The UK passes oil and mining laws the same week the SEC signals further delay in the US.
Today the United Kingdom took a huge, historic step in the fight for transparency by putting into force new regulations that implement a landmark European Union (EU) transparency law. These new regulations require oil, gas, mining and logging companies to “publish what they pay” to governments for natural resources are a big blow to the so-called “resource curse” where countries rich in natural resources are poor and plagued by conflict and instability.
Shining sunlight on these millions of dollars in taxes and royalties means activists and investors can better understand the impact and value of extractive projects, cutting down on corruption, waste, bribes and otherwise lost funds. Major international companies like Shell, BP and Total are covered by the UK rules. By quickly implementing EU law in their national context, the UK has improved transparency in dozens of countries where British and other companies operate.
We’re celebrating with our colleagues across the pond today. This is a huge moment for 1.5 billion people in resource-rich countries living on less than $2 per day. Oxfam’s extractive industries campaign has been fighting for transparency laws like this for years because revenues that are lost to corruption and waste could, if managed transparently, instead benefit local communities and reduce poverty and inequality.
But here in the US, where the mandatory oil and mining payment disclosure revolution first began, there’s still work to be done, and continued cause for concern.
Just last week, while the UK Parliament was voting on the EU laws ahead of schedule, the Securities and Exchange Commission kicked the can down the road – again.
The US passed similar transparency legislation in 2010 with Section 1504 of the Dodd-Frank law. The Securities and Exchange Commission (SEC) was tasked with implementing that law – and Congress gave them 270 days to do it. In August 2012, the SEC finally approved implementing regulations that – to their credit – showed leadership to the rest of the world and answered calls from investors, civil society and Congress. Unfortunately, Big Oil sued to block this section of the Dodd-Frank law using debunked claims that it would hurt their competiveness. Since a judge sent the rule back to the SEC on procedural grounds in 2013, we’ve been waiting for the SEC to rewrite a rule that is as strong as the August 2012 rule, and follows the global standard being set in the UK and the rest of the EU.
It’s been more than four years since Dodd-Frank was passed, and we’re still waiting.
Oxfam America sued the SEC back in September to finish the rule. The SEC should act in a reasonable amount of time (which is not next October!) and is in fact required to do so by Congress. Finalizing the US rule will give Oxfam and our partners all over the world – as well as investors, companies, and governments – certainty and clarity about the regulations and what companies will be required to disclose.
UK companies will be disclosing their payments for 2015 in 2016. Some US companies and their competitors will be covered by the EU rules, which all 28 member states must adopt by next summer. Norway has adopted similar rules.
Recently, Canada’s Parliament introduced the Extractive Sector Transparency Measures Act, which it pledged to finalize by early next year. In January, the Canadian mining industry, led by the Mining Association of Canada (MAC) and the Prospectors and Developers Association of Canada (PDAC), released recommendations for the Canadian government that endorsed strong transparency rules. Given that Canadian mining and exploration companies have interests in more than 100 countries around the world, the potential reach of these laws is huge.
“Disclosure is a well-established, practical tool to tackle corruption and improve governance in the extractive sector,” said Lina Holguin, joint policy director at Oxfam Canada and Oxfam-Quebec. “This is an historic opportunity to make a low-cost contribution to fighting corruption and improving the lives of thousands of communities around the world.”
Once all of these laws are finalized they would cover 84 of the world’s 100 largest oil and gas companies, and 58 of the 100 largest mining companies.
The UK law provides a standard for the US to follow. Too much time has passed – it’s time for the US to lead again on transparency.