API Ignores Momentum Toward Transparency

Issue: Dodd-Frank
Country: United States
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On Monday, the American Petroleum Institute (API) filed a brief in its lawsuit against the Securities and Exchange Commission (SEC) challenging the rules enforcing Section 1504 of the Dodd-Frank Act, which became law in July 2010.

The brief repeats old claims by API, especially on issues related to cost and competitiveness, but does little to substantiate them. For instance its opening salvo claims that “this case involves a challenge to one of the most expensive rules in the history of the Securities and Exchange Commission." But as we've noted before, this hyperbole doesn’t track with SEC’s considered determination of the cost of complying with the new rules, which it has estimated at a modest $90,000 to $1 million for large companies.

Additionally, it’s likely that costs incurred by companies already practicing transparency will be much lower. Newmont Mining, for instance, has stated publicly that the effects of compliance with Section 1504 will be ‘de minimis’ to its business, since it already discloses the information required as a matter of course.

Companies operating in Extractive Industry Transparency Initiative (EITI)-compliant countries – a cohort that includes API members like BP, Exxon and Shell – should expect some reprieve as well, since they are already required to divulge through EITI reporting a good deal of the information Dodd-Frank requires.

But API goes to great lengths to obscure this fact in its brief, mischaracterizing EITI as a process that results mostly in the disclosure of aggregate information designed to keep company data from public view. Analysis by Revenue Watch of over 50 EITI reports covering more than $500 billion in revenues shows that in fact, the disagreggation of EITI data by at least company and revenue stream is common – while new reforms to EITI’s minimum standards are expected to require such detailed reporting of all EITI-implementing countries.

In response to API’s brief, Revenue Watch advocacy officer Rebecca Morse said: “API’s continued attack on transparency comes at a time when the global demand for it could not be greater. EITI is raising its standards, the G8 and G20 have made their support for better reporting clear, and the European Union is now on the precipice of finalizing legislation to build on the mandatory standards established by Dodd-Frank. API can’t litigate away this momentum, and has little to gain by isolating itself "on the wrong side of history.”

Suzanne Ito blogs for RWI.

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