GOP to Target SEC’s Oil and Gas Payments Rule

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Rob Tricchinelli and Andrea Vittorio

Republican lawmakers are expected today to try nullifying a Securities and Exchange Commission rule that would require companies such as Exxon Mobil Corp. and Chevron Corp. to reveal payments to governments in connection with oil, natural gas or mineral development.

The SEC declined to comment on possible congressional action on the rule, which is scheduled to go into effect in fiscal 2018 and is designed to curb natural resource-related corruption.

The SEC estimated that the rule would affect 425 companies, and total initial compliance cost would range from $54.73 million to $700 million for all the affected companies.

Project-Level Payments

The rule requires companies to disclose project-level payments of $100,000 or more during a fiscal year, including production entitlements, taxes, royalties, fees and infrastructure improvements.

An earlier version of the rule mandated by the Dodd-Frank Act was struck down by a federal court in 2013 after a lawsuit by the American Petroleum Institute (API), which represents energy companies.

The SEC’s revised version adopted in June includes exemptions. Disclosure of resource exploration payments can wait a year and companies acquiring other companies can also delay their reporting for the acquired company.

Companies subject to the rule may also file disclosures they prepare for other jurisdictions provided the SEC determines that the requirements of those jurisdictions are substantially similar to the commission’s own rules. The SEC said that the EU and Canada, as well as the U.S. Extractive Industries Transparency Initiative, are substantially similar.

API didn’t immediately respond to a request for comment. Stacy Linden, API vice president and general counsel, said the rule would “unreasonably burden companies that develop natural resources,” in a March 2016 comment letter to the SEC.

The GOP will use the Congressional Review Act, a statute that allows Congress to negate executive branch rules. A joint resolution will be introduced later today, a Republican aide said, with action likely coming next week.

“Anyone who believes that corruption is wrong should vote against this resolution,” Isabel Munilla, a senior policy adviser on Oxfam America’s extractive industries team, told Bloomberg BNA. “A vote for this resolution is a vote for corruption.”

Oxfam sued the SEC to expedite the rulemaking.

To contact the editor responsible for this story: Seth Stern at sstern@bna.com; Yin Wilczek at ywilczek@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Securities & Capital Markets on Bloomberg Law