Oil industry cites White House reg reform in bid for disclosure rule leeway

A powerful oil industry trade group is citing the new White House initiative to ensure regulations don’t stymie the economy in its bid for leeway in looming federal mandates to disclose payments to foreign governments.

The American Petroleum Institute filed comments Jan. 28 on proposed Securities and Exchange Commission (SEC) rules — required under last year’s Wall Street reform law — that force oil and mining companies to expand disclosure.

“We ... believe that incorporating API's key recommendations into the final rules is essential in order for the Commission to comply with the spirit of President Obama's January 18, 2011 Executive Order on Improving Regulation and Regulatory Review. Among other things, the Executive Order makes clear that regulatory action should promote economic growth and competitiveness; use the least burdensome means for achieving regulatory ends; and take into account benefits and costs, both quantitative and qualitative,” API’s comments note.

The comment is further evidence that a range of industry groups are seizing on the White House initiative to call for a softening of environmental rules and other requirements they allege would be burdensome.

API’s comments reiterate concerns expressed in recent months that the SEC rule will put companies at a disadvantage when bidding for projects against competitors that do not file with U.S. regulators.

The trade group is calling on the SEC to use its discretion in several ways. For instance, the group says requiring project-specific disclosures will be harmful if that information is available to the public — and hence to competitors.

API offers suggestions such as having the SEC keep company-specific information confidential and make only compilations available to the public, or, alternatively, adopt a broad definition of “project” that allows companies to “aggregate data from multiple agreements relating to the same resource.”

And the comments seek other exemptions. “[I]t is essential for the Commission to provide an exemption for disclosure that is prohibited by foreign governments or existing contracts in order to avoid irreparable harm to investors, efficiency, competition and capital formation,” the comments note.

The disclosure provision in the Wall Street law — which is the work of Sens. Dick Lugar (R-Ind.) and Ben Cardin (D-Md.) — is aimed at ending the “resource curse” in which energy- and mineral-rich nations in Africa and elsewhere are plagued by high levels of corruption, conflict and poverty.

Cardin has already urged the SEC not to carve out broad exemptions.

But API and other oil-and-gas industry officials say the measure could hurt U.S.-listed companies while benefiting competitors like Russia’s state-owned Gazprom.

“The unilateral approach to revenue disclosure proposed by the SEC would give foreign oil and natural-gas companies access to confidential, proprietary information that they could use against U.S.-listed companies when competing for crucial energy resources around the globe,” said Misty McGowen, who heads API’s office of federal relations, in a statement Monday.

“API supports the World Bank-backed Extractive Industries Transparency Initiative approach, which encourages disclosure by all oil and natural-gas companies of payments made to foreign governments. API is hopeful that the SEC works out the anti-competitive aspects of this statute as it finalizes the rule,” she added.