This morning the Securities and Exchange Commission voted to put into effect regulations requiring that oil and mining companies report payments to foreign governments. From The Hill (which figured its headline might garner a few extra clicks):
The rules, which were required under the 2010 Dodd-Frank financial reform law, do not appear to contain several provisions that the oil industry sought, including exemptions from the SEC filing mandate if foreign governments prohibit the disclosure.
The law forces SEC-listed oil, natural gas and mining companies to reveal payments to governments [of $100,000 or more] related to projects in their countries, such as money for production licenses, taxes, royalties and other aspects of energy and mineral projects.
It’s aimed at increasing transparency to help undo the “resource curse,” in which some impoverished countries in Africa and elsewhere are plagued by high levels of corruption and conflict alongside their energy and mineral wealth.
The aftermath of a Shell spill in Nigeria. (Photo by SU.)
The argument used by the oil companies, as you might have predicted: This will increase their costs. All that reporting! Writing things down! The SEC calculates that the long-term annual cost will range between $200 million and $400 million for all affected companies. This is just under 1 percent of ExxonMobil’s 2011 annual profits.
The SEC vote on the rules, which will apply to an estimated 1,100 companies, fell along party lines. It is remarkable how much conscientious deliberation and thoughtful consideration of issues hews directly to political affiliation.
