SEC to begin work on fresh Dodd-Frank foreign disclosure rules

Note: The original version of this story, posted May 28 with the headline “OMB could recommend SEC to propose fresh Dodd-Frank disclosure rules,” erroneously reported that the notice at a White House Office of Management and Budget (OMB) web site originated at OMB. Additions were made to this story on May 28; corrections were made June 10.

The US Securities and Exchange Commission is preparing to develop revised requirements for publicly trade US oil, gas, and mining firms to disclose payments to foreign governments.

Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act mandates that such disclosures be required, a May 28 SEC notice at the White House Office of Management and Budget’s Office of Information and Regulatory Affairs said. US District Court for the District of Columbia vacated and remanded the SEC’s previous attempt to implement the rule in July 2013, it noted (OGJ Online, July 2, 2013).

SEC subsequently said it would not appeal the court’s decision, but try to rework its proposal to address shortcomings the ruling identified instead (OGJ Online, Sept. 4, 2013).

US oil and gas trade associations have expressed concern that requiring US producers and refiners to publicly report payments to foreign governments would give overseas competitors that don’t have to make similar disclosures an unfair advantage.

“We're pleased the SEC is moving ahead with a revised disclosure rule,” Stephen Comstock, tax and accounting policy director with the American Petroleum Institute, said on May 28. “The industry has led efforts to increase transparency for more than a decade and has asked the SEC to begin work on a new rule.

An effective and workable rule can provide a significant amount of information on payments without compromising US companies’ ability to compete or transparency efforts already under way, he indicated.

Comstock said the oil and gas industry is working with civil society groups and the Obama administration to implement the Extractive Industries Transparency Initiative process, a program which effectively promotes transparency without harming American companies and investors.

“The initiative is being implemented in 36 countries and continues to grow,” he noted.

Groups that support adopting such a requirement for US oil, gas, and mining companies to disclose payments to foreign governments as a way to increase financial transparency also welcomed the news. They urged the SEC to move ahead on developing robust rules which implement the law’s provision.

Contact Nick Snow at nicks@pennwell.com.

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