A number of significant briefs were filed recently with the U.S. Court of Appeals for the D.C. Circuit in support of Section 1504 of the Dodd-Frank Act, which requires oil, gas, and mining issuers to report on their payments to governments.
On January 16, Oxfam filed an intervenor brief in the case that the American Petroleum Institute (“API”) and others have brought against the Securities and Exchange Commission (“SEC”) to block its final rule. More unusually, two Senators and one former Senator filed an amicus brief siding with the SEC, which was accompanied by another amicus brief from twelve members of the House of Representatives. Each brief argued slightly different points, but all emphasized the SEC’s power to issue the rule in its current form, asserted that the final rule is aligned with Congressional intent, and argued that the final rule was supported by an adequate analysis of its economic impact.
Now, Norway-based Statoil has — albeit discretely — sought to distance itself the rest of the oil industry, noting in a letter to Global Witness that it explicitly withheld support for the API lawsuit, although it did not want to impede the ability of other oil companies to bring such a case. Until now, Newmont Mining was the only company covered by the legislation to explicitly support Section 1504. Statoil’s support is more attenuated, but nonetheless of interest, particularly as similar legislation moves forward in the European Union.
In fact, legislation similar to Section 1504 has been proposed in a number of non-U.S. jurisdictions, including the European Union, Canada, and Switzerland. The E.U. proposal has moved the farthest, and it is rumored that a vote will happen this spring. In most significant respects, the current E.U. draft parallels Section 1504, although it also covers the forestry industry. Moving beyond revenue transparency, developing nations have also passed legislation in recent years requiring the disclosure not only of payments, but of oil, gas, and mining agreements signed with the governments.
Finally, the SEC is facing demands that it issue a rule requiring corporations to disclose their use of corporate treasury funds for political purposes. Statoil’s position may simply be a nod to the fact that companies will come under growing legislative and regulatory pressure to be transparent on issues ranging from foreign government payments, to contracts, to political payments.