SEC rule release responds to Oxfam lawsuit
Oxfam America welcomes the release of today’s draft oil and mining sunshine rules by the US Securities and Exchange Commission (SEC). The draft regulations issued require oil, gas and mining companies listed on US stock exchanges to publicly disclose tax and other payments they make to the US and governments around the world.
The rules implement Section 1504 or the “Cardin-Lugar” provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which passed in 2010. The SEC issued the new draft rules as part of its response to a US Federal District Court decision in response to an Oxfam lawsuit. The law covers more than 1,000 US and foreign companies, including state-owned companies from China and Brazil.
“We are pleased to see that the SEC is proposing rules that generally align with those in other markets, by requiring public, company by company, project-level reporting with no categorical exemptions,” said Ian Gary, Associate Policy Director for Fueling Development at Oxfam America. “Oxfam is committed to support a global standard of transparency, and we look forward to supporting the rulemaking process to ensure that the final rules truly align with rules in other markets. This is the only way to meet the needs of investors and allow citizens in resource rich countries to follow the money governments receive from oil and mining companies.”
"We're pleased that the SEC is finally moving forward with these important rules, as the court required them to do," said Jonathan Kaufman, a lawyer at EarthRights International who represented Oxfam in the lawsuit.
Investors with assets under management of over $6 trillion and citizens from all over the world have written to the SEC, calling on the agency to issue final rules that align with those in other markets. Canada, Norway and the European Union have implemented similar laws.
The US Department of State recently wrote to the SEC that “Section 1504 directly advances the United States' foreign policy interests in increasing transparency and reducing corruption in the oil, gas, and minerals.” The Department of Interior also wrote to the SEC describing how the rules could support their domestic transparency efforts.
“If final rules align with those in force in other markets, this will not only meet US foreign policy goals and support domestic transparency goals, but they will also align with existing reporting requirements covering leading oil and mining companies,” continued Gary. “This will not only be good for the US, but also for the activists around the world who desperately seek this information to hold their governments to account.”
BHP Billiton, the world’s largest mining company subject to both US and EU reporting requirements. voluntarily reported its tax and project-level payment information earlier this year. BHP supports “the establishment of a globally consistent disclosure framework” and recently met with the SEC to discuss its upcoming rules. Other companies have also shown transparency leadership, including Statoil and Tullow Oil and US-listed Kosmos Energy. Kosmos voluntarily disclosed under the EU requirements, stating in a recent letter to the SEC that “[T]his type of disclosure is beneficial to investors, civil society, and local communities, and reflects evolving international expectations.”
“While we’re still reviewing the details, it’s clear that the SEC has made a positive step forward,” said Gary. “The test will now be if the final rules to be voted in June will meet US foreign and domestic policy goals, the demands from investors, and the expectations of citizens around the world. We stand ready to support the SEC to do just that.”
Notes to editors:
- The draft rules come as a response to court ruling in the case “Oxfam America, Inc. v. US Securities and Exchange Commission”, United States District Court, District of Massachusetts, Civil Action No. 14-13648-DJC.
- More information about Oxfam America’s campaign to urge the SEC to act, including information on the lawsuit is available here:
- Initial public comments are due to the SEC by January 25, 2016. Reply comments to respond to issues raised in the initial period will be due February 16. The SEC plans to vote on a final rule in June 2016.
- Section 1504 inspired a wave of similar mandatory sunlight provisions around the world, setting a new global standard for transparency. Today, 30 countries have adopted laws requiring public, company by company disclosure for each oil, gas and mining project following the US law, including the European Union, Canada and Norway.
- These laws require public, company by company, project-level reporting with no exemptions.
- The Department of Interior also wrote to the SEC supporting definitional consistency with the rules in EU, stating that this was “feasible when applied in the context of natural resource development on federal lands in the United States.”
- The U.S. is implementing the Extractive Industries Transparency Initiative (EITI), which operates in more than 45 countries and requires participating countries to report company payments at the project level in line with SEC rules and EU requirements. Final SEC rules will expand the reach of project reporting in EITI countries, which cover both public and private companies and have been awaiting the release of final rules to guide disclosure.