The US Securities and Exchange Commission outlined an expedited rulemaking schedule aimed at voting on a final rule by June 27, 2016, requiring US oil, gas, and mining companies to report payments made to foreign governments.
“In accordance with this proposed schedule, the commission anticipates holding a vote on a proposed rule before the end of this year, and to afford members of the public a comment period thereafter of at least 45 days,” it said in an Oct. 2 filing in US District Court for Massachusetts.
Oxfam America, which sued the SEC in September 2014 to implement the requirement outlined in Section 1504 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, welcomed the commission’s action. The federal court ordered the agency to move forward with the rulemaking in September 2015.
“We are very pleased to see the SEC make a concrete, time-bound commitment to this crucial rulemaking, and we are eager to work with [it] to help finalize a strong rule,” said Ian Gary, senior policy manager for the global antipoverty organization’s extractive industries program.
Publish What You Pay, a coalition of more than 800 organizations that advocates revenue transparency as an essential ingredient for foreign governments’ resource accountability, also applauded SEC’s filing.
The agency originally tried to implement a US extractive industries foreign payments disclosure rule in 2012. A coalition of business groups which included the American Petroleum Institute, Independent Petroleum Association of America, and US Chamber of Commerce sued in October 2012 to block the requirement, saying it would hurt the ability of US companies to compete globally.
The US District Court for the District of Columbia struck down that rule the following July (OGJ Online, July 2, 2013). The SEC notified the White House Office of Management and Budget late the following May that it was beginning work on a new rule (OGJ Online, May 28, 2014).
Ready to provide input
“The industry has been engaged with the SEC over the past year on approaches for the development a new set of rules that balance the need for information and the need to provide a level playing field for businesses to compete,” API Tax Policy Manager Stephen Comstock said. “We always stand ready to answer questions and provide industry input to help them implement a workable regulation.”
In its Oct. 2 court filing, the SEC said that its proposed 270-day schedule “is an extremely expedited timeframe within which to complete this rulemaking.” That schedule would be demanding under any circumstances, but in this case, the potential rule’s development comes when the commission is “engaged in an unprecedented volume of enforcement, rulemaking, and other regulatory work,” it noted.
The required rulemaking also raises policy issues that consistently have involved sharp public disagreement, further complicating the task of completing it on time, SEC said.
“Second, because adoption of any rule will require a majority vote of the participating commissioners, the [SEC] cannot guarantee that a final rule will be adopted when it holds a vote,” the filing continued. “It is particularly difficult at this juncture to commit to adoption of a final rule during the proposed June 2016 vote because the commission’s composition will likely change to a significant degree before that time.”
Finally, it said, exigencies such as a federal government shut-down, further relevant international development, and unexpected relevant legal developments could make it impracticable for the SEC to complete the rulemaking in a manner that is consistent with the Administrative Procedure Act within the 270-day period. If that happens, the commission said it would ask the court for an extension to complete its development of the new final rule.
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