The House of Representatives on Feb. 1, 2017, voted to nullify an SEC rule requiring publicly listed oil, gas, and mining companies to disclose payments to foreign governments.
The action, which takes advantage of the Congressional Review Act, is part of a broader push by a GOP-controlled Congress and White House to roll back Obama-era regulation.
H.J. Res 41, sponsored by Rep. Bill Huizenga, passed on a 235-187 vote, with five Democrats breaking ranks to support the measure. Huizenga, a Michigan Republican, chairs the influential House Financial Services Capital Markets Subcommittee.
The SEC in June 2016 issued Release No. 34-78167, Disclosure of Payments by Resource Extraction Issuers, a rule under the Dodd-Frank Act aimed at improving transparency about the payments made by public companies to the U.S. and foreign governments related to oil and gas drilling and mining. Under the rules, which are slated to go into effect in 2019, a company must report payments — such as royalties, fees, taxes or bonuses — of more than $100,000 in a year, with some limited exceptions. Sec. 1504 of PL111-203
The measure has always been unpopular with Republicans and industry groups, who argue it puts U.S. companies at a competitive disadvantage and falls outside of both the financial reform goals of the Dodd-Frank Act and the SEC’s mission to protect investors and promote capital formation.
The Congressional Review Act allows lawmakers to block administrative rules via joint resolution. To scrap the rule, the Senate must also take up its version of H.J. Res. 41. The Trump administration supports the measure and a handful of others that it said scrap “unnecessary regulations imposed on America’s businesses.”
In some cases, the resource extraction rule “would require companies to disclose information that the host nation of their project prohibits from disclosure or is commercially sensitive,” the administration said in a February 1 statement. “The rule would impose unreasonable compliance costs on American energy companies that are not justified by quantifiable benefits. Moreover, American businesses could face a competitive disadvantage in cases where their foreign competitors are not subject to similar rules.”
Huizenga, in a floor speech, equated his resolution with “a vote to reset the regulatory process.” He said the measure did nothing to undermine the SEC and Justice Department’s ability “to police against foreign corruption,” pointing to the Foreign Corrupt Practices Act (FCPA).
Defenders of the Dodd-Frank rule said governments in Europe and elsewhere have implemented similar requirements and effectively “leveled the playing field” on payment disclosures. Eliminating the rule, they say, would only serve to cloak what are essentially bribes to foreign officials.
Rep. Maxine Waters, a California Democrat and the ranking member of the House Financial Services Committee, called the Republican effort to nullify the rule “brazen.”
“The rule does not put U.S. companies at a competitive disadvantage, nor does it impose an unreasonable compliance burden,” she said.
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