Inhofe, Huizenga File CRA Disapproving of SEC Rule 1504

WASHINGTON – U.S. Sen Jim Inhofe (R-Okla.) and Rep. Bill Huizenga (R-Mich.) today filed S. J. Res 9, a Congressional Review Act (CRA) Resolution of Disapproval in the Senate against the U.S. Securities and Exchange Commission’s (SEC) rule on resource extraction issuers under Section 1504 of the Dodd-Frank Act. This rule requires companies registered with the SEC to report, on an annual basis, payments made to a foreign government or the U.S. federal government relating to the commercial development of oil, natural gas and minerals. The measure is cosponsored by Senate Majority Leader Mitch McConnell (R-Ky.) and Sen. Mike Rounds (R-S.D.).

 I am pleased to introduce this CRA against the SEC’s resource extraction rule, which would put our companies at a disadvantage by forcing them to disclose confidential business information to their private and international competitors,” Inhofe said. “Passing this CRA will right the ship and put U.S. companies back on a level playing field with their private and foreign competitors; it will also protect them from a dramatic increase in regulatory compliance costs. This is not the first time action against the SEC’s rule has been taken. In 2012, the Commission finalized essentially the same rule, which was ultimately vacated by the U.S. District Court for the District of Columbia in July 2013. It is time we take action to roll back this harmful and unlawful rule. I look forward to working with my colleagues in the House and Senate in getting this CRA to the President’s desk.

 "The SEC's proposed rule surrounding resource extraction pursuant to section 1504 of Dodd-Frank fails the agency's core mission on multiple fronts," Congressman Bill Huizenga, Chairman of the House Financial Services Subcommittee on Capital Markets said. "The SEC is tasked by Congress to both protect investors and facilitate capital formation. Despite being instructed in federal court, the SEC continues to propose a resource extraction rule that is overly burdensome, puts U.S. companies at a competitive disadvantage and fails to provide investors with useful information. Transparency is a critical element in governance and I believe there is a way for the SEC to achieve transparency regarding section 1504. However this revised rule falls short and remains deeply flawed."

 Background

  • On July 27, 2016, the SEC finalized its rule relating to the disclosure of payments by resource extraction issuers (81 Fed Reg. 49360).
  • This rule puts publicly traded companies listed in the United States at a competitive disadvantage relative to their private and international counterparts by requiring them to disclose confidential business information relating to the negotiation of business contracts.
  • The SEC was instructed to develop this rule by Section 1504 of the Dodd-Frank Act. It finalized the first version of this rule in August 2012, but it was vacated by federal district court in July 2013 because the SEC’s rule made “two substantial errors,” including “[misreading Section 1504] to mandate public disclosures of the reports,” and failing to provide an exemption to companies that are legally prohibited from making them.
  • Despite this judicial rebuke, the SEC finalized a second rule under the authorities of Dodd-Frank’s Section 1504 without making substantial modifications.
  • Under the CRA, Congress is empowered to review new federal regulations issued by government agencies. With the passage of a joint resolution and the signature of the President, Congress can permanently repeal a regulation.