Two provisions of Dodd-Frank that I have blogged about extensively are under facing challenges seeking to repeal and/or significantly weaken them.
First up on the chopping block is Section 1504 and the implementing rule (the resource extractive industries rule) that requires companies to publically disclose payments made to foreign governments for oil, gas and mining resources. (the rule and its tortured history are discussed here and here). Section 1504 of Dodd-Frank was specifically designed to increase transparency and eliminate corruption. Supporters of the rule allege that the legislation helps tackle some of the more than one trillion dollars lost each year to corruption and tax evasion in the developing world.
- "Section 1504 deters bribery, stops corruption and curbs tax evasion. It provides transparency protections for workers and vulnerable populations," according to Eric LeCompte who serves on United Nations expert groups that focus on tax and transparency issues. "We need more laws that promote transparency and financial disclosure. This is not a moment we can walk away from transparency."
On Wednesday February 1, the House of Representatives is scheduled to consider a joint resolution of disapproval of the resource extraction rule. This resolution is provided for under the Congressional Review Act that allows Congress to stop recently adopted regulations through a simple majority vote. It was introduced by Capital Markets, Securities and Investment Subcommittee Chairman Bill Huizenga (R-MI).
Repealing the rule would mean that large oil companies could make secret payments to foreign governments. It is worth noting that Trump-nominee for Secretary of State Rex Tillerson, led the fight in opposing Section 1504 when it was first introduced.
Also under attack is Section 1502 and the implementing conflict minerals rule (discussed here and here). On January 31st, acting SEC Chair Michael Piwowar announced he has directed agency staff to reconsider how companies should comply with the rule and whether "additional relief" from its requirements is necessary.
This rule cannot be repealed under the Congressional Review Act because that law only applies to rules adopted since the end of May. Still, Piwowar’s questions about the rule and his stated belief that it has done nothing to help the humanitarian crisis in Africa suggest that he may decide to have the agency issue interpretive guidance to scale back its requirements. It is also possible that he could direct the staff not to enforce the rule. And so it begins…..