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Congress calls on SEC to release extractives transparency rule this year

By Oxfam

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US risks falling behind other markets

WASHINGTON – International relief and development organization Oxfam America applauded today 58 members of the House of Representatives who are calling on the Securities and Exchange Commission (SEC) to complete by the end of the year a pending rule to implement Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In a letter sent to the SEC today, the members acknowledged the Commission’s inclusion of the rulemaking in its agenda for March 2015, but strongly urged for a “swifter, more definite time line.”  

“Members of Congress, investors, companies, citizens and activists – even the American Petroleum Institute – agree on the need for a new rule to be issued as soon as possible to provide clarity on these requirements,” said Ian Gary, senior policy manager for extractive industries at Oxfam America. “Oxfam America applauds the leadership of these members of Congress as they call for a new rule that promotes transparency with public, project level disclosure with no exemptions - by the end of the year.”

“The existing rulemaking record should provide the necessary basis to swiftly schedule a new rulemaking and to reissue a rule mandating public disclosure by company and by project with no exemptions,” the Congressional letter stated. “Anything less would undermine the intended purpose and benefits of Section 1504 for investors, companies, governments and their citizens.”

Section 1504 is a bipartisan provision first introduced by Sen. Cardin with then-Senator Richard Lugar that requires companies registered with the SEC to publicly report how much they pay governments for access to oil, gas and minerals. The provision is important for providing greater transparency for investors as they assess company risk based on payments that oil, gas, and mining companies make to governments for the right to extract natural resources. The measure also benefits citizens in these resource-rich countries by giving them information to help hold their governments accountable. The implementing rule for Sec. 1504 was challenged in court but in 2013 was sent back to the SEC for revision. Since that time, however, it has languished there with no sign of action.  

Oxfam America works with communities, civil society and corporations to promote transparency and accountability in the extractive industries. Oxfam America advocated for the passage of Section 1504 and worked with EarthRights International and its co-counsel to defend the rule against a lawsuit by the American Petroleum Institute. Now the organization – together with members of the Senate and House of Representatives, investors with more than $5.6 trillion in assets under management, and more than 500 civil society organizations from 40 countries – is calling on the SEC to quickly implement a strong rule. 

“The United States cannot now fall behind the EU, Canada and other countries in creating greater transparency and accountability in this important sector,” said Gary. “Disclosing these payments can fight corruption and waste, inform investors of risks, and help citizens hold their governments and companies accountable.”

The Congressional letter was led by Financial Services Committee Ranking Member Maxine Waters (D-Calif.), Foreign Affairs Committee Ranking Member Eliot Engel (D-N.Y.) and Natural Resources Committee Ranking Member Peter DeFazio (D-Ore.).

Section 1504 inspired similar legislation abroad that has developing into a global transparency standard for the extractive industries. In just the past 10 months:

  1. The Extractive Industries Transparency Initiative (EITI) approved a new set of standards, requiring project-level reporting consistent with the U.S. and EU rules;
  2. The 28 member states of the European Union adopted legislation modeled on the SEC’s August 2012 rule but with a strict definition of project;
  3. The G8 pledged to make progress toward developing a common global reporting standard, and urged other countries to implement mandatory reporting regimes that “move towards project-level reporting.” At its Summit this month, the G7 reaffirmed its commitment to a global standard on transparency with project-level disclosure;
  4. The government of Canada committed to implement mandatory extractives disclosure rules, and is making steady progress toward achieving that objective by 2015.
  5. Last week, UK Prime Minister David Cameron called on the U.S. to finalize the rule within the next few months so that the world can work together to deliver common global standards in order to “help end the scandal of people in power looting billions of dollars from countries that are rich in oil, gas and minerals.”

In addition, companies such as Newmont Mining, Rio Tinto, Statoil, and Tullow Oil have publicly emphasized the benefits their companies receive from increased transparency. In fact, in recognition of the role of transparency in creating stable operating environments, strong reporting requirements enjoy robust support across a wide swath of extractive companies. For instance, Canada’s two largest mining associations – with a combined membership of more than 1,300 companies and organizations – have publicly endorsed a mandatory reporting framework modeled on the SEC’s August 2012 rule, and have urged the government of Canada to use the framework as the basis for developing Canada’s regulations.

/ENDS

Note to Editors: The letter is available here: http://democrats.financialservices.house.gov/FinancialSvcsDemMedia/file/001%20Maxine%20Waters%20letters/2014_06_11%20SEC%20Section%201504%20Letter.pdf