SEC to rewrite mining transparency rule
The U.S. Securities and Exchange Commission (SEC) said it plans to rewrite regulations that would force oil and mining companies to disclose payments to foreign governments.
The rule in question forces SEC-listed oil, natural gas and mining companies to reveal payments to governments related to projects in their countries, such as money for production licenses; taxes; royalties; and other aspects of energy and mineral projects.
It’s aimed at increasing transparency to help undo the “resource curse,” in which some impoverished countries in Africa and elsewhere are plagued by high levels of corruption and conflict alongside their energy and mineral wealth, The Hill reported.
The oil industry sued, arguing that the requirement to provide financial details for specific projects rather than whole countries at a time would give their rivals a competitive advantage.
U.S. District Court Judge John D. Bates ruled in July that the SEC had failed to justify its decision to require that companies’ full filings to the commission, rather than just summaries of them, be made public.
The judge also said the SEC had failed to justify its decision to reject industry pleas that the rule should include waivers for operations in countries that bar payment disclosure.
The disclosure rule was mandated by the 2010 Dodd-Frank financial law.
“The court remanded the matter for further SEC proceedings, which the Commission will undertake informed by the court’s decision,” SEC spokesman John Nester said.
The move handed a victory to industry groups that alleged the rule would impose costly burdens and force companies to disclose sensitive information. The decision is a setback for human rights groups, like Oxfam America, that cheered the SEC for refusing to include an array of exemptions sought by industry in the original regulations.
The SEC decision not to appeal will likely revive an intense administrative lobbying battle to influence the regulation’s contents.
Oxfam America, which had intervened in the lawsuit in defense of the rule, and other advocates quickly called on the SEC to rewrite the rule in a way that doesn’t weaken it.
Advocates also released an early August letter from four U.S. senators calling on the SEC to rewrite the rule to better justifies provisions that oil industry groups challenged.
“The new rule should continue to make all reports public and should not allow for host country exemptions,” the letter states. “We believe the SEC has the discretion and authority to retain both of these key aspects of the initial rule as long as sufficient analysis and justification is provided.”
The letter was from Democratic Sens. Ben Cardin (MD), Carl Levin (MI), Patrick Leahy (VT) and Ed Markey (MA). Former Sen. Richard Lugar (R-IN), who co-authored the Dodd-Frank provision requiring the rules with Cardin, also signed the letter.