US SEC will rewrite contested disclosure rule
Washington (Platts)--3 Sep 2013 301 pm EDT/1901 GMT
The Securities and Exchange Commission will not appeal a US District Court ruling that vacated an agency decision to force oil, natural gas, coal and other companies to publicly disclose payments made to foreign governments, it said Tuesday.
Instead, the SEC, on the last day it had to appeal the July decision, said it would rewrite the financial disclosure rule.
"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 in a statement.
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The US District Court for the District of Columbia had sided with arguments from the American Petroleum Institute, US Chamber of Commerce and other plaintiffs that the SEC, in writing regulations based on the Dodd-Frank Wall Street reform law, "misread the statute to mandate public disclosure of the reports."
The court also ruled that the SEC's decision to deny any exemption to the rule, as requested by industry groups, "was, given the limited explanation provided, arbitrary and capricious."
"The rule would have jeopardized transparency efforts already underway by making American firms less competitive against state-owned oil companies," the API said in a statement. "US companies are leading the way to increase transparency, and we look forward to working with the SEC to rewrite the rule in a way that recognizes these existing efforts without harming the competitiveness of American businesses."
The lawsuit had argued that disclosing project payments to regulators would undercut American competitiveness in the global industry as companies compete with other international companies that would not have to disclose payments. Companies said being forced to publicly disclose payments could cost billions of dollars in lost profits and would violate their First Amendment rights.
The API and other groups had argued that a voluntary effort, called the Extractive Industries Transparency Initiative, would achieve the same purpose by disclosing general information about payments without disclosing specific information about companies and projects.
They had asked the SEC to follow a similar example, publishing only compilations of information submitted to it rather than opening all disclosures to public scrutiny.
The SEC rule, also known as the "Cardin-Lugar" provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires publicly traded energy companies to release commercially sensitive, detailed payment information about foreign and US projects, according to API. Firms would have to reveal data about how much they pay in licenses, taxes, royalties and other fees.
--Gary Gentile, firstname.lastname@example.org
--Edited by Kevin Saville, email@example.com