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Biden SEC Will Face Calls to Toughen Energy Payment Disclosures

Dec. 17, 2020, 7:34 PM

Anti-corruption advocates are looking to the next SEC chairman under President-elect Joe Biden to act quickly to strengthen new requirements for oil, gas, and mining companies to disclose payments to foreign governments for extraction rights.

The resource extraction rule the Securities and Exchange Commission adopted Wednesday, unless strengthened, will fail to provide the transparency necessary to fight corruption in the energy sector as Congress intended in the 2010 Dodd-Frank Act, officials with OxFam America, the National Whistleblower Center, and Publish What You Pay told Bloomberg Law.

“There’s a lot of energy in the anti-corruption community to fix this,” said John Kostyack, executive director of the National Whistleblower Center.

The regulation, which the SEC’s Democratic commissioners opposed, came after a federal court and Congress threw out two earlier versions of the rules during the Obama administration. The latest iteration under Trump-appointed SEC Chairman Jay Clayton eases some of the compliance burdens from previous rulemakings, providing more exemptions and permitting less-detailed payment disclosures.

Clayton is set to leave later this month and President-elect Biden will nominate a replacement after taking office next month.

Advocates say they want a regulation that’s closer to the Obama-era rule the SEC adopted in 2016 and the Republican-led Congress tossed out in 2017. That regulation required companies to report more individual data points about contracts than the version adopted Wednesday. The 2016 rule also didn’t include the 2020 regulation’s exemptions for smaller companies and companies with contracts in countries that prohibit payment disclosures.

The 2016 rule followed a successful OxFam lawsuit that forced the SEC to speed up its rulemaking after a federal court threw out a 2012 version of the rule.

Daniel Mulé, senior policy adviser for tax and extractive industries at Oxfam, declined to say whether his organization would sue the SEC again if the agency doesn’t revise the 2020 regulation. Oxfam though remains “heavily invested in seeing a strong rule,” he said.

“This rule has a long history,” Mulé said. “There is a need for us to still find a rule that implements the underlying law and meets congressional intent.”

Future Challenges

Suing the SEC to prompt revision isn’t ideal because it could take years, said Kathleen Brophy, the U.S. director of Publish What You Pay, which seeks financial transparency in the oil, gas, and mining industries.

Publish What You Pay is speaking with the Biden transition team about how the SEC could act, she said.

“A lot of the options to undo or change the rule in the past are less preferable than decisive administrative action that the SEC can take on its own,” Brophy said.

The agency likely would face oil and gas industry opposition to any changes it may make to the regulation.

The American Petroleum Institute, which represents oil and gas companies, was behind a lawsuit that led the U.S. District Court for the District of Columbia to vacate the 2012 rule. The group also opposed the 2016 rule.

The current regulation balances transparency with the SEC’s mission to protect investors, competition, and the efficiency of capital markets, said Stephen Comstock, American Petroleum Institute’s vice president of corporate policy.

“The final rule provides clarity for U.S. issuers on this complex issue and our members, who have long supported transparency efforts,” Comstock said in a statement.

To contact the reporter on this story: Andrew Ramonas in Washington at

To contact the editors responsible for this story: Michael Ferullo at; Roger Yu at