House Dems ramp up pressure on SEC to finish oil, 'conflict minerals' rules

Democrats are escalating a battle with oil companies over disclosures of payments to foriegn governments over drilling rights. 

Dozens of House Democrats, including senior members of the finance and energy panels, are pressuring federal regulators to complete rules that would force oil companies to disclose payments made to foreign governments for mineral rights.

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The rules are over a year past due and had been included in the 2010 Dodd-Frank financial reform law. They require U.S.-listed oil, gas and mining companies reveal how much money they give governments in relation to projects in their countries, such as money for production licenses, taxes, royalties and other aspects of energy and mineral development.

The same letter from 58 lawmakers also calls for completion of separate rules aimed at making companies more accountable for the trade of  “conflict minerals” that originate from the Democratic Republic of the Congo (DRC) or surrounding areas.

Democrats call the rule an important way to help ensure that companies’ supply chains for gold, tungsten and other industrial minerals aren’t enriching warlords and other armed groups responsible for violence in the region.

“Final rules will take the issues of non-transparent payments and conflict minerals out of the shadows and into the open, making it possible to fight corruption, increase government accountability and end the resource curse in developing countries,” states the June 22 letter to the Securities and Exchange Commission

The new letter to the SEC marks an escalation of the battle that has pit oil companies against human rights groups and drawn in parties ranging from Exxon to George Soros to Bill Gates. Oil companies argue tightening the rules would cause U.S. firms to lose business to rivals in Russia and China.

The letter, available here, urges the commission to vote on the rules by July 1.

Signers include House Natural Resources Committee Ranking Member Ed Markey (D-Mass.), as well as Rep. Barney Frank (D-Mass.), who is the top Democrat on the Financial Services Committee, and Rep. Howard Berman (D-Calif.), the ranking Democrat on the Foreign Affairs Committee. Rep. Frank Wolf (R-Va.) was the single Republican on the letter.

Major oil companies such as Exxon are pushing the SEC to include various exemptions to the requirements and leeway to report the information on a broad, aggregated basis.

The industry, in a series of letters to the SEC and meetings with regulators, have argued that the rules will provide a competitive advantage to state-owned Russian and Chinese energy companies that won’t be bound by the mandates.

The powerful America Petroleum Institute is also pushing the SEC to pull back the proposed rule and re-craft it, alleging the economic analysis is flawed.

But human rights groups say the oil industry is seeking provisions that would gut the measure. Advocates of keeping the rules free of exemptions that oil companies are seeking include billionaire investor George Soros and Bill Gates.

Click here and here for more on the battle over the rules.

The rule on conflict minerals has also been heavily lobbied at the SEC. Under that provision, companies are required to track the source of certain materials, and publicly report whether they contain conflict minerals from the DRC.

Various members of Congress have weighed in with the SEC over the past year but Friday’s letter expands the number of lawmakers who are pressuring the regulators to complete the two Dodd-Frank rules.

“This issue is too serious to allow further delay. Conflict minerals and non-transparent payments for natural resource extraction continue to be a weight on developing nations’ growth and are a risk to investors and the public. Worse, continued delay undermines efforts in the DRC to make the mining industry more transparent and to diminish the link between minerals and the funding of brutal violence carried out by warlords,” the letter states.