WASHINGTON —  Today, the Securities and Exchange Commission (SEC) issued a final rule to implement Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new rule threatens to significantly weaken enforcement of a landmark US anti-corruption law by limiting transparency requirements for US-listed oil, gas, and mining companies.

In response, Joe Kraus, ONE’s policy director, said:

“The Trump administration’s rule is a rubber stamp for corruption. Now, the public will be in the dark about key details of how much – or how little – oil and mining companies are paying governments for the resources they extract. This is a gift to dictators and corrupt leaders around the world – who under this rule will continue to steal public resources –  and marks a retreat from the global transparency standard that the United States once led. The continued secrecy this rule allows will harm US interests and national security and enable corruption that impacts billions of people in resource-rich countries, including in some of the world’s poorest countries.”

Background:

• 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 US’s passage of Section 1504 in 2010 helped inspire a global movement to increase transparency and combat corruption in the highly opaque oil, gas, and mining sectors. The disaggregated project-level reporting that Section 1504 introduced has since been adopted by more than 30 countries – Canada, the European Union, Norway, Switzerland, and the United Kingdom – and forms the basis of the reporting standard of the Extractive Industries Transparency Initiative (EITI), which includes more than 50 participating 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 many state-owned oil companies, including from China and Brazil.
• To date, more than 950 oil, gas, and mining companies have published detailed, project-level information on over $1 trillion in payments made to governments in more than 150 countries under laws in place in Canada, the European Union, Norway, and the United Kingdom.
• 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 including BHP Billiton, BP, Eni, Kosmos, Rio Tinto, Royal Dutch Shell, and Total publicly urged the SEC to align its Section 1504 rule with the global transparency standard. Instead, the SEC’s rule risks undermining that standard.
• Investors with assets under management of over $12 trillion have endorsed rules implementing Section 1504 that are fully-public, company-specific and disaggregated at the project level, consistent with the global standard. In the words of a retired investment executive: “In fact, in my 26 years in the investment management industry, I’ve never seen a rule with quite such a record of comments from investors – all in support of detailed, project-level disclosures.”