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 requires 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. Under this provision, 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 next two years, the SEC 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 submitted three comment letters and assisted as well in the participation of several Burmese civil society groups. Although the SEC’s draft rules were issued in January 2011, the Commission delayed the release of the final rules while it considered objections raised by oil companies – objections that ERI and its allies rebutted in their own comments. Finally, after a delay of over one year -- and following a lawsuit filed against the SEC by ERI on behalf of Oxfam America -- the SEC adopted final rules on August 22, 2012. The American Petroleum Institute, which has coordinated the oil industry's opposition to the rule, sued the SEC on October 10, 2012, seeking to strike down the regulations and overturn Section 1504 as unconstitutional.
Meanwhile, in other parts of the world, revenue transparency has been advancing steadily. On September 18, 2012, the Legal Affairs Committee of the European Parliament voted to adopt disclosure rules that go even further than Section 1504, encompassing large unlisted companies and also extending requirements to the forestry, banking, construction, and telecommunications sectors. The European Union is expected to adopt a final transparency rule based on these proposals later this year or early next year. In Canada, the two largest mining trade associations have agreed to work collaboratively with civil society groups to develop a mandatory extractive industry payment disclosure scheme that would be adopted by regulators.
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.
Foreign Legislative Transparency Materials
ERI Comments on Section 1504
- ERI 11/22/10 Comment Letter
- ERI 1/26/11 Comment Letter
- ERI 9/20/11 Comment Letter
- ERI 2/3/12 Comment Letter (re: Factual Record for Rulemaking)
- ERI 2/7/12 Comment Letter (re: Legislative Developments in Korea and Peru)
Partner Comments on Section 1504
- HURFOM 12/3/10 Comment Letter
- Publish What You Pay 2/25/11 Comment Letter
- HURFOM 3/8/11 Comment Letter
- TSYO 6/28/11 Comment Letter
- HURFOM 7/15/11 Comment Letter