UPDATE 2-U.S. SEC adopts rule on oil, mining payments to foreign governments

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By Lisa Lambert
WASHINGTON, June 27 (Reuters) - The U.S. Securities and
Exchange Commission on Monday approved a rule requiring oil, gas
and mining companies to disclose payments made to foreign
governments, capping a process stalled in the courts for years.
The rule requires companies to state publicly starting in
2018 how much they pay governments in taxes, royalties and other
types of fees for exploration, extraction and other activities.
It will "provide enhanced transparency," SEC Chair Mary Jo
White said in a statement.
Frustrated with delays, human rights group Oxfam in 2014
sued the SEC over the rule, which was mandated by the Dodd-Frank
Wall Street Reform Law passed four years earlier. In September,
a federal judge ordered the commission to fast-track the rule,
setting Monday as a deadline. Regulators released a draft in
December.
"After six years, we are very pleased to see the SEC release
final rules that align with those in other markets by requiring
fully public, company-by-company, project-level reporting with
no categorical exemptions," said Ian Gary, associate policy
director at Oxfam America, in a statement. "This is a huge
victory for investors and for citizens in resource-rich
countries around the world who wish to follow the money their
governments receive from oil and mining companies."
The rule will cover major corporations such as Exxon (NYSE:XOM),
Chevron (NYSE:CVX) and Shell (LON:RDSa), as well as state-owned companies in China and
Brazil, according to Oxfam.
Under the final rules, "resource extraction" companies must
disclose payments made to further the commercial development of
oil, natural gas or minerals and that total more than $100,000
during a single fiscal year for each of their projects. Those
payments can include taxes, royalties, fees, bonuses, dividends
and social responsibility payments. Companies must disclose
payments made by their subsidiaries, or any other entities they
control, as well.
The rule exempts a company from reporting payment
information for a firm it has acquired in the first year after
the acquisition, and also allows companies to delay disclosure
for a year on payments related to exploration.
The SEC said its new regulation is in line with approaches
used in the European Union and Canada. The Dodd-Frank Wall
Street reform law included a requirement for extraction
companies to report annually on their payments to foreign
governments as a way to combat corruption in places where oil
drilling and mining dominate the local economy.