WASHINGTON — Today, the Securities and Exchange Commission (SEC) issued a new proposed rule to implement Section 1504 of the Dodd-Frank Act. This new rule threatens to significantly weaken enforcement of a key US anti-corruption law by limiting transparency measures for US-listed oil, gas and mining companies.
In response, Joe Kraus, ONE’s Director of Transparency and Accountability said:
“The US has led the charge in combating corruption abroad in the oil and mining sectors, helping establish a strong global transparency standard. If the US fails to implement a rule that aligns with that standard, it risks creating a large loophole for corrupt activities that will negatively impact some of the world’s poorest countries.”
Section 1504 directs all oil, gas and mining companies required to file an annual report with the SEC to report their payments to governments for the extraction of natural resources. This information helps citizens, including in the world’s poorest countries, hold their countries accountable for the use of natural resource wealth, in addition to protecting investors and markets.
The proposed rule released today is significantly weaker than the global transparency standard that the US helped establish. In contrast to reporting requirements in place in nearly 80 countries, the SEC has proposed an alternative definition of project-level reporting that would prevent citizens from seeing key payment information, threatening to undermine the objectives of the US law to combat corruption, inform and protect investors and bolster US national security.
Notes to reporters:
- The rule proposed today, if enacted, would represent a retreat from the global standard of natural resource transparency that the United States once led. The disaggregated project-level reporting that Section 1504 introduced in 2010 has since been adopted by Canada, the European Union, Norway, and included in the reporting standard of the Extractive Industries Transparency Initiative (EITI), which includes 52 countries.
- The United States is home to the world’s largest extractives market. Section 1504 requires payment disclosure by all six of the “supermajor” oil companies, including ExxonMobil and Chevron – as well as some Chinese and Brazilian state-owned oil companies.
- To date, more than 850 oil, gas and mining companies have published detailed, project-level information on over $800 billion in payments made to governments in 152 countries under laws in place in Canada, the EU and Norway.
- In the UK government’s review of its mandatory payments law, no company reported “any substantial costs” associated with disclosing payments to governments, while some companies and many citizen groups reported significant benefits from the heightened transparency.
- Large extractives firms such as Total, BHP Billiton and Eni have publicly urged the SEC to align its Section 1504 rule with the global transparency standard. Instead, the SEC’s proposed rule threatens to undermine that standard.