WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission on Friday took up a new draft of a rule to require oil, gas and mining companies to disclose payments made to foreign governments, after a federal judge ordered it to speed up a process stalled in the courts for years.
The rule would require the companies to publicly state how much they pay governments in taxes, royalties and other types of fees for exploration, extraction and other activities.
The commission voted 3-1 to open the new proposal up to a public comment period ending Jan. 25.
Frustrated with delays, human rights group Oxfam in 2014 sued the SEC over the rule, which was mandated by the Dodd-Frank Wall Street Reform Law passed four years earlier. In September a federal judge ordered the commission to fast-track it.
Oxfam said the rule could become an important weapon in fighting corruption in places dominated by oil and minerals. It added the SEC’s proposal generally fits with other countries’ regulations by requiring reporting at the project level and not providing categorical exemptions.
“Oxfam is committed to support a global standard of transparency,” said Ian Gary, its associate policy director working on development. “This is the only way to meet the needs of investors and allow citizens in resource rich countries to follow the money governments receive from oil and mining companies.”
Under the draft, any U.S. or foreign company that files with the SEC would have to disclose payments that furthered commercial development or that totaled at least $100,000 over the course of the fiscal year. That would include payments made by subsidiaries, as well as money sent to foreign local and regional governments or the U.S. government.
Companies in the energy industry say the rule could give foreign competitors an unfair advantage by making information on costs and spending public.
“Our industry has been working hard to increase transparency for more than a decade, but this rule could interfere with ongoing efforts by making U.S. firms less competitive against state-owned firms not covered by this rule,” said Stephen Comstock, director of tax and accounting policy for the American Petroleum Institute, the industry’s top trade group.
SEC Commissioner Kara Stein, a Democrat, said the proposal gives companies flexibility and allows them to seek exemptions.
Fellow Democratic Commissioner Luis Aguilar said it was “consistent with an emerging global consensus to combat corruption through greater transparency and accountability.”
Casting the Dodd-Frank requirement as an afterthought inspired by a political agenda, Commissioner Michael Piwowar, a Republican, said the proposal would not help investors and could set new legal precedents. He also said it would put publicly traded U.S. companies at a disadvantage.
The commission completed work on its first version in 2012, a few months after Oxfam sued it over delays. Trade groups then sued, accusing the SEC of conducting a flawed analysis of industry costs. After a federal judge tossed the rule out in 2013, the SEC pledged to draft a new version, but never did.
Additional reporting by Sarah N. Lynch; Editing by Andrea Ricci and Tom Brown
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