Waiting on US Rules for Revenue Transparency
On July 21st 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act , which includes a hallmark provision to bring transparency and accountability to the extractive resource industry. Section 1504* of the Act requires domestic and foreign companies registered on U.S. stock exchanges that submit annual reports to the Securities and Exchange Commission (SEC) to report how much money the company pays foreign governments to extract oil, gas, and minerals on a per project basis. Now, almost a year later, the regulations for this law are still in the drafting process with an expected release date of late August, 2011.
Just how valuable the information on payments will provide depends on the way in which regulators interpret the law. The information provided by this Act will have a profound impact in developing countries, making companies and governments come clean with once-secret payments. Consequently, it is essential that regulations are consistent with the original intent of the law. At the moment, the spirit of the law could be threatened if terms such as “payments” or “projects” are unclearly defined, or allowed too many exemptions.
To read WRI’s full comments on the SEC draft regulations, click here
*We apologize for noting “Section 1502” instead of “Section 1504” in the July 2011 email newsletter re the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1504 is the corrected version.