Sens. Cardin, Lugar slam oil industry's Dodd-Frank lawsuit

API, along with the U.S. Chamber of Commerce and other groups, challenged the SEC in federal court Wednesday in an effort to overturn rules they argue will put U.S. companies at a competitive disadvantage.

They groups say the economic analysis behind the rule is deficient, and that the regulators illegally excluded industry-sought provisions that would provide companies leeway under the mandate.

The rule finalized in August will force SEC-listed oil, natural gas and mining companies to reveal payments to governments related to projects in their countries, such as money for production licenses, taxes, royalties and other aspects of energy and mineral projects.

It’s aimed at increasing transparency to help undo the “resource curse,” in which some resource-rich countries in Africa and elsewhere are plagued by high levels of poverty, corruption and conflict alongside their energy and mineral wealth.

Advocates say the disclosure will put pressure on foreign governments to ensure that energy and mining revenues benefit the public. Cardin and Lugar say it will help U.S. investors, too.

“Increased transparency will not put companies that comply at a competitive disadvantage but will reduce the risks for U.S. investors and it will allow citizens in resource-rich countries to hold their leaders accountable. API wants to push us back to a time when the U.S. had few tools to add accountability and stability to the inherently unstable energy sector,” Cardin said.

Business groups say they back transparency, but they argue the SEC mandate is onerous and will force disclosure of commercially sensitive information.

“American oil and natural gas companies must compete against foreign, state owned oil companies for access to resources around the world. The SEC’s ‘extraction rule’ will require them to turn over their playbooks for how they bid and compete,” said Karen Harbert, CEO of the U.S. Chamber’s Institute for 21st Century Energy.

The litigation also drew pushback from Rep. Edward Markey (Mass.), who focused his fire on API in noting the rule is meant to help curb corruption.

“API used to stand for American Petroleum Institute. With this lawsuit, it now stands for the American Payoff Institute,” said Markey, a senior Democrat who is a frequent critic of oil companies.