[Congressional Record Volume 155, Number 135 (Wednesday, September 23, 2009)]
[Senate]
[Pages S9745-S9747]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LUGAR (for himself, Mr. Cardin, Mr. Schumer, Mr. Wicker, 
        Mr. Feingold, and Mr. Whitehouse):
  S. 1700. A bill to require certain issuers to disclose payments to 
foreign governments for the commercial development of oil, natural gas, 
and minerals, to express the sense of Congress

[[Page S9746]]

that the President should disclose any payment relating to the 
commercial development of oil, natural gas, and minerals on Federal 
land, and for other purposes; to the Committee on Banking, Housing, and 
Urban Affairs.
  Mr. LUGAR. Mr. President, I rise to introduce the Energy Security 
Through Transparency Act of 2009 on behalf of myself, Senator Cardin, 
Senator Schumer, Senator Wicker, and Senator Feingold. The Energy 
Security Through Transparency, ESTT, bill takes important steps towards 
reversing the resource curse by revealing payments made here and abroad 
to governments for oil, gas and minerals.
  The Energy Security Through Transparency Act builds on the findings 
of a Senate Foreign Relations Committee staff report entitled the 
``Petroleum and Poverty Paradox: Assessing U.S. and International 
Community Efforts to Fight the Resource Curse'' which noted that many 
resource-rich countries that should be well-off are, in fact, terribly 
poor. History shows that oil, gas reserves and minerals frequently can 
be a bane, not a blessing, for poor countries, leading to corruption, 
wasteful spending, military adventurism, and instability. Too often, 
oil money intended for a nation's poor lines the pockets of the rich, 
or is squandered on showcase projects instead of productive 
investments.
  A classic case is Nigeria, the eighth-largest oil exporter. Despite 
half a trillion dollars in revenues since the 1960s, poverty has 
increased, corruption is rife, and violence roils the oil-rich Niger 
Delta.
  The ``resource curse'' affects us as well as producing countries. It 
exacerbates global poverty which can be a seedbed for terrorism, it 
empowers autocrats and dictators, and it can crimp world petroleum 
supplies by breeding instability.
  ESTT expresses the Sense of Congress that the administration should 
undertake to become an `implementing' country of the Extractive 
Industry Transparency Initiative, EITI. EITI is a major international 
transparency effort which sets a global framework for companies to 
publish what they pay and for governments to disclose what they 
receive. EITI's revenue data is intended to provide citizens with basic 
but crucial information necessary to effectively monitor government 
stewardship of natural resource revenues; hold decision-makers 
accountable for the use of public funds; and signal investors that a 
given country offers a transparent, rule of law-based business 
environment. The Bush administration supported the EITI through its 
participation on the board through the initiative's critical first 
several years.
  As an implementing country, the U.S. would commit to disclosing 
payments from companies for oil, gas and minerals extracted from 
federal lands. Norway has recently signed up to become an implementing 
country, along with thirty developing countries. The U.S. commitment to 
implementing EITI would add to our current commitment to EITI as a 
supporting country. This bill would ensure that not only was the U.S. 
promoting EITI with other countries, but that we were benefitting from 
the structured transparency here at home.
  This bill commits the Department of Interior to disclosing extractive 
payments received for resources derived from federal lands. In a letter 
I received from Secretary Salazar on June 19, 2009, he wrote that ``the 
Department of the Interior is in agreement with the goals set forth in 
the EITI especially concerning transparency in the management of 
extraction of minerals from Federal Lands.'' He went on to add that 
``the DOI is committed to an ongoing effort to improve the quality of 
our services by taking accountability for our actions and fulfilling 
our commitments to the public and all our customers in an open, 
transparent manner.''
  ESTT requires companies listed on U.S. stock exchanges to disclose in 
their regular SEC filings their extractive payments to foreign 
governments for oil, gas and mining which builds on the EITI 
requirement that all extractive companies operating in an EITI 
implementing country must report their payments to the government. This 
would allow investors to better evaluate the potential country risk 
faced by companies. It would also allow people to have information 
about the funds sent to their governments in non-EITI implementing 
countries.
  An issue has been raised over whether this would impose a burdensome 
reporting requirement on the companies and whether the payments made by 
companies to extractive countries are relevant to investors looking 
into finances of those companies. This bill would not require the 
companies to collect any new information, but to report publically 
financial figures they already maintain. Many oil companies who work in 
EITI countries already file this information in the form required by 
EITI. It is expected that the SEC will follow the reporting 
requirements established under EITI, which were developed in 
conjunction with the oil industry. The legislation also gives the SEC 
some discretion, which should ensure ease of compliance. Regarding 
materiality, many analysts say that among the root causes of the 
current financial crisis were a failure by investors to have access to 
sufficient information about their investments, and an excessive 
reliance on the judgments of the ratings agencies, which proved to be 
highly faulty. That experience argues strongly for more disclosure and 
information. Considering the well-established link between oil payments 
and the business climate, many investors might be interested in this 
information--particularly socially responsible investors.
  This legislation also encourages the President to work with members 
of the G-8, G-20, the Organization for Economic Cooperation and 
Development and the Asia-Pacific Economic Cooperation to promote 
similar disclosure through their exchanges and jurisdictions. As 
Secretary Clinton noted in her questions for the record on January 12, 
2009, ``President-Elect Obama has put a high priority on promoting 
transparency in government more broadly. I look forward to working with 
the President-Elect and the Treasury Department to promote greater 
transparency at the G-8 and now G-20 as well.''
  In developing this legislation, my staff consulted with the Security 
and Exchange Commission, the Treasury Department, the Interior 
Department, energy companies, mining companies, the industry 
representatives, and non-governmental organizations.
  When financial markets see stable economic growth and political 
organization in resource rich countries, supplies are more reliable and 
risk premiums factored into process at the gas pump are diminished. 
Information is critical to maintaining healthy economies and of healthy 
political systems. I ask for your support on passage of this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1700

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Energy Security Through 
     Transparency Act of 2009''.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) It is in the interest of the United States to promote 
     good governance in the extractive industries sector because 
     good governance strengthens the national security and foreign 
     policy of the United States, contributes to a better 
     investment climate for businesses in the United States, 
     increases the reliability of commodity supplies upon which 
     businesses and people in the United States rely, and promotes 
     greater energy security.
       (2) Developing countries that derive a significant portion 
     of revenues from natural resource extraction tend to have 
     higher poverty rates, weaker governance, higher rates of 
     conflict, and poorer development records than countries that 
     do not rely on resource revenues. The consequences of what is 
     known as the ``resource curse'' including the erosion of 
     civil society, a rise in internal conflicts and regional 
     violence, and the proliferation of terrorism are likely to 
     pose a long-term threat to the national security, foreign 
     policy, and economic interests of the United States.
       (3) Transparency in revenue payments to governments enables 
     citizens to hold their leaders more accountable.
       (4) There is a growing consensus among oil, gas, and mining 
     companies that transparency in revenue payments is good for 
     business, since it improves the business climate in which 
     they work and fosters good governance and accountability.
       (5) Transparency in revenue payments benefits shareholders 
     of corporations that make

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     such payments because such shareholders have a desire to know 
     the amount of such payments in order to assess financial 
     risk, compare payments from country to country, and assess 
     whether such payments help to create a more stable investment 
     climate. Undisclosed payments may be perceived as corrupt and 
     as decreasing the value of the corporation.

     SEC. 3. SENSE OF CONGRESS RELATING TO TRANSPARENCY FOR 
                   EXTRACTIVE INDUSTRIES.

       It is the sense of Congress that--
       (1) the President should work with foreign governments, 
     including members of the Group of 8 and the Group of 20, to 
     establish domestic requirements that companies under the 
     jurisdiction of each government publicly disclose any 
     payments made to a government relating to the commercial 
     development of oil, natural gas, and minerals; and
       (2) the United States Government should commit to global 
     leadership of transparency in extractive industries by 
     supporting--
       (A) multilateral pro-transparency efforts, such as the 
     Extractive Industries Transparency Initiative, in revenue 
     collection, budgeting, expenditure, and wealth management;
       (B) bilateral efforts to promote good governance in the 
     extractive industries through United States missions and 
     activities abroad;
       (C) the implementation of extractive industries reporting 
     requirements for companies under the jurisdiction of the 
     United States similar to the requirements established under 
     section 6 of this Act; and
       (D) efforts to persuade other members of the Organization 
     for Economic Cooperation and Development and Asia-Pacific 
     Economic Cooperation to adopt uniform legislation to ensure a 
     coordinated regulatory approach.

     SEC. 4. SENSE OF CONGRESS RELATING TO THE EXTRACTIVE INDUSTRY 
                   TRANSPARENCY INITIATIVE.

       It is the sense of Congress that the President should 
     commit the United States to become a Candidate Country of the 
     Extractive Industry Transparency Initiative.

     SEC. 5. DISCLOSURE OF PAYMENTS TO THE UNITED STATES.

       The Secretary of the Interior shall disclose to the public 
     any payment (as that term is defined in section 13(m) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78m(m)), as added 
     by section 6 of this Act) relating to the commercial 
     development of oil, natural gas, and minerals on Federal land 
     made by any person to the Federal Government.

     SEC. 6. DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION 
                   ISSUERS.

       Section 13 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78m) is amended by adding at the end the following:
       ``(m) Disclosure of Payment by Resource Extraction 
     Issuers.--
       ``(1) Definitions.--In this subsection--
       ``(A) the term `commercial development of oil, natural gas, 
     or minerals' includes the acquisition of a license, 
     exploration, extraction, processing, export, and other 
     significant actions relating to oil, natural gas, or 
     minerals, as determined by the Commission;
       ``(B) the term `foreign government' means a foreign 
     government, an officer or employee of a foreign government, 
     an agent of a foreign government, a company owned by a 
     foreign government, or a person who will provide a personal 
     benefit to an officer of a government if that person receives 
     a payment, as determined by the Commission;
       ``(C) the term `payment'--
       ``(i) means a payment that is--

       ``(I) made to further the commercial development of oil, 
     natural gas, or minerals; and
       ``(II) not de minimis; and

       ``(ii) includes taxes, royalties, fees, licenses, 
     production entitlements, bonuses, and other material 
     benefits, as determined by the Commission; and
       ``(D) the term `resource extraction issuer' means an issuer 
     that--
       ``(i) is required to file an annual report with the 
     Commission; and
       ``(ii) engages in the commercial development of oil, 
     natural gas, or minerals.
       ``(2) Disclosure.--
       ``(A) Information required.--Not later than 270 days after 
     the date of enactment of the Energy Security Through 
     Transparency Act of 2009, the Commission shall issue final 
     rules that require each resource extraction issuer to include 
     in the annual report of the resource extraction issuer 
     information relating to any payment made by the resource 
     extraction issuer, a subsidiary or partner of the resource 
     extraction issuer, or an entity under the control of the 
     resource extraction issuer to a foreign government for the 
     purpose of the commercial development of oil, natural gas, or 
     minerals, including--
       ``(i) the type and total amount of such payments made for 
     each project of the resource extraction issuer relating to 
     the commercial development of oil, natural gas, or minerals; 
     and
       ``(ii) the type and total amount of such payments made to 
     each foreign government.
       ``(B) International transparency efforts.--To the extent 
     practicable, the rules issued under subparagraph (A) shall 
     support the commitment of the United States Government to 
     international transparency promotion efforts relating to the 
     commercial development of oil, natural gas, or minerals.
       ``(C) Effective date.--With respect to each resource 
     extraction issuer, the final rules issued under subparagraph 
     (A) shall take effect on the date on which the resource 
     extraction issuer is required to submit an annual report 
     relating to the fiscal year of the resource extraction issuer 
     that ends not earlier than 1 year after the date on which the 
     Commission issues final rules under subparagraph (A).
       ``(3) Public availability of information.--
       ``(A) In general.--To the extent practicable, the 
     Commission shall make available online, to the public, a 
     compilation of the information required to be submitted under 
     the rules issued under paragraph (2)(A).
       ``(B) Other information.--Nothing in this paragraph shall 
     require the Commission to make available online information 
     other than the information required to be submitted under the 
     rules issued under paragraph (2)(A).
       ``(4) Authorization of appropriations.--There are 
     authorized to be appropriated to the Commission such sums as 
     may be necessary to carry out this subsection.''.
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