Court Vacates Disclosure of Payments Rule
On July 2, oil companies claimed a victory in the court case against the Securities and Exchange Commission (SEC) over Section 1504 of the Dodd-Frank Act. The rule that was finalized in 2010 would have required American companies in the extractive industries to disclose their payments to foreign countries. With this rule, the SEC followed the model of the Extractive Industries Transparency Initiative (EITI) implemented in Europe. Deciding on minor but significant changes to the EITI rules, the SEC faced criticism from major oil companies within the American Petroleum Institute (API). The national trade organization expressed its concern over legal conflicts in foreign countries, implementing costs of, and competitive disadvantages created by the SEC rules.
According to a statement issued by the API on July 2, the organization will work closely with the government and representatives of the extractive industries to implement the EITI standard. The European rules would enable transparency while maintaining the competitiveness of American companies. Simultaneously, the SEC is expected to rewrite parts of its rules, specifically sections on exemptions from the disclosure requirement. The decision to vacate the rule marked a significant development in the course of establishing transparency in the extractive industries.
By Patrick Schmitz