Federal Court Vacates SEC's Extraction Payment Disclosure Rule

On July 2, 2013, Judge John D. Bates of the U.S. District Court for the District of Columbia (the District Court) vacated a new rule promulgated by the Securities and Exchange Commission (the Commission) under the Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) that required oil, gas, and mining issuing companies to include in an annual report information about certain payments made to foreign governments or the U.S. government for the purpose of commercial development of oil, natural gas or minerals (the Rule). In its 30-page decision, the District Court found the Commission had, inter alia, "misread the statute to mandate public disclosure of the reports." Judge Bates also found the Commission's refusal to waive the Dodd-Frank Act's disclosure requirements for countries that prohibit disclosure of payment information was "arbitrary and capricious." The District Court vacated the Rule in its entirety and remanded the matter to the Commission for further proceedings.