SEC adopts rule on oil, mining payments to foreign governmentsReprints
(Reuters) — The U.S. Securities and Exchange Commission on Monday approved a rule requiring oil, gas and mining companies to disclose payments made to foreign governments, capping a process stalled in the courts for years.
The rule requires companies to state publicly starting in 2018 how much they pay governments in taxes, royalties and other types of fees for exploration, extraction and other activities.
It will "provide enhanced transparency," SEC Chair Mary Jo White said in a statement.
Frustrated with delays, human rights group Oxfam in 2014 sued the SEC over the rule, which was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed four years earlier. In September, a federal judge ordered the commission to fast-track the rule, setting Monday as a deadline. Regulators released a draft in December.
"After six years, we are very pleased to see the SEC release final rules that align with those in other markets by requiring fully public, company-by-company, project-level reporting with no categorical exemptions," said Ian Gary, associate policy director at Oxfam America, in a statement. "This is a huge victory for investors and for citizens in resource-rich countries around the world who wish to follow the money their governments receive from oil and mining companies."
The rule will cover major corporations such as Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell P.L.C., as well as state-owned companies in China and Brazil, according to Oxfam.
Under the final rules, "resource extraction" companies must disclose payments made to further the commercial development of oil, natural gas or minerals and that total more than $100,000 during a single fiscal year for each of their projects. Those payments can include taxes, royalties, fees, bonuses, dividends and social responsibility payments. Companies must disclose payments made by their subsidiaries, or any other entities they control, as well.
The rule exempts a company from reporting payment information for a firm it has acquired in the first year after the acquisition, and also allows companies to delay disclosure for a year on payments related to exploration.
The SEC said its new regulation is in line with approaches used in the European Union and Canada. The Dodd-Frank Wall Street reform law included a requirement for extraction companies to report annually on their payments to foreign governments as a way to combat corruption in places where oil drilling and mining dominate the local economy.