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By Yin Wilczek
Jan. 26 — Oxfam America Inc. has asked a district court to award it summary judgment over the Securities and Exchange Commission's failure to issue a resource extraction disclosure rule.
In a Jan. 23 filing in the U.S. District Court for the District of Massachusetts, the relief organization faulted the SEC for dragging its heels on a rule that would require the resource extraction industry to disclose payments made to governments to further the commercial development of oil, natural gas and minerals.
Oxfam asked the court to direct the SEC to issue a rule proposal within 30 days after granting summary judgment or by Aug. 1, whichever is sooner. It also asked that a rule be finalized by Nov. 1.
The rulemaking is mandated by Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Oxfam filed the lawsuit in September to compel the SEC to promulgate a resource extraction rule.
There is “no dispute that now, almost four years after the deadline that Congress established for the promulgation of rules to implement Section 1504 and an additional eighteen months after the rule was remanded to the SEC, the SEC has not promulgated a new rule or even published a projected schedule for finalizing the rule,” Oxfam said in its Jan. 23 filing. “This repeated failure to meet statutorily required deadlines presents a clear and indisputable instance of agency action ‘unlawfully withheld'” under the Administrative Procedure Act.
An SEC spokesman told Bloomberg BNA that the commission “will be making a responsive filing at the appropriate time.”
This is the second time that Oxfam has sued over the SEC delay. The group's previous lawsuit was filed in May 2012.
However, a rule the SEC subsequently finalized was invalidated by the U.S. District Court for the District of Columbia in 2013 in response to an action brought by four trade groups, including the American Petroleum Institute. Judge John Bates ruled that the agency “misread the statute to mandate public disclosure of the reports, and its decision to deny any exemption was, given the limited explanation provided, arbitrary and capricious.”
In its latest regulatory flexibility agenda, the SEC indicated that a reproposal may be issued by October this year.
Nongovernmental organizations are not the only ones that want the SEC to speed up the rulemaking. The oil and gas industry also has called for a rule, pointing to European Union efforts and citing the need for a coordinated and harmonized global transparency regime.
In December, the U.K. became the first EU member to implement directives requiring companies to report natural resource payments.
The extractives industry is hoping for a SEC reproposal that would not require individual company reports to be made public. Instead, the commission would publish, in aggregate form, the information disclosed by the companies. The industry also is hoping for a “substituted compliance” approach in which compliance with the reporting rules of one country would be deemed to satisfy similar reporting requirements in another jurisdiction.
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Oxfam's request for summary judgment is available at http://www.bloomberglaw.com/public/document/Oxfam_America_Inc_v_Securities__Exchange_Commission_Docket_No_114/1.
The SEC's latest regulatory flexibility agenda is available at http://www.reginfo.gov/public/do/eAgendaMain?operation=OPERATION_GET_AGENCY_RULE_LIST¤tPub=true&agencyCode=&showStage=active&agencyCd=3235.
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