Advocates wield new EU disclosure plan in defense of SEC oil mandate

A new European Union deal to force oil and mining companies to disclose payments to foreign governments has quickly surfaced across the Atlantic in ongoing litigation over similar U.S. requirements.

{mosads}Oxfam America, in a letter to judges reviewing recent U.S. disclosure rules, says the E.U. deal undercuts the case that oil industry and business groups have brought against the U.S. mandates.

“Petitioners can hardly claim that the [Securities and Exchange Commission’s] analysis was unreasonable when the EU is poised to adopt similar measures,” states a letter Friday from Oxfam’s attorney to the U.S. Court of Appeals for the District of Columbia Circuit.

Oxfam has intervened in the lawsuit in defense of an SEC rule issued last year that’s required under the 2010 Dodd-Frank financial law.

The rule forces 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.

The American Petroleum Institute, the U.S. Chamber of Commerce and other groups are urging the court to scuttle the mandate, alleging it will impose costly burdens and hinder competitiveness.

They allege the SEC’s economic analysis was badly flawed and that the regulators should have provided certain exemptions. (Click here and here for more on the litigation.)

But the new letter from Jonathan Kaufman, the lawyer representing Oxfam, says a preliminary deal that E.U. nations struck several days ago undercuts claims against the U.S. rules, noting the E.U. rule does not include the exemptions either.

“It . . . undercuts Petitioners’ predictions of competitive harm and extreme compliance costs due to the SEC’s regulatory choices . . . as the agreed regulation is functionally identical in relevant part to the aspects of the Final Rule for Section 1504 of the Dodd-Frank Act that Petitioners challenge,” Kaufman writes.

“For example, the fact that the EU’s 27 member states agreed that exemptions are unnecessary certainly suggests that they did not believe, as Petitioners have claimed, that a failure to grant exemptions will cost companies billions of dollars,” the letter adds.

The rules on both sides of the Atlantic are aimed at undoing the “resource curse,” in which some impoverished countries in Africa and elsewhere are plagued by corruption and conflict alongside their energy and mineral wealth.

Oil-and-gas industry groups say they favor transparency, pointing to their work with a multilateral program called the Extractive Industries Transparency Initiative.

Industry groups say the farther-reaching Dodd-Frank mandates 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 industry unsuccessfully appealed to the SEC to include various exemptions in the law, including an exemption when a foreign government bars the disclosure.

Critics of that idea, however, say that would allow a “tyrant’s veto” of the rules by foreign governments.


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