Monday January 14, 2013, 2:35 pm
U.S. State Dept backs rule on foreign payments by firms

Thu, 10 Jan 2013 21:28 GMT

Source: reuters // Reuters

In this 2009 file photo, a woman leaves the U.S. State Department building in Washington REUTERS/Jim Young

By Sarah N. Lynch and Timothy Gardner

WASHINGTON, Jan 10 (Reuters) - The State Department on Thursday waded into the debate over a controversial rule to force energy companies to disclose payments made to foreign governments, saying it "directly advances our foreign policy interests" in curbing corruption.

The so-called "resource extraction" rule, which was adopted by the U.S. Securities and Exchange Commission in August 2012, stems from a requirement in the 2010 Dodd-Frank Wall Street reform law.

It would force certain companies to disclose any payments made to further the exploration, extraction, processing and export of oil, natural gas or minerals, as well as any payments to acquire a license for those activities.

But the rule is tied up in a legal challenge with four business groups, including the U.S. Chamber of Commerce and the American Petroleum Institute, which sued to block it in October saying the SEC failed to properly weigh its benefits and costs.

Thursday marked the first time the State Department's sentiments about the SEC's rule have been publicized since the lawsuit was filed.

Secretary of State Hillary Clinton "has called corruption a national security issue, and has called increasing transparency a key tool to combat this challenge," a State Department spokesman said.

The Dodd-Frank law and the SEC rule "provide transparency by ensuring that a sufficiently detailed level of information concerning payments from the extractive industry ... will soon be made public and accessible to civil society and investors," the spokesman said.

The business groups' argument against the rule concerning the lack of a proper cost-benefit analysis has been used often in recent years to successfully combat SEC regulations in court.

The challenge is being headed by Gibson Dunn attorney Eugene Scalia, the son of Supreme Court Justice Antonin Scalia.

He has a strong track record in knocking down other SEC regulations, such the SEC's proxy access rule that would empower shareholders to nominate directors to corporate boards.

The resource extraction rule has been one of the most controversial provisions in Dodd-Frank. It is championed by human-rights groups who say it will help reduce corruption.

The business groups argue it is too costly and would give rivals sensitive business information.

The case is slated for oral argument sometime this year in the U.S. Court of Appeals for the District of Columbia Circuit.

In a Jan. 2 letter, the SEC asked for the argument to be set sometime after Feb. 20.

The spokesman would not comment on whether the department plans to file a brief with the court in support of the SEC's rule.

Federal lawmakers who backed the provision in Dodd-Frank, however, have already signaled to the court they will file briefs in support of the SEC.

Monday January 14, 2013, 5:13 pm
Follow the money and you will find the criminals.

Monday January 14, 2013, 5:14 pm
Excellent advice Michael! You cannot currently send a star to Michael because you have done so within the last week.

Tuesday January 15, 2013, 9:22 am
All the crooks rise to the top

Tuesday January 15, 2013, 9:39 am
You cannot currently send a star to Mike because you have done so within the last week.

Tuesday January 15, 2013, 2:15 pm
Thanks J.L. for the post. Kudos to the State Department and Secretary Clinton for their action. This transparency is sorely needed. I will be looking forward to seeing how the lawsuit plays out. Read and noted.

Tuesday January 15, 2013, 2:25 pm
You are welcome John. Clinton does indeed deserve kudos for progressing this issue before her duties as SOS end. It is indeed needed; me, too.You cannot currently send a star to Brian because you have done so within the last week.

Tuesday January 15, 2013, 2:59 pm
Thanks J.L. A. These three business stories today are all highly related.

Tuesday January 15, 2013, 3:23 pm
You are welcome Mary. Thanks for noticing how I sometimes post interrelated stories that provides a fuller picture of the issues.