Last week, for the first time, major U.S. oil, gas and mining companies like Exxon, Chevron, and Conoco, publicly reported the payments they made to all foreign governments and the U.S. federal government for the extraction of natural resources. This payment data, now available on the Securities and Exchange Commission’s (SEC) website, is disaggregated by project, type of payment (e.g. royalties, taxes, bonuses), and the specific government recipient.
These first reports mark a historic milestone in the fight to bring essential transparency to notoriously opaque industries that have long been plagued by corruption and mismanagement. In addition to playing a critical role in deterring corrupt dealings in the first place, the disclosures give citizens greater insight into the deals their governments make with extractive companies, give investors critical information to assess risk, and give the broader public new tools for monitoring natural resource governance and accountability.
The road to this point was rocky and fraught to say the least. Along with colleagues at Publish What You Pay United States (PWYP-US) and Oxfam America, as well as investors, economists, foreign policy experts, citizens of resource rich countries, and anti-corruption watchdogs, we have fought for 14 years to make this information public. Congress initially passed the bipartisan Cardin-Lugar amendment, known as Section 1504 of the Dodd-Frank Act, in 2010, directing the SEC to make regulations requiring extractive companies to disclose payments to governments on a project-by-project basis. But what followed was more than a decade of opposition from oil majors like Exxon and Chevron and industry groups like the American Petroleum Institute (API), who fought tooth and nail to keep this payment information secret. We’ve been through three rounds of litigation (one industry lawsuit and two undue delay lawsuits), three rounds of notice-and-comment rulemaking, a resolution of disapproval under the Congressional Review Act, and a Trump administration effort to weaken the rules and undermine the broader extractive industry transparency regime.
Despite the domestic delay, however, the SEC’s initial rulemaking efforts set in motion broader progress at the international level. Canada, the UK, Norway, Switzerland, and all European Union countries enacted rules modeled off the earlier SEC rules, and major extractive companies in those jurisdictions have been publicly reporting project-level payment data for many years. Likewise, more than 50 countries implement the Extractive Industries Transparency Initiative (EITI) reporting standard, which has required virtually identical disaggregated project-level reporting since 2018.
Under the Trump administration, the SEC began a third rulemaking to implement Section 1504, and again, API and other industry actors sought to dramatically undermine the transparency the statute was intended to provide. The SEC’s 2020 rule gave industry some of what it wanted – most notably by allowing industry to invent a definition of “project” that allowed for aggregation of some revenue streams across different projects, creating problematic inconsistencies with the broader industry reporting standard – but industry actors failed in their broader efforts to keep this payment data secret.
While we still think the rules should be strengthened to better align with the international standard used by every other major market and EITI countries, there is no question that this is a historic moment for transparency and accountability. Disclosure by US-listed companies fills a major gap in market coverage and will have a significant impact deterring corrupt conduct from happening in the first place and exposing corruption and mismanagement; enabling investors to better assess risk in their investment decisions; and empowering citizens and local governments to monitor revenue flows, and better advocate for accountability and fair deals in natural resource extraction.
We know data users will just be starting to digest this information and digging in, and there’s a lot of work to be done to figure out what the data reveals in different contexts. (For those new to industry data, we recommend this Global Witness guide to identifying red flags in payment data.) But on its face, the reports already say a lot – for example, a lot of media reports have flagged the significant difference in taxes paid by majors like Exxon and Chevron to other countries as compared to the United States (see for example here and here). Exxon and Chevron specifically fought against disclosing their U.S. taxes during the U.S. effort to implement the EITI standard. Now, it’s not hard to see why they would have preferred to keep U.S. taxpayers in the dark about how much they pay to the US government.
Extractive companies have long sought to hide the undeniable reality that citizens in the U.S. get one of the worst deals for the extraction of our natural resources. That will now be harder to do. What else are these companies hiding?
