Twelve Democratic Senators urged the SEC to "promptly re-issue a new anti-corruption rule implementing Section 1504 of the . . . Dodd-Frank Act . . . that is consistent with both Congressional intent and the extractive industry transparency laws in effect in thirty other countries." The Senators emphasized that the recent enactment of H.J. Res. 41 to nullify the SEC final rule regarding resource extraction issuer disclosure requirements (see previous coverage) "does not change the [SEC's] legal obligation under the Dodd-Frank Act to promulgate a [final] rule."

Commentary / Nihal Patel

The Democratic Senators agree with their Republican colleagues on at least one point. In a February 2, 2017 letter, six Republican Senators expressed "strong" support for combating U.S. companies' "participation in corrupt financial practices abroad," and urged the SEC to adopt rules that are "consistent with the international standards adopted by European and other governments" when implementing the "bipartisan Cardin-Lugar anti-corruption provisions in [Section 1504]." The Democratic Senators agree that consistency with European rules is "critical"; however, they argue that their Republican colleagues' concern that certain countries may prohibit the relevant disclosures is unfounded. Instead, the Democratic Senators urged the SEC to adopt a rule that contains narrowly tailored exceptions where any such prohibitions exist, rather than "blanket exemptions" that would conflict with international reporting schemes.

As previously highlighted, the history of the SEC implementation of Section 1504 is tortured. When Congress overruled the SEC rulemaking via the Congressional Review Act, it did not amend the statute, and so the SEC remains tasked with writing the rules required under Section 1504. (One of the sponsors of H.J. Res. 401 (Rep. Huizenga) said that rather than have Congress rewrite the rule, he preferred to "put it back to the SEC.") It remains to be seen whether the SEC will take up the task. Acting Chair Michael Piwowar has made no secret of his distaste for the statutory provision:

"Provisions such as Section 1504 have nothing to do with helping investors. This is yet another situation where politically connected special interests are using shareholder resources to push their own agenda." (emphasis in original)

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