Corporations say rules will cost $1 billion to implement and $400 million a year to maintain.
The US Chamber of Commerce, the America Petroleum Institute and other corporate umbrella groups jointly launched a suit against the SEC in federal court over rules that require disclosure of payments made to foreign governments.
The coalition, which also includes the National Foreign Trade Council and the Independent Petroleum Association of America, accused the SEC of disregarding its ‘clear legal obligations to limit the costs and anti-competitive harm of the rule’ when it passed the so-called 'conflict minerals' rules in August.
The measure, part of the Dodd-Frank Act, obliged oil, natural gas and mining companies to disclose payments, or series of payment, totaling more than $100,000 to the US or foreign governments, starting September, 2013. Companies will have to report taxes, fees, royalties, bonuses, dividends, infrastructure improvement costs and other payments to governments, detailing the amounts per project and per government and outlining the purpose of the payments.
Oil and mining industry representatives have said implementation of the ruling will cost some $1 billion at the start and as much as $400 million a year thereafter, and force US companies operating abroad to disclose trade secrets and financial information that would give competitors an advantage when bidding for new contracts.
'The rule as written would impose enormous costs on US firms and put them at a competitive disadvantage against government-owned oil giants not subject to the rule,' Jack Gerard, president of the API, says in a press release announcing the joint legal action. '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 US firms to gain access to resources abroad.' The coalition filed the appeal with the US District Court for the District of Columbia on October 10 and backed it with a petition for review filed to the US Court of Appeals for the DC Circuit.
The cases accuse the SEC of failing to conducting an adequate cost-benefit analysis, of refusing to insert a clause that exempts companies dealing with foreign governments that prohibit such disclosures, and more. 'American oil and natural gas companies must compete against foreign, state owned oil companies for access to resources around the world,’ says Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy, in a statement. `The SEC’s ‘extraction rule’ will require them to turn over their playbooks for how they bid and compete.'
In approving the ruling in August, the SEC argued that lengthy public hearings allowed the creation of fair regulations and helped minimize cost to businesses.
'We have received significant public input on this rulemaking, and in response we incorporated many changes from the proposal that are designed to address concerns about the costs,' Mary Schapiro, chairman of the SEC, said at the time. 'I believe the final rule faithfully implements the statutory requirement as mandated by Congress in a fair and balanced manner.'
