International relief and development organization Oxfam America celebrated a victory today when the US Court of Appeals for the District of Columbia Circuit dismissed an oil industry lawsuit against the US Securities and Exchange Commission (SEC) that seeks to overturn a landmark law requiring companies to disclose payments they make to governments for oil and mineral extraction.
The lawsuit, filed by the American Petroleum Institute, the US Chamber of Commerce and two trade groups in October, was dismissed on jurisdictional grounds – an argument only Oxfam America, an intervenor in the case, made to the court.
“The court’s decision to dismiss the case on jurisdictional grounds is a victory for transparency supporters, investors and citizens in resource-rich countries,” said Ian Gary, senior policy manager of Oxfam America’s oil, gas and mining program. “The case will likely go forward in the district court, but we believe the facts and arguments are on the SEC’s side. A comprehensive review of the record will show the hollowness of industry arguments.”
"The D.C. Circuit agreed with Oxfam that Congress, and not API, decides which court has the power to hear a case,” said Jonathan Kaufman, counsel for Oxfam at EarthRights International. “We're prepared to defend the transparency rules in the district court, where this case belongs."
Oxfam argued in its brief that API’s claims are without merit and that the SEC sensibly dismissed most of them in its final rule. Regarding oil industry claims that the statute violates the First Amendment, Oxfam argued that oil companies have “no constitutional right to keep payments to foreign governments secret.”
After the ruling, SEC spokesman John Nester said that "SEC staff continue to believe that our legal interpretation and economic analysis are sound and that this congressionally-mandated rule will be affirmed.”
Now that the European Union has agreed on similar payment disclosure rules, the industry should give up its fight against increasing transparency in the sector. Statoil, the Norwegian oil giant operating in places such as Angola, has said that it “has explicitly withheld support for the litigation” in the US.
“Global momentum is overtaking the API case,” said Gary. “It’s time for oil companies, such as Exxon, Chevron, BP and Shell, to embrace the tide of transparency and join Statoil in disassociating themselves from this groundless lawsuit.”
A bi-partisan group of members and former members of Congress, such as Senators Ben Cardin (D-MD), Carl Levin (D-MI), retired Senator Richard Lugar (R-IN) and Reps. Maxine Waters (D-CA) and Ed Markey (D-MA) also submitted arguments to defend the law, known as the Cardin-Lugar provision or Section 1504 of the Dodd-Frank Act.
API can “point to no evidence that the final rule would actually conflict with the existing laws of any foreign country. Absent that evidence, there is no practical basis even to consider an exemption,” stated the Senate brief.