House Members File Amicus Brief Opposing Industry Attack on Resource Extraction Rule
A contingent of 12 Members of the House of Representatives today filed an amicus brief in the United States Court of Appeals for the District of Columbia Circuit in support of the Securities and Exchange Commission's Resource Extraction Rule. The rule is based on a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The rule is designed to help investors and ensure more stable and growing capital markets through transparency while also combating the developing world's so-called "resource curse," where natural resources are squandered by ineffectual or corrupt governments or otherwise fail to benefit local communities. The scourge of many countries in Africa and Asia, this curse currently means that in many developing nations like the Democratic Republic of the Congo, natural resources are used only to benefit a small, often corrupt, political elite.
The list of Members signing the amicus brief includes: Rep. Edward J. Markey (D-Mass.), Rep. Maxine Waters (D-Calif.), Rep. Eliot L. Engel (D-N.Y.), Rep. Jim McDermott (D-Wash.), Gregory W. Meeks (D-N.Y.), Rep. Betty McCollum (D-Minn.), Rep. Jim Moran (D-Va.), Rep. Earl Blumenauer (D-Ore.), Rep. André Carson (D-Ind.), Rep. Sam Farr (D-Calif.), Rep. Peter Welch (D-Vt.), and Rep. Barbara J. Lee (D-Calif.).
For a link to the brief filed today, please click here.
The filing of this amicus stems from the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which mandates in Section 1504 that oil, gas and mining companies listed on US exchanges disclose to the Securities and Exchange Commission (SEC) payments they make to governments for the extraction of oil and mineral resources. After the rule was released, the American Petroleum Institute (API), the Chamber of Commerce, and others jointly filed suit against the SEC, claiming, among other things, that the agency used a flawed cost-benefit analysis and failed to carve out exemptions for non-transparent governments. In the amicus brief filed today, the twelve Members of Congress strongly oppose the claims made by those organizations.
In the brief, the lawmakers argue that contrary to the claims of API and the Chamber, the SEC acted with all necessary deliberation and did so consistent with the intent of Congress and the mandates of the law. As the Members argue in the brief:
"Congress and the Commission have had good reason for devoting so much time and energy to requiring corporate disclosures: increased disclosure goes to the very heart of the Commission's mission to protect investors and the markets. Undisclosed payments are corrosive to free enterprise. They destroy trust and transparency. They obscure valuations and penalize sensible business practices. Investors and the public need to be able to fully evaluate whether a company has properly addressed the commercial, political, and legal risks it faces when operating around the globe in environments where corruption is rife and rule of law weak. The Resource Extraction Rule, and the country-by-country and project-by-project data that will be disclosed under it, are critical to giving investors and the public the ability to make these evaluations."
Congress passed Section 1504 of Dodd-Frank as part of an effort to combat the developing world's "resource curse." The Resource Extraction Rule should also prove a boon to domestic investors and the American public as it will shine a light on some of the commercial, political, and legal risks that companies may face related to their investments.
"It is true that the Resource Extraction Rule will help reduce corruption and aid in the alleviating of the Resource Curse for developing countries. But it will also shine a light for investors on the true value of a company's oil, gas, and mining projects. There is information that will be disclosed under the Resource Extraction Rule that is material information for investors; there can be no doubt that the Commission is the proper organization to release and enforce the rule as mandated by Congress."
In June, a bipartisan contingent of more than 55 Members of the House sent a letter to the SEC calling for the Commission to finally release the Resource Extraction Rule. The Commission voted to promulgate the rule in August 2012. A copy of that letter is available HERE.
The brief was filed in the case of American Petroleum Institute v. Securities and Exchange Commission, Docket Number 12-1398. Rep. Markey is the Ranking Member of the House Natural Resources Committee. Rep. Waters is the Ranking Member of the House Financial Services Committee. Rep. Engel is the Ranking Member of the House Foreign Affairs Committee. Rep. McDermott is the Ranking Member of the House Ways and Means Committee's Subcommittee on Trade.
Congresswoman Maxine Waters has been deeply involved in international development issues and has been a strong proponent of greater transparency in extractive industries. She was a member of the Dodd-Frank conference committee, and helped ensure that a provision addressing this issue was included in the final version of the Act. In the 110th Congress, Congresswoman Waters co-sponsored a precursor bill on resource extraction. She strongly believes that the industry challenge to the SEC's rule is a wrong, and she plans to continue to work to make sure this provision of Dodd-Frank is implemented as intended.