Two U.S. senators who wrote the provision in the Dodd-Frank law requiring oil and gas companies to report payments to foreign governments defended it against a lawsuit that said regulators went beyond what Congress intended.
The American Petroleum Institute, whose members include Exxon Mobil Corp. and Chevron Corp., and other business groups sued in federal court yesterday, saying the regulation based on the law “grossly misinterpreted” the lawmakers’ directive by requiring each company to report publicly payments made to a foreign government.
“The U.S. economy and our values substantially benefit when our companies are working in oil, gas, and mineral rich states,” Senator Richard Lugar, an Indiana Republican who wrote the provision with Senator Ben Cardin, a Maryland Democrat, said today in a statement. “The benefits will not be realized if investments serve to entrench authoritarianism, corruption and instability. With oil prices high and volatile, our economy needs more transparent markets, not less.”
Cardin disputed the argument by API and the U.S. Chamber of Commerce that the rule, written by the Securities and Exchange Commission to implement the 2010 overhaul of financial markets, places U.S. companies at a competitive disadvantage.
“Congress and the SEC carefully crafted a reasonable and very manageable reporting requirement that will bring greater transparency to oil, gas and mineral sector,” Cardin said.
The SEC approved a rule in August requiring public companies to disclose payments of more than $100,000 to foreign governments relating to the development of oil, gas or minerals.
“We’ve been working hard to increase transparency for a decade, but this rule could interfere with ongoing efforts by making U.S. firms less competitive against state-owned firms in China and Russia that have no interest in transparency,” API President Jack Gerard said in a statement yesterday.
The business groups say companies should be able to report payments to the SEC confidentially. The regulator would then release aggregate figures to the public. The groups also argue the SEC didn’t adequately consider the rule’s effects on competition.
The case is American Petroleum Institute v. U.S. Securities and Exchange Commission, 12-cv-01668, U.S. District Court, District of Columbia (Washington).