The Securities and Exchange Commission (SEC) on Tuesday said it plans to rewrite regulations that would force oil and mining companies to disclose payments to foreign governments.
A court struck down a version of the regulations in July, and an SEC spokesman said the agency does not intend to appeal the ruling.
“The court remanded the matter for further SEC proceedings, which the Commission will undertake informed by the court’s decision,” SEC spokesman John Nester said.
The move by a federal judge to vacate the 2012 disclosure regulation handed a victory to industry groups that alleged the rule would impose costly burdens and force companies to disclose sensitive information.
The decision is a setback for human rights groups, like Oxfam America, that cheered the SEC for refusing to include an array of exemptions sought by industry in the original regulations.
U.S. District Court Judge John D. Bates ruled in July that the SEC had failed to justify its decision to require that companies’ full filings to the commission, rather than just summaries of them, be made public.
The judge also said the SEC had failed to justify its decision to reject industry pleas that the rule should include waivers for operations in countries that bar payment disclosure.
The disclosure rule was mandated by the 2010 Dodd-Frank financial law.
The SEC decision not to appeal will revive an intense administrative lobbying battle to influence the regulation’s contents.
“U.S. companies are leading the way to increase transparency, and we look forward to working with the SEC to rewrite the rule in a way that recognizes these existing efforts and doesn’t harm competitiveness,” said Carlton Carroll, a spokesman for the American Petroleum Institute, which alongside the U.S. Chamber of Commerce and other groups, sued to overturn the rule.
Oxfam America, which had intervened in the lawsuit in defense of the rule, and other advocates quickly called on the SEC to rewrite the rule in a way that doesn’t weaken it.
“It is now up to the SEC to swiftly reissue strong rules ... with a stronger justification that satisfies the court’s requirements,” said Ian Gary, senior policy manager for extractive industries at Oxfam America.
Advocates also released an early August letter from four U.S. senators calling on the SEC to rewrite the rule to better justifies provisions that oil industry groups challenged.
“The new rule should continue to make all reports public and should not allow for host country exemptions,” the letter states. “We believe the SEC has the discretion and authority to retain both of these key aspects of the initial rule as long as sufficient analysis and justification is provided.”
The letter was from Democratic Sens. Ben CardinBenjamin (Ben) Louis CardinDefense & National Security — Military starts giving guidance on COVID-19 vaccine refusals Blinken pressed to fill empty post overseeing 'Havana syndrome' GOP disappointment with McConnell deal could delay vote MORE (Md.), Carl LevinCarl Milton LevinOvernight Defense: First group of Afghan evacuees arrives in Virginia | Biden signs Capitol security funding bill, reimbursing Guard | Pentagon raises health protection level weeks after lowering it Biden pays tribute to late Sen. Levin: 'Embodied the best of who we are' Former Colorado Gov. Richard Lamm dead at 85 MORE (Mich.), Patrick LeahyPatrick Joseph LeahyOvernight Energy & Environment — Presented by the American Petroleum Institute — Democrats address reports that clean energy program will be axed Overnight Health Care — Presented by Carequest — Colin Powell's death highlights risks for immunocompromised On The Money — Democrats tee up Senate spending battles with GOP MORE (Vt.) and Ed MarkeyEd MarkeySenate GOP signals they'll help bail out Biden's Fed chair Biden likely to tap Robert Califf to return as FDA head Biden faces pressure to pass infrastructure bills before climate summit MORE (Mass.). Former Sen. Richard Lugar (R-Ind.), who co-authored the Dodd-Frank provision requiring the rules with Cardin, also signed the letter.
The rule in question 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.
It’s aimed at increasing transparency to help undo the “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.
This post was updated at 3:39 p.m.