SEC denies request to delay transparency rule

The U.S. Securities and Exchange Commission (SEC) denied a request from the U.S. Chamber of Commerce and the U.S. oil industry to delay new rules that will require oil, gas and mining companies to disclose payments to foreign governments.

In an order dated Nov. 8, the SEC said the groups had failed to demonstrate the “imminent, irreparable harm” that is required to grant a stay.
The denial comes as the SEC and other regulators face a barrage of lawsuits from industry seeking to stop or delay new financial regulation, much of it stemming from the 2010 Dodd-Frank law, Reuters reported.

The rule at issue is championed by humanitarian organizations. It aims, in part, to combat corruption abroad by U.S. energy companies. But industry groups have argued the rule is far too costly and would give rivals sensitive business information.

The SEC ruled the American Petroleum Institute, the Independent Petroleum Association of America and the Chamber of Commerce “have failed to demonstrate imminent, irreparable harm” would occur to U.S. oil, mining and natural gas companies before a federal district court weighs in on a petition for review of the validity of the resource transparency rule.

In addition to suing the SEC, the groups separately asked the SEC to stay the effective date of the rule while the court considered their challenge, citing the initial compliance costs and the immediate competitive disadvantage the rule would impose.

But initial compliance costs are usually not considered irreparable harm, and competitive disadvantage claims are too speculative, the commission said.

In a statement, API federal relations director Justin Spickard said: “We’ve been working hard to increase transparency for a decade, but this rule could interfere with ongoing efforts by making U.S. firms less competitive against state owned firms in China and Russia that have no interest in transparency.”

The court overseeing the challenge to the rule established an expedited schedule for the case and will likely issue a decision by spring 2013, almost one year before the first filings would be due, the SEC said.

Under the new rule, companies are expected to include the information in the 2013 annual reports, due after February 2014, at the earliest.
Business groups have won several challenges to other Dodd-Frank rules, giving others ammunition to file new challenges.