The recent 2014 agenda released by the U.S. Security and Exchange Commission (SEC) may have outlined what the country can expect in regulation for the upcoming year, however, it failed to address a controversial provision that didn’t go unnoticed by government aides and officials. The biggest concern for aides reluctant of the agenda is more about why there was no mention of the regulation at all; a regulation that government officials are already well aware of.
As stated in a recent National Journal report, the Dodd-Frank provision would force oil, gas, and mining companies to disclose their payments to foreign governments, as a way to weaken corruption and poverty in resource-rich nations. In other words, the rule will essentially pit the world’s most powerful oil companies against human-rights groups and advocates. Additionally, the rule requires businesses listed on U.S. stock exchanges to file SEC disclosures that tally royalties, taxes, and production licenses to governments for oil, gas or mining projects in their countries.
According to sources close to the issue, affected parties have different views on the consequences of the Dodd-Frank provision overall. Senators argue that accountability can help while the Chamber of Commerce suggests that an aggressive order could be a recipe for disaster. However, Dodd-Frank’s oil-industry objections was a huge victory for transparency advocates who gained to benefit when the SEC stated last year that it would not keep the filings disclosed or provide exemptions from the mandate.
After other business groups filed lawsuits, the regulation was eventually thrown out of court stating that the SEC didn’t need to make company filings public, and failed to justify why it wouldn’t exempt projects in countries that provide payment disclosures. When the SEC declined to appeal it saw no choice but to begin rewriting the rule.
Opponents say the original SEC rule went too far, creating a competitive disadvantage by forcing companies to disclose commercially sensitive information. According to the National Journal report, now the American Petroleum Institute wants the SEC to keep individual companies’ filings to the agency out of the public’s hands in order to fight for a compilation that doesn’t name specific companies, but would still benefit oil-state citizens.
The best-case scenario for all involved parties would be to revert back to the initial version of the provision, but to change the verbiage to legally justify the disputed provisions. Unfortunately, if the government decides to keep the filings a secret, the law’s original purpose will be defeated, allowing exemptions to incentivize more governments to outlaw disclosure.
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