Washington, D.C. – International relief and development organization Oxfam America has today filed a lawsuit against the Securities and Exchange Commission (SEC) for unlawfully delaying the issuance of a Final Rule implementing a provision of the Dodd-Frank Act that requires disclosure of payments from oil, gas and mining companies to the United States and foreign governments. Known as Section 1504 or the “Cardin-Lugar” provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, this provision would provide information to investors and citizens in resource-rich countries, help stem corruption, and encourage the accountable use of billions of dollars in annual revenues from the oil, gas and mining sector.
Congress set a deadline of April 17, 2011, for the SEC’s promulgation of the final rule that is needed to bring Section 1504 into effect. The SEC has now missed this statutory deadline by one year and one month. Oxfam America notified the SEC on April 16, 2012 that it would file suit if the regulatory agency did not issue a final rule within 30 days. As Oxfam America’s lawsuit states, “the extractive payment disclosures that Congress mandated nearly two years ago will not take place unless and until the SEC issues a Final Rule. Unfortunately, the SEC’s pattern of delay gives no assurance that it will ever promulgate a Final rule without the involvement of this Court.” The SEC issued a proposed rule on December 15, 2010.
This legal action follows engagement by Oxfam America and allies in the Publish What You Pay coalition with the SEC since the Dodd-Frank Act was signed into law. Oxfam America has made numerous substantive submissions to the SEC and has had multiple meetings with SEC staff about the proposed rule and the need for a strong final rule.
“We have been patient, but the Commission’s continued failure to issue a Final Rule implementing Cardin-Lugar frustrates Congress’s intent to increase transparency in resource-rich countries,” said Ian Gary, senior policy manager of Oxfam America’s oil, gas and mining program. “For those living in poverty in resource-rich countries, there’s no time left to wait.”
Gary added, “Oxfam America is simply asking for the SEC to follow the law.”
Investors representing more than $1.2 trillion worth of assets under management have made submissions to the SEC in support of the provision. Secretary of State Clinton has called on the SEC to “go as far as possible” in the final rule and many prominent members of the Senate and House of Representatives have called on the SEC to respect the statutory deadline and Congressional intent. The oil and mining industries have been fighting implementation, with the American Petroleum Institute calling on the SEC to “repropose” the rule.
“One of the reasons for the financial crisis was a lack of public information about the real risks of investments,” said Gary. “In the case of the oil and mining industries, investors have a right to know how and whether companies are exposed to political and expropriation risks in volatile resource-rich countries.”
The lawsuit, filed in the US District Court for the District of Massachusetts, asks the court to order the SEC to issue a Final Rule as required by Section 1504. Oxfam America is represented in this matter by Baker Hostetler LLP, one of the largest law firms in the US, and EarthRights International, an organization dedicated to defending human rights and the environment through legal actions and other strategies.