SEC Stands Firm as Industry Tries to Un-Do Transparency Law

As natural resources companies wage a legal battle against a new regulation that calls for more revenue reporting, the Securities and Exchange Commission (SEC) has stood its ground, firmly rejecting industry’s anti-transparency arguments.

The regulation requires oil, gas, and mining companies to publicly disclose their payments to U.S. and foreign governments in annual reports to the SEC. The companies—who are being represented in court by the American Petroleum Institute, the U.S. Chamber of Commerce, the Independent Petroleum Association of America, and the National Foreign Trade Council—argue that the regulation is too burdensome and violates their First Amendment rights.

As an SEC attorney noted last Friday, the regulation “doesn’t even touch on the core values” of the First Amendment, openness coalition Publish What You Pay (PWYP) reported.

Rather, the regulation will help combat corruption in resource-rich countries and make oil, gas, and mining companies more accountable to governments and citizens. In the United States, this means taxpayers can be more confident that they are getting the revenues they are owed from natural resources that are extracted from public lands.

“In an era where tax dollars are scarce, this common-sense law shines a light on billions in financial flows to the U.S. and foreign governments to allow citizens to follow the money and make sure it’s put to good use,” PWYP U.S. Director Isabel Munilla said in a press release.

In addition to benefiting taxpayers at home, the United States’ commitment to revenue transparency is becoming a model for other countries—which is important, given that many U.S. oil, gas, and mining companies do business abroad.

“The U.S. has introduced legally binding measures to require oil, gas and mining companies to publish key financial information for each country and project they work on. And I want Europe to do the same,” UK Prime Minister David Cameron wrote last year.

The lawsuit comes at a time when the United States is preparing even more transparency regulations through a voluntary global effort known as the Extractive Industries Transparency Initiative (EITI). Danielle Brian, the executive director of the Project On Government Oversight, sits on the advisory committee for the U.S. EITI, along with other representatives from civil society, government, and industry. The next U.S. EITI meetings—which the public may listen to live via phone—will be held on April 11, May 1, and May 2.