SEC Agrees to Issue Extractive Payments Rule By June 2016

Complying with a court order, the Securities and Exchange Commission has agreed to an expedited schedule for filing and approving a rewritten rule requiring oil, gas, and mining companies to disclose information—on a country-by-country, project-by-project basis—about payments made to host governments.

The result of a lawsuit by Oxfam America, in September the U.S. District Court for the District of Massachusetts ordered the SEC to file an “expedited schedule” detailing when the agency planned to issue a final rule for Section 1504 of Dodd-Frank. In a filing with the court on Friday, the SEC agreed to such a timeline. The Commission plans to vote on a proposed rule before the end of this year, provide members of the public a comment period of at least 45 days, and to hold a vote on the adoption of a final rule within 270 days (on or before June 27, 2016).

“The 270-day schedule that the Commission is proposing is an extremely expedited timeframe within which to complete this rulemaking,” SEC legal counsel wrote. “Under any circumstances this would be a demanding rulemaking schedule, but it is particularly so here because, as the Commission detailed in its summary judgment filings, it has been—and continues to be—engaged in an unprecedented volume of enforcement, rulemaking, and other regulatory work. And, of course, the rulemaking required under Section 13(q) is one that raises a number of difficult policy issues that have consistently involved sharp disagreement among members of the public, which further complicates the task of completing the rulemaking on an expedited basis.”

The court document also warns that adoption of any rule will require a majority vote of the participating commissioners, and the SEC “cannot guarantee that a final rule will be adopted when it holds a vote.”

Section 1504 of the Dodd-Frank Act requires oil, gas, and mining companies publicly traded in the U.S. to disclose the payments made to governments for the extraction rights to their natural resources. When Congress passed the Dodd-Frank Act in 2010, it required the SEC to issue a final rule by April 17, 2011. When the SEC did finally issue a rule in 2012, it was challenged by the American Petroleum Institute and vacated by the U.S. District Court. In September 2014, Oxfam America sued the SEC for “unlawfully withholding” a rewritten final rule.

 “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 the SEC to help finalize a strong rule,” said Ian Gary, senior policy manager for Oxfam America’s extractive industries program. 

"By filing this schedule, the SEC is accepting that it has an obligation to act quickly to make information about extractive revenues available to investors and communities,” added Jonathan Kaufman, legal advocacy coordinator at EarthRights International and counsel for Oxfam America in the lawsuit. “Given the SEC’s missed deadlines, we’re encouraged that the District Court will maintain jurisdiction over the case and monitor compliance until a final rule is out."