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International Coalition Wants SEC to Reissue Dodd-Frank Disclosure Rule

The U.S. Securities and Exchange Commission (SEC) should reissue an implementing rule for the Dodd-Frank Wall Street Reform and Consumer Protection Act that would require disclosure of payments made to governments worldwide for the rights to extract natural gas, oil and other natural resources, according to Publish What You Pay (PWYP), a London-based affiliation of 544 groups.

The rule was approved by the SEC in August 2012, but in a major victory for the energy industry, it was vacated and remanded by the U.S. District Court for the District of Columbia last year (see Daily GPI, Sept. 5, 2013; Aug. 23, 2012; July 5, 2013). U.S. District Judge John Bates said the SEC incorrectly interpreted the section of the 2010 Dodd-Frank Wall Street reform law that called for the development of the disclosure rule. The rule would have 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.

But the court's 2013 ruling "does not preclude the SEC from requiring full public disclosure of project-level payments or denying exemptions," and SEC has the discretion to retain the provisions in the final rule, PWYP said in a letter to SEC Chair Mary Jo White.

"Project-level reporting will bring great benefits to citizens' groups in resource-dependent countries. Some of the signatories to this letter work in areas where numerous extractive companies are active, and in order to ensure that each company is meeting its fiscal obligations to the host government and community, we need to know the identity of individual company making the payment."

The organizations urged SEC to implement a rule that would ensure full public disclosure of payments, including the identity of reporting companies; require contract-based project-level reporting; include no country exemptions; and set a reporting threshold of $100,000.

Most of the groups that signed the letter are in Africa and Asia. Project-level reporting would "bring great benefits to citizens' groups in resource-dependent countries" by ensuring that companies meet their fiscal obligations to host governments and communities. The importance of full project-level transparency is heightened in areas where local revenue-sharing agreements are in place, they said. Such transparency would also benefit investors and companies, according to PWYP.

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