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SEC ordered to expedite long-delayed Dodd-Frank oil transparency rules
Oxfam America applauded a US Federal District Court’s decision today ordering the Securities and Exchange Commission (SEC) to expedite rulemaking for a landmark oil, gas and mining financial transparency law.
The ruling requires the SEC to submit to the court an “expedited schedule” to issue a final rule for Section 1504 of the Dodd-Frank Act within 30 days. The provision requires the SEC to issue rules to require the publication of country-by-country and project-by-project information about payments made by oil, gas and mining companies to host governments around the world. Such information helps citizens hold their own governments accountable for the spending of billions of dollars in revenue and supports the ability of investors to assess risk. Oxfam, in collaboration with the Publish What You Pay coalition, has been advocating for mandatory payment disclosure requirements around the world for years.
“We are pleased that the Court agrees with Oxfam that the SEC has ‘unlawfully withheld’ a final rule for this landmark provision,” said Ian Gary, senior policy manager of Oxfam America’s extractive industries program. “Today’s ruling compels the SEC to move quickly to provide relief to citizens and investors who have been waiting for strong transparency requirements for more than five years. The task before Mary Jo White’s SEC is now crystal clear: a rule must be issued urgently.”
In its summary judgment decision, the Judge Denise Casper concluded that the SEC’s “duty to promulgate a final extraction payments disclosure rule remains unfulfilled more than four years past Congress’s deadline.”
“We look forward to collaborating with the SEC to help provide the information they need to issue a rule that follows the global transparency standard of public, project-level, country-by-country disclosure with no exemptions,” Gary said. “This aligns with requirements in other markets, provides the level of information that citizens and investors need, and can be followed by industry with no competitive harm. It’s time the US resumes its leadership on transparency and rejoins the fight against mismanagement and corruption surrounding billions of dollars every year.”
Section 1504 requires oil, gas, and mining companies – including, US, European, Canadian, Chinese and Brazilian companies publicly traded in the US – to disclose the payments they make to governments for the extraction of natural resources. When Congress passed Dodd-Frank in 2010, it required the SEC to issue a final rule by April 17, 2011. When the SEC did issue a rule in 2012, the oil industry – led by the American Petroleum Institute and backed by companies such as Exxon, Chevron, BP and Shell – sued to overturn and the Court sent the rule back to the SEC on narrow procedural grounds. One year ago, Oxfam America sued the SEC in the US District Court for the District of Massachusetts to force the SEC to finish the rule. Citizens, investors and even some in industry have called for the long-awaited regulations to be finalized in a timely manner.
"Today's decision means that the SEC can't dawdle when Congress gives it a deadline," said Jonathan Kaufman, Legal Policy Coordinator at EarthRights International and counsel for Oxfam America. "Judge Casper is retaining jurisdiction over the case, which means she'll be monitoring the SEC to make sure that it handles this rulemaking on an expedited basis." Oxfam America is represented by EarthRights International, Goulston & Storrs and Meyer Glitzenstein & Eubanks.
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 give the SEC a clear standard to follow in implementation of Section 1504.
Many US-listed extractive companies, such as Royal Dutch Shell, BP, BHP Billiton, Rio Tinto, Total, and Statoil are also covered by the European, Norwegian or Canadian regulations. US-based Kosmos Energy, Norway’s Statoil and UK-based Tullow Oil have already begun disclosing this information with no competitive harm or negative feedback. These companies have been applauded by transparency advocates, while providing important information to their investors and citizens of countries where they operate. This progress increases the incentives for the SEC to adopt rules that align with payment disclosure standards in these markets.
“The arguments made by some oil companies against strong rules have been disproven by the disclosures already taking place amongst their peers,” said Gary. “The SEC has a clear standard to follow, and evidence backing them up. This transparency will be a huge boon to citizens of resource-rich countries plagued by corruption and mismanagement, and we look forward to working with civil society to ensure that governments are held accountable for how they spend this money.”
- The ruling comes 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:
- For information on how organizations are already using similar information in Angola, Sierra Leone, Indonesia, and Zimbabwe, visit:
- http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-60.pdf (Angola)
- http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-61.pdf (Sierra Leone)