A federal judge has thrown out a rule that required companies to disclose payments made to U.S. and foreign governments for the extraction of oil, natural gas, and minerals.
The decision is a major setback for proponents of greater transparency and accountability in the extractive resources industry.
Congress instructed the Securities and Exchange Commission (SEC) to write the rule as part of the 2010 Dodd-Frank law. In his opinion today, U.S. District Judge John D. Bates ruled that the federal regulator erred in requiring public disclosure of the payment reports. “The statute’s plain language poses an immediate problem for the Commission, for it says nothing about public filing of these reports,” he wrote.
Senator Ben Cardin (D-MD)—one of the authors of the Dodd-Frank provision—said today that the Judge misinterpreted Congress’s intent. “Congress was clear in the letter and the spirit of the law that this information should be in the public domain,” he stated. Earlier this year, Cardin and other Senators submitted an amicus brief arguing that “only public disclosure…serves Congressional intent.”
Oxfam—which joined the SEC in defending the rule—said they “strongly disagree” with the Judge’s opinion, but they believe the SEC “will be able to ultimately reissue the rules in the same form, with a stronger justification that satisfies the court’s requirements.”
An SEC spokesperson said the agency is reviewing the Judge’s decision, according to Reuters.
Several years ago, the U.S. Court of Appeals threw out a different SEC rule that would have made it easier for shareholders to replace members of corporate boards. The agency did not appeal the Court’s decision.
The SEC’s resource transparency rule was challenged by groups representing oil companies and other corporations.