Regulators failed to adequately consider the costs and benefits of a new rule requiring resource-extraction companies to submit reports on payments they make to foreign governments, oil industry and business groups argue in a court brief filed yesterday.

Led by the American Petroleum Institute and the U.S. Chamber of Commerce, the groups are seeking to both vacate the rule approved by the Securities and Exchange Commission in August and to strike down the provision passed by Congress that compelled the SEC to write it.

In the 151-page filing, which is the first formal brief in the case, the groups call the provision "one of the most expensive rules in the history" of the SEC.

The rule, they said, will require "U.S. companies to publish confidential and sensitive commercial information that will cause the companies -- and ultimately their investors -- billions of dollars in competitive injuries, lost business opportunities and compliance costs."

The final disclosure rule approved by the SEC requires oil, gas and mining companies listed on U.S. stock exchanges to submit, on a project-by-project basis, yearly data on all payments greater than $100,000 that they make to foreign and U.S. governments.

Sens. Ben Cardin (D-Md.) and Richard Lugar (R-Ind.) added the disclosure provision to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, saying that it would cut down on corruption in resource-rich countries.

But the industry groups, which also include the Independent Petroleum Association of America and the National Foreign Trade Council, argue that the SEC used a "flawed" cost-benefit analysis that not only underestimated the costs to industry but also did not determine that the rule would actually benefit investors or citizens of other countries.

"While estimating that the rule could cost U.S. companies and their investors more than $14 billion," the groups wrote, "the commission made no determination regarding the rule's benefits."

The SEC's decision to not allow confidential reporting, they said, would further give them a competitive disadvantage against state-owned companies that do not have to comply with the disclosure rule.

The SEC, the groups wrote in their brief, also failed to provide exemptions in four countries -- Angola, Cameroon, China and Qatar -- that expressly prohibit such disclosures in industry contracts. The commission, they said, has previously provided such exemptions in similar circumstances.

In the brief filed yesterday, API and the chamber ask that the courts also strike down the provision in the Dodd-Frank Act that led to the rule in the first place, arguing that it violates the First Amendment by compelling "U.S. companies to engage in costly speech on a controversial matter in order to influence political affairs in other countries."

The groups filed the case in both the U.S. Court of Appeals for the District of Columbia Circuit and the U.S. District Court for the District of Columbia "out of an abundance of caution."

Last month, the SEC denied a petition by the same groups to temporarily halt the rule, which used several of the same arguments, until the litigation was resolved. The commission found that the groups had failed to show that the rule would cause them "irreparable harm" or that a stay would serve the public interest.

Oxfam America, which has intervened in the case and has been pushing for payment disclosure for several years, said it "welcomed" the SEC's decision.

"Big Oil is using their corporate power to try getting out of following a law that is clearly in the public interest," said Ian Gary, senior policy manager of Oxfam America's oil, gas and mining program. "They had a fair hearing in the SEC's two-year rulemaking process and during the time that Congress considered the issue."