The US Dodd-Frank Act mandates disclosure of payments related to extractive industries. It requires companies registered with the SEC to disclose country-by-country payments to governments for oil, gas, and mining projects. This will provide citizens and civil society new tools to increase transparency. While voluntary initiatives like EITI are important, mandatory rules provide standardized data that can strengthen transparency globally and help combat corruption. Improved transparency of revenue flows supports good governance, stability and sustainable development.

1. The US Dodd-Frank Act and Mandatory
Disclosure Requirements for Extractive Industries
Todd Arena
Legal Fellow, RWI
tarena@revenuewatch.org
April, 2011 | Quito, Ecuador

2. About Revenue Watch Institute
Where We Work
Latin America
Ecuador Mexico Peru Bolivia
Brazil Trinidad y Tobago

3. About Revenue Watch Institute
Who do we work with?
Over 300 organizations, working in over 45 resource rich
countries

4. Linking Resources to Development
Ensuring Managing Investing in
Getting a
Deciding to extract revenue Volatile sustainable
good deal
transparency resources development
© M. Genasci
©Jacob Silberberg/Panos Pictures

5. The EITI and PWYP Movements
EITI advantages
• MSG approach
• Provides critical
baseline, audited
data
• Reporting required
from companies and
governments
© 2010 - Transparency International Indonesia

6. International Disclosure Standards
Voluntary:
• EITI—Extractive Industries Transparency Initiative
• Company disclosure policies
Mandatory:
• National laws
• Accounting standards
• Bank lending policies
• Stock market listing requirements
– London Stock Exchange’s AIM
– Hong Kong Stock Exchange
– US Securities and Exchange Commission/Dodd-Frank rules

7. Passage of the US Dodd-Frank Act
• Section 1504: ―Disclosure
of Payments by Resource
Extraction Issuers‖
• Passed by Congress and
signed into law by
President Obama in July of
2011
―We are leading a global effort to combat corruption, which in many
places is the single greatest barrier to prosperity, and which is a profound
violation of human rights. That’s why we now require oil, gas and mining
companies that raise capital in the United States to disclose all payments
they make to foreign governments.‖ –US President Barack Obama, 22.09.2011

8. Cooperation between CSOs and Government
The Role of Congressional ―Champions‖
– Key allies within Government
– Typically members of Congressional staff
– Constructive relationship
• First, CSOs (and lobby groups) work with Champions in
the drafting of a piece of a legislation draft
• Second, Congressional Champions monitor the progress
of the draft legislation to ensure it becomes law
• Third, CSOs and Champions meet to discuss the
progress, and CSOs may continue pushing for the draft
legislation to be come low ―outside‖ of government
(public campaigns)

9. What the Law Does
Law requires all companies registered with the US stock
market regulator – the Securities and Exchange
Commission – to disclose their payments to
governments:
• In standard annual reports, which will be published online
• Including payments to the US and foreign governments
• At the national and sub-national level
• Country-by-country, in all countries of operation
• For each project
• Disaggregated by payment type including:
royalties, signature bonuses, taxes, fees and other benefits

10. Implementation
• Law will be interpreted by new US stock exchange
rules that will apply to ―resource extraction issuers‖
• The US Securities and Exchange Commission (SEC)
has opened up a fully transparent public comment
period as it drafts rules
– Companies, investors and civil society groups are meeting
with SEC officials and offering written comment
– The SEC has released proposed (draft) rules, and will issue
final rules by December, 2011
• Payment data resulting from the US law may not be
published by companies until 2013

11. Who Will the Law Apply To?
• Applies to US and foreign companies making
payments related to ―the commercial development of
oil, natural gas or minerals‖
• Companies under the control of and/or owned by
foreign governments will report payments
• The law covers over 90% of the major internationally
operating oil and gas companies, and eight out of 10
of the world’s most profitable mining companies

12. Company Coverage
International majors covered
Chevron (fmr. Exxon BP Shell
Texaco)
Total Petrobras Petrochina Talisman
ConocoPhillips Statoil ENI - AGIP Newmont
Occidental Repsol BHP Sinopec
Hess Anadarko Marathon Freeport
Rio Tinto Vale Ecopetrol YPF
(Colombia) (Argentina)
Companies operating in Indonesia that are NOT covered
PDVSA, Petroecuador, YPFB, Pemex, Codelco,
Perupetro, Petroperu

13. What is Gained through Mandatory Disclosure?
• A new tool to empower citizens and civil society
groups in natural resource dependent countries
• A permanent mechanism; Dodd-Frank disclosures
will not wax/wane based on host government political
will, or on the voluntary decisions of companies
• Mandatory disclosure frameworks complement the
EITI, and increase the amount of information coming
from implementing and non-implementing countries
– Dodd-Frank disclosures are meant to build productively on the
EITI’s gains
– Reporting under Dodd-Frank will provide more detailed
information than EITI’s minimum requirements produce
– Mandatory reporting will also produce standardized and regular
data, which can encourage improved EITI reporting standards

14. Replicating Dodd-Frank in Other Markets
14

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Legal & General Investment Management (UK) – Peter Chambers – Karina Litvack
SNS (The Netherlands) – TheoAsset Management (UK)
F&C Dijkstra
Local Authority Pension Fund F
ency in the Extractives
Local AuthorityLife Investments (UK) – Julie McDowell
Standard Pension Fund Forum (UK) – Tessa Younger Merrill Lynch Investment Mana
Merrill Lynch Conneticut (US) AberdeenL.–Nappier & Donald A. Kirshbaum Preston & Clare PaynMorley Fund Management (UK
State of Investment Managers (UK)Asset Managers Ltd (UK) – Andrew
– Denise Alex Popplewell
State Street Global Advisors Toby BelsomManagement (The Netherlands) – Gemma Taylor- Newton Asset Management Ltd
Morley Fund Management (UK) – (US) – Bill Page ABN Amro Asset
xposure to companies
eve it is in the interest of Newton Asset Pensioenfonds Gee (TheKatie Swanston Stephen Lister
Stichting Management Ltd (UK) – Netherlands) –
ABP New York State Common Retir
to operate in a business New Storebrand Common Retirement Fund (US) – Julie Gresham– Lucy Butler
York State (Norway) – Kristine Meisingset Association of British Insurers (UK)
Norges Bank Investment Mana
by stability, transparency Norges Bank Investment ManagemeGifford & Co – PaoloKennyHenrik
Swiss Re Asset Management (Swit zerland) (UK) – – Dr. Be ll
Baillie nt (NBIM) (Norway) Sismondi
4 Syse
se factors are essential to Banco Fonder (Sweden) – Sasja Beslik
SyseTIAA-CREF (US) – Peter Clapman Nottinghamshire County Counc
Trades Union Congress (UK) – Tom Powdrill Daniel Simard
Bâtirente (Canada) –
ocial cohesion, which, in
ch we invest to prosper. Nottinghamshire County Council (UK) – John Pearson Ohio Public Employees Retirem
tatement orstandards details for
contact Boston Common Asset Managemen t (US) – Dawn Wolfe
mined by poor Ohio Trillium Employees Retirement System (US) – Cynthia Richson
Public Asset Management (US) – Steve Lippma n Ontario Teachers’ Pensions Pla
ease can give rise to
which contact Karina UBS Global Asset Management (UK) Ltd – da) Pitfield
Litvack, CalPERS (US) – Dennis Johnson
Ontario Teachers’ Pensions Plan (OTPP) (Cana Ian – Catherine Jackson
ce & Socially Jackson CalSTRS (US) – Janice
Responsible Superannuation Scheme (UK) – Dan Hester-Amey
Universities Summerfield PGGM (The Netherlands) – Ka
Management PGGM (The – Sector. Management (US)GroupF&C(US) – Lily Donge Ltd
Investors' Statement on Transparency in the Extractives
plc
Walden Netherlands) – Karina Litvack, Smith
Asset
Calvert
– Tim
For further information on thi
ompanies are particularly
Canadian Labour Congress (Canad a) Railpen Investments (UK) – Fra
7506 1219. University Pensions Fund (Canada) – Leona Fields
Railpen Investments (UK)
York investors with exposure – Frank Curtiss the Investors listed below,
by operating in these RCM (UK) – Bozena Jankowsk
make legitimate, but institutional the world, we believe it is into companies (UK) – Neville White
As
operating around – Bozena Jankowska of
CCLA Director, Pension Investments
Head of Govern
of
RCM (UK)
ents may be accused the companies in which we invest to operate in a Central Finance Board of the Methodist Church ( UK) – Bill Seddon Rio Tinto
the interest
business
environment that Pension Investments Ltd (UK) – Steph en Burley
Rio Tinto is characterised by stability, transparency Investment, Netherlands) – E
Robecco (The F&C Ass
er which corruption can Christian Brothers Investment Servic es (US) – John Wilson
s risk, making companies Robecco (The Netherlands) – which, inBreen Erik
and respect for the rule of law. These factors are essential to
securing economic prosperity and social cohesion, Co-operative Insurance Society (UK) – Jo Allen
karina.litvack@fandc.com or 0
Sarasin (Switzerland) – Eckhar
4
city in corrupt behaviour, enable the companies in which – Eckhard Plink
Sarasin are frequently undermined by poor standards Agricole Asset Management (France) – David Diamond
turn,
(Switzerland) we invest to prosper.
Schroders Investment Manage
ce to operate”, renderingHowever, they Crédit
ofSchroders Investment Management (UK) – Sue Livingston
governance and transparency, which can give rise to
d insecurity, and possibly operating environments.
corrupt Dexia Asset Management (Belgium/France) – Leene Colle Scottish Widows Investment Pa
ercial prospects in these Scottish Widows Investment Partnership (SWIP) (UK) – Anne – Adam Kanzer
Domini Social Investments (US) C Fraser
We are concerned that extractive companies are particularly
Fraser the risks posed by operating in these
exposed to The Dreyfus Premier Third Century F und Inc and The Dreyfus Legal & General Investment Man
Services Employees Internation
) – Karina Litvack payments to governments may be accused of Responsible Growth ve Abrecht – John O’Toole
ncy about both payment
Services Employees International Union (SEIU) (US) – Ste Fund Inc (US)
environments.
undisclosed,
Companies that make legitimate, but
Socially Local Authority Pension Fund For
SNS (The Netherlands) – Theo
contributing to theNetherlands) – Theo Dijkstra
SNS (The conditions under which corruption can Merrill INVESTOR GROUP
EITI Lynch Investment Manage
Standard Life Investments (UK
ant contributor to good thrive. This is a significant business risk, making companies Funds (Canada) – Robert Walker
Ethical
although its Preston &Standard Life Investments (UK) – Julie McDowell
– Andrew effectivenessClaretoPayn global “licence to operate”,behaviour, Investment Foundation (Switzerland) – Caroline Schu m
vulnerable accusations of complicity in corrupt
Ethos Morley Fund Management (UK) –
State of Conneticut (US) – Den
der initiatives to combat impairing their local and rendering
Netherlands) – Gemma Taylor- conflict and insecurity,Denise L. Nappier & Donald – Niamh W hooley
them vulnerableConneticut (US) – andFidelity Investments (UK) A. Kirshbaum
State of to local possibly Newton Street Management Ltd(U
F&C Asset Global Advisors (U
State Asset Management (
es. compromising their long-term commercial prospects in these New York State Common Retirem
markets. Street Global Advisors (US) – BillInsurance Group (Sweden) – Carina Lundberg
State Folksam Page Stichting Pensioenfonds ABP (T
Lucy Butler Stichting Pensioenfonds ABP (The Netherlands) – Stephen Lister
overnance problem often believe that improved transparency about both Förster AP-fonden (AP1) (Sweden) – Nadine Viel Lamare
We payment
Storebrand (Norway) – Kristine
Norges Bank Investment Manage
Aberdeen Asset Managers Ltd (U
Statement or contact details (Norway) – contributor Frater Asset Management (South Africa) – William Frater
y in many host countries. revenue flows isfor important Kristine Meisingset
ll Storebrand Syse
Swiss Re Asset Management (
and an to good
ABN Amro Asset Management (T
governance by host governments, although its effectiveness
ease oncontact about depend Rethe successManagementtoGartmore Investment Management plc (UK) – Tony Little
ssions corruption and
slik transparency will Karina on Asset of wider initiatives (Swit zerland) – Paolo Sismondi
Swiss Litvack, combat
Nottinghamshire County Council
TIAA-CREF (US) – Peter Clapm
reate Gee
corruption and the misuse of revenues.
nce & sector has an Responsible – Peter Clapman
corporate Socially TIAA-CREF (US) Goldman Sachs Asset Management International (UK) – Alex Trades Union Congress (UK) –
Ohio Public Employees Retireme
Association of British Insurers (U
Ontario Teachers’ Pensions Plan
t (US) – Dawn Wolfe –
Management Trades Union Congress (UK) Marshall – Tom Baillie Gifford & Management (US
Trillium Asset Co (UK) – Kenny
We recognise that the root of the governance problem often
plc
vernment and multilateral in underdeveloped local capacity in many host countries. Powdrill
lies
Banco Global Asset Managemen
Jackson
0otect its 1219.
7506 own long-term Trillium Asset Management (US) – Steve Global Investors (UK) – Rob Lake
Henderson Lippma n
However, in the light of the G8 discussions on corruption and UBS
ForPGGM FonderSuperannuation Sc
further information on ––Sasja
(Sweden)
y
increased international attempts to create transparency about
UBS Global Asset Management (UK) Ltd – Ian PitfieldHermes Investment Management Limited (UK) – Jennifer WelmsleyUniversities (The Netherlands) this St
Karin
revenue flows, we believe that the corporate sector has an
Bâtirente (Canada) –below, Sim
Investors listed Daniel ple
the Railpen Investments (UK) – Frank
te sector cannot single-
important opportunity to support government and multilateral
institutions by taking Superannuation Scheme (UK) – Dan Pension Plan (HOOPP) (Ca nada) – Julie C. Cays
Universities action to protect its own long-term of Ontario Summerfield
Hospital Walden Asset Management (U
Boston Common Asset Managem
a)iness practices such as interests.
Walden Asset Management (US) – Tim Smith HSBC (UK) – Francis Sullivan Director,(UK) – Bozena Jankowska
RCM Universityof Governanc
York Head – Pensions Fund
CalPERSPensionDennis Johnson
(US) Investments Lt
to government, nor can acknowledge that the corporate sector cannot single-
We
York University Pensions Fund (Canada) I.DE.A.M. – – Leona Development Asset Management (France) Rio Tinto (US)F&C
Integral Fields Investment, Asset
CalSTRS(The Netherlands) – Erik
– Janice Hester-A
hout compromising their handedly reform long-standing business practices such as
Robecco
karina.litvack@fandc.com–or 020
owever, we believe – Billof transparency over payments to government,Illinois State Board of Investment (US) – William Attwood
ist Church ( UK) that Seddon
Sarasin Group Ltd (US) Eckhard
Calvert (Switzerland) – Lily Do
lack nor can
individual companies act alone without compromising their
es (US) – John Wilson commercial interests. However, we believe that
anies in which we invest ING Investment Management (The Netherlands) – Hendrik-Jan Boer
4
Schroders Labour Congress (Can
Canadian Investment Manageme
immediate
– Jo Allen
ributors to, and not just will give the extractive companies in which we invest Investment Management (UK) – Rachel Crossley
reform
Insight
an opportunity to be seen as contributors to, and not just CCLA (UK) – Neville White
ent and reconstruction. beneficiaries
France) – David Diamond of, economic development and reconstruction. JPMorgan Asset Management (US) – Amy Davidsen Scottish Widows Investment Part
K) – Karina Litvack
France) – Leene Colle Jupiter Asset Management (UK) – Aled Jones Fraser Finance Board of the Me
Central
Christian Brothers Investment Se

16. Lessons Learned
• Support by many investors, mining companies and some oil
companies (Petrobras), but not all supporters of Voluntary
rules could be counted upon to support Mandatory rules
LESSON: Contested spaces can be a powerful entry point
for CSO and activists.
• Mandatory rules v. voluntary rules—which to pursue first?
• The U.S. branch of the Oil lobby, the American Petroleum
Institute (API), along with executives from Exxon, Shell
and others have said begun a campaign against Dodd-
Frank, and increased hiring of lobby and PR firms.
LESSON: Difficulty in achieving even politically moderate
reforms in the Extractive Industry sector.

17. Thank you!
• Questions?
• For more information:
www.revenuewatch.org
Todd Arena
Legal Fellow
Revenue Watch Institute
tarena@revenuewatch.org