Last month, President Trump signed his first significant piece of legislation in to law, which has the effect of enabling corruption and secrecy in an already corruption-plagued industry. Using the little-known Congressional Review Act (CRA), Congress passed, and Trump signed, H.J. Res. 41, a one-line “resolution of disapproval” gutting a critical transparency rule that required oil, gas and mining companies to publicly disclose the payments that they make to foreign governments. It’s a rule that oil giant Exxon and its former CEO, now Secretary of State, Rex Tillerson, have spent years trying to kill.
Congress directed the Securities and Exchange Commission (SEC) to create the rule in 2010 in the bipartisan Cardin-Lugar provision (also known as Section 1504 of the Dodd-Frank Act). The SEC’s rule implementing the statute had widespread support. Investors with more than $10 trillion in assets under management said the rule was important to them, providing critical information for evaluating risk that they wouldn’t otherwise have. National security experts deemed it vital to combatting the corruption, secrecy and government abuse the fuel violent extremism and threaten U.S. security.
Government agencies, including the State Department, USAID, and the Interior Department voiced strong support for the rule, highlighting the important U.S. transparency and anti-corruption interests the disclosures would serve. Faith-based groups deemed it a critical way of protecting the world’s poorest, including religious minorities, and citizens and community-based groups emphasized the importance of finally having the information they need to hold their governments accountable and fight the rampant corruption that plagues countries rich in natural resources.
Since 2010, the rest of the world has followed the leadership of the United States and implemented similar mandatory disclosures regimes. There are now 30 other countries that require extractive companies to publicly disclose the payments they make to foreign governments at the project-level, including all countries in the European Union, Norway, and Canada.
But some companies – in particular Exxon – didn’t want to shine a light on their dealings with foreign governments like Russia. For years, Exxon, Tillerson and the oil industry association API (the American Petroleum Institute) lobbied against the Cardin-Lugar provision and the SEC rule. Despite their efforts, for more than 7 years government officials and politicians on both sides of the aisle recognized how much there was to gain from transparency in the extractives sector, recognizing the rule’s importance to combatting the resource-curse and fighting corruption. For more than 7 years, facts and evidence prevailed over crony capitalism.
Not anymore. Trump is in the White House and Tillerson – despite questionable ties with Russia’s Vladimir Putin, a career dedicated to maximizing profit, and no public service experience – now runs the State Department, days after cashing out with hundreds of millions of dollars from Exxon. Suddenly undoing the SEC’s transparency rule became the most urgent priority of the White House and the 115th Congress. Using a fast-track procedure under the CRA, in a matter of days Congress pushed through a resolution that voids the SEC’s rule and on February 14, Trump signed it into law. Happy Valentine’s Day to Exxon.
Fact vs. Fiction.
That this is the top priority of Congressional leadership and the White House is shameful and alarming. Worse are the lies they used to justify it. Using industry talking points, Congress and the White House relied on demonstrably false statements to claim that this resolution would benefit average Americans, when the only winners are corrupt regimes and the companies that want to keep their dealings with those governments secret.
Let’s look at those statements, and let’s compare to them to the facts.
Gutting the rule isn’t “bringing back” American jobs.
Members of Congress claimed this resolution was about jobs. Congressman Jeb Hensarling (R-Tex.), for example, claimed voting for the resolution was a “vote for jobs,” calling on his colleagues to “vote down this leftist, elitist agenda declaring war on carbon-based jobs.” In signing the resolution, Trump similarly promised it would bring jobs back: “we’re bringing back jobs big league, we’re bringing them back at the plant level; we’re bringing them back at the mine level. The energy jobs are coming back.”
No, they aren’t, because killing this rule has nothing to do with “jobs.” Industry has spent 7 years opposing the SEC’s disclosure rule and they’ve made a lot of different claims, but the idea that the rule will result in a loss of jobs, and that killing the rule will bring them back at the mine or plant level, is new. It’s also preposterous. The rule requires companies to track the payments they make, compile that information into a report and submit it to the SEC. Industry opponents have repeatedly claimed that the burdens of compliance with the rule would come from the hours of time people will have to put into compiling the report – in other words, to comply with the rule, companies would have to hire people and pay them a lot of money to do work. So rather than bring jobs back, killing the rule means companies won’t create those new compliance jobs.
There are no jobs to bring back because not a single job has been lost to this rule. Even if compliance would result in job losses – which it won’t –US-listed companies weren’t required to start reporting under the SEC rule until 2018, so compliance hadn’t started yet. But a substantial number of companies – including U.S. companies – are already reporting this exact information under the laws in other countries, and their experience is telling. Oil and gas giants like Shell, Total, BP, Statoil, Eni, and Kosmos Energy, and some of the biggest mining companies like BHP Billiton, Rio Tinto, and Newmont, are among those reporting. None has reported the loss of any jobs, nor any financial losses as a result of disclosure.
Instead, many reporting companies have emphasized the business advantages of project-level payment transparency. You can find some of their recent statements here and here. Foreign subsidiaries of US companies like Exxon and Chevron listed on exchanges in other countries have already started reporting their project-level payments and they haven’t reported having to lay anyone off either, nor have they reported injury to their bottom line from transparency.
It’s important to think about what compliance actually requires. We’re talking about filing a form that lists normal payments, like tax and royalty payments, that companies already track and record in the ordinary course of business. If companies don’t already have the ability to easily figure out what they’re paying to governments, that’s a much bigger problem that goes to their basic management and recordkeeping practices.
In fact, companies covered by the U.S. rule are already required “to make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer,” under the Foreign Corrupt Practices Act (FCPA). In other words, U.S.-listed companies like Exxon and Chevron are already recording and tracking payment information. They just aren’t required to show you the numbers yet. The only additional burden is putting that information into the appropriate form and filing it with the SEC.
The “jobs” rationale is dishonest political pandering at its worst: a shameless way of hiding the true purpose of an action, while trying to convince the public that you really did it for them. It’s a way for Trump and Congress to pretend they are acting in the interests of the American people, while really doing the bidding of the powerful corporate interests that make enormous campaign contributions.
Make no mistake: This move benefits the kleptocrats, dictators, and extremist that threaten US interests and the few companies that try to gain an edge by pursuing secret deals over transparent practices. Killing this rule to allow companies to hide the payments they make to corrupt foreign governments does nothing for American jobs and nothing for the American people.
Transparency does not make American companies less competitive.
Congressional sponsors of the resolution and industry lobbyists claim that the SEC rule puts American companies at a “competitive disadvantage” because foreign competitors don’t have to disclose the same information. House majority leader Kevin McCarthy (R-Cal.), for example, wrote in an op-ed that the SEC rule added “an unreasonable compliance burden on American energy companies that isn’t applied to their foreign competitors.” Senator Jim Inhofe (R-Okla.), lead sponsor of the resolution in the Senate, said the rule required companies to disclose “information that foreign competitors don’t have to provide,” and Congressman Pete Sessions (R-Tex.) claimed the rule would affect “American companies – and only American companies.” API issued a statement this week praising the move to gut the rule, saying it would have put U.S. companies “at a disadvantage to foreign competitors around the word who are not subject to any disclosure.”
They all conveniently omit two critical facts, and while the members of Congress might simply be woefully misinformed, API’s actively lying.
First, the SEC’s rule covers foreign companies, too, not just American companies. All companies – both foreign and domestic – that file annual reports with the SEC would have been required to disclose their payments. Congress itself explicitly required that the rule cover both foreign and domestic companies in the text of the Cardin-Lugar provision, and the SEC complied. In fact, more than 30 foreign mining companies are listed on U.S. exchanges, and would have to comply with the rule.
Second, the majority of US companies’ foreign competitors are already making the very same disclosures the SEC rule would have required. Thirty other countries already have mandatory reporting regimes modeled off of the US rule. Together, the rules in the US, EU, Canada and Norway would require 84% of the world’s 100 largest oil and gas companies and approximately 60% of the world’s 100 largest mining companies (by market capitalization) to disclose their project-level payments to governments.
Some members of Congress took the “competitive disadvantage” argument further and suggested state-owned companies are given special treatment. Congresswoman Ann Wagner (R-Mo.) claimed the SEC’s rule would make it “more expensive for our public companies… to be competitive overseas with foreign state-owned companies,” and Congressman Andy Barr (R-Ky.) claimed disclosures would reveal information “that foreign-state owned competitors can use against American firms.”
This is also a lie: There is no special treatment for state-owned companies. Under the SEC’s rule, several major state-owned companies listed on US stock exchanges, such as Brazil’s Petrobras and China’s PetroChina and Sinopec, would have been required to disclose their payments to governments. Under the rules in other countries, Russian companies Gazprom, Lukoil and Rosneft are already reporting their project-level payments to governments, as are some Chinese oil companies. Yes, that means state-owned Russian and Chinese companies are currently more transparent than U.S. companies. Is Exxon using the information their foreign-state owned competitors disclose against them?
If Russian and Chinese-owned companies can disclose their payments, why can’t US companies? What do Chevron and Exxon have to hide?
No foreign laws prevent disclosure of project-level payments.
So what about the claim that the SEC rule would require companies to disclose information in violation of the laws of other countries, which could in turn result in big losses for companies that have to stop operating in that country? Another lie repeated by politicians giving cover to oil companies.
Senator Inhofe, the lead sponsor on the Senate side, stated on the floor: “the SEC’s rule lacks an exemption for circumstances in which disclosure under 1504 would violate the laws of a country where a U.S. company is operating. So it leaves U.S. companies with a choice of complying with U.S. laws or the laws of foreign countries. That is an impossible position to be in.” Senators Bob Corker (R-Tenn.), Johnny Isakson (R-Ga.), Marco Rubio (R-FL), Lindsey Graham (R-SC), Todd Young (R-Ind.), and Susan Collins (R-ME) wrote a letter to the SEC, apparently designed to explain why they voted to gut the rule. Their one – and only – criticism of the rule was the same:
[A]s we understand it, U.S. companies would be required to make the disclosures about their payments to host governments even where another country’s laws might prohibit by law those disclosures. Effectively that could require US companies to stop doing business in those countries, leaving those markets to the unfettered advantage of their foreign competitors.
The senators’ introductory phrase here is key, because it’s obvious that they don’t understand it, in two fundamental ways.
First, there is no evidence – zero – that any country’s laws prohibit these disclosures. This is the same tired claim API and Exxon made for 6 years, without ever providing any evidence that any laws or regulations prohibiting these disclosures actually exist. This claim was disproved repeatedly during the rulemaking process; the simple fact is no countries prohibit disclosure of payment information.
Because this is a key claim, it’s worth getting into the gory details. During the initial SEC rulemaking period, API and Exxon originally claimed four countries prohibited disclosures: Angola, China, Cameroon and Qatar. They were wrong about all four, but even API abandoned their claims with respect to Cameroon and Angola for the second rulemaking period, in 2015–16. (This is probably because Cameroon became compliant with the Extractive Industry Transparency Initiative in 2013, which means it must require rather than prohibit disclosure of extractive payments, and Norway’s Statoil began publishing project-level payments to the Angolan government in 2015, without any negative consequences.)
So let’s focus on China and Qatar, which Exxon and API continued to claim might prohibit disclosures. The only evidence ever submitted with respect to Qatar was a 2009 letter from the Qatari government to Exxon saying it was considering changes in the law, and telling Exxon it should not disclose commercially sensitive information that could harm the interests of the Qatar government. The letter then lists several categories of such information, none of which overlaps with the disclosures required under the SEC rule. The letter made clear no prohibitions on payment disclosures existed at that time, and since the 2009 letter, the Qatari government has enacted no new prohibitions.
Legal analysis of Chinese law by commenters – including analysis by ERI attorneys – likewise demonstrated that Chinese law had no prohibitions on disclosures required by the rule, and in fact showed some Chinese-listed companies were already disclosing information required by the SEC’s rule. Tellingly, although major Chinese companies like PetroChina and Sinopec would be subject to the SEC rule, none of the Chinese companies ever claimed that Chinese law prohibited disclosure.
There was never any evidence for API’s claims, but recent developments have demolished them. In early 2016, European companies like Shell began reporting project-level payments for all countries of operation – including China and Qatar. They have suffered no negative consequences from doing so, further confirming neither country prohibits disclosures. No one – neither API, nor Exxon, nor their allies on the Hill – has ever argued any other countries prohibit disclosure. When Congressman Keith Rothus (R-Penn.) stated on the floor that “some foreign countries have laws to prohibit the sort of disclosures called for in this rule,” he conveniently cited no examples.
The importance of these lies goes beyond the statements of these members of Congress, because these claims are an important factor in the supposed cost of the rule. When industry and their allies claims that the rule would be incredibly costly, they are primarily talking about theoretical losses that a company might experience if they had to sell their foreign operations in a “fire sale” because foreign law prohibits disclosure. There is no evidence that this would happen, and it has not happened for any company now reporting in Europe or Canada.
Second, it’s also a lie that no exemptions are allowed. That’s the real kicker: despite a lack of any evidence for real concern, the SEC still bent over backwards to include safeguards to make sure US-listed companies were protected by expressly allowing companies to apply for exemptions where they faced a legitimate problem with reporting, such as a conflict with foreign law. If ever a foreign government were to tell a company that they would face penalties for reporting under the U.S. rule, the company could simply apply for that exemption.
So, when Senator Inhofe said the rule “lacks an exemption,” and Congressman Rothus said “the rule provides no exemptions,” their noses grew a few more inches. As for the six Senators who wrote the letter, they either didn’t bother to learn anything about the rule they were voting to gut or the years of hard work the SEC already put into it, or they intentionally omitted key facts that thoroughly refute the only justification they could muster for voting to undermine a critical anti-corruption tool.
Companies would only be harmed by the rule if the following chain of events took place: (1) a country actually prohibited disclosures, (2) the foreign government was unwilling to waive the prohibition and allow disclosure, (3) the company supplied evidence of this prohibition to the SEC and applied for an exemption to avoid having to violate the law, (4) the SEC denied the application, (5) the company was compelled the disclose and to violate foreign law, (5) the company was forced to terminate their operations or dispose of their assets as a result of violating the law, and (5) the company had to sell their assets immediately and at discounted rates.
That scenario is sheer fantasy. Although the SEC recognized losses could be large if that scenario actually occurred, it recognized it was extremely unlikely that it ever would. There are countless other factors that would minimize loss and disincentivize punitive action by a foreign government even if anti-disclosure laws existed, such as bilateral investment treaty protections, political risk insurance, the ability to redeploy assets to other projects and sell stakes in joint ventures, among others.
Disclosure does not reveal “confidential” or “proprietary” information.
Let’s turn next to the argument that the rule would require companies to, as Congressman Huizenga (R-Mich.) claimed, “reveal sensitive business information.” Senator Inhofe also claims the rule would have “put companies at a disadvantage by forcing them to disclose confidential business information to their private and international competitors.” On the floor, he went much further, saying the rule
strikes at the heart of American competitiveness. It makes public the information of our very best companies on how to win oil and gas deals. It requires companies to disclose and make public highly confidential and commercially sensitive information, and this is information that foreign competitors don’t have to provide. Under this regulation . . . . American companies would have to disclose all of the background and sensitive information that companies develop in competing for contracts . . . .
No, no and no. Submissions to the SEC by various experts showed the information required by the rule would not reveal information that could give competitors an advantage. The rule did not require disclosure of any contractual details, trade secrets, or strategies involved in competitive bidding. It is simply payment information.
Again, the experience of companies already reporting this information is revealing. Many foreign competitors are already reporting this information, without any exceptions, and yet there is no evidence to suggest disclosures have hurt their bottom line or made them less competitive against companies that aren’t reporting this information. Exxon and Chevron haven’t claimed they are using the information Shell, Total and BP are reporting to underbid them and win deals.
And again, such statements fail to look at what the SEC’s rule actually does. In an abundance of caution, the SEC built in safeguards – specifically, by adding an exemption that would allow companies to delay reports on payments associated with exploratory activity for a full year and allowing companies to apply for additional exemptions on a case-by-case basis where other circumstances warrant. These are options that foreign competitors reporting under the rules in other jurisdictions do not have, and thus the SEC’s rule is more protective of sensitive information than foreign rules already in place.
The rule was already “substantially similar” to the rules in other countries.
Responding to statements showing that other companies are already reporting the same information under the rules in other jurisdictions, Rep. Huizenga suggested the problem was really that the U.S. rule was quite different: it is “like comparing apples and oranges with the foreign rules versus this particular rule. And if we allow [the SEC] to rewrite this particular rule, we might actually mirror what the EU and what foreign governments are doing.” In its press release following the vote to gut the rule, API also characterized the SEC’s rule as “inconsistent” with the EU rules.
While it is literally true that the SEC’s rule was not identical to the EU rules, that’s only because the EU’s rules are stricter. The most notable difference is that the EU rules contain no exceptions for reporting, and no process for requesting any type of exemptions. The SEC’s rule, on the other hand, has an exemption for newly acquired companies, an exemption for payments associated with exploratory activity, and it allows companies to apply for other exemptions on a case-by-case basis if they face problems with reporting.
Aside from that, the rules are intentionally harmonized. The SEC said the rule was “substantially similar” to the regulations in Canada and the EU, and cross-listed companies could satisfy their reporting obligations by filing the same reports they used in the EU and Canada. This was specifically designed to ensure consistency and compatibility of reported information and to reduce the burden on cross-listed companies.
This critique makes no sense at all. At the same time they falsely criticized the rule’s lack of exemptions, they also attacked the rule for inconsistency with the rigid no-exceptions EU rules. The changes they demand would make the rules less consistent with other regimes. That’s nonsensical and doesn’t make the SEC’s job easier.
Project-level disclosures are critical to investors.
So what about the claim that this rule has nothing to do with investors? Rep. Huizenga, for example, said the rule “fails to provide investors with useful information.” Others claimed the rule failed to fulfill the SEC’s investor protection mission.
However, investors representing $10 trillion in assets under management strenuously disagree. Institutional investors wrote more than two dozen letters to the SEC. They repeatedly emphasized that company-specific, project-level payment information is vital to them, and praised the SEC for the strong rule. Who should we trust to know what benefits investors — investors or the Congressman from Michigan?
Transparency enhances worker safety.
House Speaker Paul Ryan (R-Wisc.) issued a statement saying the SEC’s rule “actually could have threatened the safety of American workers abroad.” No – and shame on you, Paul Ryan, for trying to pretend you’re doing this to protect American workers. (If Ryan actually cared about protecting American workers, maybe he could start by not overturning an executive order penalizing federal contractors for repeated, serious workplace safety violations.)
During the rulemaking, certain industry voices claimed that revealing project-level payment information could be used by groups to destabilize a country’s economy and put workers at the production site at risk. But that makes little sense. The general location of extractive projects is already widely-known; governments publicize who owns the contracts to which concessions, and the projects themselves are big, easily spotted, widely reported in the news and available online. Terrorists need not wait for SEC filings to identify production site locations. The idea that securities disclosures would be the sole source of this information, instead of Google, local news outlets and the naked eye is extremely farfetched.
But perhaps it’s worth listening to the workers themselves, rather than the self-serving statements of corporate apologists. Multiple unions representing oil and gas workers wrote in to express their support for project-level disclosures. For example, the United Steelworkers, the principal labor group representing oil and gas industry and mine workers in North America, wrote to the SEC saying they believed greater transparency would make employees safer and the Nigeria Union of Petroleum and Natural Gas Workers explained that “enhanced transparency will in fact enhance employee safety, especially in volatile places like Nigeria’s Niger Delta.”
Anyway, even if this were not the case, the SEC built protections into the rule. To the extent a company and its employees faced a legitimate safety threat from disclosing payment information, the SEC’s rule gave them the option of requesting an exemption.
The rule provides a critical tool for fighting corruption.
Representative Huizenga, apparently feeling some pressure to explain why he prioritized gutting an anti-corruption rule, wrote an op-ed last week claiming it will not “undermine the ability of the SEC and the Justice Department to police foreign corruption” because it is already illegal to bribe foreign officials. The statement shows he misunderstands both the nature of FCPA enforcement and the purpose of the Cardin-Lugar provision. One of the most important tools for identifying corruption is the public. The Department of Justice and the SEC cannot identify corrupt payments by scrutinizing the books and financial disclosures of every single company.
But more importantly, the purpose of the Cardin-Lugar provision isn’t to make fighting global corruption the task of the U.S. government. Public disclose of payment information allows other governments to investigate and prosecute the corruption that falls within their jurisdiction.
And the focus isn’t just on payments clearly marked as “payment of bribe.” The intent is to shine a light on the payments made to foreign governments to prevent foreign leaders and other corrupt officials from lining their own pockets with the money that is supposed to go into the government coffers and spent on public services.
In some cases, the companies may not even know that the payments they’re making are corrupt; they may appear legitimate on their face, but when civil society and watchdog groups have the information to take a closer look, they discover that money is actually being funneled to private accounts. Transparency deters corrupt conduct by companies and by governments and it arms the citizens of resource rich countries with the information they need to hold their own governments accountable.
Congress’s use of the CRA allows it to hide its true purpose.
One of the stated rationales for the CRA mechanism is to allow Congress to roll back “midnight regulations” that get rushed through at the end of an administration without proper vetting by Congress. In a statement about H.J. Res. 41, Speaker Ryan explained that the CRA “provides relief for Americans hurt by regulations rushed through at the last minute by the Obama administration.” On the floor, Senator Inhofe characterized the rule in a similar way, saying “[i]t is as if the Obama administration was rushing this rule out in hopes that there wouldn’t be time or an opportunity for a court or Congress to overturn it.”
But the SEC rule is not a midnight regulation hastily pushed through in the last hours of the Obama Administration, and it isn’t a situation of agency overreach. Congress itself – in a bipartisan measure – specifically required the SEC to issue this rule. And it did so after years of committee debate and consideration (you can see PWYP’s summary of the legislative history here).
The SEC was supposed to be finished with the rule 6 years ago – by April 2011 – but the first version got hung up in litigation, and the agency dragged its feet in finishing the rule. We sued the agency twice for delay – in fact, the reason the SEC came out with a final rule when it did, is because a federal court told the SEC it had to. The final rule came out in June 2016 – 7 months before the Trump administration took over, and more than 6 years past the deadline Congress set.
Over multiple notice-and-comment periods, the SEC received more than five hundred comments from a broad range of experts and various stakeholder, and the final rule was the product of the agency’s careful consideration. If, as members of Congress claimed, the issue was simply that the rule needed to be improved, there were others ways to accomplish that – most importantly, the public comment period after the notice of proposed rulemaking.
In fact, over the six years the SEC received comments from the public, Members of Congress repeatedly weighed in with submissions to the SEC on various aspects of the rule. And even after a rule is finalized, the SEC has authority to re-open a comment period to consider changes to its rules. In other words, if the purpose was really to simply “fix” perceived problems with the rule, there were other ways that could have been done.
Instead, Congress chose the most astonishingly inefficient and reckless solution. Voiding the rule through the CRA process and sending it back to the SEC to start over will result in a massive waste of government resources.
Because Congress has done nothing to repeal the Cardin-Lugar provision, the SEC still must issue a disclosure rule. The SEC now has a year to issue a new rule, but under the CRA, the new rule can’t be “substantially the same” as the old rule. It’s unclear what that means as a general matter and even less clear in a situation where an agency has both a statutory obligation to issue a particular rule and a conflicting directive from Congress saying it “disapproved” of the way they made the rule without any clear guidance as to what it did wrong.
This practically guarantees that the agency will again become embroiled in litigation over a new rule. Industry would likely challenge a similar new rule by arguing it violates the “substantially the same” provision. But a rule that differs significantly from the 2016 rule faces an even bigger legal problem if it deviates from what the Congress required the SEC to do in the Cardin-Lugar provision and what the evidence in the rulemaking record supports. If the SEC justifies changes by reaching different conclusions from the same evidence, its action would very likely be struck down as “arbitrary and capricious” under the Administrative Procedure Act.
For example, adding in categorical exemptions for certain countries that API and Exxon allege prohibit disclosures (rather than the opportunity to apply for exemptions on a case-by-case basis, with evidence) would be impossible to justify given the evidence in the record that no countries prohibit disclosure, that no companies have experienced any problems with reporting, and the SEC’s prior findings that such exemptions would be counterproductive and undermine congressional intent.
But the point, of course, was never to allow the SEC to “improve” the rule. The point was to kill the disclosure requirement, period. Rep. Hensarling made clear “this joint resolution does not repeal section 1504 of Dodd-Frank. I wish it did, but it doesn’t.” Huizenga, among others, said this issue – the one Congress specifically required the SEC to work on – simply wasn’t something the SEC should be working on, and Rep. Barr suggested we should “leave this to the State Department.”
Yes, you heard that right: members of Congress suggested we leave the fate of the rule up to the former CEO of Exxon, now Secretary of State, who personally lobbied against the statute and the rule for years.
Other members of Congress – in particular Senator Ben Cardin (D-Md.), Senator Sherrod Brown (D-Ohio) Senator Leahy (D-Vt.), Congresswoman Maxine Waters (D-Cal.), Congresswoman Gwen Moore (D-Wisc.), Congresswoman Carolyn Maloney (D-N.Y.), and others – spoke out against the move on the floor, making out a strong defense of the rule and calling out the lies and hypocrisy of their colleagues. The original sponsors of the statute, Senator Cardin and former Senator Richard Lugar (R-Ind.) summed it up in an op-ed:
Section 1504 was specifically ordered by Congress . . . . It won’t cost a single American job. Everything the oil companies can legally do today is still allowed once Cardin-Lugar takes effect. They will only have to do one more thing – send in their numbers. Besides Big Oil, those most eager to repeal Cardin-Lugar are the autocrats, in places like Russia, Iran or Venezuela, with oil wells, gas fields or copper mines who want to keep the money secret from their citizens. Why do their bidding?
But the CRA’s fast-track procedure ensured they had little time to be heard. Although the real target was the Cardin-Lugar provision itself, using the CRA to kill the implementing rule was easier than amending or repealing the underlying statute because it allowed Congress to avoid a filibuster, skip meaningful deliberation and debate, and hide the real objective.
Voting to repeal both the rule and the underlying statute would be much harder to disguise as anything other than a blatant roll back of anti-corruption measures and a boon to big oil and it almost certainly wouldn’t have passed the Senate. The letter from the six Senators to the SEC made clear they weren’t comfortable voting against an anti-corruption tool – and by writing the letter, they clearly felt the need to explain they were still committed to efforts to combat corruption.
And that’s the whole problem. The CRA allows members of Congress to talk out of both sides of their mouth and avoid responsibility for their actions by shifting the blame to another branch of government – in this case, to the SEC. They can claim they didn’t actually vote to get rid of the statute, only to make sure the SEC improves the rule, while really acting to further special interest groups’ real objective – getting rid of the statutory directive – by continuing to obstruct implementation, kicking the problem down the road another few years, wasting more government resources, and hoping transparency advocates eventually grow weary and give up.
But facts still matter. Payment transparency has become an international expectation, and that isn’t going away. We’ve been in this fight for a long time, and we aren’t going away either.