form 20-F (referenced in Sec. 249.220f) by adding Item
16J, and adding Instruction 19 to the Instructions as to Exhibits, of
Form 20-F, to read as follows:
Note: The text of Form 20-F does not, and this amendment will
not, appear in the Code of Federal Regulations.
FORM 20-F
* * * * *
Item 16J. Mine Safety Disclosure
If the registrant is the operator, or has a subsidiary that is an
operator, of a coal or other mine, include the information set forth
below for the time period covered by the annual report. In an
appropriately captioned section of the annual report, provide a
statement that the information concerning mine safety violations or
other regulatory matters required by Section 1503(a) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act and this Item is
included in a specified exhibit to the annual report. Include the
following information in an exhibit to the annual report.
(a) For each coal or other mine of which the registrant or a
subsidiary of the registrant is an operator, identify the mine and
disclose:
(i) The total number of violations of mandatory health or safety
standards that could significantly and substantially contribute to the
cause and effect of a coal or other mine safety or health hazard under
section 104 of the Federal Mine Safety and Health Act of 1977 (30
U.S.C. 814) for which the operator received a citation from the Mine
Safety and Health Administration.
(ii) The total number of orders issued under section 104(b) of such
Act (30 U.S.C. 814(b)).
(iii) The total number of citations and orders for unwarrantable
failure of the mine operator to comply with mandatory health or safety
standards under section 104(d) of such Act (30 U.S.C. 814(d)).
(iv) The total number of flagrant violations under section
110(b)(2) of such Act (30 U.S.C. 820(b)(2)).
(v) The total number of imminent danger orders issued under section
107(a) of such Act (30 U.S.C. 817(a)).
[[Page 80390]]
(vi) The total dollar value of proposed assessments from the Mine
Safety and Health Administration under such Act (30 U.S.C. 801 et
seq.).
Instruction to Item 16J(a)(vi): Registrants must provide the total
dollar value of assessments proposed by MSHA during the period covered
by the report, and also provide the total dollar value of all
outstanding assessments as of the last day of the period covered by the
report, regardless of whether the registrant has challenged or appealed
the assessment.
(vii) The total number of mining-related fatalities.
(b) A list of coal or other mines, of which the registrant or a
subsidiary of the registrant is an operator, that receive written
notice from the Mine Safety and Health Administration of:
(i) A pattern of violations of mandatory health or safety standards
that are of such nature as could have significantly and substantially
contributed to the cause and effect of coal or other mine health or
safety hazards under section 104(e) of such Act (30 U.S.C. 814(e)); or
(ii) the potential to have such a pattern.
(c) For each violation, order or citation disclosed in response to
(a) and (b) above, a brief description of the category of violation,
order or citation.
(d) Any pending legal action before the Federal Mine Safety and
Health Review Commission involving such coal or other mine.
Instructions to Item 16J(d): 1. Item 16J only applies to annual
reports, and not to registration statements on Form 20-F.
2. The exhibit described in this Item must meet the requirements
under Instruction 19 as to Exhibits of this Form.
3. The registrant must report any legal actions commenced during
the time period covered by the report, as well as any developments
material to a legal action previously reported under this provision
occurring during the period covered by the report. Registrants must
disclose the date the action was instituted, by whom, the name and
location of the mine involved, and a brief description of the category
of violation, order or citation underlying the proceeding.
* * * * *
Instruction to Item 16J
For purposes of this Item:
1. The term coal or other mine means a coal or other mine, as
defined in section 3 of the Federal Mine Safety and Health Act of 1977
(30 U.S.C. 802), that is subject to the provisions of such Act (30
U.S.C. 801 et seq.).
2. The term operator has the meaning given the term in section 3 of
the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 802).
* * * * *
INSTRUCTIONS AS TO EXHIBITS
* * * * *
19. The mine safety disclosure required by Item 16J.
A registrant that is the operator, or that has a subsidiary that is
an operator, of a coal or other mine must provide the information
specified in Item 16J in an exhibit to its annual report on Form 20-F.
20 through 99. [Reserved]
* * * * *
8. Amend Form 40-F (referenced in Sec. 249.240f) by adding
Paragraph (18) to General Instruction B. to read as follows:
* * * * *
(18) Mine safety disclosure. If the registrant is the operator, or
has a subsidiary that is an operator, of a coal or other mine, include
the information set forth below for the time period covered by the
annual report. In an appropriately captioned section of the annual
report, provide a statement that the information concerning mine safety
violations or other regulatory matters required by Section 1503(a) of
the Dodd-Frank Wall Street Reform and Consumer Protection Act and this
Item is included in a specified exhibit to the annual report. Include
the following information in an exhibit to the annual report.
(a) For each coal or other mine of which the registrant or a
subsidiary of the registrant is an operator, identify the mine and
disclose:
(i) The total number of violations of mandatory health or safety
standards that could significantly and substantially contribute to the
cause and effect of a coal or other mine safety or health hazard under
section 104 of the Federal Mine Safety and Health Act of 1977 (30
U.S.C. 814) for which the operator received a citation from the Mine
Safety and Health Administration.
(ii) The total number of orders issued under section 104(b) of such
Act (30 U.S.C. 814(b)).
(iii) The total number of citations and orders for unwarrantable
failure of the mine operator to comply with mandatory health or safety
standards under section 104(d) of such Act (30 U.S.C. 814(d)).
(iv) The total number of flagrant violations under section
110(b)(2) of such Act (30 U.S.C. 820(b)(2)).
(v) The total number of imminent danger orders issued under section
107(a) of such Act (30 U.S.C. 817(a)).
(vi) The total dollar value of proposed assessments from the Mine
Safety and Health Administration under such Act (30 U.S.C. 801 et
seq.).
Instruction to paragraph (18)(a)(vi): Registrants must provide the
total dollar value of assessments proposed by MSHA during the period
covered by the report, and also provide the total dollar value of all
outstanding assessments as of the last day of the period covered by the
report, regardless of whether the registrant has challenged or appealed
the assessment.
(vii) The total number of mining-related fatalities.
(b) A list of coal or other mines, of which the registrant or a
subsidiary of the registrant is an operator, that receive written
notice from the Mine Safety and Health Administration of:
(i) A pattern of violations of mandatory health or safety standards
that are of such nature as could have significantly and substantially
contributed to the cause and effect of coal or other mine health or
safety hazards under section 104(e) of such Act (30 U.S.C. 814(e)); or
(ii) the potential to have such a pattern.
(c) For each violation, order or citation disclosed in response to
(a) and (b) above, a brief description of the category of violation,
order or citation.
(d) Any pending legal action before the Federal Mine Safety and
Health Review Commission involving such coal or other mine.
Instruction to paragraph (18)(d): The registrant must report any
legal actions commenced during the time period covered by the report,
as well as any developments material to a legal action previously
reported under this provision occurring during the period covered by
the report. Registrants must disclose the date the action was
instituted, by whom, the name and location of the mine involved, and a
brief description of the category of violation, order or citation
underlying the proceeding.
* * * * *
Notes to Paragraph (18) of General Instruction B:
For purposes of this Item:
1. The term coal or other mine means a coal or other mine, as
defined in section 3 of the Federal Mine Safety and Health Act of
1977 (30 U.S.C. 802), that is subject to the provisions of such Act
(30 U.S.C. 801 et seq.).
2. The term operator has the meaning given the term in section 3
of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 802).
[[Page 80391]]
3. Instruction B(18) only applies to annual reports, and not to
registration statements on Form 40-F.
* * * * *
9. Amend Form 8-K (referenced in Sec. 249.308) by adding Item 1.04
under the caption ``Information to Be Included in the Report'' after
the General Instructions to read as follows:
Note: The text of Form 8-K does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form 8-K
* * * * *
General Instructions
* * * * *
Information to Be Included in the Report
* * * * *
Item 1.04 Mine Safety--Reporting of Shutdowns and Patterns of
Violations.
(a) If the registrant or a subsidiary of the registrant has
received, with respect to a coal or other mine of which the registrant
or a subsidiary of the registrant is an operator--
an imminent danger order issued under section 107(a) of
the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 817(a));
a written notice from the Mine Safety and Health
Administration that the coal or other mine has a pattern of violations
of mandatory health or safety standards that are of such nature as
could have significantly and substantially contributed to the cause and
effect of coal or other mine health or safety hazards under section
104(e) of such Act (30 U.S.C. 814(e)); or
a written notice from the Mine Safety and Health
Administration that the coal or other mine has the potential to have
such a pattern, disclose the following information:
(1) The date of receipt by the issuer or a subsidiary of such order
or notice.
(2) A brief description of the category of order or notice.
(3) The name and location of the mine involved.
Instructions to Item 1.04.
1. The term ``coal or other mine'' means a coal or other mine, as
defined in section 3 of the Federal Mine Safety and Health Act of 1977
(30 U.S.C. 802), that is subject to the provisions of such Act (30
U.S.C. 801 et seq.).
2. The term ``operator'' has the meaning given the term in section
3 of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 802).
* * * * *
10. Amend Form 10-Q (referenced in Sec. 249.308a) by adding Item 4
in Part II to read as follows:
Note: The text of Form 10-Q does not, and this amendment will
not, appear in the Code of Federal Regulations.
FORM 10-Q
* * * * *
PART II
* * * * *
Item 4. Specialized Disclosures * * *
If applicable, provide a statement that the information concerning
mine safety violations or other regulatory matters required by Section
1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection
Act and Item 106 of Regulation S-K (17 CFR 229.106) is included in
exhibit 95 to the quarterly report.
* * * * *
11. Amend Form 10-K (referenced in Sec. 249.310) by adding
paragraph (b) to Item 4 in Part I to read as follows:
Note: The text of Form 10-K does not, and this amendment will
not, appear in the Code of Federal Regulations.
FORM 10-K
* * * * *
PART I
* * * * *
Item 4. Specialized Disclosures * * *
(b) If applicable, provide a statement that the information
concerning mine safety violations or other regulatory matters required
by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and Item 106 of Regulation S-K (17 CFR 229.106) is
included in exhibit 95 to the annual report.
* * * * *
By the Commission.
Dated: December 15, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-31941 Filed 12-21-10; 8:45 am]
BILLING CODE 8011-01-P