August 11, 2020

Volume X, Number 224

August 11, 2020

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August 10, 2020

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Congress Passes Legislation Requiring Oil, Gas and Mining Companies to Report Payments to Government

U.S. Congress passed legislation that required oil, gas, mining, and other extractive industry companies to report to the Securities Exchange Commission (“SEC”) their payments to governments. The legislation was added as an amendment to the Wall Street Reform and Consumer Protection Act, which was sponsored by Senator Christopher Dodd (D-CT) and Representative Barney Frank (D-MA), and voted into law on July 15, 2010.

The premise of the bill is that transparency, in the long run, supports human rights, and helps limit corruption in countries where few benefits from mineral wealth typically reach the general population. The bill requires all companies that are securities issuers under U.S. law to report to the SEC on their payments in an annual report. The legislation covers most, but not all, major multinational companies, but does not encompass a number of state-owned companies that are primarily active in their own jurisdictions and have no presence in the U.S., and thus are not issuers.

The legislation requires companies to report on the type and total amount of payments made on a project basis The U.S. Congress passed legislation that required oil, gas, mining, and other extractive industry companies to report to the Securities Exchange Commission (“SEC”) their payments to governments. The legislation was added as an amendment to the Wall Street Reform and Consumer Protection Act, which was sponsored by Senator Christopher Dodd (D-CT) and Representative Barney Frank (D-MA), and voted into law on July 15, 2010.to both the U.S. and foreign governments. The payments that companies must report include taxes, royalties, fees, production entitlements, bonuses, and other material benefits. Payments do not include de minimis payments.

The legislation is intended to reinforce the Extractive Industries Transparency Initiative, which is a multi-stakeholder initiative consisting of oil, gas, and mining companies; civil society; and governments. Under the Extractive Industries Transparency Initiative, many U.S. companies already report their payments to some, although not all, governments around the world.

Although the legislation is intended to support the Extractive Industries Transparency Initiative, it requires reporting by project, in contrast with the Extractive Industries Transparency Initiative, which typically is less rigorous, calling for reporting either in the aggregate by country or by type of revenue.

The SEC’s rulemaking process will help define more clearly how companies will need to change their accounting practices. For instance, the SEC will presumably define a “de minimis” payment. Therefore, the SEC’s rulemaking process merits close attention.

 

Copyright © 2020 Foley Hoag LLP. All rights reserved.National Law Review, Volume , Number 206

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About this Author

Gare Smith, Foley Hoag, regulatory attorney
Partner

 

Drawing on his extensive corporate and public policy experience, Gare Smith founded the firm’s Corporate Social Responsibility (CSR) and International Strategies practice to help clients adopt policies and practices to address the challenges of globalization. He advises corporations and nations on legal, political, and economic aspects of globalization and crisis management, including developing codes of conduct, compliance programs, and monitoring systems. He also provides guidance regarding the resolution of conflicts with governments, the media, unions, communities, and non-...

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Amy Lehr, Corporate attorney, Foley Hoag
Counsel

Amy Lehr is part of Foley Hoag’s unique Corporate Social Responsibility (CSR) practice. In this role, she provides advice to major multinational corporations, international financial institutions, and governments on best practices with regard to human rights, labor rights, and indigenous rights issues, as well as on stakeholder relations. Working with clients in a broad range of industry sectors, Amy provides advice on managing both the challenges and the opportunities of globalization, as well as on risk management issues. She also carries out human rights impact assessments and other forms of due diligence for clients. Before coming to Foley Hoag, Amy served as a legal advisor to the UN Special Representative on Business and Human Rights. She also previously worked for development NGOs in Burma (Myanmar) and Thailand.

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