SEC Rejects Oil Industry Request for Suspension of Extractive Transparency Rules
This week, the U.S. government signaled its commitment to transparency in the extractive industries by denying a request from the oil lobby to suspend hard-fought disclosure requirements. ERI opposed the suspension on behalf of Oxfam America. The decision from the U.S. Securities and Exchange Commission (SEC) means that implementation of Section 1504 of the Dodd-Frank Act, which requires oil, gas, and mining companies to publish the payments they make to governments, will proceed on track while the courts decide a lawsuit filed by the oil companies to overturn the law.
Section 1504 was enacted in 2010 in response to the secrecy surrounding the billions of dollars in annual payments that extractive companies make to national and local governments. The ability of governments to capture the revenues from extractive operations rather than returning a fair share to the communities that are affected by those operations is an important part of the “resource curse” – the correlation between resource-rich countries and high levels of poverty and corruption. But when the SEC issued regulations for Section 1504, requiring companies to publicly disclose their payments for every project in each country where they operate, the American Petroleum Institute (API) and other industry lobbying groups sued the SEC, and asked the SEC to suspend the rule until after the legal challenge is concluded.
Oxfam, which ERI has represented in a lawsuit to force the SEC to issue the regulations in the first place, strongly opposed the suspesion. ERI and its co-counsel argued that the oil companies were not likely enough to win their lawsuit, that a stay was not necessary to prevent “irreparable injury” to the oil companies, and that delaying compliance was not in the public interest.
The SEC agreed with these arguments, and also rejected API’s claim that Section 1504 would companies to violate laws in their host countries that prohibit disclosure of payments, finding that there was no persuasive evidence that these laws even exist.
Without a stay, oil, gas, and mining companies will have to continue preparing to disclose their government payments. The first disclosures under Section 1504 are expected in March or April 2014.