WASHINGTON – Lobbying is ramping up over proposed rules that would require oil, gas and mining companies listed with the Securities and Exchange Commission to disclose what they pay to nations where they extract resources for commercial purposes.
Critics in the oil and gas industry and human rights activists have flooded the SEC with comments on the rules, which the agency must issue under the Dodd-Frank financial reform law.
Ian Gary, senior policy manager for extractive industries at Oxfam America, an anti-poverty group that supports the disclosure rules, said resource-rich countries often are plagued by conflict, impoverishment and ineffectual political institutions – the “resource curse.” Groups supporting the rules say payment disclosure could discourage corruption in countries in Africa, Asia and elsewhere that rely heavily on natural-resource revenues.
“If the money is being used well, that creates new business opportunities, new investment opportunities and a stable operating environment for companies,” Gary said.
Companies such as Chevron Corp. and Shell and the American Petroleum Institute, an industry trade group, are fighting the rules and seeking disclosure exemptions. API told the SEC that U.S. companies would face “a significant competitive disadvantage to foreign companies not covered by the proposed rule – in particular, foreign, state-owned oil companies.”
API also recently claimed the SEC didn’t properly assess the proposed rules’ economic impact as required by law, meaning the rules wouldn’t survive a court challenge. The group asked the SEC to scrap them and start over.
Protest in Houston
Gary said Oxfam and other groups are in the midst of a public campaign urging the SEC to finish the rules – originally due last April – and resist the industry’s lobbying efforts. Activists plan to demonstrate outside Chevron’s Houston office on Thursday.
He said a similar proposal under debate in the European Commission further underscores the need to complete the U.S. rules.
But industry representatives say another multinational effort, the Extractive Industries Transparency Initiative, or EITI, already provides an adequate global standard. Industry representatives have urged the SEC include exemptions in the final rules that would mirror those in EITI. One such exemption would apply when disclosure would violate a host country’s laws and another for “commercially sensitive information.”
Gary said the industry hasn’t identified nations that have laws against disclosure. And he said Oxfam supports EITI, but he noted only certain countries have signed on.
“We don’t think that EITI by itself is a solution,” Gary said. “We think this voluntary approach needs to be complemented by mandatory regulation.”
Russell Johnson, a Chevron spokesman, said the company was “committed to promoting revenue transparency” as evidenced by its participation in the transparency initiative, “of which Chevron is the longest-serving board member.”
API also asked the SEC to limit the types of projects that would fall under the rules and to list payments to countries on an aggregate, not company-specific, basis.
Sen. Ben Cardin, D-Md., who co-authored the transparency measure with Sen. Richard Lugar, R-Ind., said what the industry seeks would run counter to the law’s intent.
“Rule-making should follow the intent of Congress,” Cardin said. “I thought we were very clear. We wanted full disclosure, and we didn’t want exemptions.”