Oil industry sues to overturn transparency legislation within Wall Street Reform Act
Presbyterians stand up to curb corruption
March 28, 2013
Citizen groups packed a District of Columbia appeals court last Friday (March 22) to support a pillar transparency law in financial reporting opposed by oil industry lobbies and the U.S. Chamber of Commerce.
The Securities & Exchange Commission (SEC) mounted its defense of regulations released Aug. 22, 2012, that grant no exemptions to oil, gas and mining companies, who are required to publish payments to foreign governments in annual reports to the SEC.
The new regulations were drafted to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Barack Obama in 2010. The SEC is charged with regulating and enforcing federal securities laws and the oil industry quickly sued the SEC after the regulations were released last summer.
The lawsuit is led by the Chamber, the American Petroleum Institute (API), the International Petroleum Producers Association and other lobby organizations. They say the rule violates free speech by forcing companies to make now secret data public and accuse the SEC of failing to weigh the estimated $14 billion economic impact of implementing it.
The provision under dispute is known as the Cardin-Lugar Amendment, named after the bipartisan champions of the bill, Senator Ben Cardin (D-Md.) and former Senator Richard Lugar (R-Ind.).
“We commend the SEC for aggressively defending the Cardin-Lugar Amendment and the intent of Congress,” said Isabel Munilla, director of the Publish What You Pay campaign U.S. (PWYP), who has said since the suit’s inception that the oil industry’s claims are “flat wrong” and the lawsuit “frivolous.”
“In an era where tax dollars are scarce, this common-sense law shines a light on billions in financial flows to the U.S. and foreign governments and allows citizens to follow the money and make sure it’s put to good use,” Munilla said.
Most of the judges’ questions focused on the First Amendment challenge and whether the SEC could have narrowed the scope of the rule. Eugene Scalia, a lawyer arguing on behalf of the oil industry, said the SEC needed to allow some exemptions for disclosures that are prohibited by foreign governments or contracts.
Judge David Tatel said that the SEC does not accept the argument leveled by the industry that some foreign governments do not allow disclosure. Activists tied to the campaign say the SEC’s stance is accurate, according to researchers.
Another argument revolved around whether the appellate court even has jurisdiction in this matter under the Securities Exchange Act. The API filed an identical suit in U.S. District Court, also in the nation’s capital, but the suit is stayed until this appeals court rules.
The Presbyterian Church (U.S.A.) was the first denomination to sign onto this international global transparency effort ― called Publish What You Pay ― in 2008 at the urging of RELUFA, a Cameroonian organization with ties to the Presbyterian Hunger Program’s (PHP) Joining Hands Initiative.
The decision was applauded by other partners in Africa and Latin America, as well as Presbyterians linked to churches in resource-rich countries where government leaders grow rich through corrupt practices and bribery while ordinary citizens live in abject poverty.
Presbyterians in more than 70 presbyteries witnessed to the moral importance of the provision, contending that charity is no solution for the 1.5 billion people who live on less than two dollars a day in the roughly 60 resource-rich countries.
Church leaders’ statements say that redirecting millions of accountable dollars through transparency efforts may well improve life for the poorest through infrastructure, health care and education upgrades, as well as curb corruption and human rights abuses tied to resource extraction.
More thorough reporting also gives investors access to information that enables ethical decision-making and assessment of risk, including project-level reporting. Oil companies typically release aggregate numbers for an entire country by year which makes it harder to assess projects.
Three clergy from National Capital Presbytery were among listeners in the court representing the PCUSA: The Rev. Chuck Booker of Bethesda Presbyterian Church in Bethesda, Md., the Rev. Carla Gorrell, associate general presbyter, and the Rev. Andrew Plocher of New Hope Presbyterian in Derwood, Md.
“There are two contrasting proverbs involving elephants that spring to mind. One comes from the Kikuyu people in Kenya: ‘When elephants fight, it’s the grass that suffers.’ The other, attributed to Desmond Tutu is Zulu in origin: ‘If an elephant has its foot on the tail of a mouse, the mouse will not appreciate your neutrality,’” said Booker shortly after leaving the court. “This case is hardly one involving two elephants. And so I, as a Presbyterian cleric, can hardly remain neutral.”
Cardin and Lugar filed briefs claiming that the rule follows Congressional intent.
Mining companies are not party to the suit. Only the oil industry and the Chamber are litigants.
PC(USA) Stated Clerk the Rev. Gradye Parsons wrote to the API on Feb. 27 asking that the suit be dropped. He said that by opting for transparency, the oil industry could claim good corporate citizenship by helping to boost the GDP of fragile developing nations, assisting investors who do not want to do harm, encouraging stable and democratic government, and equipping citizens to hold their own governments accountable.
Similar transparency laws are now being put forward by the European Union, with strong support by Britain’s Prime Minister David Cameron. Regulatory proposals are under development in Canada and a campaign for disclosure is gaining traction in Australia.
There is no scheduled date for the court to issue its decision.
Alexa Smith is associate of Joining Hands Against Hunger, a ministry of the Presbyterian Hunger Program.