After a lengthy delay, the U.S. Securities and Exchange Commission has proposed a rule for oil, gas, and mining companies that supporters say will increase transparency in the resource extraction industries.
Under the proposed rule, which was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, a publicly-traded resource extraction company would be required to disclose payments made to the U.S. government or a foreign government to help develop oil, natural gas, or mineral resources.
The kinds of payments to be disclosed would include taxes, royalties, fees, and payments for infrastructure improvements, and the disclosure would be filed publicly with the commission annually on Form SD.
“These proposed rules would implement a statutory mandate and require disclosure consistent with other payment transparency disclosure regimes around the world,” SEC Chair Mary Jo White said in a news release.
The SEC originally completed work on a rule in August 2012 but trade groups including the U.S. Chamber of Commerce and the American Petroleum Institute filed a legal challenge to the rule. In 2013, a federal judge tossed it out, saying it was “arbitrary and capricious.”
The commission has been under pressure from human rights groups to promulgate a final rule.
“The focus of the resource extraction payment rules is not bribery or anti-corruption,” Dynda A. Thomas, an attorney with Squire Patton Boggs, wrote in the National Law Review. “Instead, the focus is transparency and making the payment information publicly available in order to pressure the governments receiving these payments to use them for legitimate purposes.”
Thomas said the SEC intends the rules to be consistent with the Extractive Industries Transparency Initiative and with similar rules already adopted by Canada and the EU.
“The SEC’s proposed rule has real teeth and is a big step toward making sure U.S.-listed oil, gas, and mining companies do their deals in the open,” Simon Taylor, director of the human rights group Global Witness, said in a news release.