Senators: Arab Spring shows need for strong oil-disclosure rule

A bipartisan Senate duo says uprisings in Libya and other nations underscore why U.S. regulators must end delays and issue tough rules that force oil companies to disclose their payments to foreign governments.

Sens. Dick Lugar (R-Ind.) and Ben Cardin (D-Md.), in a Huffington Post column, fire a shot across the bow of the Securities and Exchange Commission (SEC), which this month is slated to issue rules under a provision the lawmakers inserted in the 2010 Dodd-Frank law. From their joint column:

Since we passed Cardin-Lugar, the Arab Spring has created new opportunities for oil and gas investment in the Middle East, particularly Libya. It is vital that those investments be as transparent as possible, given the record of corruption and the yearning of those peoples for more accountable leaders. Similarly, as sanctions may ease, oil companies are rushing into Burma, where corruption is endemic, and the lack of an SEC rule hampers U.S. efforts to devise an appropriate investment framework.

The Dodd-Frank law requires the SEC to issue regulations that force SEC-listed oil, gas and mining companies to reveal payments to governments related to projects in their countries, such as money for production licenses, taxes, royalties and other aspects of energy and mineral projects.

The provision is aimed at increasing transparency to help undo the “resource curse,” in which some impoverished countries in Africa and elsewhere are plagued by high levels of corruption and conflict alongside their energy and mineral wealth.

The column notes that the law will “help citizens ‘follow the money’ that is often lost to corruption,” while giving investors a clearer picture of oil and mining companies’ financial soundness and helping create more stable governments.

The SEC is slated to issue the final rules on Aug. 22.

Major Western oil companies such as Exxon are pushing the SEC to include various exemptions to the requirements and leeway to report the information on a broad, aggregated basis. They say the rule will place them at a competitive disadvantage absent such flexibility. More on that here.

Cardin and Lugar, in the column, warn the SEC to hold firm when it finally issues the long-delayed rules.

“With a commission vote not scheduled until late August, the lengthy delay has raised fears that the SEC may dilute the regulation, either by granting a broad exemption to countries that don't want the public to know the sums they receive or by limiting the specifics of the payments disclosed. The law is clear on both points: no exemptions, and project-by-project reporting. We urge the commission: Follow the law and issue the rule,” they write.