SEC schedule will put the US behind legislation in UK, Norway, and Canada
WASHINGTON – International relief and development organization Oxfam America warned today that the rulemaking timeline set by the Securities and Exchange Commission (SEC) for Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act will cause the US to fall further behind on global oil and mining payment transparency standards that benefit investors, citizens, companies, and governments.
Oxfam’s warning comes following the release of the SEC’s latest “Unified Agenda” detailing the agency’s commitment to initiate a rulemaking by March 2015, five years after Congress passed the law. However, this agenda is not binding and provides no guarantee that final rules will be adopted in 2015.
“Citizens in resource-rich countries hope to use this information to fight poverty and corruption and investors want to know about risk exposure. They do not deserve delay after delay,” said Ian Gary, senior policy manager for extractive industries at Oxfam America. “With similar legislation on the books or moving forward around the world, the SEC should finish this process quickly so there is a uniform global standard and companies do not have to navigate disparate disclosure requirements.”
“While we note that the SEC has finally put rulemaking for Section 1504 back on the calendar, this timeline ignores the statutory deadline and is far behind what Congress, investors, and the industry have called on the agency to deliver,” said Gary. “The pressure is mounting from legislators, investors, activists, and even oil companies for the SEC to finally deliver the rules in 2014 in order to implement this cornerstone transparency law.”
Earlier this month, 13 senior Senators, including the original co-sponsors of the legislation and the Chair of the Senate Banking Committee, sent a letter to SEC Chair White reminding the agency of the statutory deadline and calling for a release of strong final rules this year. “Prompt enactment of a robust rule will help protect US investors, promote US national and energy security, and create more stable operating environments for American businesses,” noted the Senators. “Based on these reasons, as well as the SEC’s statutory obligation, we strongly urge you to prioritize the issuance of a new rule for Section 1504 in 2014.”
A number of investors also wrote to the SEC last month calling on the agency to align its rules with those in other markets and to release strong rules noting: “Delay in implementation of these rules or their significant revision would continue to deny investors this valuable information.”
Oil companies have also called on the SEC to initiate the rulemaking this year. “We believe this additional information increases the urgency for the Commission to consider Dodd-Frank 1504 in calendar year 2014,” said Shell and Exxon in a letter to the SEC. Chevron also sent a letter to the SEC calling on it to “move ahead with new rulemaking under Section 13(q) [Section 1504] as soon as possible in 2014.”
Section 1504 provides investors with unique information about companies’ payments to host governments and exposure to project-specific risks, helping them to make better investment decisions. The rule will also provide citizens of resource-rich countries with critical information to hold their governments and foreign companies accountable, helping to prevent corruption, waste and fraud and ensure that revenues from natural resources benefit the countries that own them and the communities that bear the impacts of extraction.
Since the enactment of Section 1504, more than 30 countries have adopted or have begun the process of adopting mandatory disclosure laws for oil, gas, and mining companies. In 2013 the European Union adopted legally binding payment disclosure requirements that apply to all members states. Some countries, such as the UK where transparency requirements will cover major companies such as Shell and BP and the Russian giant Gazprom, are fast-tracking implementation. Similar legislation has been enacted in Norway and Canada has committed to put in place legislation by early 2015. The US regulations will cover 68 out of the world’s 100 largest oil and gas companies, 22 of which are cross-listed on either EU, Norwegian, or Canadian exchanges, and therefore captured by transparency mandates in those jurisdictions. Out of the 100 largest mining companies, 40 are listed on a US exchange, and 25 of those are cross-listed on either EU, Norwegian, or Canadian exchanges.
“Investors worth $5.6 trillion in assets, more than 500 civil society organizations from 40 countries, and members of Congress have called on the SEC to quickly reissue strong transparency rules,” said Gary. “Some oil and mining companies have begun disclosing payments voluntarily – recognizing the benefits to them and their shareholders. Even the American Petroleum Institute agrees on the need for a quick rulemaking process. The SEC must stop dragging its feet and finish this rule.”
/ENDS
Note to editors:
• Groups that have spoken out in support of strong transparency regulations include:
o A senior group of Senators: http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-41.pdf
o 544 civil society organizations from 40 countries: http://www.publishwhatyoupay.org/resources/civil-society-around-world-calls-sec-reissue-strong-oil-gas-mining-transparency-rule
o Investors with assets worth more than $5.6 trillion under management: http://pwypusa.org/Investor_SECLetter_Re-Issue_1504Rules_Aug2013
• The array of transparency laws adopted or in process cover a large number of the world’s 200 largest oil, gas and mining companies.
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
