More than a dozen Democratic lawmakers yesterday urged a federal court to side with the Securities and Exchange Commission in a lawsuit brought by oil and business interests over the commission's controversial payment disclosure rule.

In an amicus brief filed with the U.S. Court of Appeals for the District of Columbia Circuit, 12 Democratic House members said the SEC acted within Congress' intent when it approved the rule, which requires oil, gas and mining companies to disclose, on a project-by-project basis, the payments they make to governments.

"We are filing this brief because we can provide clarity about the original congressional intent" behind the provision, the document said. "The commission acted appropriately and within the boundaries of federal law in promulgating the Resource Extraction rule."

In a separate brief filed yesterday with the court, a pair of senators also defended the provision, which applies to taxes, royalties, fees, production entitlements, bonuses and other material benefits paid to U.S. and foreign governments.

The provision "addresses a major threat to U.S. interests: that abundance of natural resources in developing countries has frequently led to poverty and instability in those countries and, as a result, jeopardizes the national and energy security of the United States," said the brief by Democratic Sens. Ben Cardin of Maryland and Carl Levin of Michigan.

Cardin and Levin were joined in the brief by former Republican Sen. Richard Lugar of Indiana, who earlier this month left the Senate.

The disclosure requirement was added to the 2010 financial reform act by Cardin and Lugar as a means of reducing corruption and instability in resource-rich countries. SEC commissioners approved the rule in August by a 2-1 vote.

In their lawsuit filed in October against the rule, oil and business groups led by the American Petroleum Institute and U.S. Chamber of Commerce argued that it would cost companies billions of dollars and put the United States at a competitive disadvantage. In court documents, they also argued that the SEC failed to weigh the costs and benefits of the rule and should have provided exemptions for certain countries (Greenwire, Dec. 4, 2012).

The lawmakers who filed the brief yesterday are among the rule's greatest supporters. Along with Cardin and Lugar, they include Rep. Ed Markey (D-Mass.), who has been publicly critical of oil interests' opposition to the rule, and Rep. Maxine Waters (D-Calif.), who introduced a version of the provision in the 110th Congress.

Congress, the House lawmakers wrote, didn't give the SEC much leeway when it mandated that the commission approve and carry out the extraction rule. As part of its work on the rule, the commission was not required to do a lengthy cost-and-benefit analysis, they wrote.

The rule, they said, would help reduce instability in key energy-producing regions around the world and will increase investor knowledge and confidence about extraction companies. Because several other countries are expected to follow in the United States' footsteps, they added, it will not "significantly dampen" the competitiveness of American companies.

In their brief, the senators argued that there was no basis to provide any exemptions to the rule, as had been requested by oil, gas and mining groups.

API and the U.S. Chamber can "point to no evidence that the final rule would actually conflict with the existing laws of any foreign country," the senators wrote. "Absent that evidence, there is no practical basis even to consider an exemption, and if the agency allowed exemptions, this would provide an incentive for foreign governments to subvert U.S. law by passing laws that prohibited disclosure."

The D.C. federal court has yet to schedule oral arguments in the lawsuit, which also involves the National Foreign Trade Council and the Independent Petroleum Association of America. Oxfam America, which filed a court brief yesterday, is intervening on behalf of the SEC.

"We are heartened to see prominent members of Congress ... stepping forward to defend the rules promulgated by the SEC," said Ian Gary, senior policy manager of Oxfam America's oil, gas and mining program. "The oil industry should drop its last-ditch effort to deprive investors and citizens of important information regarding billions of dollars companies pour into countries for oil and mineral projects."