Oil transparency rule strongly defended by SEC in court

By jforres

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Washington, DC – The International relief and development organization Oxfam America commended the US Securities and Exchange Commission (SEC) for strongly defending its final rule to implement a landmark oil, gas and mining transparency law in arguments today before the US Court of Appeals for the District of Columbia Circuit. The SEC approved final regulations last August as part of its requirements by 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

Section 1504, or the “Cardin-Lugar” provision, requires US and foreign oil, gas and mining companies reporting to the SEC to disclose annually the tax, royalty and other payments that they make to governments in every country where they do business. In October, the American Petroleum Institute (API) and three other business associations sued the SEC in an effort to overturn the law. The SEC denied an industry request to hold on implementation while the legal case proceeded, calling industry arguments “unpersuasive.”

“From Equatorial Guinea to the United States, the Cardin-Lugar amendment sheds a powerful light on the murky world of financial flows between oil and mining companies and governments,” said Ian Gary, senior policy manager of Oxfam America’s oil, gas and mining program. “Oil industry actions in this case show that they would rather keep investors and citizens in the dark than operate in a transparent and responsible manner.”

Among other arguments used against the rule, attorneys for API unveiled a new tactic by claiming that disclosures required by the final rule would violate oil companies’ First Amendment rights.

“There simply is no constitutional right to keep payments to governments secret," said Jonathan Kaufman, staff attorney at EarthRights International and co-counsel representing Oxfam America as intervenor in the lawsuit.

Kaufman also said that judges expressed skepticism that the case belonged in the Appeals Court in the first instance. “Not only is the oil industry trying to overturn the will of Congress, its arrogance extends to trying to get this case heard in a court where it doesn’t belong.”

“If the court agrees with the companies’ challenge, it could undermine the countless reporting statutes and regulations that require disclosure of information on corporate activities to the public,” continued Kaufman.

Global mining firms have refused to join the last ditch legal tactics employed by the oil industry and civil society groups from around the world have called on the oil industry to drop the lawsuit. Last month, the Norwegian global oil company Statoil, an API member, publicly disassociated themselves from the API lawsuit.

“I come from a country where voluntary transparency approaches simply haven’t worked,” said Tutu Alicante, executive director of EG Justice, an organization fighting for transparency and human rights in oil-rich Equatorial Guinea and a witness to today’s court proceedings. “This law will make sure that the billions of dollars paid by US and foreign firms to my government are fully transparent.”

“Oil companies that don’t have anything to hide should follow Statoil’s lead and stand up for what’s right,” said Gary. “If API’s overblown rhetoric regarding costs of compliance were true, Statoil would be using every available means to fight disclosure.”