If Dodd-Frank took so long… is US EITI in trouble?
The US Securities and Exchange Commission (SEC) has finally voted on the implementation of oil and mining transparency rules in the Dodd-Frank financial regulatory reform bill, more than a year after the original deadline came and went. Good news, to be sure, since tough financial disclosure rules are better late than never.
But the delay is troubling, not only because of the bill’s possible watering-down thanks to stalling lobbying by the American Petroleum Institute, whose membership reads like a who’s who of Big Oil. But also because of what the delay says about the prospects of other initiatives, like the Extractive Industries Transparency Initiative (EITI).
EITI, unlike Dodd-Frank, is not a law; it’s a voluntary financial transparency initiative to which countries like the US sign up. EITI isn’t backed by a sprawling institutional framework like Congress or the SEC; and it doesn’t garner the same media scrutiny or public interest as provisions wedged into superstar bills like Dodd-Frank.
So if Dodd-Frank Sections 1502 and 1504 – the two dealing mainly with oil and mining transparency – take this long to be implemented; if their provisions can be diluted by special interest lobbies, how does this bode for the timely, rigorous implementation of EITI in the US? If Dodd-Frank is flawed despite the attention it has received, how can a relative unknown like EITI pass snuff?
EITI implementation always takes years; we know that. It takes a long time to build the multi-stakeholder group (MSG), the tense coalition of delegates from civil society, industry and government which manages implementation, and publish the reports that reconcile oil, gas and mining company payments with government receipts.
But no matter the time needed, a voluntary rather than legally binding initiative like this needs genuine public involvement to have maximum impact. In other words: for EITI to be effective, people need to know about it. As my colleagues at OpenOil have related, this has not happened in other implementing countries, like Colombia and Azerbaijan; and I know from my own experience that similarly few people know about EITI in the US. ‘American exceptionalism’ in other areas, maybe, but not here.
Allow me to illustrate how the Department of Interior (DOI), the agency charged with engaging the public on EITI and building the MSG, has not fulfilled its mandate so far.
I attended an EITI ‘public listening’ session organized by DOI in my home town of New Orleans this summer, whose purpose was to get the input of ordinary citizens at the outset of implementation. Contrary to what the session brochures would have you think, the session was hardly in New Orleans – it was actually halfway between the airport and the swamps, sandwiched in the suburban jungle between an old cinema and rows of decaying strip malls. As I noted: not the best venue for positive public engagement.
I was also disappointed – though not altogether surprised – to recognize most of the ‘public’ in the room. The reason being that the previous day, together with friends at Revenue Watch and Publish What You Pay, OpenOil had hosted a pre-DOI session discussion with about twenty local civil society activists, academics and others. Those who had attended our discussion on Monday made up a healthy chunk of those attending Tuesday’s DOI session.
Almost no one in the room at our Monday discussion had heard about the DOI session to take place the following day. A few had a bare-bones idea of EITI, but many others had never heard of it – and these were people who had dedicated their lives to working in communities affected by oil and gas activity, who would be some of the main beneficiaries of the transparency EITI may help bring about.
DOI showed minimal effort in getting the word out about the listening session in New Orleans, which was also the case for summer sessions in Anchorage, Pittsburgh and Washington, DC. The session was announced in an obscure notice in the Federal Register in May, but, when in New Orleans, I saw no ads in the local paper, The Times-Picayune, and nothing on television or in the mail. No one was talking about it and no one was writing about it; but it’s not like no one cared – when we told people about it, they jumped on it, as their attendance of the DOI session demonstrated.
Being somewhat new to the transparency game, it was a wake-up call to see how slowly the wheels on initiatives like this can turn. I’ve seen how, in even the most well-oiled operations, the pace of the process can make you grit your teeth.
But what gets to me as regards EITI is the seeming lost opportunity for DOI to get the public involved. Unlike Dodd-Frank, EITI in the US doesn’t have legions of beady-eyed media and watchdog groups tracking its every move, agitating decision-makers to get the thing done right. A rigorous, broad-based implementation of EITI in the US needs a committed DOI spreading the word, even if external engagement has never been the reclusive agency’s strong suit. If DOI doesn’t move, it seems others, like Revenue Watch and Publish What You Pay, will have to do it for them.
EITI will be slow-moving and imperfect in the US even without more participation from the public. But implementation will drag on longer than it needs to – certainly, much longer than the implementation of Dodd-Frank – and be less effective than it might otherwise be if the public is not adequately informed and involved.
The SEC seemingly tried but couldn’t hide from the prying eyes of Congress and the media, and eventually, finally, voted on Dodd-Frank. DOI shouldn’t be hiding the process of EITI implementation from the affected public, either.