Senators: Dodd-Frank lawsuit ‘fundamentally’ threatens Congress’s power

A trio of senators say that business groups challenging new Securities and Exchange Commission rules are taking dead aim at the power of Congress to make policy on energy and national security.

Sens. Ben Cardin (D-Md.), Carl Levin (D-Mich.) and ex-Sen. Dick Lugar (R-Ind.), in a court filing Thursday, defend SEC rules that will force oil, gas and mining companies to disclose payments to foreign governments.

Their brief in the case notes that oil and business groups have challenged not only the specifics of the rule, but Congress’s power, in the Dodd-Frank financial overhaul law, to force the disclosure.

“This raises for this Court whether Congress can require United States issuers to disclose such payments, a question which fundamentally implicates the ability of the legislature to make judgments regarding the national and energy security of the United States, its ability to insist upon the transparency and integrity of its securities markets to protect investors, as well as its ability to spread the values of transparency and integrity to other countries as a matter of foreign policy judgment,” the brief to the U.S. Court of Appeals for the District of Columbia Circuit states.

Lugar, who left Congress this month, and Cardin authored the Dodd-Frank provision that required the SEC disclosure rules. They have intervened in litigation against the rules on the side of the SEC.

The American Petroleum Institute, the U.S. Chamber of Commerce, the National Foreign Trade Council and the Independent Petroleum Association of America are challenging the rules, and say they will put U.S. companies at a competitive disadvantage overseas.

Their lawsuit claims the SEC’s economic analysis is badly flawed, and that the rule violates the First Amendment “by “compelling U.S. companies to engage in costly speech on controversial matters in order to influence political affairs in other nations.”

Cardin, Lugar and Levin, in the new filing, reject the various claims, including the First Amendment argument.

“Stated simply, there is nothing in the Cardin-Lugar Amendment that requires anything other than garden variety disclosure of factual, financial information by SEC issuers to the public. These required factual disclosures are devoid of any ideological or political message,” their new brief states.

The rule is aimed at increasing transparency to help undo the so-called “resource curse,” in which some impoverished countries in Africa and elsewhere are plagued by high levels of corruption and conflict alongside their energy and mineral wealth.

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