The recently passed financial reform bill contains a “transparency” provision with disclosure requirements that could place energy companies in a considerable bind. In an effort to reduce the possibility of corruption, the late addition to the Dodd-Frank Act requires all SEC-registered corporations to disclose how much they pay foreign governments for oil, gas and mineral rights.

“Many foreign governments mandate that the terms of these agreements be kept confidential, so forcing the disclosure of this information could cause these companies to violate the terms of their contracts,” says Andrew Derman, leader of the International Energy Practice Group at Thompson & Knight. According to environmental organization EarthRights International, which supported the provision, the requirement will cover the majority of the top 15 international oil and gas companies as ranked by Fortune magazine based on total revenues. Together, these listed companies accounted for more than $2.2 trillion dollars in revenues and close to $200 billion in profits. “While some contracts with foreign governments contain exceptions that allow the disclosure of certain confidential information, it’s unclear how the SEC may interpret the limits of that disclosure,” Derman says.

The SEC is now moving forward with a rulemaking and a public comment period before the requirements take effect; a process that could take up to a year. Once disclosure rules are in place, covered companies would begin disclosures in their annual reports on an ongoing basis.