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August 22, 2011
Disclosure by Extractive Industries Could Help US Taxpayers
by Robert Kropp
The Office of Natural Resource Revenue writes to the Securities and Exchange Commission in favor of
rules requiring disclosure of payments to governments, stating that they could help ensure that
energy companies are reimbursing US taxpayers.
The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Securities and Exchange
Commission (SEC) to address disclosures by extractive industries, and among the rules proposed by
the Commission was one requiring companies engaged in resource extraction to disclose payments made
to the US or foreign governments.
When the rules were first proposed, Ian Gary,
senior policy manager for extractive industries at Oxfam America, told SocialFunds.com, "We believe this
provision has a dual purpose. One is to inform investors about the types of risks these companies
are exposed to. But an important second purpose is to support good governance, transparency, and
accountability for payments."
A recent blog post by Gary acknowledged, "We were largely focused on the
impact that these new disclosures would have on resource-rich developing countries."
However, the post pointed out, a letter submitted to the SEC earlier
this month by the Department of the Interior's Office of Natural Resource Revenue (ONRR) suggests
that there may well be benefits for the US taxpayer as well.
ONRR, which, according to the
letter, "collects, accounts for, analyzes, audits, and disburses revenues associated with energy
and mineral leasing on the Outer Continental Shelf (OCS) and onshore Federal and American Indian
lands," wrote to the SEC that the proposed rules could help "ensure that energy companies are
reporting correctly and paying every dollar due to the American taxpayer."
In his blog
post, Gary observed, "The newly formed ONRR – replacing the scandal-ridden Minerals Management
Service – is trying to turn a new page and has recently penalized Chevron, Anadarko and other
companies for improper deductions and knowingly underpaying royalties."
Meanwhile, the SEC
has yet to implement the new rules, despite a deadline of April 2011, as extractive industries
trade associations such as the American Petroleum Institute (API) seek to undermine implementation.
Nevertheless, Gary pointed out, "Interior has told the SEC that, if feasible, payment data should
be reported at the lease level, mirroring our project-level definition recommendation."
ONRR's letter to the SEC concluded that disclosure of payments would "provide a valuable
cross-check for the data we receive from resource companies, and help ensure that the Federal
Government and American taxpayers are receiving the proper returns for extraction of these valuable
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