Congress Should Eliminate SEC Rule that Discloses Company Information to Foreign Governments
This week, the U.S. House of Representatives will use the Congressional Review Act to consider a joint resolution of disapproval, sponsored by Rep. Bill Huizenga (R-MI), aimed at the Securities and Exchange Commission’s ‘‘Disclosure of Payments by Resource Extraction Issuers” rule. CEI supports the elimination of this harmful rule that is the second attempt to implement Section 1504 of the Dodd-Frank Act.
The United States District Court for the District of Columbia struck down the first version for inadequately measuring costs. But the current regulation still imposes unnecessary costs to entrepreneurs and investors in return for dubious benefits.
The rule would force publicly-traded U.S. energy companies to disclose in their financial filings any payments to foreign governments. The rule, and the provision of the law on which it is based, stigmatizes routine payments such as fees to foreign governments by putting them in the same category as bribes of foreign officials.
Moreover, under the rule, U.S. energy companies exploring for resources abroad may be required to publicly disclose trade secrets, such as how much they paid for an individual project. Should this happen, state-owned oil companies in some of the world’s most corrupt nations will have access to this valuable information, and they won’t have to disclose anything in return. As American Petroleum Institute President Jack Gerard has pointed out in The Wall Street Journal, “the 16 biggest oil companies in the world do not fall under SEC jurisdiction,” because they don’t list on U.S. exchanges.
The SEC, tasked by Congress with investor protection and facilitating capital formation for entrepreneurs, should not be promulgating rules implementing foreign policy objectives such as anti-corruption. Any such rules should come from clear foreign policy entities such as the Department of State.
Congress should pass this joint resolution of disapproval and block this rule and any succeeding rules until Section 1504 is repealed.