WASHINGTON, March 23: The US securities regulators sought to convince a federal appeals court on Friday they followed the mandate of Congress when they adopted a rule last year forcing energy and mining companies to disclose payments to foreign governments.

The case involved a lawsuit filed against the US Securities and Exchange Commission in October by the US Chamber of Commerce, the American Petroleum Institute, and two other groups. The plaintiffs are challenging a rule known as “resource extraction,” one of three sets of mining-related disclosure rules that were inserted into the 2010 Dodd-Frank law.

The resource extraction rule is championed by human rights organisations like Oxfam, the US State Department, and a bipartisan group of the US lawmakers who have said it could be an important step toward curbing corruption. The business groups call it one of the most burdensome rules in the SEC’s history, saying it will impose more than $14 billion in costs on the US companies while providing no real benefits to investors.

Friday’s oral arguments in the US Court of Appeals for the District of Columbia mark the second time the SEC has faced a legal challenge by business groups to rules stemming from the 2010 Dodd-Frank Wall Street reform law.

The SEC has already seen its Dodd-Frank “proxy access” rule, which empowered shareholders to nominate directors, overturned in 2011.

The central argument by the groups fighting the rule is a familiar one for the SEC, namely that the agency failed to properly weigh the economic impact of the regulation. That argument has led to the downfall of several prior SEC rules, including proxy access.

On Friday, little time was dedicated in oral arguments to a discussion of cost-benefit analysis. Instead, most of the judges’ questions hinged on other matters, including whether the rule infringes on First Amendment free speech rights and whether the SEC could have narrowed the scope of the rule. Judges also separately questioned whether the appellate court has jurisdiction to hear the case, after a human rights group filed a motion challenging the court venue.On the First Amendment debate, the groups say the rule violates companies’ free speech by forcing them to engage in speech they don’t want to make and violating their “contractual and legal commitments.” That point was of particular interest to Judge David Sentelle, part of the court’s conservative wing, who repeatedly questioned the SEC about how the US government interests trump the speech of corporations.—Reuters