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Wind at SEC's back on long overdue oil transparency rule
Earlier this month, the SEC finally released a rulemaking schedule for the oil and mining sunshine rule, Section 1504 of the Dodd-Frank Act. The SEC schedule came as a result of a tug -a successful lawsuit that we at Oxfam brought to compel the SEC to commit to a timeframe to get the rule done. It's been more than five years since the law was passed. Thankfully, the SEC committed to an 'expedited' rulemaking and will vote on a draft rule in December and meet to vote on a final rule in June 2016.
The move is a critical step to bring the U.S. back into step with the oil and mining transparency movement that it started, but that is now led by the European Union, Canada and Norway, whose sunshine laws are in force or will be in force by end of the year. As I described in The Hill in July, these laws make clear that the U.S. law had global impact, even if our implementation fell behind.
As we move into the rulemaking phase, the wind is at the SEC's back. These sister laws now in force provide an excellent roadmap for the SEC as it kicks off the rulemaking again. All of these laws require company by company reporting for each project, with no exemptions. Luckily, the SEC has most of what it needs to produce a strong rule, such as the details on the EU and Canadian reporting requirements, and details on how the UK is putting the law into force.
There is also strong, broad-based support for the SEC to harmonize its rules with these other markets. Investors managing more than $6.4 trillion have written to the SEC supporting harmonization, and leading companies have voiced their support.
Just last month, BHP Billiton, the world's largest mining company, came out with a voluntary project payment transparency report before it was even required by EU regulators. BHP is also covered under the SEC's rules since it is listed on the NYSE. After a recent meeting with the SEC to discuss their report and position on transparency they said "we support the establishment of a globally consistent disclosure framework that includes formal equivalency agreements between jurisdictions."
Dallas-based Kosmos Energy, a U.S.-listed oil company covered under Section 1504, committed to project reporting in 2014. In their voluntary payment report released this year they said, "We believe that this type of disclosure is beneficial to investors, civil society, and local communities, and reflects evolving international expectations."
The SEC's record is replete with positive evidence and the supporters are many. It's time to take this across the finish line.
Munilla is senior policy adviser for Extractive Industries at Oxfam America.