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The U.S. Securities and Exchange Commission (SEC) has given its approval to a rule that will require oil and gas companies to disclose payments they make to foreign governments.
Under the new rule, companies would be required to make known what they paid in taxes, royalties and other types of fees for exploration, extraction and other activities. The rule, which the SEC approved on Monday, requires the reporting when a company spends in excess of $100,000 in a fiscal year on a project. A company is exempt from the rule when it involves the first year of acquisition for a firm, and also allows companies to delay disclosure on payments related to exploration for up to one year.
The rule, which was mandated by the Dodd-Frank Wall Street Reform Law, had been on hold for years, and had become had become mired in the courts. The human rights group Oxfam filed a lawsuit against the SEC over the rule, and a federal judge ordered that the rule be fast-tracked. SEC chairwoman Mary Jo White said that the rule would provide “enhanced transparency.”
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The move by the SEC comes in the wake of a decision by the federal courts in 2013 to block a version of the rule that would have required companies to disclose even more information. The court characterized the rule as being overly-broad, requiring companies to disclose too much information. At the time, drilling companies were concerned that the rule would expose proprietary information, including financial data.
The oil and gas industry expressed its displeasure with the rule. Stephen Comstock, the director of tax and accounting policy for the American Petroleum Institute stated, “The SEC’s rule forces U.S. companies to disclose proprietary information to its competitors while foreign entities do not. This can give some large industry players an advantage on future business projects, and can fundamentally harm American jobs.”
The Institute sued the SEC over the rule.
By Lincoln Brown for Oilprice.com
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Lincoln Brown is the former News and Program Director for KVEL radio in Vernal, Utah. He hosted “The Lincoln Brown Show” and was penned a…