In a recent letter to the SEC, Durbin, the No. 2 Senate Democrat, and Cardin, the No. 2 Democrat on the Senate Foreign Relations Committee and co-author with Sen. Lugar of the 2010 amendment, known as Sec. 1504 of the Dodd-Frank Wall Street reform bill, said the agency failed to consider significant comments from stakeholders and issued a rule too weak to stop corruption and out of step with international standards on extractives transparency.

“Congress intended the U.S. to lead on extractive industries transparency and in the fight against corruption, but with the current version of the final rule we would fall far behind,” they wrote.

Sen. Lugar and Sen. Cardin originally proposed the Energy Security Through Transparency legislation to stem the crippling corruption in many poor resource-rich countries that causes poverty, disease and instability, which threaten American national security and economic interests. By forcing oil, gas and mining companies to disclose how much they pay to governments where they operate, the legislation aims to expose bribery, corruption and mismanagement.

However, the implementing regulation approved in December under former SEC Chair Jay Clayton, a Trump appointee, sided with the oil industry and allows companies to hide many payments and obscure others. The agency ignored the pleas of investors, civil society organizations, many large foreign oil and gas companies, and legal experts to make the rule stronger, consistent with the international standard (ironically, inspired by the Cardin-Lugar legislation itself) and the standards of the Extractive Industries Transparency Initiative, a widely supported anti-corruption organization.

“The SEC can and must act to strengthen certain key aspects of the rule to ensure it satisfies the anti-corruption and investor protection objectives of the original statute,” the Senators wrote. “We urge the SEC to act swiftly to amend the December 16, 2020 rule to ensure it serves as an effective tool for combating corruption and provides critical information to investors.”

Their criticisms of the final rule echoed those of the current acting SEC chair, Allison Herren Lee, who voted against the rule in December.  President Biden’s nominee for SEC chair, Gary Gensler, is awaiting confirmation by the Senate. He is a former CFTC commissioner under President Obama and was credited with taking tough action against the financial derivatives market, which had contributed to the 2008-09 financial crisis. It is unknown whether he would be open to strengthening the current weak Cardin-Lugar rule.

Amending the regulation would require the agency to conduct a new rule-making exercise, which would include taking public comments on proposed amendments and holding another vote by the five-member commission. The Republican Congress in 2017 struck down an earlier, stronger version of the regulation under the controversial Congressional Review Act (CRA).

Democrats could, in principle, strike down he current weak regulation by the same CRA process, which requires only a majority vote in each house and cannot be filibustered. However, that would leave no rule in place, requiring the SEC to start all over. There are also legal uncertainties about limits the CRA may place on the content of any new rule.