By Ben Geman - 01/11/13 05:21 PM EST
The State Department is throwing its weight behind controversial Securities and Exchange Commission (SEC) rules that will force oil, gas and mining companies to disclose payments to foreign governments.
“The rule directly advances our foreign policy interests in increasing transparency and reducing corruption, particularly in the oil, gas and minerals sectors,” a State Department spokesman said.
The rules finalized last August are required under the 2010 Dodd-Frank financial law, but they have drawn a legal challenge from oil industry and business groups that say the mandate will impose costly burdens.
Secretary of State Hillary ClintonHillary Rodham ClintonPolitical bedfellows of 2016 may be strange but not unheard of Eric Trump: It would be 'foolish' for my dad to release tax returns The Hill's 12:30 Report MORE has previously expressed support for the Dodd-Frank provision, Section 1504, and the SEC’s rules when they were in draft form.
Additionally, Sen. Ben CardinBen CardinDem senator: Clinton Foundation 'clearly' needs to change Sunday shows preview: Unveiling Trump's new team GOP tries to link Dem candidates to Obama on Iran 'ransom' MORE (D-Md.) and ex-Sen. Dick Lugar (R-Ind.), who authored the Dodd-Frank language, as well as Rep. Edward MarkeyEd MarkeyDem senator criticizes Facebook, Instagram for gun sales Apple, Google enlisted for FCC robocall effort Airlines brace for boost in travel volumes over Labor Day MORE (D-Mass.), have joined a closely watched lawsuit to defend the rule.
The disclosure requirement could also prompt legislation aimed at thwarting it.
The rule forces SEC-listed oil, natural-gas and mining companies to reveal payments to governments (including the U.S.) 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 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.
But the American Petroleum Institute, the U.S. Chamber of Commerce and two other groups are challenging the mandate.
They say it will place SEC-listed oil companies at a disadvantage when competing for contracts overseas against state-owned Russian and Chinese firms that aren’t subject to the regulation.
The business groups’ lawsuit also contends that the mandate runs afoul of 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.”
However, the State Department aide said the rule provides needed sunlight.
“Section 1504 and the SEC rule provide transparency by ensuring that a sufficiently detailed level of information concerning payments from the extractive industry for the development of oil, natural gas, and minerals, much of which has been previously inaccessible, will soon be made public and accessible to civil society and investors,” Finn said.