WASHINGTON Jan 13A key U.S. securities
regulator is expressing tentative support for an alternative
plan to force oil, gas and mining companies to reveal how much
money they pay foreign governments for resource projects, after
the courts struck down the original rule.
"If we did a rulemaking that made sense and didn't impose
too many burdens ... then maybe I can get on board with it,"
Daniel Gallagher, a Republican member of the U.S. Securities and
Exchange Commission, said in an interview with Reuters late last
Gallagher previously voted against a strict version of the
SEC's "resource extraction" rule, which forced energy companies
to disclose detailed information about how much money they pay
The SEC was required to write the rule as part of the 2010
Dodd-Frank Wall Street reform law. Human rights groups
championed the reform, saying it would help combat corruption
and wasteful spending in resource-rich nations.
The rule was subsequently shot down by a federal court last
year after the American Petroleum Institute (API) and other
industry trade groups filed a legal challenge. They argued the
SEC drafted the rule in a way that was too costly and would
force companies to disclose secret, proprietary information that
could harm their bottom line and violate state secrets laws in
countries like China.
In his ruling, U.S. District Judge John Bates agreed with
the API. He said the SEC erred in forcing companies to publicly
disclose their payments and noted that the SEC had failed to
exercise its discretion to grant reasonable, targeted
Following the court victory, API in November submitted a new
plan to the SEC suggesting how the agency should re-write the
rule. The proposal calls for compiling and aggregating the data
from all the companies at the project level.
This aggregated data would then be disclosed so that the
investing public could see which activities are taking place in
various geographic regions "without being so granular as to
reveal proprietary commercial information," API wrote.
In an interview with Reuters, Gallagher said API's
alternative plan seems promising. "I think what they have come
back with makes sense and I think it is workable," he said.
Whether it has a chance of becoming the new rule on the
books remains to be seen.
Of the five current SEC commissioners, only two - Gallagher
and Democrat Luis Aguilar - were serving at the time that the
original resource extraction rule was finalized in 2012. That
makes it hard to gauge how the other three commissioners might
vote on a new rule.
Moreover, the SEC is facing pressure from human rights
groups and other advocates to redraft the rule in a way that
would still require granular disclosures.
(Reporting by Sarah N. Lynch; Editing by Karey Van Hall and