Congress passed a joint resolution this week expressing its disapproval of the revenue transparency rule issued last June by the Securities and Exchange Commission. The rule, issued pursuant to Section 1504 of the Dodd-Frank Act, required extractive sector companies (oil, gas, and mining) to disclose the payments that they make to governments for the commercial development of oil, gas, or minerals.
President Trump is expected to sign the joint resolution, thus formally voiding the rule.
Congress’s authority to issue the resolution of disapproval stems from the Congressional Review Act of 1996 (“CRA”). Pursuant to the CRA, once an agency notifies Congress of a new regulation, Congress has 60 consecutive legislative days to review the regulation. If Congress disapproves, it may pass a joint resolution of disapproval under expedited procedures by simple majority.
Notably, once Congress strikes down a rule through CRA review, an agency may not issue any new rule that is “substantially similar” to the rule that was struck down. At this time, Section 1504 of the Dodd-Frank Act, which directed the SEC to develop the rule, still stands, at least for now. It is unclear what action the SEC will take going forward.
As discussed in previous posts, the SEC originally issued a rule implementing Section 1504 in August 2012. That rule was subsequently vacated in July 2013 by the U.S. District Court for the District of Columbia after a lawsuit challenging the rule was filed by the American Petroleum Institute and other business groups. A new rule was then issued on June 27, 2016.
Civil society organizations strongly condemned the repeal of the rule, as did several Democratic members of Congress. Senator Sherrod Brown (D-OH) stated that the “kind of transparency” called for by the rule “is essential to combating waste, fraud, corruption and mismanagement.”