E&E News
Amanda Peterka
Federal regulators have missed an industry-requested deadline to respond to a motion by oil and business groups to temporarily halt a new rule requiring extractive companies to disclose payments they make to foreign governments.
The groups, which include the American Petroleum Institute and the U.S. Chamber of Commerce, asked the Securities and Exchange Commission to make a decision by yesterday on delaying the rule. API spokesman Carlton Carroll said today that the group has yet to hear back from the regulators.
The SEC-approved rule would require oil, gas and mining companies listed publicly on U.S. exchanges to report all taxes, royalties, fees, production entitlements and bonuses paid to governments on a project-by-project basis. Sens. Ben Cardin (D-Md.) and Richard Lugar (R-Ind.) added the provision to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act as a means to stem corruption in resource-rich countries.
Although the rule becomes effective Nov. 13, companies will not have to comply until the fiscal year beginning Oct. 1, 2013.
API, the U.S. Chamber, the Independent Petroleum Association of America and the National Foreign Trade Council filed a lawsuit against the SEC last month and on Oct. 25 requested that the SEC halt the new rule until the litigation was resolved.
"They now ask the commission to stay the rule to defer the staggering costs that otherwise will begin accruing immediately," the groups' attorneys wrote in the motion for stay, "including (but not limited to) an estimated $1 billion in 'initial' compliance costs that energy companies and their shareholders will bear in the next year, while litigation is pending."
The groups also argue that the rule would put U.S. companies at a competitive disadvantage to foreign, state-owned companies that do not have to comply.
While API and the others asked for a response by yesterday on the motion for stay, the SEC legally is not required to respond immediately.
The Publish What You Pay coalition, a group that has been leading the effort to require payment disclosure in foreign countries, last Friday asked that the commission take more time to respond.
"We believe that a period of less than one week for the commission to consider the stay request is insufficient and wholly inappropriate," wrote coalition Director Isabel Munilla, "particularly given the criteria to be considered by the commission and the importance of allowing interested and impacted parties an opportunity to comment on a potential stay."
Oxfam America has also asked for at least a 30-day comment period on the motion.
The SEC has not given any timeline on its decision. Under law, the commission must consider whether a petitioner has shown a strong likelihood to prevail, a petitioner has shown that a stay is needed to prevent irreparable injury, other parties would suffer from a stay and that granting a stay would serve the public interest.
A bipartisan group of senators Wednesday urged the commission to deny the motion and "actively resist any other attempt to delay the implementation of the rule."
Any further delay would "cause harm to investors and citizens in the United States and abroad, who anxiously await these disclosures to analyze and manage risk and hold their governments to account," wrote Sens. Cardin, Lugar, Carl Levin (D-Mich.) and Patrick Leahy (D-Vt.).
The litigation in the United States comes as the European Union is working on finalizing a similar provision that would cover companies on E.U. exchanges as well as private companies and the forestry industry.
In an opinion piece yesterday in The Wall Street Journal, U.K. Prime Minister David Cameron called on the European Union to act on the measure.
"I want people to see exactly where every penny is going," Cameron wrote. "Where it's not reaching the people who need it, we will stop it."