Securities and Exchange Commission Complies with Court Order
Oxfam America welcomed today’s submission by the Securities and Exchange Commission (SEC) to the US District Court for the District of Massachusetts outlining their expedited rulemaking schedule for a landmark oil, gas and mining financial transparency law.
As the result of a lawsuit by Oxfam America, the Court ordered the SEC last month to file an “expedited schedule” with the Court that identified when the agency would issue a final rule for Section 1504 of Dodd-Frank. The filed schedule states that the SEC will propose a draft rule by the end of the year and meet to adopt a final rule in June 2016. Oxfam has been urging the SEC to issue a strong rule to implement the oil and mining transparency law since it was passed more than five years ago, but missed deadlines at the SEC and a 2012 lawsuit by oil companies has delayed implementation of the law.
“We are very pleased to see the SEC make a concrete, time bound commitment to this crucial rulemaking, and we are eager to work with the SEC to help finalize a strong rule,” said Ian Gary, Senior Policy Manager for Oxfam America’s extractive industries program. “Investors and communities can’t wait any longer for this vital information. Trillions of dollars are at stake, but limited or no transparency has prevented investors and interested citizens from following the money. This new schedule provides a roadmap for the US to rejoin other countries that are leading the fight against secrecy and helping to ensure that government revenues support the fight against poverty.”
Section 1504 requires US-listed oil, gas, and mining companies to disclose the payments they make to governments for the extraction of natural resources on a company-by-company and project-by-project basis. Section 1504 inspired a wave of similar sunlight laws around the world, setting a new global standard for transparency in the sector. The 28-country European Union as well as Canada and Norway have adopted laws requiring public, company-by-company disclosure for each oil, gas and mining project. These laws give the SEC a clear standard to follow in finally implementing Section 1504.
“Thankfully, much of the substantive work for the rule has been done and there is strong support from investors, leading oil and mining companies and civil society groups from all over the world for the SEC to align its rules with laws in other markets,” said Gary. “We now look forward to supporting the Commission’s efforts to issue a rule that follows the global transparency standard of public, project-level, country-by-country disclosure with no exemptions.”
Many US-listed extractive companies, such as Royal Dutch Shell, BP, Rio Tinto, Total, and Statoil are already 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 reported competitive harm or negative feedback from host governments. The world’s largest mining company, BHP Billiton, last month disclosed its payments to governments, before being required by the US and UK laws.
"By filing this schedule, the SEC is accepting that it has an obligation to act quickly to make information about extractive revenues available to investors and communities. The Commission should now build on the work of other transparency-promoting countries and enact strong rules," said Jonathan Kaufman, Legal Advocacy Coordinator at EarthRights International and counsel for Oxfam America in the lawsuit. “Given the SEC’s missed deadlines, we’re encouraged that the District Court will maintain jurisdiction over the case and monitor compliance until a final rule is out."
“Final rules for this essential section of the Dodd-Frank law are years overdue and will cover more than 1,100 companies listed on US stock exchanges, including many of the world’s largest internationally operating oil and mining companies, including several Chinese and Brazilian state-owned companies ,” said Gary. “These disclosures will be a huge boon to citizens of resource-rich countries plagued by corruption and mismanagement as well as to investors in extractive industry companies. We look forward to supporting citizens and civil society groups to help ensure that companies and governments are held accountable for how they spend this money.”
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Notes:
• More information about Oxfam America’s lawsuit against the SEC is available here:
o http://www.oxfamamerica.org/press/oxfam-presses-for-oil-mining-transparency-law-in-court/
• For information on how organizations are already using similar information in Angola, Sierra Leone, Indonesia, and Zimbabwe, visit:
o http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-60.pdf (Angola)
o http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resource-extraction-issuers.shtml (Indonesia)
o http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-61.pdf (Sierra Leone)
o http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-60.pdf (Zimbabwe)
