Washington, DC – International relief and development organization Oxfam America joined Senior US Senators and key investors with over five trillion dollars in assets to call on the Securities and Exchange Commission (SEC) to promptly re-issue landmark oil, gas and mining transparency rules.
The landmark rules implementing Section 1504 (the “Cardin-Lugar” provision) of the Dodd-Frank Wall Street Reform and Consumer Protection Act required companies to publicly disclose in annual reports to the SEC all payments made to either the United States or a foreign government for the extraction of oil, gas and minerals. The final rules were challenged by an oil industry lawsuit backed by companies such as Exxon, Chevron, Shell and BP. The final rule was vacated by the District Court judge in July and sent back to the SEC for revision. The SEC had until September 2nd to appeal the District Court decision but declined to do so. However, the law still stands and the SEC is still required to issue rules to implement the provision.
“The oil industry might want to keep their dealings in the shadows, but the global momentum for increased transparency in the oil, gas and mining industry is irreversible,” said Ian Gary, Senior Policy Manager for Extractive Industries at Oxfam America. “It is now up to the SEC to swiftly re-issue strong rules for Section 1504 with a stronger justification that satisfies the court’s requirements.”
Senior US Senators who provided formal comments to the SEC during its two-year rulemaking process, and who commended the SEC on the final regulations because they “adhered closely to Congressional intent,” called on the SEC to write equally strong revised rules as soon as possible in a letter addressed to SEC Chairman Mary Jo White and made public today.
“[A] prompt revision of the rule that takes into account the decision handed down by the US District Court will ensure that implementation of the law stays on track and that the United States will retain its leadership role in this important anti-corruption and anti-tax evasion effort,” stated the letter signed by Senators Benjamin Cardin (D-MD), Patrick Leahy (D-VT), Carl Levin (D-MI), Edward Markey (D-MA) and former Senator Richard Lugar (R-IN).
“The new rule should continue to make all reports public and should not allow for host country exemptions. We believe the SEC has the discretion and authority to retain both of these key aspects of the initial rule as long as sufficient analysis and justification is provided in the rulemaking process.”
Both Senate and investor letters called on the SEC to align its new disclosure rules with new European Union laws, which were adopted this summer and that apply to many companies, including some, such as Shell and BP, listed in both markets. As with the original SEC rules, which were issued in August 2012, the European law requires public reporting and includes no exemptions.
In a separate letter released last week, investors controlling more than $5.6 trillion in assets under management echoed the importance of aligning US and European disclosure regimes:
“It is in the interest of investors and companies subject to both the US and EU requirements that the reporting obligations in these jurisdictions are as uniform as possible. Consistent and predictable regulations may lower compliance costs and enhance the salience of disclosures,” stated the letter which included Allianz Global Investors, UBS Global Asset Management, Boston Common Asset Management, Calvert Investment Management and 40 other investment firms. “We hope that the SEC will take all necessary steps to ensure that the rules go into effect as early as possible and that they maintain continuity with regulations in other jurisdictions. In doing so, the SEC should have due regard to the lengthy deliberations it conducted before the promulgation of the rules, and the inputs from diverse constituencies including many investors.”
The SEC has not yet announced the timeframe for the new rulemaking process. The UK and France have initiated an expedited process to apply EU law to their national legal frameworks, a process called transposition, with requirements expected to be in place next year.
The US State Department continues to argue that the Dodd-Frank provision "directly advances our foreign policy interests" and continues to strongly defend the provision. Speaking at conference in Ghana last month, a US Embassy official said the “US District Court decision on July 2 did not invalidate Dodd-Frank Section 1504. Section 1504 remains US law… As we await the outcome of the SEC’s determinations, we remain committed to using Dodd-Frank as a valuable tool in promoting increased transparency around the world.”
“The ball is back in the SEC’s court and they must urgently breathe life into this landmark law,” said Gary. “Millions of poor people and investors worth trillions of dollars are still waiting to be armed with the knowledge of how much money oil and mining companies pay their governments so they can claim their rights and protect their investments.”
Oxfam America is a global organization working to right the wrongs of poverty, hunger, and injustice. We save lives, develop long-term solutions to poverty, and campaign for social change. As one of 17 members of the international Oxfam confederation, we work with people in more than 90 countries to create lasting solutions. To join our efforts or learn more, go to www.oxfamamerica.org
Notes to Editors:
- The Senate letter to the SEC can be found here - http://pwypusa.org/Senate_SECLetter_Re-Issue_Rules_Aug2013
- The investor letter to the SEC can be found here – http://pwypusa.org/Investor_SECLetter_Re-Issue_1504Rules_Aug2013
- A press release from the investors that sent the letter can be found here - http://pwypusa.org/Investor_PressRelease_SECLetter_Re-Issue_Rules_28Aug2013
- Notable signers of the investor letter includes APG, the third largest pension fund in the world, UBS, the largest private wealth manager in the world, as well as ING IM International, the global asset management arm of the world’s largest banking, financial services and insurance conglomerate.