US Congress undoes Dodd-Frank regulations on extractive industry revenue transparency

Oil companies that support revenue transparency

Congressional leaders in early 2017 said they would use the US Congressional Review Act, allowing quick legislative repeal of regulations recently issued by the Executive branch, to reverse regulatory and executive actions from the last seven months of the Obama Administration.  As a priority, Congress targeted for repeal regulations finalised in June 2016 by the Securities & Exchange Commission under section 1504 of the Dodd-Frank financial reform act.  These regulations require oil, gas and mining firms to disclose their payments to foreign governments.  A wide range of NGOs opposed the repeal, arguing that it will foster corruption by enabling companies and governments to hide these payments, including to repressive governments such as Angola, Equatorial Guinea and Kazkhstan; and that companies listed on stock markets in other countries including the EU and Canada are already subject to very similar requirements.  Both houses of Congress passed legislation to undo these regulations in the week of 30 January 2017.

Business & Human Rights Resource Centre has invited 30 companies to respond to an open letter by Publish What You Pay coalitions and several of their member NGOs on this issue.  The letter urges the companies to issue statements in defence of the SEC regulations and against the Congressional bill to undo the regulations.  The letter, related materials, and company responses and non-responses available here.  See additional materials on opposition to the repeal and the importance of these rules here.

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Article
26 January 2017

Civil society orgs. call on US State Department to ensure transparency & accountability in extractives sector

Author: Publish What You Pay

…Publish What You Pay is a global civil society coalition that works for a more open and accountable oil, gas, and mining sector…One of [the] core objectives is to ensure that citizens are able to follow the money paid by oil, gas, and mining companies to governments in order to fight corruption…The United States’ commitment to promote democracy and protect human rights…is a fundamental contribution to our common battle…Last month, PWYP launched a report with CIVICUS, the Global Alliance for Citizen Participation, that documents the disturbing increase in sometimes lethal risks facing citizens that tackle corruption and injustice in the oil, gas, and mining sectors…Now is the time when the United States government is needed…to defend civil society activists when they exercise their freedom of speech, and their right to fight oil, gas, and mining corruption…Equally important is US leadership in global efforts to counter corruption…by vigorously promoting transparency efforts…

Download the full document here

Article
26 January 2017

Civil society orgs. urge UK Prime Minister to advocate for keeping Dodd-Frank extractives transparency regulation

Author: Publish What You Pay

"Threat to United States extractive industry mandatory reporting law", 25 January 2017

…In light of…your Government’s strong anti-corruption commitments, we must alert you to a threat under the Congressional Review Act (CRA) to mandatory reporting in the United States. Certain US legislators are seeking to use the CRA to void the Cardin-Lugar anti-corruption rule (Dodd-Frank Act 2010, Section 1504), which requires oil, gas and mining companies publicly listed in the USA to publish their payments to governments. The first year of mandatory extractive company reporting in the United Kingdom…has been a real success. Similar laws exist throughout the European Union and in Canada and Norway, as well as in the USA. It would be a serious setback for global efforts to achieve greater transparency and accountability in the extractive industries…if mandatory reporting legislation in the US were to be rolled back. We urge you…to do everything possible to persuade your US counterparts and American legislators to ensure that the Cardin-Lugar anti-corruption rule…remains intact…

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Article
26 January 2017

FACT Coalition urges US Congress to keep anti-corruption provisions of Dodd-Frank Act

Author: Financial Accountability & Corporate Transparency Coalition

“Letter to House Urging Lawmakers to Oppose Efforts to Overturn the Bipartisan Cardin-Lugar Anti-Corruption Measure”, 26 January 2017

We are writing…to urge you to oppose any effort to overturn the implementing rules of the bipartisan Cardin-Lugar anti-corruption provisions (Section 1504) of the Wall Street Reform and Consumer Protection Act of 2010…It’s inaccurate to suggest that the implementing rules promulgated by the SEC…put U.S. companies at a competitive disadvantage. 30 other countries…have instituted the same disclosure requirements on extractive companies. This means that over 90 percent of internationally operating companies in the extractives sector are covered by these transparency measures. And, there are already reports coming out…from BP, Shell, and BHP Billiton—among other major multinational oil and gas companies. Despite this, no European company has suffered any disadvantage as a result of disclosures it has made. Moreover, it’s estimated that Cardin-Lugar would result in negligible compliance costs for American Businesses…We would strongly urge you to consider ways to strengthen anti-corruption measures rather than weaken this important safeguard…

[Also refers to Tullow Oil]

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Article
26 January 2017

This Move By The US Congress Is Good For Exxon, Bad For Everyone Else

Author: Elisa Peter, Executive Director of Publish What You Pay, in Huffington Post (USA)

One of President Trump’s best tools to “drain the swamp” is under threat from his own side.... Republican Congress members began attacking a key piece of anti-corruption legislation. This rule, the Cardin-Lugar provision (also known as Section 1504 of the Dodd-Frank Act), was a bipartisan effort to shield US citizens and shareholders from millions of their dollars vanishing to foreign oligarchs in the oil, gas and mining sector... The “swamp” — a handful of lobbyists, executives and contractors who feed off such business ties — has attacked it for years... United States leadership inspired similar legislation in the EU, oil-rich Norway, Canada and beyond. In total, governments enacted similar provisions in over 30 countries.  Today these measures apply to 80 percent of the world’s largest publicly listed oil, gas and mining companies, including state-owned companies from Russia, China and Brazil. This is a win-win for resource-rich countries too: citizens from Indonesia to Zimbabwe are using these transparency laws to keep track of the funds their governments receive and ensure that oil, gas and mining revenues don’t simply vanish into private accounts held offshore, but rather contribute to shared economic growth... Yet a handful of oil companies seeking to keep their business dealings secret continued to oppose the law. Leading this opposition was one company, Exxon Mobil, hiding behind an oil lobbying group called the American Petroleum Institute (API).

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Article
30 January 2017

Human Rights Watch condemns congressional resolution to invalidate extractives transparency regulation

Author: Human Rights Watch

“United States: Don’t Cancel Oil Transparency Rule. Congressional Resolution Would Help Shield Corruption”, 30 January 2017

Republicans introduced joint resolutions in the US Senate and House of Representatives today that would gut efforts to carry out a key law for fighting corruption in resource-rich countries…The House…is expected to vote on the measure as soon as…February 1…The Cardin-Lugar Transparency Rule requires US-listed oil, gas and mining companies to publicly disclose what they pay governments for natural resources production in those countries. It represents the culmination of a…years-long rulemaking process to carry out the anti-corruption provisions of the Dodd-Frank financial reform law. Its repeal would for all practical purposes gut that section of the law. The proposed resolution would nullify the rule by using the Congressional Review Act…Governments in many countries have misused natural resource revenues, contributing to massive corruption, conflict, and human rights abuses. The rule…was meant to inject transparency into the system by ensuring that companies disclose what they pay governments…

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Article
31 January 2017

Put the American people first: Keep the anti-corruption rule

Author: Former Senator Richard Lugar and Sen. Ben Cardin, in The Hill (USA)

...[Some] politicians now want to...cancel a pioneering anti-corruption law that bolsters American national security, advances our humanitarian goals, and demonstrates U.S. moral leadership. The bipartisan Cardin-Lugar amendment, aimed at fighting corruption in mineral-rich developing countries,...requires that oil, gas and mining companies listed on U.S. stock exchanges (whether or not U.S.-based) disclose their royalties and other payments to foreign governments... [Many] resource-rich countries are actually poor because the vast mineral revenues breed corruption that leads to poverty, hunger and instability. Oil-rich Venezuela is running out of food and medicine.  Nigeria, with vast reserves, is gripped by economic crisis and terrorism.  This “resource curse” is not only a tragedy for the citizens of these countries, it impacts Americans, too. It has empowered anti-American dictators... It worsens global poverty, which can be a seedbed for terrorism... 

One way to fight this corruption...is to reveal just how much money the autocrats are making from their oil, gas, copper, gold and other resources. These vast sums are often secrets known only to the governments and the international extractive industry companies who pay them. Disclosure of these funds shifts power from the elites to the citizens so they can “follow the money” and hold governments accountable. [refers to disclosure reports already filed by BP, Shell, Total, Rosneft]... [Now] Big Oil is back, seeking repeal of Cardin-Lugar so their payments can be kept secret from the people... Besides Big Oil, those most eager to repeal Cardin-Lugar are the autocrats, in places like Russia, Iran or Venezuela, with oil wells, gas fields or copper mines who want to keep the money secret from their citizens. Why do their bidding?

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Item
31 January 2017

Statement from EITI Chair on repeal of SEC's 'resource extraction' rule

Author: Fredrik Reinfeldt, chair of Extractive Industries Transparency Initiative

The proposed Congressional Review Act resolution now being considered by Congress would overturn the SEC Rules – adopted in June 2016 – that require resource extraction issuers to disclose payments made to governments for the commercial development of oil, natural gas or minerals as mandated by the Dodd-Frank...Act (Dodd Frank 1504). The European Union and Canada have adopted similar requirements.

The EITI has in recent years frequently spoken about the ways in which disclosure requirements like Dodd Frank 1504 and the EITI complement each other... Our aim is to ensure responsible and transparent resource governance and this requires multiple efforts. The SEC took great care in drafting these rules in consultation with industry to ensure that they complement the EITI’s efforts and avoid unnecessary duplication. I would urge Congress to consider this matter thoroughly, and to ensure that any action does not undermine the hard-won gains in this arena.

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Item
31 January 2017

Urgent: Rule On Extractive Transparency At Risk in the Senate!

Author: Amnesty International USA

Representative Bill Huizenga (R-MI) is gathering support from his fellow Republicans to gut one of the signature bi-partisan anti-corruption laws passed in the last 8 years...which requires oil and mining companies to publish the payments they make to governments around the world... The Dodd-Frank transparency measure was passed to ensure people in low and lower income countries can follow the money and to break the "resource curse", which has plagued low and lower income countries like Indonesia, Nigeria, Angola, Equatorial Guinea and more... The [effort] to limit Section 1504...comes the same week that the former CEO of Exxon Mobil Rex Tillerson, a vocal opponent..., is expected to be confirmed by the Senate as the next Secretary of State. Exxon has spent millions, along with the American Petroleum Institute, to try to block this rule... Tell Congress to stand up to corruption and for human rights and vote NO!

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Article
1 February 2017

Is Congress voting for corruption?

Author: [opinion] Isabel Munilla, senior policy advisor for extractive industries - Oxfam America, in The Hill (USA)

...[You] might find it perplexing that scrapping an anti-corruption law is at the top of the congressional to-do list in Washington.  But Congress will seek to do just that this week by voting to roll back rules to implement the landmark bipartisan Cardin-Lugar anti-corruption law known as section 1504 of the Dodd-Frank Act... This rule is a hallmark of U.S. global leadership in fighting corruption in poor countries. It covers the vast majority of the world’s largest oil, gas and mining companies, including ExxonMobil, Chevron, BP and Shell, as well as leading state-owned companies from China and Brazil...

[More] than 30 countries have followed the United States’ lead and passed similar laws... Reports have been published by BP and Shell and even by Russia’s state-owned companies, Gazprom and Rosneft... At a time when aid dollars are shrinking, transparency is essential to prevent the looting of much needed revenues by corrupt officials. And if the rule is rolled-back, these payments will remain a secret, possibly forever, fueling corruption, waste, and keeping poor countries dependent on U.S. foreign aid... Business professors from George Washington University and Catholic University...[conducted] a study of more than 1,500 equity securities...[which] found that increased transparency resulting from disclosures required under section 1504 lowers the cost of capital for covered U.S.-listed firms by up to $12.6 billion... This effort comes just as the Senate moves to confirm former ExxonMobil CEO Rex Tillerson to be the next U.S. secretary of state. Tillerson and ExxonMobil lobbied aggressively to oppose this anti-corruption rule with the American Petroleum Institute, and tried to block it and overturn it in the courts. 

[refers to support for the law by ING, BNP Paribas, UBS; also refers to reports already published by BHP Billiton, Rio Tinto, Glencore, Kosmos Energy]

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Item
2 February 2017

A gift for Putin, courtesy of Congress

Author: Jana Morgan, Director, Publish What You Pay - United States

With unresolved questions lingering about Russia’s interference in...[US] elections, it is peculiar that one of the apparent priorities of the new Congress is to hand Russian president Vladimir Putin a rather valuable gift.  Only one month on the job the House has rushed to kill a regulation intended to make it more difficult for Vladimir Putin and other corrupt leaders to rule with impunity. It’s an odd thing to do, especially when doing so would undermine U.S. security and foreign policy objectives.  Why would Congress do such a short-sighted thing? Money. Not yours, but that of oil companies, namely the profits of big oil companies and the millions of dollars the oil industry generously “donates” to members of Congress each year... 

The regulation in question, a bipartisan anti-corruption provision passed in 2010..., requires oil, gas and mining companies to disclose the payments they make to government around the world. This includes places like Russia, China, and many other non-democracies whose leaders treat oil revenues as a state secret in order to stay in power and enrich themselves at the expense of their citizens, millions of whom struggle just to survive. Put an end to that secrecy, and suddenly citizens are empowered with information they can use to hold their leaders accountable. [refers to ExxonMobil]

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