On December 21, 2011, the Securities and Exchange Commission (the "SEC") amended Forms S-3, 8-K, 10-Q, 10-K, 20-F, 40-F and Regulation S-K to reflect its adoption of new rules detailing how issuers that are operators (or have a subsidiary that is an operator) of a coal mine or other type of mine in the United States must disclose the mine safety information required by Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act").
The disclosures required under Section 1503 were self-implementing, meaning the disclosures required by the Act came into effect even though the SEC had not adopted any rules regarding them. Section 1503(a) of the Act required the following information be included in issuers' periodic reports filed with the SEC:
- The total number of violations of mandatory health or safety standards for which the operator received a citation from the Mine Safety and Health Administration (the "MSHA").
- The total number of orders issued under section 104(b) of the Federal Mine Safety and Health Act of 1977 (the "Mine Act").
- 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 the Mine Act.
- The total number of flagrant violations under section 110(b)(2) of the Mine Act.
- Any pending legal action before the Federal Mine Safety and Health Review Commission.
- Any notices from the MSHA of a pattern (or potential for a pattern) of violations of mandatory health or safety standards under section 104(e) of the Mine Act.
- The total number of imminent danger orders issued under section 107(a) of the Mine Act.
- The total dollar value of proposed assessments from the MSHA under the Mine Act.
- The total number of mining-related fatalities.
Section 1503(b) of the Act required an immediate disclosure on Form 8-K if an issuer received an imminent danger order issued under section 107(a) of the Mine Act, or a notice from the MSHA of a pattern (or potential for a pattern) of violations of mandatory health or safety standards under section 104(e) of the Mine Act.
The SEC's new rules and the adopting release clarify the scope and application of the mine safety information which must be disclosed by issuers:
- Mine safety disclosures only apply to mines located in the United States.
- Mine safety disclosures must be done by MSHA mine identification numbers (mines cannot be grouped into economic units which the issuer generally uses in discussing its mining operations in its periodic reports).
- Issuers are not required to report violations by independent contractors which occur on their mines (if the independent contractors are reporting persons, they would report those violations in their SEC filings),
- No special treatment is afforded smaller reporting companies or foreign private issuers (other than foreign private issuers do not have to file a current report for a Mine Act Section 107(a) or 104(e) event).
- Wholly owned subsidiaries of reporting issuers which also file periodic reports must also report the safety information even though the parent is reporting it.
- The required information for periodic reports will be set forth in a new exhibit (although not required to be in tabular form, the adopting release contains a form of a table that could be used for the reporting).
- Form 10-Qs cover matters occurring only in the quarter covered by the report and Form 10-K covers matters occurring in the full fiscal year (separate fourth quarter information is not required).
- The information will be considered filed and subject to the liability provisions of Section 18 of the Securities Exchange Act.
- Issuers cannot exclude information about citations or orders received which were subsequently vacated or dismissed prior to the due date for filing the Form 10-Q, Form 10-K or Form 8-K (issuers may include explanatory footnotes if the citations or orders were vacated, dismissed or reduced).
- The dollar amount of all MSHA assessments proposed during the period covered by the report including contested assessment must be disclosed (no cumulative totals of proposed assessments is required).
- All mining-related fatalities must be reported unless the MSHA determined that the fatality is unrelated to mining activity.
- The number of legal actions pending on the last day of the period covered by the periodic report is to be reported along with the number of legal actions instituted and resolved during the applicable fiscal period (no updating requirement for subsequent development in matters reported in prior periods).
- Form 8-K for reporting Mine Act Section 107(a) or 104(e) events is due in four business days.
- The late filing of a Form 8-K to report these events will not disqualify the issuer from using Form S-3.
For questions or more information, contact one of the members of the firm's Securities/SEC Practice Group including:
Lewis U. Davis, Jr. – 412 562 8953; firstname.lastname@example.org
Jeremiah G. Garvey – 412 562 8811; email@example.com
Jennifer R. Minter – 412 562 8444; firstname.lastname@example.org
Brian S. North – 215 665 3828; email@example.com
Brian S. Novosel – 412 562 5266; firstname.lastname@example.org