NGOs Apply Pressure for SEC Resource Payment Rule

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By Yin Wilczek

July 15 — The opportunity cost of the SEC's failure to issue a final resource extraction disclosure rule is about $1.55 trillion, according to a new report.

Oxfam America's July 15 report, “Show Us the Money!”, notes that it has been five years since Dodd-Frank Wall Street Reform and Consumer Protection Act Section 1504 directed the Securities and Exchange Commission to require the resource extraction industry to disclose payments made to governments to further the commercial development of oil, natural gas and minerals.

In that time, an estimated $1.55 trillion in oil money has flowed to governments around the world, many of which are not fully transparent, according to the report.

“Without payment transparency, following the money and holding governments accountable is next to impossible for citizens of developing countries,” Oxfam America President Raymond Offenheiser said in a related release.

Need for Prompt Rulemaking 

Separately, two other non-governmental organizations—Publish What You Pay (PWYP) and Global Witness—called on the same day for the SEC to “promptly” finalize a rule to implement Section 1504.

The statute, “properly implemented, will help ensure that citizens are the ultimate beneficiaries of their countries' natural resource wealth, rather than a handful of well-connected elites,” PWYP-US Director Jana Morgan said in a release.

SEC spokesman John Nester declined to comment.

According to the SEC's unified regulatory agenda, a resource extraction rule may not move forward until spring 2016.

A rule that the SEC finalized in 2012 was invalidated by the U.S. District Court for the District of Columbia in 2013.

Oxfam filed a lawsuit in the U.S. District Court for the District of Massachusetts to expedite the rulemaking, in which a decision is expected soon.

Others Moving Ahead 

In the meantime, the European Union, Canada and Norway have moved ahead with similar disclosure requirements. Norway received its first transparency report earlier this year in which Statoil, one of the world's largest oil and gas companies, disclosed the payments it made to governments at the project level.

The first EU transparency reports are expected in early 2016, and the first Canadian disclosures are expected in 2017.

Some companies also are choosing to voluntarily disclose their project-level payments. In their release, PWYP and Global Witness highlighted disclosures by Kosmos Energy and Tullow Oil.

In a July 14 briefing for reporters, Oxfam researcher James Morrissey said that Oxfam's $1.55 trillion amount is an estimate that was derived from the amount of oil produced by about 80 low- and medium-development countries multiplied by the price of the oil, after accounting for production costs.

Oxfam's estimate is conservative given that it excludes mineral production, which also would be covered under a final SEC rule, said Morrissey, who worked on the Oxfam report.

“The problem is great and the opportunity cost is clear,” Isabel Munilla, senior policy advisor for oil and mining transparency at Oxfam America, said at the briefing.

Why U.S. Rule Needed 

Morgan noted that although disclosures in foreign markets will cover many large extractive companies, the U.S. is home to a majority of the world's top, publicly traded extractive issuers. “Without disclosures from the U.S., we are missing a major component of the global picture on extractive payments,” she told reporters.

Munilla said it also is important to shine the light on extractive payments made to the U.S. government. On average, the government collects about $10 billion annually from oil, gas and mining projects on federal land.

Another reason why the SEC should hurry on the rulemaking is that once in place, it will apply not only to U.S.-listed companies but also to private companies, “which is really critical” because “so many operate here,” Munilla said.

Munilla and Morgan said they do not expect the SEC to write a new rule. Instead, the commission should finalize the same or nearly the same rule that was invalidated in 2013, but better justify the decisions that it made in the rulemaking, they said.

“What the SEC must do is prioritize putting it out there,” Morgan said.

Outside SEC Expertise 

The SEC declined to comment, but officials have said in the past that the rulemaking involves an area outside the commission's traditional expertise.

During its litigation with Oxfam, the SEC also said the rulemaking was delayed because of “the Commission's myriad obligations”.

Both Oxfam and the SEC have asked the court for summary judgment.

At the briefing, Oxfam Senior Policy Manager Ian Gary said that the NGO expects “a ruling from the judge any day now so that's something to watch for.”

To contact the reporter on this story: Yin Wilczek in Washington at

To contact the editor responsible for this story: Ryan Tuck at

Oxfam's report and release are available at

The PWYP and Global Witness release is available at

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