Extractive Industry Transparency

Communities living in resource-rich countries won a historic victory when the U.S. Congress passed landmark transparency legislation in July of 2010 as Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The provision will require oil, gas, and mining companies registered with the US Securities and Exchange Commission (SEC) publicly disclose their payments to governments for the extraction of natural resources on an annual basis.

This legislation sets a new standard for transparency in the extractive industry while encouraging other countries to pass similar measures. Once the provision takes effect, payments to governments will be publicly available to citizens in resource-rich countries, providing crucial information to hold governments accountable for the spending of this revenue. Senator Cardin (D-MD), one of the transparency provision's lead supporters added, "This provision is a critical part of the increased transparency and corporate responsibility that we are striving to achieve in the financial industry. . . We now have the tools to help people in resource-rich countries hold their leaders accountable for the money made from their oil, gas and minerals."

Over the last year, the SEC has conducted a rule-making process, inviting all interested groups and individuals to submit comments about the content of proposed regulations to put Section 1504 into effect. ERI has submitted three comment letters and has assisted some of Burmese civil society groups to participate as well. Although the SEC’s draft rules were issued in January 2011, the Commission has delayed the release of the final rules while it considers objections raised by oil companies – objections that ERI and its allies have rebutted in their own comments. Once SEC disclosure rules are in place, covered companies are expected to begin disclosures in their annual reports on an ongoing basis.

Transparency and disclosure of extractive industry revenue contracts, payments, and receipts by companies, governments, and international financial institutions is crucial in breaking the cycle of corruption, poverty, and human rights and environmental abuses that plagues many resource-rich societies. ERI supports mandatory extractive industry disclosure requirements as a critical element in promoting the responsible use of resource revenue.