Washington, DC – International relief and development organization Oxfam America has requested the US Court of Appeals for the D.C. Circuit for leave to intervene in a lawsuit filed by oil industry trade groups that aims to strike down a sunshine law that would provide investors with information to assess risk and help stem corruption in countries rich in oil and minerals. The law, known as Section 1504 or the Cardin-Lugar Amendment of the Dodd-Frank Act requires oil, gas and mining companies to disclose payments they make to U.S. and foreign governments for natural resources extraction.
The Securities and Exchange Commission (SEC), the regulatory agency responsible for implementing the law, issued final regulations on August 22, 2012 and companies are required to start reporting their payment for fiscal years ending after September 30, 2013. However, the American Petroleum Institute (API), a lobby group representing companies such as BP, Exxon, Chevron and Shell, the Chamber of Commerce and two trade groups filed a lawsuit against the SEC last month to overturn the law and block implementation of the rules.
"Big oil is using their corporate power to try getting out of following the law that is clearly in the public interest,” said Ian Gary, senior policy manager of Oxfam America's oil, gas and mining program. "They had a fair hearing in the SEC’s two-year rulemaking process and during the time that Congress considered the law. The SEC and courts should not cave under industry pressure.”
Oxfam America’s motion to intervene argues that API's lawsuit would negatively impact Oxfam’s mission to ensure citizens in oil and mineral rich countries know how much money their governments receive from the extraction of oil and minerals. Since the organization also holds stock, the motion also argues that the lawsuit undermines Oxfam’s status as an investor in companies such as Chevron and Exxon.
"We've been a leader in this fight since the beginning and we intend to seek to protect this law and SEC’s final regulations in the courts,” said Gary. "We will continue fighting to ensure that this landmark victory for transparency over secrecy is fully implemented.”
Protection of SEC’s rules is essential to shedding light on the murky world of financial flows between oil and mining companies and governments. The communities Oxfam represents in the United States and in foreign countries are eagerly awaiting the disclosures to hold their governments to account.
“We seek to intervene to ensure that the court isn’t just hearing from the oil companies as they try a last ditch effort to use the courts to keep legitimate payments from public view,” added Gary.
In a recent review, the Government Accountability Office (GAO) concluded that the SEC "complied with applicable requirements in promulgating" the final rule for Section 1504. Investors worth more than $1.2 trillion weighed in with the SEC, asking the agency to quickly implement a final rule that followed the statutory language and Congressional intent. Several companies, such as Talisman Energy, Statoil, AngloGold Ashanti and Newmont Mining already disclose payments in every country of operation, in some cases at the project level as the law and final rule requires. The final rule does not require companies to disclose contracts or contract terms, nor does it require companies to disclose proprietary information.
"If payment disclosures hurt bottom lines, then leading companies like Statoil and Talisman Energy would not already be disclosing this type of information," said Gary. "Any well-run company should already collect and account for this information and if systems aren't in place for tracking payments, investors need to ask why."
Last month, a European parliament committee voted for a law that goes beyond Section 1504 and expected to approve shortly.