Last week, SocialFunds.com reported that the Office of Natural Resource Revenue (ONRR) wrote to the Securities and Exchange Commission (SEC) in favor of rules requiring disclosure of payments to governments, stating that this could help ensure energy companies are reimbursing US taxpayers.
This is one of the rules that was included in the Dodd-Frank Wall Street Reform and Consumer Protection Act. When it was first proposed, Ian Gary, senior policy manager for extractive industries at Oxfam America, told SocialFunds.com: “We believe this provision has a dual purpose. One is to inform investors about the types of risks these companies are exposed to. But an important second purpose is to support good governance, transparency, and accountability for payments.”
After the letter was written, Gary observed that the ONRR was trying to turn a new page after replacing the Minerals Management Service, and has recently penalized Chevron, Anadarko and other companies for improper deductions and knowingly underpaying royalties to taxpayers and the government.
Regardless, the SEC has yet to implement the new rules despite an April 2011 deadline. Because of this, trade associations such as American Petroleum Institute (API) want to undermine the implementation. However, Gary pointed out that: “Interior has told the SEC that, if feasible, payment data should be reported at the lease level, mirroring our project-level definition recommendation.”
The ONRR’s letter to the SEC concluded that the disclosure of payments would be a valuable cross-check for data, and it would help ensure that the government and taxpayers are receiving the correct payment in exchange for extraction of natural resources.
To read the full article please click here.
What do you think about this? Do you think requiring companies in the extraction industry to disclose their payments to the government is a good idea? Do you think it will adhered to? Discuss!
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