U.S. Senators Ben Cardin (D-MD) and Dick Lugar (R-IN), authors of the provision in Dodd-Frank Act that requires transparent reporting of payments made to governments for the extraction of oil, natural gas, and minerals by companies that otherwise must file disclosures with the Securities and Exchange Commission (SEC), called the legal challenge by the American Petroleum Institute (API) "expected" and "frivolous" in its attempts to have the SEC ignore the law. The SEC took two years to craft rules that reflect abundant input from industry. In August, they unveiled long-overdue plans for implementation of Cardin-Lugar.
"Increased transparency will not put companies that comply at a competitive disadvantage but will reduce the risks for U.S. investors and it will allow citizens in resource-rich countries to hold their leaders accountable. API wants to push us back to a time when the U.S. had few tools to add accountability and stability to the inherently unstable energy sector," said Senator Cardin. "Congress and the SEC carefully crafted a reasonable and very manageable reporting requirement that will bring greater transparency to oil, gas and mineral sector."
"The U.S. economy and our values substantially benefit when our companies are working in oil, gas, and mineral rich states. But the benefits will not be realized if investments serve to entrench authoritarianism, corruption and instability. With oil prices high and volatile, our economy needs more transparent markets, not less," Senator Lugar said. "The Cardin-Lugar Amendment puts transparency -- the key to citizens' ability to hold their government to account -- ahead of corruption. To do otherwise is a losing proposition for the United States and company shareholders."
The Cardin-Lugar Amendment became law in 2010 as Section 1504 of the Dodd-Frank Act and required the SEC to promulgate rules for implementation. The Cardin-Lugar transparency provision will help empower investors to have a more complete view of the value of their holdings and encourage capital formation. It will bring more information to global commodities markets, which would benefit price stability. And it will help empower citizens to hold their governments to account for the decisions made by their governments in the management of valuable oil, gas, and minerals resources and revenues.