WASHINGTON — Financial regulators have quietly confirmed they are rewriting a rule requiring companies to disclose what they pay foreign interests in exchange for rights to harvest oil, gas and other minerals.
According to the federal government’s just-updated regulatory agenda, the Securities and Exchange Commission is set to propose new mandates in March 2015. That puts the agency on track to issue a final rule as early as the end of 2015, after accepting and responding to public comments — well after a federal district court tossed out the SEC’s first attempt in July 2013.
“This is longer than many of us had hoped, and we will continue to push for speedier action, but it is progress,” said Joseph Williams, senior advocacy officer for the Revenue Watch Institute. “We’re really glad the SEC has added this to their active rule making agenda.”
The transparency rule’s rewrite has been on a slow track; it wasn’t mentioned at all in the government’s last formal outline of planned regulatory activity. And the head of the SEC, Mary Jo White, had questioned the entire approach in a high-profile speech, further suggesting the measure was not a top agency priority.
When Congress first mandated the foreign payment disclosure as part of the 2010 Dodd-Frank financial law, it tasked the Securities and Exchange Commission with writing the details. The result was the now-invalidated SEC measure imposed in August 2012 and quickly challenged by the American Petroleum Institute.
The rule would have forced more than 1,000 publicly traded oil, gas and mining companies to annually report project-level payments of at least $100,000 to further commercial resource development.
Human rights groups say the disclosure is needed to discourage graft, expose bribes and deter corruption in resource-rich nations where oil and mineral wealth isn’t trickling down. But oil companies opposed the granular, project-level detail the SEC initially required, saying that competitors could use the information to boost their own bottom line.
The SEC’s decision to formally schedule work on the rule comes after pressure from international groups and U.S. lawmakers, who note that federal law still obligates the agency to write the mandates.
Although some oil companies have softened their opposition, the American Petroleum Institute has asked the SEC to allow firms to file payment information confidentially to the agency, which would then compile the data and aggregate it for public use.
Human rights groups say that detail would not be sufficient for citizens in resource-rich countries to hold their governments accountable for specific company payments. Instead, Williams said, the answer is for the SEC to model its next draft after transparency laws adopted in the European Union and Norway in the past year. Both the EU and Norway require individual companies to publicly disclose payments for all projects.
“This will give citizens and investors the information they need,” Williams said, “but will also provide a level playing field for companies in different jurisdictions.”