(Adds comment from the API)
By Sarah N. Lynch
WASHINGTON, Sept 3 U.S. securities regulators
said on Tuesday they would not appeal federal court's decision
from July to toss out a new rule requiring oil, natural gas and
mining companies to disclose the payments they make to foreign
Instead, the Securities and Exchange Commission will redraft
the so-called "resource extraction" rule to address the judge's
concerns, and start the process all over again, SEC spokesman
John Nester said.
"The court remanded the matter for further SEC proceedings,
which the commission will undertake informed by the court's
Nester did not provide a timetable for the new proposal.
The rule was required by the 2010 Dodd-Frank Wall Street
reform law, and is among its most controversial provisions.
The SEC did not provide a reason for its decision not to
appeal. However, the appeals court in Washington, D.C. has
handed victories to industry groups that have challenged the
agency's rules in the past.
Carlton Carroll, a spokesman for the American Petroleum
Institute, which had challenged the rule, said the industry
group looks forward to working with the SEC to rewrite it in a
manner that will not harm the "competitiveness of American
In early July, U.S. District Judge John Bates tossed out the
rule after the API and the U.S. Chamber of Commerce filed a
legal challenge. The groups said it would impose enormous costs
on the industry and that it goes outside the scope of
congressional intent by forcing all of the data to be publicly
disseminated to investors.
The industry groups also argued the SEC failed to include
common-sense exemptions by forcing disclosure of payments to
countries like China and Angola, where such disclosures are
Proponents of the rule, including certain lawmakers and
human rights groups, have argued that mandating detailed
disclosures will help combat corruption and wasteful spending in
But Judge Bates said he agreed with a handful of the trade
He ruled the SEC had erred in its interpretation of the law
by mandating public disclosure of the reports, and failed to
properly consider requests for exemptive relief. [ID:
Although his decision effectively vacated the rule, it still
left the door open for the SEC to redraft it in a way that would
take his criticisms into account.
Throughout August, proponents of the rule including current
and former U.S. senators, investors, and human rights groups
like Oxfam America have been urging SEC Chair Mary Jo White to
reissue strong new regulations as soon as possible.
In a series of letters, they have asked the SEC to retain a
requirement to make all of the reports disclosing the payments
to other countries public.
"The new rule should continue to make all reports public and
should not allow for host country exemptions," a handful of U.S.
senators wrote on August 2.
"We believe the SEC has the discretion and authority to
retain both of these key aspects of the initial rule as long as
sufficient analysis and justification is provided."
The letter was signed by Maryland Democrat Ben Cardin,
Vermont Democrat Patrick Leahy, Michigan Democrat Carl Levin,
Massachusetts Democrat Edward Markey and retired Indiana
Republican Richard Lugar.
Cardin and Lugar are the original drafters of the resource
extraction provision in Dodd-Frank.
SEC spokesman John Nester did not provide a timetable for
when a new proposal could be issued.
The SEC could face some international pressure after the
European Union earlier this summer adopted its own resource
extraction rule which is stricter than the SEC's original
(Reporting by Sarah N. Lynch; Editing by Gerald E. McCormick
and Richard Chang)