Originally published January 26, 2012

Keywords: Dodd-Frank, Federal Mine Safety and Health Act, MSHA, safety disclosures, SEC, mine safety requirements

Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires all issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine, as defined under the Federal Mine Safety and Health Act of 1977 (MSHA), to make mine safety disclosures in periodic reports filed with the Securities and Exchange Commission. MSHA defines "operator" to include the operator, supervisor or controller of a mine (along with independent contractors performing services at such mine) and defines "coal or other mine" to include any site located in the United States, and certain appurtenant areas such as roads, from which non-liquid minerals are extracted or from which liquid minerals are extracted with workers underground.

On December 21, 2011, the SEC adopted final rules, effective on January 27, 2012, to implement the Dodd-Frank mine safety requirements.1

Disclosure Requirements

The rules require disclosures to be made of the following items on a mine-by-mine basis in annual reports filed with the SEC by all issuers and in quarterly reports filed by US domestic issuers:

  • Significant and substantial violations of mandatory health or safety standards under Section 104 of MSHA, for which the operator received a citation from MSHA;
  • Orders under Section 104(b) of the Mine Act;
  • Citations and orders for unwarrantable failure of the mine operator to comply with Section 104(d) of MSHA;
  • Flagrant violations under Section 110(b)(2) of MSHA;
  • Imminent-danger orders issued under Section 107(a) of MSHA;
  • The dollar value of proposed assessments from MSHA;
  • Notices from MSHA of a pattern of violations or potential to have a pattern of violations under Section 104(e) of MSHA;
  • Pending legal actions before the Federal Mine Safety and Health Review Commission; and
  • Mining-related fatalities.

For U.S. companies, these mine safety disclosure requirements are contained in a new Item 104 of Regulation S-K.

The new rules also help require U.S. domestic issuers to file a report on Form 8-K under a new Item 1.04 within four days of receipt of any of the following:

  • An imminent danger order issued under Section 107(a) of MSHA;
  • A written notice from MSHA of a pattern of violations of mandatory health or safety standards that could have significantly and substantially contributed to the cause and effect of mine health or safety hazards under Section 104(e) of MSHA; or
  • A written notice from MSHA that the mine has the potential to have such a pattern.

The rules relating to the new 8-K Item would require disclosure of the date of receipt, a brief description of the category of notice or order received, and the name and location of the mine involved.

Form S-3 Eligibility

The SEC has revised Form S-3 to make clear that the untimely filing of a Form 8-K required by the new mine safety rules will not result in the loss of Form S-3 eligibility, provided that the required Form 8-K is filed prior to the time of filing of a Form S-3.

Practical Considerations

  • The SEC's new mine-safety rules apply only with respect to mines located in the United States. However, the SEC noted in the adopting release that to the extent safety issues relating to a non-U.S. mine are material, disclosure of those issues could be required under other existing disclosure provisions such as management's discussion and analysis of financial condition and results of operations, risk factors, description of business or legal proceedings.
  • The rules do not require a particular presentation format disclosure, but the adopting release encourages the use of tabular presentations and contains a sample tabular format.
  • The use of footnotes, accompanying narrative disclosure or additional tables, may be helpful when making a tabular presentation of the required mine safety information.
  • The mine safety information required by the new rules is deemed "filed" with the SEC rather than "furnished, which means issuers are subject to securities law liabilities with respect to such information and the chief executive officer's and chief financial officer's certification will extend to such disclosures.
  • The mine safety information required by the new rules does not have to be provided in interactive data format.

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1. Release 33-9286; 34-66091, available at www.sec.gov/rules/final/2011/33-9286.pdf .

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