The Securities and Exchange Commission (SEC) said it will not appeal a federal court’s decision that vacated and remanded a Dodd-Frank rule that would have required publicly traded producers to report to the agency how much they pay foreign governments for to commercially develop oil, natural gas and minerals.

“The Commission is not appealing the district court decision vacating the rule mandated by Section 1504 of the Dodd-Frank Act requiring the disclosure of certain [foreign] payments in connection with resource extraction,” a SEC spokesman said. He did not indicate whether the agency would attempt to rewrite the rule. The SEC has said it would undertake further agency proceedings “informed by the court’s decision.”

The rule was approved by the SEC in August 2012 (see Daily GPI, Aug. 23, 2012).

In a major victory for the energy industry, the U.S. District Court for the District of Columbia in July tossed the SEC disclosure rule that required producers to disclose in their annual reports information relating to their resource extraction payments, or those of a subsidiary or any other unit under their control, to a foreign government or to the U.S. government for the commercial development of oil, natural gas or minerals.

The disclosure rule defines commercial development of oil, gas and minerals to include exploration, extraction, processing and exports, according to the SEC. It would require reporting of “any payment, whether [it is] a single payment or a series of related payments, that equal or exceeds $100,000 during the most recent fiscal year.”

In the July court ruling, U.S. District Judge John Bates said the SEC incorrectly interpreted Section 1504 of the 2010 Dodd-Frank Wall Street reform law that called for developing the disclosure rule.

The American Petroleum Institute, U.S. Chamber of Commerce, Independent Petroleum Association of America and the National Foreign Trade Council had challenged the SEC mandate last year (see Daily GPI, Oct. 12, 2012) and in March presented the case to the U.S. Court of Appeals for the District of Columbia, raising both constitutional and statutory claims. The four groups argued that the rule could potentially damage the competitiveness of U.S. companies by requiring business-sensitive information to be shared with global competitors, such as those in China and Russia.

But the appellate court dismissed the petition, saying that it lacked authority to hear the suit in the first instance, and it said jurisdiction rested with the U.S. District Court (Daily GPI, April 29).

“Section 1504 requires only that a ‘compilation’ or aggregation of payment information made by all U.S. companies to each foreign government and federal government be made publicly available,” the energy associations said. “The SEC, however, grossly misinterpreted its statutory mandate to require that each U.S. company publicly file a report on the Commission’s online electronic database, detailing each payment made to each and every foreign government, for each and every ‘project’ relating to extractive industry.”