58 Democrats Call on SEC to Quickly Move Toward Extractive Industry Transparency
Following the release of the Securities and Exchange Commission’s (SEC) new anticipated agenda, which includes a commitment to propose a rule on extractive industry transparency within the next ten months, a coalition of 58 Democratic House members yesterday called on the Commission to initiate the rulemaking on a faster, more definite timeline.
The rule is mandated by Section 1504 of the Dodd-Frank Act, which requires all extractive companies listed on U.S. exchanges to report all payments made to U.S. and foreign governments for oil, gas and mining resources. In July 2013, the U.S. District Court vacated the rule, remanding it back to the SEC for additional analysis and better justification for its decisions on several key requirements.
The SEC was already a year past the statutory deadline when it released its final rule implementing section 1504 in August 2012, and in light of the District Court’s vacatur order, the rule is now almost three years overdue.
The letter was organized by Congresswoman Maxine Waters (D-CA), the Ranking Member of the Financial Services Committee. Waters led the letter along with Reps. Eliot Engel (D-NY) and Peter DeFazio (D-OR), Ranking Members of the House Foreign Affairs Committee and the House Natural Resources Committee, respectively.
“The implementation of Section 1504 is critical,” the letter states. “Resource revenue transparency allows shareholders to make better-informed assessments of risks and opportunity costs, threats to corporate reputation, and the long-term prospects of the companies in which they invest. It is no surprise, then, that investors with assets worth over $5.6 trillion recently called on the SEC to quickly reissue a strong rule to align with transparency rules in other markets.
“Public reporting of extractive payments is also fundamental to improving governance, curbing corruption, improving revenue management, and allowing citizens to demand greater accountability from their governments for spending that serves the public interest,” the letter continues. “This, in turn, can help create more stable and democratic governments, as well as more stable business environments, which contribute to the advancement of U.S. national security interests.”
Full text of the letter is below, a signed copy can be found here.
June 11, 2014
The Honorable Mary Jo White
Dear Chair White:
We are aware that the Securities and Exchange Commission (SEC) recently announced its anticipated agenda for the next ten-month period, and that this agenda includes a proposal to initiate rulemaking for Section 1504 of the Dodd-Frank Act by March 2015.
Public reporting of extractive payments is also fundamental to improving governance, curbing corruption, improving revenue management, and allowing citizens to demand greater accountability from their governments for spending that serves the public interest. This, in turn, can help create more stable and democratic governments, as well as more stable business environments, which contribute to the advancement of U.S. national security interests.
Since its passage, Congress has continued to support the strong implementation of Section 1504 rules. Last year, legislation to implement an agreement between the U.S. and Mexico to develop oil and gas reserves in the Gulf of Mexico (HR 1613) was significantly delayed when the House version of the bill included a waiver from Section 1504 requirements. The White House strongly objected to the House bill precisely because of the waiver, and issued a Statement of Administration Policy calling the exemption unnecessary and claiming it would directly and negatively impact U.S. efforts to increase transparency and accountability in the oil, gas, and minerals sectors. Congress ultimately passed a version of the bill that did not include the Section 1504 waiver.
Importantly, the final legislation was supported by the same industry groups and lawmakers who initially alleged that Section 1504 would create conflicts of law and put American companies at a competitive disadvantage.
Maxine Waters Eliot L. Engel