Dodd-Frank reform on the line: SEC won't appeal ruling against disclosure
American mining companies won't be revealing their government payments quite yet. On Tuesday the US Securities and Exchange Commission (SEC) decided not to appeal a court ruling from July which tossed out a rule requiring mining companies to disclose payments they make to US and foreign governments.
In July, a court vacated the rule after the American Petroleum Institute and the Chamber of Commerce filed a lawsuit. Now, the SEC has decided to redraft it rather than fight for the current rule in court, Reuters reports.
Under the 2010 Dodd-Frank Wall Street reform laws, oil, natural gas and mining companies must reveal which foreign coffers they are filling – also known as the Cardin-Lugar rule. Once the SEC drafted the rule to implement these measures, business interests promptly challenged the regulation, calling it a violation of free speech and an impediment to competitiveness.
Dodd-Frank reform measures were signed into law by President Barack Obama in an attempt to reign in financial institutions and make them more accountable after the economic collapse.
Business groups successfully challenged Cardin-Lugar in July when a US district judge ruled that the SEC had "erred in its interpretation of the law," Reuters writes.
When the court tossed the rule, it told the SEC that it must provide further justification for the provision.
Opponents of the regulation argue that it hinders competitiveness and would be very costly to implement. Business groups also point out the fact that some countries such as Angola and China have laws which mandate the exact opposite: Resource extraction companies may not disclose payments.
Meanwhile, proponents of the new rule have been lobbying the SEC to ensure that legislation does not die. Disclosure requirements, they say, would make foreign and domestic governments more accountable and increase investors' abilities to spot risk and unethical behaviour.
In a letter sent to the SEC and made public on Tuesday, a group of senators urged the Commission to "act quickly in releasing a new rule" for the Cardin-Lugar provision. Senators Ben Cardin and Richard Lugar asked that the Commission "write an equally strong revised rule as soon as possible" – one which would "continue to make all reports public" and "not allow for host country exemptions."
A forty-four-person group of investors also wrote to the SEC urging them to act quickly.
The rest of the world will be watching closely as the SEC plans its next move. The European Union has been pushing forward with its own strict rules for resource sector transparency. Also, just last week a group of US investors sent a letter to Canadian lawmakers petitioning them to push forward with disclosure laws.