Four business lobbying groups have filed suit against the Securities and Exchange Commission regarding the commission’s rule requiring energy and resource extraction firms to disclose any payments made to foreign governments.
The suit, filed by the U.S. Chamber of Commerce, the American Petroleum Institute, the Independent Petroleum Association of America and the National Foreign Trade Council, alleges that the SEC failed to conduct an adequate cost-benefit analysis on the rule, according to Insurance Journal.
“The rule as written would impose enormous costs on U.S. firms and put them at a competitive disadvantage against government-owned oil giants not subject to the rule,” Jack Gerard, the CEO at API, said, referring to foreign competitors, Insurance Journal reports. “Not only will the rule hurt the millions of Americans who own shares in oil and natural gas companies, it will also cost jobs and damage America’s energy security by making it more difficult for U.S. firms to gain access to resources abroad.”
The rule, which aims to combat bribery abroad by U.S. energy firms, is one of the most contentious rules of the 2010 Dodd-Frank Act. Humanitarian groups have championed the rule, but industry groups maintain that the rule would allow competitors access to sensitive information that may allow them to outbid American firms.
The challenge to the rule is being spearheaded by Eugene Scalia, an attorney and son of Supreme Court Justice Antonin Scalia who has helped other trade groups win battles against other Dodd-Frank rules.
The suit also alleges that the SEC “grossly misinterpreted its statutory mandate” in saying that Dodd-Frank forced the commission to adopt the rule in its original form. The groups maintain that the law only requires firms to provide a “compilation” of payment data rather than a detailed list of payments, as required under the current SEC rule.
The lawsuit further says that the rule violates firms’ First Amendment rights, as the forced disclosure would be “in violation of [firms’] contractual and legal commitments,” adding that the disclosure “does not further the investor protection purposes of the securities laws,” Insurance Journal reports.
The SEC adopted the rule in a 2-1 vote in August, with one dissenting vote and two other commissioners recused from participation in the vote. Commissioner Daniel Gallagher said in his dissent that the SEC failed to determine the rule’s benefits and has disregarded costs to firms and their shareholders.