[Congressional Record Volume 163, Number 18 (Thursday, February 2, 2017)]
[Senate]
[Pages S634-S653]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONGRESSIONAL DISAPPROVAL OF A RULE SUBMITTED BY THE
SECURITIES AND EXCHANGE COMMISSION
The PRESIDING OFFICER. The clerk will report the joint resolution.
The legislative clerk read as follows:
A resolution (H.J. Res. 41) providing for congressional
disapproval under chapter 8 of title 5, United States Code,
of a rule submitted by the Securities and Exchange Commission
relating to ``Disclosure of Payments by Resource Extraction
Issuers.''
The PRESIDING OFFICER. Pursuant to 5 U.S.C. 802(d)(2), there will now
be up to 10 hours of debate, equally divided between the proponents and
the opponents of the joint resolution.
The Senator from Idaho.
Mr. CRAPO. Mr. President, I rise today to discuss the regulatory
burden imposed by the SEC's extractive resource rulemaking and offer my
support for the resolution to disapprove it.
I will take a few minutes to talk about the complicated history of
this rule and then about the concerns with the way it was formulated.
The SEC originally adopted the rule in 2012 and was challenged in
court by the Chamber of Commerce and the American Petroleum Institute.
In 2013, the U.S. district court threw out the regulation, contending,
among other things, that the SEC misread the requirements of the
statute. The SEC did not appeal the decision, acknowledging that it
needed to rewrite the rule.
The SEC's proposed timetable for a new rule was delayed several
times, and in 2014, Oxfam America sued to compel the SEC to move
forward on a new rulemaking. The court ordered the SEC to file an
expedited schedule and, as a result, a new rule was proposed in 2015
and finalized last year.
As one can see, this rule and its various iterations have been
fraught with controversy for many years. Advocates of the rule have
said that it will combat corruption in resource-rich nations. The SEC's
final rule raised doubts about this. The final rule stated several
things, including: The direct causal relationship between increased
transparency in the extractive industry and social benefits is
``inconclusive.'' In fact, it noted that ``research and data available
at this time does not allow us to draw any firm conclusions.'' Unlike
the potential benefits, though, the costs are reasonably certain.
The SEC estimated up to $700 million in initial costs and up to $590
million in ongoing annual costs. Put another way, each company would
endure between $560,000 and $1.6 million in initial costs, and between
$224,000 and $1.3 million in
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additional costs each year. We cannot view these costs as affecting
only the largest companies, but must consider the plight of the smaller
ones.
Just under half of all companies covered by this rule are considered
smaller companies, and they would be disproportionately impacted by
millions of dollars in fixed costs--money that could be better spent on
jobs and growth.
Finally, the President's statement of administration policy also
endorses this resolution. Some of the reasons it highlights include:
In some cases, the rule would require companies to disclose
information that the host nation of their project prohibits
from disclosure or is commercially sensitive.
The rule would impose unreasonable compliance costs on
American energy companies that are not justified by
quantifiable benefits.
Moreover, American businesses could face a competitive
disadvantage in cases where their foreign competitors are not
subject to similar rules.
I have repeatedly stressed the need for the U.S. financial system and
markets to remain the preferred destination for investors throughout
the world, and this rule harms this status.
I urge my colleagues to support this resolution and to preserve the
integrity of our securities laws and capital markets.
Mr. President, I ask unanimous consent to at this time enter into a
colloquy with my colleague from Georgia, Senator Isakson.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. ISAKSON. Mr. President and chairman of the Banking Committee, I
appreciate the time and the recognition. As the chairman knows, I am a
member of the Foreign Relations Committee and a former chairman of the
African Subcommittee, and I have traveled to both of those continents
for many years. I have seen resource-rich and poverty-poor countries
where they have a natural resource investment and wealth, but they
never reinvest in their people.
I think transparency is important in seeing to it that the resources
they receive for selling those natural resources are made available to
their people so that the resources go to the benefit of the people and
not the government.
Are you also aware that I am not a big supporter of the Dodd-Frank
disclosure bill, but I also have concerns that simply vacating the rule
implementing the Lugar-Cardin amendment without providing for a
replacement would create a setback for U.S. leadership in anti-
corruption efforts around the world?
Because of what we have done in transparency and anti-corruption,
countries like the United Kingdom, the EU, Norway, and Canada have
followed our lead, and I do not want to lose that. Therefore, I wish to
ask the chairman of the Banking Committee a couple of questions to ease
my fears about this question.
First, I would like to direct a couple of questions to the chairman.
It is my understanding that this joint resolution does not--underscore
not--repeal section 1504 of Dodd-Frank law; is that correct?
Mr. CRAPO. Yes, that is correct. What this resolution does is to
cause the current SEC rule to not take effect. As it was characterized
yesterday on the House floor and will be characterized further today on
the Senate floor, what the SEC will need to do is to go back to the
drawing board and come up with a better rule that complies with the law
of the land.
Mr. ISAKSON. I thank the chairman for that answer.
I would like his commitment to work with me and other members of the
caucus who are concerned and who want to be assured that the SEC will
move forward with the implementation of this replacement provision as
soon as possible.
Mr. CRAPO. I thank my colleague. I will work to ensure that the SEC
implements all of its congressional mandates.
Mr. ISAKSON. I thank the Chair.
Mr. CRAPO. Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Ohio.
Mr. BROWN. Mr. President--
Mr. INHOFE. Will the Senator from Ohio yield for a request?
I ask unanimous consent that at the conclusion of the remarks of the
Senator from Ohio, I be recognized for up to 5 minutes.
The PRESIDING OFFICER. Is there objection?
Mr. BROWN. Up to 5 minutes?
Mr. GRASSLEY. OK, as long as I get to speak after this issue is over.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BROWN. Mr. President, I rise in opposition to the resolution
before us, which really ought to be titled the ``Kleptocrat Relief
Act.''
My Republican colleagues today are trying to repeal a critical
bipartisan rule initiated by Senator Lugar, a Republican from Indiana,
and Senator Cardin, a Democrat from Maryland. It is a critical
bipartisan rule to prevent corruption.
This transparency rule is part of the Dodd-Frank Wall Street reform
law. It is one of the best anti-corruption tools that President Trump
now has to keep his promise to, in his words, ``drain the swamp'' in
Washington and around the world.
But now, in just week 2 of his Presidency, Republicans are racing to
use an obscure law called the Congressional Review Act to wipe it out.
The CRA was not intended to hand a new President the power to roll back
regulations that protect workers, protect the environment, protect
investors, and protect consumers.
In this case, Republicans are using the CRA to target rules that have
gone through extensive years-long administrative and public review,
including on issues that agencies were specifically ordered by this
Congress to study and address.
Republicans' unprecedented use of the CRA is not about Congress
performing due diligence or agency oversight, it is a gross abuse of
power to make their big corporate allies happy. I heard my friend from
Idaho talk about the Chamber of Commerce and the American Petroleum
Institute. That is just a start.
The rule they are trying to repeal protects U.S. citizens and
investors from having millions of their dollars vanish into the pockets
of corrupt foreign oligarchs. It does that by requiring all oil, gas,
and mineral companies listed on U.S. stock exchanges to disclose the
royalties and the bonuses and the fees and the taxes and other payments
they make to foreign governments.
This kind of transparency is essential to combating waste, fraud,
corruption, and mismanagement, as Senator Isakson talked about the
poverty he sees in these resource-rich countries.
Yet Rex Tillerson, whom this body just, I believe yesterday,
confirmed with a pretty much partisan vote--Rex Tillerson and
congressional Republicans want to strip it away. Rex Tillerson, in his
years as CEO of ExxonMobil--and we will talk about that in a moment--
strongly opposed this rule, almost by himself, with ExxonMobil as the
head of that company.
At Mr. Tillerson's confirmation hearing, Senator Kaine from Virginia
introduced into the record a 2008 report by Republican Senate Foreign
Relations Committee staff. That report was the basis--Republican staff,
I assume at the behest of Senator Lugar and others--that report was the
basis for what eventually became section 1504 of Dodd-Frank, known as
the bipartisan Cardin-Lugar amendment to fight corruption in mineral-
rich developing countries. That report concluded that many resource-
rich countries are poor because their vast mineral resources often
breed corruption. That corruption lines the pockets of the
kleptocrats--read ``thieves''--increases poverty, increases hunger, and
increases instability.
As Senator Lugar said:
Paradoxically, history shows that rather than a blessing,
energy reserves can be a bane for many poor countries,
leading to fraud, corruption, wasteful spending, military
adventurism and instability. Too often, oil money that should
go to a nation's poor ends up in the pockets of the rich or
is squandered on the trappings of power and massive showcase
projects instead of being invested productively and
equitably.
That is called the resource curse. It prevails all over the world
today. For example, oil-rich Venezuela is running out of food and
medicine. Resource-rich Nigeria is in an economic mess wracked by
terrorism and poverty. Armed groups have fought for years
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over mineral wealth in the Congo and elsewhere in Africa.
Resource-rich countries in Asia have similar problems. The natural
resource sector in so many countries is famously corrupt--the world's
single most corrupt industry, according to the Organisation for
Economic Co-operation and Development. But oil companies can no longer
hide behind the excuse of confidentiality. Increasingly, companies are
expected to disclose what they pay in taxes and other payments to
governments whose natural resources they extract. That is what this
language from Senator Lugar, Senator Cardin, and Senator Leahy did.
That is what the rule does. That is what we should do. This Congress
wants to undo that. This is now required under the laws of the United
States and 30 other countries, as well as international initiatives. In
other words, what we did here was followed by 30 other countries, and a
number of more responsible energy companies, I would say, passed this
language and began to implement these laws.
The Extractive Industries Transparency Initiative is a global
standard that aims to put information about government revenues from
natural resource deals into the public domain in 51 countries,
including ours. This includes telling us what taxes the companies pay,
which is key to ensuring citizens know what benefits they get--from
Venezuela or Nigeria or Congo--from their own natural resources.
Let me offer some concrete examples of the kind of corruption we are
talking about. This just turns your stomach.
In Equatorial Guinea, according to anti-corruption groups, oil
companies, including Exxon, have had a long history of problems on this
front. The regime of President-for-life Obiang, who executed his brutal
uncle to gain power almost 40 years ago, has been tarnished with
allegations of corruption, cronyism, brutal political repression,
routine human rights violations, and drug trafficking for years and
years.
Years ago, the Senate Permanent Subcommittee on Investigations
released a report and held a public hearing which revealed that a
number of oil companies--again, ExxonMobil; they keep coming up in
this--were making direct payments into an account in the name of the
Republic of Equatorial Guinea located at Riggs Bank in Washington, DC.
Virtually all of the money in the account, tens of millions of dollars,
consisted of royalties and other payments from oil companies,
primarily--surprise--ExxonMobil, to the country of Equatorial Guinea
for the right to explore and produce oil in that country. But instead
of paying the money to the government or the national treasury of
Equatorial Guinea, the companies sent the money to the account at Riggs
Bank. That account was controlled by President-for-life Obiang and two
of his relatives. The account signatories were the President-for-life,
his son, and his nephew. Imagine that. Instead of paying the national
treasury, the oil companies made payments into this account in another
country, controlled by a dictator and his relatives. I can't believe we
in this body support that. How could the citizens of Equatorial Guinea
know how much royalty money was coming in for their oil in their
country and where it was going when it was in a secret account
controlled by a dictator? The answer, obviously, is they couldn't.
The report from the PSI--the committee that investigated--documented
that some of the funds from that account were used to make suspicious
transactions. The United States then investigated the President-for-
life's family finances. Prosecutors noted that President-for-life
Obiang's son ``received an official government salary of less than
$100,000 a year but used his position and influence as a government
minister to amass more than $300 million worth of assets through
corruption and money laundering.'' He paid himself $100,000 but found a
way to amass $300 million more--all in violation of the laws of his
country and our country both.
In 2014, the son settled a case brought by Federal prosecutors. He
agreed to sell his $30 million mansion in Malibu, his Ferrari, and
various items of Michael Jackson memorabilia he had collected.
The New York Times reported earlier this month that he is still
working to delay his trial on corruption charges in France, where
prosecutors say he amassed a personal fortune of $115 million, which he
used to indulge his tastes.
When he served as Agriculture Minister of Equatorial Guinea,
prosecutors say he used his influence over the timber industry--next to
oil, the most important export industry in the country--to line his
pockets.
Last November, prosecutors in Switzerland seized luxury cars
belonging to him, and last month, at the request of the Swiss, the
Dutch authorities seized his 250-foot, $100 million yacht named the
``Ebony Shine'' as it was about to sail to Equatorial Guinea. He said
the yacht belonged to his country's government. All the while, his
people are starving.
You can't make this stuff up. If the bill before us were adopted, the
Obiang family would be celebrating. They would be celebrating in
Washington, in California, and in Equatorial Guinea.
In Nigeria, again according to Global Witness, a major oil deal
struck by--surprise--ExxonMobil with the Nigerian Government is being
investigated by Nigeria's Economic and Financial Crimes Commission, a
law enforcement agency that investigates high-level corruption. The
probe centers on a protracted and controversial deal agreed to by
ExxonMobil and the Nigerian Government in 2009 to renew three lucrative
oil licenses, which at the time accounted for around a quarter of
Nigeria's entire oil production.
ExxonMobil agreed to pay $600 million to renew the licenses and
construct a powerplant at a cost of $900 million to the company, making
a total contribution of $1.5 billion. Yet documents suggest that the
Nigerian Government may have valued the licenses at $2.5 billion and
that the Chinese oil company CNOOC offered to pay $3.7 billion for the
same licenses--over six times the amount reportedly paid by ExxonMobil.
Other incredible and notorious examples abound. It would be reason
enough for us to act to try to help the millions of people around the
world who are victims of this corporate collusion, but in today's
world, the resource curse doesn't just impact far-off countries; it
affects Americans every day. It has empowered anti-American dictators
in Iraq, Libya, and Syria, situations which cost American lives and
American taxpayer dollars. It worsens global poverty, which can be a
seedbed and a fertile growing ground for terrorism against us and our
allies. It leads to the instability that threatens global oil supplies.
It raises gas prices at home.
That is why we need this rule--all of the above--to protect American
national security interests by combating the corruption and secrecy,
with all these oil companies at the table with them. That has caused
conflict, instability, and violent extremist movements in Africa and
the Middle East. As ISIS has demonstrated, nonstate actors benefit from
trading natural resources in order to finance their terrorist
operations.
Despite all this, the Republican-led House of Representatives, as
Senator Crapo said, voted yesterday to repeal this bipartisan
initiative--an initiative that holds Big Oil accountable and protects
the American people. Today, the Senate Republican leadership is
following suit. It is a little ironic in light of the fact that
Candidate Trump, at almost every rally in my State, almost every rally
in State after State after State where he was campaigning, talked about
draining the swamp.
Since the rule's creation, ExxonMobil, led by Mr. Tillerson--now the
Secretary of State--and Big Oil allies, such as the American Petroleum
Institute, the U.S. Chamber of Commerce, and the Heritage Foundation,
have fought to kill it.
Who else opposes this rule besides Senate Republicans, House
Republicans, and President Trump? There are the autocrats in Russia. We
know about the connections between Russia and the Secretary of State.
We don't know quite enough about the connections between our President
and President Putin because we can't get the President's tax returns.
We know something is going on. Everybody knows it. Nobody knows quite
what.
Who else opposes it? Autocrats in Iran, where Advisor Flynn made some
interesting and provocative comments today, autocrats in Venezuela,
autocrats in Africa with oil wells, gasfields,
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or copper mines who want to keep their payments a secret. It is working
for them. It is working for the autocrats. It is working for Exxon.
Apparently it is working for Republicans in the House and Senate too. I
am not sure exactly how, but I know it is working.
More than 30 countries--mostly the United States, Canada, and
European nations--have adopted similar anti-corruption standards.
Senator Lugar, Senator Leahy, and Senator Cardin's law passed as part
of Dodd-Frank, and the SEC is adopting this rule. More than 30 other
countries in the world followed our lead, and some of the more
responsible oil companies were prepared to comply. So to be clear, with
Europe and Canada in the same disclosure system, the playing field is
now level. It is working.
Many companies already report such payments under European rules and
are doing just fine, so this is hardly causing them undue burdens in
the regulatory framework that my colleagues like to talk about. That is
why many in industry support the rule, despite the actions of Exxon,
the bad actor here, and the CEO of Exxon--now, amazingly, our Secretary
of State.
BP and Shell--two major, large oil companies--have publicly endorsed
payment reporting and lining up U.S. rules with those in other markets.
Foreign and state-owned oil companies from China and Brazil, including
CNOOC, PetroChina, Sinopec, and Brazil's Petrobras, are required to
disclose under U.S. rules, leveling the playing field for U.S.
companies. Gazprom, Rosneft, BP, and Shell already report under UK
rules. The largest mining companies in the world, including Newmont
Mining, BHP Billiton, and Rio Tinto, have supported similar reporting.
Oil, gas, and mining workers unions, such as United Steelworkers, back
the rule.
Notice who doesn't back the rule: Exxon, the American Petroleum
Institute, and autocrats in Iran, Russia, and Venezuela.
Investors also support it--including investor groups with $10
trillion under management--so they can better understand and manage the
reputational, expropriation, sanction, and other risks facing firms in
which they invest. It is supported by the American Catholic bishops,
the Presbyterian Church--all kinds of religious groups.
Who is against it? Republicans in the House, Republicans in the
Senate, the President of the United States, ExxonMobil, the Secretary
of State, who used to be CEO of ExxonMobil, and autocrats in Iran and
Venezuela. We get the picture.
All these groups who care about justice, who care about fair play,
who care about doing business with predictable and fair rules, like BP
and Shell, all of them support it--Global Witness, the ONE Campaign,
Oxfam, and Publish What You Pay.
We need to be clear on one other thing my friend from Idaho said:
This rule won't cost a single American job. Everything oil companies
can legally do today is still allowed under the anti-corruption rule.
They only have to do one more thing: They have to report their numbers
to the Securities and Exchange Commission. How can that cost millions
of dollars?
The Cardin-Lugar rule makes Big Business and government more
transparent, fights corruption, and does it all without hurting
taxpayers. It is a creative approach to global problems that our
leaders did embrace until we had a President who wants to ``drain the
swamp,'' he says--should be embracing, not rejecting at the behest of
just a few actors.
Again, who is lobbying to overturn this rule? It is autocrats around
the world. It is Exxon. It is the American Petroleum Institute. It is a
very small number of companies, when so many people are on the other
side.
If we repeal this measure today, shareholders, investors, and poor
communities around the world will continue to see their money and
natural resources stolen by crooked oligarchs. We will be undoing the
moral leadership. This is in so many ways a moral question that Senator
Cardin, Senator Lugar, and Senator Leahy brought to us bipartisanly,
with broad support by both parties. We will be turning a blind eye to
corruption, we will be betraying our principles, and we will be
undercutting our allies in Europe and Canada who followed our lead and
crafted their own rules based on ours.
Under the terms of the Congressional Review Act, any future
``substantially similar'' rule will be forever prohibited from being
written by the SEC. That makes no sense.
I hope this effort fails. I know my Republican colleagues understand
this because enough of my colleagues recognize the merits of this anti-
corruption measure and they refuse to kowtow to the dinosaur wing of
Big Oil. It is not even all of Big Oil; it is the dinosaur wing of Big
oil. It is the autocrats. It is the American Petroleum Institute. It is
the Chamber of Commerce. It is ExxonMobil.
I thank Senator Cardin and Senator Leahy for their work, and I thank
former Senator Lugar from Indiana for the important work he did on this
measure.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. INHOFE. Mr. President, I know that President Obama is gone now,
but his War on Fossil Fuels is alive and well. However, they are not
winning that.
Back in Oklahoma, they ask me the question sometimes: If all of the
liberals are concerned and if they are all opposed to fossil fuels--and
to nuclear, I might add; coal, oil, gas, and nuclear--if coal, oil,
gas, and nuclear are responsible for 89 percent of the power it takes
to run this country, how do you run the country without those? Those
are the kinds of questions we get.
I appreciate and--I know it is a very popular statement that was made
by my friend from Ohio; unfortunately, it has nothing to do with the
issues we are looking at right now.
Back during the time Dodd-Frank was considered, it was dealing with
banks and financial institutions. It had nothing to do with energy. Yet
section 1504 was put in there. Part of section 1504 required that
information be provided during the course of a competitive situation
for some kind of a project.
I will give you an example. We have a private sector in our oil and
gas. For China, that is a government project. If we are competing with
them--let's say for some cause that is in Tanzania or someplace--they
said, so that there is a safeguard and there can't be corruption, so
that if we should win--I say ``we,'' but I am talking about the private
sector in the United States of America--then they have to report the
information to the SEC, which in turn makes it published. Their intent
was not to have to break down everything that was in that offer. It is
the bottom line.
What is the total cost that goes to these countries? What are the
total costs? That is all they care about because if that money went to
Tanzania--and there are some corrupt officials there and they might
steal some of the money, but to keep that from happening, we want to
report what the cost was in the winning party. You don't have to have
all that information.
In fact, in 2013, the court struck this down because they said that
was not the intent. The intent was to have the total figure, so they
said, even suggested--and our intent at that time was to vacate that,
as the court did vacate that rule and send it back and have the SEC
redo it in such a way that it would affect only the amount of money
that would go that might cause some corruption at some time. That is
what it was all about. Unfortunately, they put together another one
that was very similar and required a lot of information that was not
necessary.
I would like to correct something on the CRA that the Senator from
Ohio said. The CRA is there because when an unelected bureaucrat comes
out with some kind of an unreasonable rule that is very costly to the
people of this country and it is done by someone who is not an elected
official, the elected official says: Look at this. Wait a minute. This
is something that people are complaining about when I go home.
They love that because they can say: This wasn't me. This wasn't me.
This was an unelected bureaucrat that put these rules in.
What a CRA does is make us in the House and in the Senate more
accountable because we have to then stand up and vote on something,
saying that we endorse this rule or we don't endorse this rule. That is
what it is all about.
Anyway, we have an opportunity here to go ahead, and I am certainly
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hoping that we will do this and change this rule so that it would make
as a requirement nothing but the amount of money that is paid by the
winning party in a situation where they are competing with each other.
If that happens, then we will know how much money that was, and we
will be able to go to the party and find out if they are stealing some
of this money. Why is it necessary to have all of the components of
competition when you have the private sector in the United States of
America competing with countries like China where it is a government-
owned institution?
That is all this is about. All we want to do is to be able say we
want to report so that the public knows how much the total bid or, in
this case, the total amount was, not all the components that went into
the calculation of that. That is all it is about.
My time has expired.
I yield the floor.
The PRESIDING OFFICER (Mr. Young). The majority leader.
Order of Business
Mr. McCONNELL. Mr. President, I wish to lay out the schedule for
everyone. I know they are interested in knowing the way forward. I have
discussed with the Democratic leader where we go from here.
The Senate is going to debate the pending joint resolution tonight
for as long as there is interest in debate. Tomorrow the Senate will
convene at 6:30 a.m. and immediately proceed to two rollcall votes:
passage of the joint resolution of disapproval and cloture on the
nomination of Betsy DeVos.
Restating that, debate tonight as long as our friends on the other
side would like to debate, and tomorrow we will convene at 6:30 a.m.
and immediately turn to two rollcall votes: passage of the joint
resolution of disapproval and cloture on the nomination of Betsy DeVos.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. LEAHY. Mr. President, has the distinguished majority leader
finished?
Mr. McCONNELL. Yes.
Mr. LEAHY. Mr. President, Republicans in both Chambers have
introduced a resolution to permit oil, gas, and mining companies to
continue making secret payments--involving billions of dollars--to
corrupt foreign governments in exchange for access to their countries'
natural resources.
This resolution would overturn legislation on which I worked closely
with former Republican Senator Richard Lugar and Senator Cardin and was
included as section 1504 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act to provide greater transparency when such
payments are made and help better inform investors and combat massive
corruption in the process.
One would think that everyone here would support a commonsense rule
that will protect investors and make it a lot harder to get away with
the theft of billions of dollars in public funds in some of the poorest
countries of the world. But apparently, that is not a concern, at least
not to the sponsors of this resolution or those who intend to support
its passage.
Some Republicans and their friends in the oil and gas industry say
this rule creates unacceptable burdens. That is utterly without merit,
as I will explain in a moment.
But even assuming there were a grain of truth to that, rather than
proposing to amend the underlying legislation, which would require
bipartisan support, this resolution is being advanced under the
Congressional Review Act, to enable a simple majority vote to
completely dismantle the rule with minimum debate.
Keep in mind that the rule is simply the product of the U.S.
Securities and Exchange Commission, SEC, implementing bipartisan
congressional intent and would not take effect until the end of 2018.
Despite what some have claimed, the SEC has not twisted the statute in
any way when they developed this rule. But if this rule is overturned,
the SEC will be prevented from issuing any substantially similar rule,
potentially in our lifetimes.
In other words, what we are doing here is, for all practical
purposes, the death knell for global efforts--involving most of our
closest allies--to combat massive corruption resulting from the
extraction of natural resources and help investors assess risk in the
often murky and unstable oil, gas, and mining sectors. This is an issue
on which the United States, until now, has been a global leader.
I mention this because the sponsors of this resolution have said that
they support the goals of this rule, and all they want to do after
overturning it is make some minor adjustments to it. That is the
epitome of disingenuous. The rule does not take effect until the end of
2018. If that was what they really wanted to do, they would propose an
amendment, and we could discuss it. Their real purpose, even if they
are reluctant to say so, is to prevent disclosure.
This rule has two primary purposes. First, it is to protect
investors. Investors whose combined net worth exceeds $10 trillion,
support this rule and its equivalency with the rules adopted by some 30
other governments. And second, to protect the public.
The practical effect of overturning this rule is that U.S. and
foreign companies will be able to continue to make secret payments to
corrupt foreign autocrats like Vladimir Putin and kleptocracies in
Africa like the governments of Angola and Equatorial Guinea. By doing
so, these companies will be aiding and abetting those kleptocrats when
they pocket the proceeds for their personal use. We have seen this for
years. The people of those countries barely survive on $1 or $2 per
day, while their leaders drive Mercedes, fly private jets to vacation
homes on the French Riviera or in Santa Monica, and pay off the armed
forces to keep themselves in power.
And where does the money come from that pays for that grotesque
flaunting of wealth? From the royalties paid by U.S. and other foreign
companies.
Do we really want to be complicit in that kind of thievery and
immorality by shielding it from public scrutiny? Do we really think
that the American people want to be tarred with it indirectly through
the shady activities of American companies? Do we really want to hide
important information from investors who are trying to assess risk in
the companies they invest in? Of course not.
Anyone who reads this rule and pays the slightest attention to the
estimated $1 trillion lost to crime, corruption, and tax evasion in
these countries and the millions of deaths attributed to corrupt
practices where these extractive companies operate will recognize the
fallacy of the baseless attacks by those who oppose it.
The sponsors of this resolution claim that this rule puts American
businesses at a competitive disadvantage. What are they talking about?
The rule applies to both U.S. and foreign companies and complements
existing laws elsewhere in the world. In fact, Chinese state-owned
companies, like PetroChina and Sinopect, are covered by the U.S. law.
Great Britain, the EU, Canada, and Norway are just four examples of
governments that have adopted similar rules, with Russian state-owned
companies like Rosneft and Gazprom covered in the U.K.
I challenge the sponsors of this legislation to provide any objective
facts to support the argument that U.S. companies are disadvantaged by
this rule. That is a pernicious myth.
The sponsors have also repeated the self-serving claims of the
petroleum industry that complying with this rule would unacceptably
increase their cost of doing business. While that has become the
predictable complaint of the business community whenever such a rule is
promulgated, in this instance, they base it on an outdated and
discredited analysis. The irony is that, even if one were to agree with
their most farfetched, worst-case scenario, it pales compared to their
immense profits.
If we overturn our rule, what prevents others from doing the same?
And then we are right back where we started. Once again, we will have
paved the way for secret payments and billions of dollars stolen from
the public treasuries and squirreled away in Swiss bank accounts by the
Robert Mugabes of the world.
There is another aspect to this that no one has talked about, and
that is the connection between corruption and terrorism, particularly
in Africa. Terrorist groups flourish where government corruption
contributes to incompetent, corrupt military forces. Terrorists benefit
when revenues from these
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activities are kept in the dark, enabling them to radicalize and
recruit an impoverished and resentful population. By overturning this
rule, Senators should know that violent extremists, terrorists, and
other criminal enterprises will be among the beneficiaries.
Corruption is among the most corrosive forces that breed instability
and violence, and then countries like ours end up trying to feed and
shelter the innocent people who bear the brunt of it.
It not only wreaks havoc on the people of those countries; it hurts
American companies trying to do business there, and it hurts Americans
who invest in these risky companies. If the norm is nondisclosure, then
bribery becomes an unavoidable and accepted way of doing business.
That is what companies from countries like Russia and China that
compete with American companies would prefer because corruption is what
they are best at. But this rule requires those foreign companies and
others to similarly disclose their profits. Are the sponsors of this
resolution even aware of this? This rule will enhance U.S.
competitiveness. This rule protects investors and the public.
When it was first passed, section 1504 put the United States at the
forefront of transparency and government accountability efforts. And as
I have already said, that leadership paid off. Other countries have
followed our example. This resolution will jettison a decade of work
here and abroad. There is no excuse for it. There is no need for it. If
there are legitimate concerns about section 1504, then let's talk about
ways to amend it and improve it.
But let's not, by overturning this rule, tell the world that we don't
believe in transparency and good governance, that we will turn our
backs on the theft and misuse of payments made by U.S. companies, that
we do not care about the people of those countries who suffer the
consequences, and that we do not care about American investors who
deserve this critical information so they can have confidence in the
companies they invest their hard-earned money in. This resolution is an
affront to the values and to the citizens of our great and good Nation.
The PRESIDING OFFICER. The Senator from Maryland.
Mr. CARDIN. Mr. President, let me thank Senator Leahy for his
comments. Ten years ago, I was privileged to be elected by the people
of Maryland to represent them in the U.S. Senate. I came to the Senate
with Senator Brown at that time. It was our first year. Senator Brown
had the opportunity to serve on the Banking Committee. I had the
opportunity to serve on the Senate Foreign Relations Committee. Today I
hold the position on the Senate Foreign Relations Committee that
Senator Lugar held when I first went on the committee; that is, the
ranking member of the committee.
I remember one of the very first hearings we had in the Senate
Foreign Relations Committee on resource, curse or blessing. It was a
matter of concern to every single member of the Senate Foreign
Relations Committee, Democrats and Republicans. We saw the faces of
people from nations in Africa who had a resource wealth, but they had
the resource curse. The people were living in horrible poverty. Yet the
country had mineral wealth--gas and oil--that was being exploited but
not for the benefit of the people. It was being used to obtain income
for their leaders to funnel corrupt practices. Senator Lugar, in
October of 2008, authored a committee report of the Senate Foreign
Relations Committee entitled ``The Petroleum And Poverty Paradox:
Assessing U.S. And International Community Efforts To Fight The
Resource Curse.''
We went through the regular legislative process as to how we could
deal with the circumstance that we knew the United States must exercise
leadership. As Senator Brown has pointed out the whole history and the
importance of it--and all of the details--I just want to fill in some
of the details as to how this came about because we were looking for a
way in which we could turn the wealth of a nation to its people and cut
off the corruption that it funded. The corruption was not just the
obscenity of wealth being used by their leaders--as Senator Brown
pointed out in Equatorial Guinea--it was also the fact that this wealth
that was coming to these leaders was also being used for criminal
activities, to finance illegal drug activities and to finance
terrorism.
I take issue with my friend from Oklahoma and his comments. There has
never been an effort in this legislation to affect the supply of any
source of energy here or anywhere around the world. That is being done.
The question is, Where does the money go that is being used to exploit
these resources? Do they go to the people of the country where the
resource is located or do they go for corruption? That is what we
attempted to do--Senator Lugar and I and others. I thank Senators Leahy
and Durbin, who was on the floor earlier and was one of our early
leaders, Senators Menendez and Wicker. We did this not only in the
Senate Foreign Relations Committee at the time I was chairman of the
Senate U.S. Helsinki Commission--the Helsinki Commission, and Senator
Wicker was helping, we worked in that organization to see how we could
deal with transparency and how the American leadership could help the
international effort to end the resource curse. As a result,
legislation was authored and introduced in order to try to deal with
this issue. Senator Lugar and I authored a bill, a bill that said we
want to know where the money is going so we can track the money. We
wanted to be able, for the people of that nation, to say: We know money
is coming in now. Our leaders show us where the money is going.
That legislation was introduced. It was debated. It became part of
the Dodd-Frank law. Quite frankly, it was supported in a rather
bipartisan way, and it became law. Ever since its enactment, it has
been fought by the American Petroleum Institute. I am not sure why
because today other countries have adopted similar standards. This
information is readily available as far as the way it is compiled by
companies. Many oil and mineral companies today are supplying this
information with no complaints, no problems, but it was fought.
Tonight we are debating the use of the Congressional Review Act. It
was pointed out earlier tonight that before today, it only had been
used once since its 1996 enactment. The reason is because it is a
sledgehammer approach to dealing with issues that should be dealt with
by a scalpel, but here is the real abuse. We are using the
Congressional Review Act--which is supposed to be used when an agency
goes rogue, when they start to do things that were never intended by
Congress, were never authorized by Congress. Section 1504 was passed by
Congress, and it has taken the SEC almost a decade to get the rules
out. And we are saying they abused their power? Maybe they abused their
power by delay, but they certainly haven't abused their power with what
they have come forward with. They are carrying out congressional
mandate as they should. It was never the intent of the CRA to be used
for this type of a process. So I just urge my colleagues to recognize
that this is not the right way we should be proceeding.
In September 2009, with Senator Lugar's help, I introduced
legislation. It was bipartisan. Senators Merkley, Wicker, Schumer,
Leahy, Durbin, Feinstein, Menendez, and others joined in that effort.
The SEC was directed to develop rules on oil, gas, and mining companies
as to how the disclosures could be made on the U.S. stock exchange so
they could disclose their rights and payments made to foreign
governments. That is what we mandated. Why do we want to know that?
Because these royalties and payments were basically bribes to
government leaders because it never went to the people. It was in the
U.S. interest, not only because of how those funds were used against
our principles and not only did it finance illegal activities, but it
could have been a source for stable governments, which was important
for U.S. interests that we have stable governments. It helps us in our
foreign policy and national security. It also gives us a stable source
of oil, gas, and minerals. Investors have the right to know. They have
the right to know in what countries their companies are investing their
stockholder investments.
It was a reasonable request by Congress. One of my colleagues
indicated that it was held to be inappropriate by our courts. That was
on a process issue. It was not on a substantive issue. That
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was corrected. A new rule has come out, and now we are using a CRA in
order to block it. The rule, as it is currently worded, provides for a
reasonable period for enforcement. So it is not even going into effect
immediately because we are allowing the companies to have ample time in
order to comply with the rule.
I just want to make this point. It creates a level playing field. It
does not put American companies at a disadvantage. This is a level
playing field. Thirty countries already require this. The EU requires
this. Canada requires this. Do you want to know why they did it?
Because the United States led. We passed the law. I met with the
Europeans. I met with the Canadians. They said: This is a good bill.
You are our leaders. You are doing it. We are going to do it also so
they did it. It is in effect in these countries. Oil companies and
mineral companies have complied with it. They are fine. Guess what. It
wasn't difficult. Shell, BP, France's Total, Russian's Rosneft, Lukoil,
Gazprom--their huge giant--all have reported. It has not caused any
competitive problems. They are not losing any proprietary rights, as
has been suggested. There has been no harm done.
When I listen to the cost-benefit analysis and listen to our
distinguished chairman talk about the data is not really available, the
reason the data is not available is because we don't have disclosure.
If we get the information, then we will be able to tell exactly how we
can deal with the problems in Ghana or Nigeria or in Equatorial Guinea
or problems in so many countries where the people are hurting with some
of the worst poverty rates in the world. We will be able to find that
information out, but if we don't know what is being paid by U.S.
companies, how do you do a cost-benefit analysis? I don't know how you
could possibly do it.
I heard the numbers, the cost of compliance, and I would challenge
that. I would challenge the cost of compliance numbers because this
information is already available. Companies know where their money is
going. It is a normal business issue. I heard it is going to cost
hundreds of millions of dollars of contracts. I don't want to minimize
the cost, but as a percentage of the business they are doing, it is
minor. The benefit we get if the money can go to the people and deal
with these horrible conditions that we see in these resource-wealthy
countries, then it is certainly worth the effort. That is part of our
effort in dealing with other countries, to try to lift up the standard
of living in so many of these countries.
So when we look at, again, what is at stake--what is at stake? And
that is to allow the wealth of a country to go to its people for its
stability. I have heard my colleagues say: Well, we are not against
this. The law is still there. All we are talking about is this
regulation. Once we pass this CRA, we are going to go back to work with
the SEC and bring in a new rule. Do you really believe that? Do you
really believe that if we pass this CRA, that we are going to see a new
rule come out of the SEC? It has taken us 9 years to get to where we
are right now. Do you really believe that with the law saying that the
SEC cannot bring out a rule that is substantially the same in form,
unless authorized by a subsequent law of Congress--do you really
believe that will not be challenged in the courts with lengthy
litigation before we will ever see another rule take effect?
Let us be clear about this. I am going to continue to do everything I
can to make sure that the people of these nations get the wealth of
their country. I am going to do everything I can. I am going to work
with all my colleagues on both sides of the aisle. I really do believe
in the sincerity of my colleagues, that they believe in this
transparency. It is going to be tested. I am going to come back and see
where we can make sure that 1504 is enforced because if I heard my
chairman--and I respect him greatly, we work on a lot of issues
together--when the chairman says that he is going to make sure the SEC
complies with all congressional mandates--this is a congressional
mandate--and it is our responsibility to make sure the SEC complies
with Section 1504. If our colleagues pass this CRA--and I hope you
don't--it is our responsibility to make sure the SEC complies with
1504. I am going to be here urging in every way I can to make sure that
happens.
Mr. President, I ask unanimous consent that the statement from
Publish What You Pay, which talks about a lot of the different aspects
and myths that have been said, be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Publish What You Pay United States
Myth Busting: The Truth About the Cardin-Lugar Anti-Corruption
Provision
The Cardin-Lugar Provision requires US-listed oil, gas and
mining companies to publicly disclose the project-level
payments they made to the U.S. and foreign governments for
the extraction of oil, gas and minerals.
The Cardin-Lugar provision is a landmark piece of
bipartisan legislation. The final anticorruption rule
implementing the Cardin-Lugar provision passed by the SEC in
June 2016 significantly advances international efforts to
curb corruption and has been applauded by investors,
companies and governments around the world. However, a great
deal of misinformation has been spread about the rule. Below
you will find evidence correcting the most glaring
inaccuracies put forward.
But before getting into the myths, here are some hard
facts.
Research concludes that increased transparency resulting
from the disclosures required by the Cardin-Lugar Rule could
lower the cost of capital for covered companies by $6.3
billion to $12.6 billion.
The international norm of resource sector payment
transparency, built on strong American leadership, is
estimated to have increased predicted global GDP by $1.1
trillion.
Investors representing nearly $10 trillion in assets under
management support of the Cardin-Lugar Rule.
Between 2011-2014 conflict linked to corruption in Libya
led to five U.S.-listed companies missing out on an estimated
$17.4 billion due to production disruptions.
Myth 1: Compliance costs for disclosure could reach as high
as $591 million per year.
Facts: The only comprehensive cost analysis submitted to
the SEC concluded that the total aggregate compliance cost to
industry in the first year would amount to $181M and would
not exceed $74 million per annum in subsequent years.
The $591 million number comes from an outdated SEC estimate
from the 2012 version of the final rule. The reason the
number is so high is because API claimed that there were
countries that prohibited disclosure and if companies were
forced to disclose they would have to hold a `fire-sale' of
all of their assets in that country--this number comes from
the assumption that every company would lose their assets in
these countries where disclosure was supposedly prohibited.
It is (1) disingenuous to quote this cost estimate from the
2012 regulation, instead of quoting form the 2016 regulation,
and (2) irrelevant because the SEC now allows for companies
to apply for an exemption if they believe disclosure is
prohibited in a country, therefore the above estimate is
wildly inaccurate.
Myth 2: U.S. companies are at a competitive disadvantage
because non-U.S. companies do not have to make the same
disclosures, and the rule applies only to public companies.
Facts: The U.S. law covers all oil, gas and mining
companies listed on U.S. stock exchanges not simply companies
based in the United States. Thus, the rule covers all
companies filing an annual report with the SEC both foreign
and domestic. This includes foreign oil majors BP, Shell, and
Total as well as leading state-owned oil companies from China
and Brazil, such as PetroChina and Petrobras. But a
significant number of foreign companies are already required
to make the same type of disclosures under the rules in other
jurisdictions.
Since the passage of Cardin-Lugar in 2010, important U.S.
allies have followed our leadership in payment transparency
and now 30 countries have adopted their own mandatory
disclosure rules for companies listed on their stock
exchanges. And while in many ways, the Canadian and EU
requirements are more stringent (and also cover private
companies), the laws in all jurisdictions have been deemed
equivalent by the SEC. Companies are allowed to submit the
same reports in all jurisdictions. These laws already cover
the vast majority of companies that compete with American
firms including Russia's state-owned companies, Gazprom and
Rosneft which are required to report in the UK.
Myth 3: The SEC rule is burdensome.
Facts: The Cardin-Lugar Provision is a reporting
requirement, which is not onerous and does not limit the
operations of oil, gas, and mining companies; the rule simply
requires companies to publicly report payments that companies
would track in the normal course of doing business The rule
is a straightforward requirement to make that data
transparent and usable by investors and citizens. Leading
global oil and mining majors such as Shell, BP and Total,
along with Russian state-owned companies, are entering their
second year of reporting under EU rules without any negative
impact or reported issue. In fact, many major companies have
publicly endorsed this type of reporting
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and have called on the U.S. to ensure our rules are
harmonized with those other markets.
Myth 4: The rule requires companies to disclose proprietary
information that could help foreign competitors.
Facts: The SEC rule requires companies to disclose payment
information; it does not mandate the disclosure of
proprietary, confidential or commercially sensitive
information by companies. Numerous companies are already
reporting under the similar rules in other markets, such as
Shell and BP, and none have reported any competitive harm
from payment transparency. However, the SEC's rule
nonetheless contains safeguards. To the extent a company
legitimately believes that disclosure will risk exposing
proprietary information, they can apply to the SEC for
exemptive relief on a case-by-case basis.
Furthermore, a competitor cannot use payment data to
``reverse engineer'' a company's return on investment or the
contract terms of a specific project. Complex factors such as
access to technology and finance determine a company's
success in winning bids with host governments--not
transparency of payments. Extractive companies that are
covered by payment disclosure requirements in other
jurisdictions have continued to win bids.
Myth 5: This rule was not properly vetted by Congress.
Facts: The Cardin-Lugar Amendment enjoyed bipartisan
support and was subject to extensive review in both the House
and Senate, and it was unanimously supported in conference.
It is based on underlying legislation with a long
Congressional history that was the subject of multiple
hearings in both the House and Senate. In fact, the first
precursor was a Republican House resolution on oil and mining
transparency from 2006. For this reason, propositions to
repeal the rule signify an inappropriate use of the CRA. The
intent of the CRA is to address midnight rules, not rules
like 1504 that have undergone years of extensive regulatory
development.
Myth 6: The SEC rule will cause companies to lose out on
foreign contracts.
Facts: Opponents of the Cardin-Lugar anti-corruption
provision have claimed that companies could be placing
themselves at odds with legal or contractual prohibitions on
reporting in countries like Angola, China, Qatar, and
Cameroon and may subsequently lose out on business in those
countries due to the transparency rule. In the six years
since this law was passed, no company has produced evidence
that any country prohibits this type of disclosure, and
numerous submissions to the SEC have demonstrated no such
prohibitions exist. The experience of companies already
reporting under the parallel disclosure rules in other
countries likewise confirms the absence of any prohibition on
reporting; companies like BP and Shell have disclosed
project-level payments made in Angola, China, and Qatar with
no repercussions. Nor have these companies lost out on bids
because of payment disclosure requirements. Nonetheless, the
Cardin-Lugar provision contains safeguards to ensure that
companies that face a legitimate problem can apply for an
exemption from disclosure on a case by case basis.
Myth 7: The Cardin-Lugar provision has nothing to do with
the SEC or investors.
Facts: It is important to note that the SEC extractives
transparency rule is not a case of agency overreach. Congress
specifically mandated the SEC issue this rule in Section 1504
of the 2010 Dodd-Frank Act, and by issuing the 2016 rule the
SEC complied with the will of Congress. Both Senator Cardin
and Senator Lugar, the original sponsors of the bill, along
with Senators Leahy, Durbin, Brown, Warren, Baldwin, Markey,
Coons, Shaheen, Whitehouse, Menendez and Merkley, expressed
explicit support for the SEC's interpretation of Section 1504
during the rulemaking process.
The rule has significant benefits for investors. Throughout
the rulemaking process, investors worth nearly $10 trillion
of assets under management repeatedly emphasized their
support for payment disclosures under the rule. The rule
provides investors with critical information for assessing
risk in the often murky and unstable oil, gas and mining
sectors, with positive follow-on impacts for firms that
benefit from increased investor confidence and certainty. The
increased transparency resulting from this provision has been
estimated to lower the cost of capital for covered U.S.-
listed firms by $6.3 billion to $12.6 billion.
Myth 8: We don't need Cardin-Lugar because we have the
Foreign Corrupt Practices Act.
Facts: While the Foreign Corrupt Practices Act (FCPA)
remains an important statutory tool critical to fighting
global corruption, its scope is confined to bribery. Bribery
is only one tool used to facilitate corruption. All too
often, it is the legal payments made to governments that are
misused, or siphoned off to the bank accounts of a country's
corrupt elites. However, the fact that companies are already
subject to the FCPA does mean the burden of reporting
payments to comply with the Cardin-Lugar rule is minimal;
companies are already required to collect and track payment
information as part of the books and records provision of the
FCPA. In this way, the two laws work very well together in
creating a strong regulatory foundation to prevent
corruption.
Myth 9: This rule is the same as the one sent back to be
revised by the courts in 2013 and did not incorporate the
Court's or industry concerns.
Facts: The American Petroleum Institute filed suit to
challenge the original rule issued by the SEC in 2012,
despite its largest member companies claiming to support
transparency. The earlier version of the rule was vacated by
the court and sent back to the SEC in 2013 on narrow
procedural grounds, not on the substance of the rule. Since
then, the SEC has had another two years of public
consultations and internal analysis, resulting in an even
more robust record with substantial evidence supporting each
aspect of the 2016 rule. That evidence also includes the
experience of companies already reporting on their payments
under similar rules in other jurisdictions. The SEC's final
rule strikes an appropriate balance by requiring the level of
transparency Congress intended, while also accommodating
industry concerns by providing companies with the opportunity
to apply for case-by-case exemptions when they face reporting
challenges and a generous phase-in period. Reporting will
only begin at the end of 2018.
Myth 10: Sections 1504 (extractives transparency) and 1502
(conflict minerals) are the same thing/substantially similar.
Facts: Section 1504 requires U.S.-listed oil and mining
companies to annually disclose the company's major payments
made to the U.S. and foreign governments. It is simply a
financial disclosure of payments companies already track.
Section 1502 mandates that a certain set of companies using
tin, tungsten, tantalum or gold in their products undertake
supply chain due diligence and report annually to the SEC
regarding the source of the minerals used in their products
and whether the minerals are sourced in conflict areas in the
Democratic Republic of Congo.
Myth 11: The Cardin-Lugar rule poses a security risk for
American companies and their employees working abroad.
Facts: There is no evidence justifying the claims that the
Cardin-Lugar rule would have any negative impacts on
security. In fact, all available evidence points to the
contrary. The United Steelworkers explicitly argue that the
Cardin Lugar anti-corruption rule will enhance employee
safety. Generally, 1504 helps protect U.S. national security
interests by preventing the corruption, secrecy, and
government abuse that has catalyzed conflict, instability,
and violent extremist movements in Africa, the Middle East
and beyond. As ISIS demonstrated, non-state actors can
benefit from trading natural resources in order to finance
their operations; project level reporting will make hiding
imports from non-state actors more difficult, thereby
limiting their ability finance themselves with natural
resource revenues.
Myth 12: This law increases prices at the pump and takes
capital away from other business opportunities.
Facts: All of the data suggests that transparency actually
helps company balance sheets by lowering the cost of capital
and increasing investor confidence. On the other hand,
corruption costs oil and mining companies millions of dollars
every year from instability and fragility in resource-rich
countries, which contributes to increased operating risks,
waste, inefficiency, and delays. For instance, between 2011
and 2014, the conflict in Libya fueled in part by citizens'
frustration with corruption and poor governance caused five
U.S.-listed oil companies to miss out on more than $17
billion in revenues due to production disruptions in the
country.
Mr. CARDIN. Let me conclude, for years, Congress has been fighting to
shine a light on the billions of dollars paid by extracted companies to
foreign governments. By taking away one of the only tools we have to
shine a light on extracted payments' associated corruption, we are
sending a message to corrupt leaders around the world that the United
States does not care about corruption; that we won't hold them
accountable, and that they should continue with business as usual:
Exploiting their own people, and perhaps even funding terrorist
organizations with some of their secret proceeds. It is not in our
national interest to stop an anticorruption rule that bolsters
America's national security, advances our humanitarian and
anticorruption goals, and demonstrates U.S. moral leadership.
I urge my colleagues to join me in voting against this resolution of
disapproval.
I yield the floor.
The PRESIDING OFFICER. The Senator from Iowa.
Nomination of Neil Gorsuch
Mr. GRASSLEY. Mr. President, I want to take a few minutes to comment
on some of the initial reactions that I have heard from my Democratic
colleagues on the President's nomination of Judge Gorsuch to be an
Associate Justice of the Supreme Court.
First of all, even before we had the nominee, there were many of the
Democratic Members vowing to filibuster the nominee, site unseen. That,
of course, is very unfortunate, as well as being ridiculous--in other
words, saying you are going to filibuster somebody before you even know
who the nominee is. But of course, given
[[Page S642]]
how the minority has treated the President's Cabinet nominees so far,
it is not exactly surprising that they would say this before the
President even nominated somebody for the Court.
Then, of course, this week the President announced his nominee. Judge
Gorsuch, of course, was confirmed by the Senate in 2006 without a
single ``no'' vote and is universally respected as one of the finest
and most fairminded judges in the country. In fact--get this--one of
President Obama's Solicitors General called him ``one of the most
thoughtful and brilliant judges to have served our Nation over the last
century.''
Now, if an Obama Solicitor General says that and that is not
mainstream enough, I don't know what is. After the President's
announcement, something very interesting happened. Right out of the
gate, there were a number of Senate Democrats calling for ``a hearing
and a vote.'' Well, that certainly sounds very encouraging. The press
picked up on these comments, and one newspaper even reported that after
learning who the nominee was, there were already seven Senate Democrats
opposed to filibustering this nominee.
At first glance, it appears those Democrats were trying to be
consistent with their stance from last year that a nominee deserves a
hearing and an up-or-down vote. But of course, now they conveniently
seem to have dropped the up-or-down portion of that stand.
Now, isn't that a nice trick, a new trick. Take, for example, one of
my colleagues, who last year said: ``The Constitution says the Senate
shall advise and consent, and that means having an up-or-down vote.''
But oddly, just yesterday, that same colleague said: ``I support a 60-
vote margin for all Supreme Court nominees.''
That is a very nice sleight of hand. But most of the Senators are not
that gullible. The Washington Post Fact Checker certainly took notice
of their wordsmithing. That has earned them two Pinocchios. When you
look at the facts, a 60-vote threshold has never been a standard, as
the minority leader said yesterday. Otherwise, we would not have two of
the current justices sitting on the Supreme Court.
Of course, my colleagues tried unsuccessfully to filibuster Justice
Alito. The Senate voted 72 to 25 to invoke cloture. He was then
confirmed 58 to 42 on an up-or-down vote.
Justice Thomas, now on the Supreme Court for 25 years, was confirmed
52 to 48. There was no cloture vote on Justice Thomas's nomination. In
fact, the Senate did not set any sort of a requirement that there be 60
votes for 7 of the 8 justices serving on the Court. So, if there has
been any sort of requirement or practice in the Senate on Supreme Court
nominees, it has, in fact, been that the nominee does not need 60
votes, although many of them received that kind of support.
We already know some Members have pledged to filibuster the nominee.
This minority leader stated that part of the ``fair process'' is a 60-
vote threshold. I suppose that if you are already committed to
attempting a filibuster on a Supreme Court nominee before you even know
who that person might be, then you might consider that part of a fair
process.
Of course, we all know--all Republicans and Democrats know--that
launching a filibuster against a Supreme Court nominee is not part of a
fair process. It never has been. But I suppose we should cut our
colleagues just a little bit of slack. They are having a hard time
figuring out how to make good on their promise to attack the nominee no
matter who it is, when they have now been presented with a nominee with
impeccable credentials as well as broad bipartisan support.
This brings me to the second brief point that I want to make. Judge
Gorsuch had barely finished speaking at the White House, and there were
already attacks on the nominee by some on the left. Some of my
colleagues on the other side of the aisle had already taken to the
Senate floor to attack and mischaracterize Judge Gorsuch's record.
Though we expected it, these scurrilous attacks are untoward and
obviously misplaced. After all, those on the left trot out the same
tired arguments against every Republican nominee.
Now, you know, going back a few years--maybe, too far for some of you
younger Members--they attacked Justice Stevens because he ``revealed an
extraordinary lack of sensitivity to problems that women face.''
They called Justice Kennedy a sexist who ``would be a disaster for
women.'' They said there was ``ample reason to fear'' Justice Souter.
Of course, you know what turned out. Justices Stevens and Souter turned
out to be favorites of the left, and too often Justice Kennedy has
ruled the liberal way.
This morning, the Washington Post editorial board noted that, while
we argued last year--meaning the paper argued last year--that the
President should not fill a Supreme Court vacancy that occurs during a
Presidential election year, Senate Republicans--quoting the Post--
``refrained from tarring Mr. Garland personally.''
Now, in contrast, the paper noted that this dissent is unwarranted
this early by writing this: ``Trashing Mr. Gorsuch as an outlandish
radical, despite his impeccable credentials, the wide respect he
commands in his field, his long service as an appeals court judge and
the unanimous voice vote he received the last time the Senate
considered him for the Federal bench is, at the very least,
premature.''
Our friends on the other side of the aisle would do well to take note
of the Washington Post's observation. So I would like to make this
point. If the process we have witnessed for the President's Cabinet
nominees is any guide, I am quite confident that we will hear all
manner of reasons and arguments about why we should delay a hearing on
Judge Gorsuch.
But as my friend and former chairman of the Judiciary Committee,
Senator Leahy, often noted, Supreme Court nominees don't have the
opportunity to respond to personal attacks outside of their
confirmation hearing. So I am going to consult with the ranking member
on timing for the hearing. But I can tell you what we are not going to
do. We are not going to delay this hearing, especially in the face of
all of these attacks on his record and character, which, both for the
record and for his character, are unjustified.
So I will conclude with this. I had the good fortune of meeting one-
on-one with Judge Gorsuch yesterday. He is as impressive a person in
person as he is on paper. I expect that as my friends on the other side
of the aisle meet Judge Gorsuch and actually review his record, they
will find him to be an imminently qualified and universally respected
judge, whose decisions faithfully applying the text of the law place
him well within the judicial mainstream.
Now, maybe people that say they want a mainstream judge wanted an
activist judge who will read the text the way the judge wants it read
for their own personal views, as opposed to the intent by Congress. But
Judge Gorsuch is doing what any judge should do reading the law. He
said: If any judge likes every decision he makes, then he is not a very
good judge.
Now, this is what we are going to do. We are going to do our due
diligence, and we are going to send a questionnaire to Judge Gorsuch in
the next day or so. I will expect he will answer that questionnaire
promptly, and then we will do what I said before the election, before
we knew who was going to be the next President.
In fact, we thought it was going to be Secretary Clinton. When I say
we, the country as a whole had that in their mind. There was no doubt
about it. So I said before the election, as the one responsible for not
having a hearing on the previous nominee, that, whoever was elected
President, this process was going to move forward.
So we will have that hearing where Members can ask this nominee any
questions they deem appropriate. We will vote on him in committee, and
the full Senate will vote on his nomination. But given his exemplary
record and the facts as we know them, I expect this nominee to be
confirmed.
I yield the floor.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. KAINE. Mr. President, I am going to try to be very brief.
I am rising to return to the topic of the effort of the CRA to roll
back transparency in the oil and gas industry, and I will speak
briefly. I know my colleague from Arizona is here and wants to speak
too.
[[Page S643]]
The issue has been described. It is an SEC rule requiring energy
companies to disclose the payments they make to foreign governments for
natural resources. The reason is that many countries with abundant
natural resources are run by dictators, and there has been a long
history of payments by oil companies--American and others--to those
dictators that don't get to the people and actually further the
corruption of the country.
Just one example: An IMF report stated that in just 1 year, 1998, the
Government of Equatorial Guinea received $130 million in oil revenue,
and $96 million of that went directly into the personal bank account of
the dictator, Teodoro Obiang. Meanwhile, hunger in that country is
rampant, and that is what led to this.
I am on the Foreign Relations Committee. In preparation for our
hearing on the nomination of Rex Tillerson, the former CEO of
ExxonMobil, for Secretary of State, I read a wonderful report that was
done by Senator Lugar when he was the ranking member of the Senate
Foreign Relations Committee.
October 2008: Report to members of the Foreign Relations Committee
from the ranking member. The title was ``The Petroleum And Poverty
Paradox: Assessing U.S. And International Community Efforts to Fight
The Resource Curse.'' I read this. I read the book ``Private Empire,''
a recent history of ExxonMobil written by journalist Steve Coll, to
prepare for my examination of Rex Tillerson for Secretary of State.
This particular report was the basis for the 2010 law that was
described by Senator Cardin, and it was sponsored in a bipartisan way.
It didn't prohibit any company from doing anything. It only required
companies that pay foreign governments to disclose those payments.
I voted yesterday against Rex Tillerson for Secretary of State
because I believe a public official's duty--especially Secretary of
State--has to be to the country. I was worried, based on three areas of
his testimony, that Rex Tillerson could not set aside his loyalty to
ExxonMobil.
He refused to answer questions that I asked him about ExxonMobil's
knowledge of climate science, yet their efforts to convince the public
that the science was not settled. He told me he wouldn't answer my
questions.
He did not demonstrate to the committee's satisfaction, in my view,
that he could be independent in Russia. For example, he said that
ExxonMobil had not lobbied against sanctions against Russia, when we
actually have the lobbying forms to suggest they had.
In both of those areas, I found his responses wanting, and I voted
against him.
I will be honest. I asked him about the resource curse question, and
today I kind of feel like I got snookered.
I said: There is a lot of concern about these countries that let
resource wealth go to dictators and further corruption. What are you
going to do about it, as the Secretary of State, working on
development, for example, of some of these poor nations? And he talked
about high-minded values and virtues of the things the United States
could do that would battle corruption and increase transparency.
He didn't tell me that he had been personally involved in an effort
to defeat the legislation that passed Congress in 2010. Now there is
press out suggesting that is the case, and he didn't tell me that
apparently there was an effort underway to undermine the transparency
statute that was so important.
I have to put it on the record. Within 1 day--within 1 day of the
Senate approving Mr. Tillerson for Secretary of State, the Trump
administration has relaxed sanctions on Russia. That happened today.
And now, apparently, we are going to vote to eliminate a law that
requires transparency among companies like ExxonMobil.
I kind of feel like I got snookered at the hearing. What public
interest is at stake in rolling this back? I don't think there is any.
Some say: Well, look, it is about leveling the playing field. The
United States shouldn't be at a competitive disadvantage, but U.S.
companies are at a disadvantage. Companies listed on the U.S. stock
exchange--wherever they are from--are required to do this transparency,
these disclosures, and many are already doing it. Because we have led,
the European Union and Canada have said this is a great idea, and they
are doing it too.
It would be a horrible thing if the United States pulled away from
its leadership.
In conclusion, I am concerned that in the opening 2 weeks of the
Trump administration--despite a lot of promises about what they would
do in the economy--what has the administration done about the economy?
On day one, they entered an Executive order retracting an FHA
mortgage reduction, thereby requiring homeowners with FHA loans to have
to pay more for their monthly mortgages. They have done a Federal
hiring ban that falls disproportionately on veterans because the
Federal workforce is a veteran-heavy workforce. They have done the
immigration rules that we have discussed which not only affect
immigrants but have a dramatic negative effect on America's technology
industry.
And then in the first two uses of the CRA procedure since the 1990s,
they have eliminated a rule to allow more pollution of streams in poor
areas where coal is produced, and now this--allowing companies to
escape transparency and make the very kinds of payments that lead to
corruption in foreign governments, corruption so severe that a former
Republican Member of this body was compelled to write a superb report
in 2008 and have bipartisan legislation passed.
I urge my colleagues to vote against the CRA repeal of this rule.
Mr. DURBIN. Mr. President, during my time in the Congress, I have had
the privilege of visiting many other nations, often fragile or new
democracies struggling to meet the needs of growing numbers of youth
and emerging middle classes.
For example, many of the fastest growing economies are in the
developing nations of Africa and Asia. In fact, a few years ago, the
World Bank said Africa was on ``the brink of an economic take-off.''
Such economic gains should be welcome news for lifting millions out
of poverty, providing better basic services such as education and
health care, and improving the lives of women.
They are also opportunities to create more markets for our goods and
services, to add to our global allies, and to reverse the conditions
that lead to violent extremism.
But for those of us who have visited many such nations, we are also
aware of a major impediment to realizing these improvements--namely
effective and clean government.
You see, too often, endemic corruption--frequently around lucrative
extractive oil and minerals--robs untold sums from generation after
generation in many of these nations.
Just look at such oil rich nations as Angola, Venezuela, Nigeria, or
Equatorial Guinea, where government after government squandered and
stole the oil wealth from its own people, far too many of whom still
live in terrible squalor.
Some of you may remember the devastating column Nicholas Kristof
wrote in 2015, ``Deadliest Country for Kids.'' Here is how he describe
Angola: ``This is a country laden with oil, diamonds, Porsche-driving
millionaires and toddlers starving to death. . . . this well off but
corrupt African nation is ranked No. 1 in the world in the rate at
which children die before the age of five. . . . Under the corrupt and
autocratic president, Jose Educardo dos Santos, who has ruled for 35
years, billons of dollars flow to a small elite--as kids starve.''
He continues: ``There are many ways for a leader to kill his people,
and although dos Santos isn't committing genocide he is presiding over
the systematic looting of his state and neglect of his people . . . Let
's hold dos Santos accountable and recognize that extreme corruption
and negligence can be something close to a mass atrocity.''
In 2008, Republican Foreign Relations Committee staff, under then-
Senator Richard Lugar, released a report on this scourge, ``The
Petroleum and Poverty Paradox.''
The report from Lugar discussed the ``resource curse'' which is a
``phenomenon whereby large reserves of oil or other resources often
negatively affect a country's economic growth, corruption level and
stability.''
Why is this important? Let me quote from the report: ``This `resource
curse'
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affects us as well as producing countries. It exacerbates global
poverty which can be a seedbed for terrorism, it dulls the effect of
our foreign assistance, it empowers autocrats and dictators, and it can
crimp world petroleum supplies by breeding instability. . . . This
report argues that transparency in revenues, expenditure and wealth
management from extractive industries is crucial to defeating the
resource curse.''
Wise words from a wise man.
And so, this report became the basis for a very thoughtful,
bipartisan law that I was proud to support which tried to tackle this
issue in a very commonsense manner.
It simply required that the SEC issue a rule requiring all oil, gas,
and mineral companies listed on the U.S. Stock Exchange to disclose
royalties, bonuses, fees, taxes, and other payments made to foreign
governments as a transparency tool for fighting corruption.
The U.S. law became the catalyst for others: all 28 European Union
member states have enacted similar legislation, followed by Norway and
then Canada, who are key players in extractive industries--further
establishing an international norm.
Moreover, a study conducted by business professors at George
Washington University and Catholic University found that increased
transparency resulting from disclosures required under the rule lowers
the cost of capital for covered U.S. listed firms by up to $12.6
billion.
So claims that this is burdensome and will result in competitive harm
to American firms are unfounded and simply untrue.
So here we are, 4 months since our intelligence services disclosed
that a former KGB official led a cyber act of war on our Nation and
democracy--and what is the priority of the Republican majority?
Establishing an independent commission to look into the Russian
attack?
No.
Taking up bipartisan legislation to tighten sanctions on Russia for
its attack on our Nation?
No.
In fact, not a single Republican has even come to the Senate floor to
discuss these grave matters of national security.
Ronald Reagan, who understood the Russian mentality so well, must be
turning in his grave to see this abdication by his party.
Instead, what is the majority party's priority?
Well, repealing health care from millions without an alternative--
and, now, trying to strip this good governance anticorruption law--one
led by a member of their own party and subject to years of debate and
input--aimed at addressing corruption that robs so much from the
world's poor--not exactly draining the swamp.
This isn't an onerous rule. It is simply a matter of disclosure,
transparency, and good governance. It is hard to understand opposition
to greater transparency.
As such, I will vote against his measure and I urge my colleagues,
especially my Republican colleagues who have made helping the world's
poor one of their endeavors to do the same, don't vote to put more
money in the pockets of the world's worst autocrats at the expense of
the world's most vulnerable.
Mr. UDALL. Mr. President, President Trump made bold claims about his
intention to ``drain the swamp.'' But here we are, debating a measure
that would do the exact opposite. The Senate is actually voting to kill
an anticorruption regulation.
This regulation was the result of bipartisan effort led by Senator
Dick Lugar. Senator Lugar was my mentor when I first joined the Senate.
He helped me better understand the role and traditions of this body;
and he showed me what it meant to be a statesmen.
Senator Lugar was one of the most thoughtful foreign policy experts
to serve in the Senate. He chaired the Foreign Relations Committee, and
he was deeply respected on both sides of the aisle.
He understood the ``resource curse.'' How developing countries with
billions of dollars in oil, gas, or other valuable minerals often had
the worst poverty, how the governments of these countries made deals
with huge corporations to sell their resources, but the citizens of
those countries never saw the benefits. Instead, corrupt leaders would
enrich themselves, rather than use the funds to pay for healthcare,
education, infrastructure, or housing.
Senator Lugar, with Senator Cardin, developed legislation to address
the resource curse, to bring transparency to an opaque system. The
result was section 1504 of the Dodd-Frank Act. It directed the SEC to
issue a rule requiring all oil, gas, and mineral companies listed on
U.S. stock exchanges to disclose the payments they make to foreign
governments.
This allows the citizens of those countries to hold their leaders
accountable. It shines a light on corruption. And when citizens can
demand that this money is used for their benefit, it reduces their need
for foreign aid.
Opponents of this rule claimed it would put American companies at a
disadvantage. In fact, it made the U.S. a leader. Other countries
followed suit and passed similar requirements.
The Cardin-Lugar rule became the global standard for transparency.
Today, 80 percent of the world's largest publicly listed oil, gas and
mining companies--including state-owned companies from Russia, China,
and Brazil--are subject to disclosure rules.
This resolution of disapproval is just one of many misguided efforts
by Republicans to use the Congressional Review Act to kill regulations
that protect the most vulnerable.
The CRA was enacted in 1996 as part of the radical deregulatory and
anticonsumer actions by shepherded by Newt Gingrich. Before now, the
CRA has successfully been used to overturn only one rule.
There is a reason it has only been successfully used once. The CRA is
a blunt weapon. It is a poorly written law that comes with unintended
consequences. The CRA allows Congress to strike down a rule in its
entirety with only an hour of floor debate in the House and without the
ability to filibuster it in the Senate.
This flawed process can undo years of careful work by stakeholders
and Federal agencies. Work done through an open, thoughtful rulemaking
process. The Cardin-Lugar rule took years to finalize. Republicans want
to kill it in a day.
And let's be clear--it does kill the regulation. Earlier today,
Leader McConnell mischaracterized this effort. He said, ``Let's send
the SEC back to the drawing board to promote transparency.''
But that is not what the CRA does. It doesn't send the agency ``back
to the drawing board.'' What it does do is prohibit the agency from
issuing another regulation that is ``substantially the same,'' unless
Congress specifically authorizes the agency to do so through subsequent
legislation.
The courts have not yet determined how different a new regulation
must be so that is not ``substantially the same.'' This discourages an
agency from issuing a new similar regulation once a rule has been
blocked.
This is not going back to the drawing board. This is going back to
corruption.
Mr. VAN HOLLEN. Mr. President, with this resolution, the Senate
majority is continuing its rush to overturn Obama administration
consumer and investor protections, this time by targeting a bipartisan
anticorruption measure.
In 2008, under the direction of Senator Richard Lugar, Republican
staff of the Senate Foreign Relations Committee produced a report,
``The Petroleum and Poverty Paradox: Assessing U.S. and International
Community Efforts to Fight the Resource Curse.'' They traveled to some
of the most resource-rich countries in the world and explored how
government corruption, fraud, and instability prevented those nations'
people from benefitting from their oil, gas, and mineral reserves.
Rather than spurring national economic development, benefits were
concentrated among government and military elites and organized crime.
According to the nonprofit research organization Global Financial
Integrity, in 2012, developing countries ``lose roughly $1 trillion per
year to crime, corruption, and tax evasion.''
The 2008 Foreign Relation Committee report led to the bipartisan
Cardin-Lugar amendment to direct the Securities and Exchange Commission
to require that all oil, gas, and mineral
[[Page S645]]
companies listed on U.S. stock exchanges disclose their payments to
foreign governments, including royalties, fees, taxes, and bonuses.
Congress enacted the Cardin-Lugar amendment as section 1504 of the
Dodd-Frank Act.
These transparency provisions are critical to combatting corruption
in resource-rich nations. And these provisions are critical to
protecting investors by ensuring that they have a clear picture of
companies' interactions with foreign nations.
As the Foreign Relations Committee report noted: ``transparency in
extractive industries abroad is in our interests because mineral wealth
breeds corruption, which dulls the effects of U.S. foreign assistance;
inequitable distribution of mineral revenues creates civil unrest,
threatening political and energy instability and adding a price premium
to commodities such as oil and gas; and energy rich countries can
become emboldened militarily.''
The Cardin-Lugar amendment continued American leadership in
anticorruption efforts, and has established a new global standard.
Similar rules ale now in effect in Europe, Norway, and Canada and apply
to 80 percent of the world's largest publicly listed oil, gas, and
mining companies, including state-owned oil companies in Russia, China,
and Brazil.
While many of the world's largest extractive businesses have
expressed support for transparency, including BP, Shell, and Newmont
Mining, the SEC rule has been strongly opposed by a narrow group,
including ExxonMobil. I am concerned to see the Senate acting to repeal
this rule and prohibit the SEC from ever establishing a similar
anticorruption and investor-protection measure in the same week that it
voted to confirm Rex Tillerson, former CEO of ExxonMobil, to be
Secretary of State.
There is no logical reason to go against international norms and
repeal a rule supported by much of the regulated industry, investors,
and advocates for transparency and government reform in favor of a
narrow opposition led by ExxonMobil. I urge my colleagues to reject
this special-interest favor to ExxonMobil and maintain this important
tool to fight corruption and protect investors.
The PRESIDING OFFICER. The Senator from Arizona is recognized.
(The remarks of Mr. Flake pertaining to the introduction of S. 276
are printed in today's Record under ``Statements on Introduced Bills
and Joint Resolutions.'')
Nomination of Neil Gorsuch
Mr. FLAKE. Mr. President, I want to speak for a couple of minutes
about the Supreme Court.
A year ago, we lost one of the greatest legal minds to ever serve on
the Nation's highest Court. For nearly three decades, Justice Antonin
Scalia fought for individual liberty and defended the integrity of the
Constitution.
No Justice in recent memory has so fundamentally influenced the
trajectory of the Supreme Court. From his landmark decision that
protected our Second Amendment right to bear arms to his staunch
defense of limited government and enumerated powers, Justice Scalia
stood as a bulwark against any erosion of our constitutional rights by
an activist judiciary. He did this with his unshakable commitment to an
originalist interpretation of the Constitution. Through this lens, he
did not read words that were not there or infer intent that did not
exist. Instead, Justice Scalia simply understood the Constitution, as
the Founders understood it.
Judge Scalia's passing marked a watershed moment for the future of
our country. Suddenly, in the midst of the last Presidential campaign,
voters were empowered to determine the philosophical balance of the
Supreme Court at the polls. By entrusting Republicans with the
stewardship of our Federal Government, voters signaled their desire for
change and for the values that our party embraces. From strong
separation of powers to a commitment to federalism, to religious
freedom, people in Arizona and around the country wanted to restore
these foundational principles. Now, President Trump's nomination of
Judge Neil Gorsuch to the Supreme Court will help usher in that change
and solidify those values on the Court for a generation to come.
Earlier this week, I had the opportunity to attend the ceremony at
the White House and listen to Judge Gorsuch accept his nomination. I
was impressed by his humble respect for the law and for his commitment
to service. I was particularly struck by his recognition that ``it is
for Congress, not the courts, to write new laws'' and that a Justice
should make decisions based on what the law demands, not the outcome
that he or she desires.
I also appreciate his experience as an appellate court judge. This
experience has given him a firm understanding of a properly functioning
Federal circuit. As someone who has tried to reform an oversized and
overworked Ninth Circuit, I really appreciate that insight.
Judge Gorsuch is an accomplished, mainstream jurist with a judicial
philosophy worthy of Judge Scalia's seat. We can be confident that he
will read the law as written and not attempt to legislate from the
bench, but if we allow rigid partisan and ideological calculus to seep
into our confirmation process, I fear that no President will ever be
able to get a Cabinet or Supreme Court pick confirmed.
A favorite line of our former President is that ``elections have
consequences.'' Indeed, they do. Like it or not, the winning party
governs. That is democracy, and we have a responsibility now to govern.
My hope is a return to the longstanding traditions of bipartisan
cooperation on this Supreme Court nomination. Judge Gorsuch is
experienced. He is qualified, and he deserves a fair hearing. He
deserves an up-or-down vote on the Senate floor. I am confident that
when he receives that up-or-down vote, he will fill the vacancy on the
Supreme Court.
I yield back.
The PRESIDING OFFICER. The Senator from Hawaii.
Mr. SCHATZ. Mr. President, back on the topic of the evening: the
Congressional Review Act action to overturn the SEC's rule.
I am just kind of at a loss for words. There are people back home
asking how politics is going, and they have a certain set of
assumptions about the way Congress works. They watch ``House of
Cards.'' They watch movies about politics. They have watched other TV
shows on Hulu and Netflix, whatever it may be. I submit to you that
what we are doing right now is so corrupt, so grotesque, so obvious, so
trite that it wouldn't even make the cut as a plot for a TV show about
politics because who would believe that the Republican Congress, as one
of their first acts, would pass a law prohibiting the implementation of
a rule that requires oil companies to disclose what kind of foreign
payments they are making for the privilege of extracting resources.
So what does that mean? You have oil companies that in order to
extract resources in places like Africa and elsewhere--mostly poor
countries around the globe--they have to cut a deal with whoever is in
charge of the government in order to have access to that
resource. Whether it is in Equatorial Guinea, Indonesia, Africa,
Myanmar, or elsewhere, they cut a deal with the governing despot,
usually. That money very often makes it directly into the pockets of
the family of the people who run the country. This is what Senator
Cardin was elucidating, as was Senator Leahy and the ranking member,
Senator Brown.
But this issue was new to me, and I came to the floor not as a member
of the Senate Foreign Relations Committee but as a citizen. I can't
believe we are doing this. This is one of the stinkiest pieces of
legislation that I have seen in my now 5 years in the Senate and my 8
years in the Hawaii State Legislature, in my life in politics. I can't
believe that we would have the gall to put a bill on the floor to
prevent us from disclosing what kinds of foreign payments--that is a
euphemism--are being made to despots and autocrats around the planet.
These are American companies traded on the stock exchange, American
companies making foreign payments, euphemistically, for the privilege
of extracting primarily oil. Our ability as a country to be the world's
lone superpower--as Madeleine Albright called us, ``the indispensable
nation,''--to be the superior country when it comes to money, morals,
and might is now in question. Everywhere you look, it seems like
America is ceding global leadership.
China is set to outshine the United States on climate change policy--
[[Page S646]]
China. Germany's Prime Minister is explaining international conventions
on refugees to the President of the United States. We have insulted
some of our closest allies in the fight against ISIS with a Muslim ban.
Now we are alienating ourselves from Australia, a country that has
stood with the United States in every major conflict since the
beginning of the 20th century. It is hard work to offend Australia. You
have to go out of your way in a phone call between the United States
and Australia to have it go sideways.
So the world is asking if the United States will still lead in the
fight against ISIS. The world is asking if the United States will still
keep its word, and they are asking if the United States is still the
moral leader for the world.
I think everyone in the Congress would agree that the answers to
these questions should be a resounding yes, but somehow one of the
first orders of business in this Republican Congress is not a bill that
demonstrates American leadership but one that concedes it, because that
is exactly what we would do if we overturn the Cardin-Lugar amendment.
If we diminish our moral compass, the rest of the world stops looking
at the United States as the leader among nations. The law we are voting
to repeal set a new international standard in the fight against
corruption. It requires oil and mining companies that are listed on the
U.S. Stock Exchange to report any payments they may make to foreign
governments. The idea is that the companies won't bribe dictators in
mineral rich countries because they know they will have to disclose the
payments.
After the United States passed this law in 2010, some 30 countries
followed our lead, but we never got to implementing it. So today, more
than one-third of the world's oil and gas companies have strong legal
incentives to do business the right way. If Republicans get rid of this
disclosure requirement, it will be bad for American consumers.
In 2004, a Senate subcommittee uncovered that oil companies,
including ExxonMobil, have paid hundreds of millions of dollars to the
President of Equatorial Guinea, which is an oil-rich country in Africa.
That money didn't go to the businesses and citizens. It went directly
into the pockets of the President who has been called Africa's nastiest
dictator. Instead of buying food or roads for people--by the way, most
people who live there live on less than $1 a day--the President and his
family bought real estate in Paris, luxury cars and life-sized
statues--plural--of Michael Jackson.
Getting rid of this amendment will also be bad for national security.
Senator Lugar is one of the Republican Party's most distinguished
foreign policy voices and the former chairman of the Foreign Relations
Committee. He understood the risk. He understood how corruption fuels
insecurity, poverty, and oppression in other countries and how that can
contribute to the condition that breeds violent extremism. That is why
he fought for the level of transparency required by this rule and to
make it harder for dictators to steal from their own citizens. That
means that getting rid of the Cardin-Lugar amendment is also bad for
investors. If a company is operating in a risky, corrupt, unstable
country, investors have the right to know. If a company is perhaps even
adding to the region's insecurity, investors have a right to know that
too. But that right is now in jeopardy.
The way Republicans are going about this, we won't be able to revisit
this once it is all said and done. This is an important point. I said
it last night on the stream protection rule, and I think it bears
repeating. If you do a CRA action--we are now on the third in American
history, and the second was yesterday. The first was sometime in the
eighties, about ergonomics. The reason this never gets done is because,
when you overturn a regulation using the Congressional Review Act, it
is an incredibly blunt instrument. What happens under law is that the
rule can't be promulgated again. You can't tweak this thing.
As to the concerns that were expressed by some of the Members on the
Republican side about the modifications they would like, if we want to
legislate, let's legislate. But what they are going to do is overturn
this rule and the Securities and Exchange Commission from doing
anything ``substantially similar'' ever again. Everybody who
understands the CRA under the law understands that, basically, we can't
touch this topic again. So this isn't about fixing a reg or being a
check on runaway bureaucrats. These so-called bureaucrats, these civil
servants in the Securities and Exchange Commission, had a statute. They
were told to do something. Now, they took forever to do it, but that is
not running away and going rogue. That is going a little slow, I will
grant you, but they did the right thing pursuant to the law.
Now--I don't know why, but I have my suspicions; I don't know why,
but I have my suspicions--we are overturning both a rule and a law that
requires the disclosure of payments to foreign governments made
primarily by oil companies. It is one of the most awful things I have
seen done in the Congress--not just when I have been here but as I have
observed it over the last 20 years.
I yield the floor.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. MERKLEY. Mr. President, I appreciate my colleague from Hawaii,
both on the substance of the issue and on the Congressional Review Act
and how it is an unsuitable tool in a situation like this because of
how it bars the door for a simple way to replace or modify a
regulation.
I am coming to the floor tonight to share my concerns about a basic
challenge we have in the world. This basic challenge is that when you
get a ruler of a country who is corrupt, they forge contractual
relationships, particularly if they are rich in minerals or oil, and
they pocket the money and they spread the corruption. It makes it
virtually impossible for the interests of the people of that country to
be represented by their government because whatever governing body they
have keeps making decisions based on those corrupt payments.
Now, we are a nation that values government by the people--of, by,
and for the people. That is the vision of our Nation, but that vision
would not be fulfilled if the Members of this body were being paid by
foreign companies to serve the interests of the foreign companies
instead of the interests of the people. We can understand from our own
perspective our own desire to have a government that serves our
citizens and that other nations want to have a government that serves
their citizens. That is what this particular bill and the regulation
that flows from it were all about. It was section 504 of Dodd-Frank,
the resource extraction rule, that was passed now 7 years ago.
It took quite a while to get the regulation into place. The first
version came out in 2012, after a tremendous amount of consultation was
struck down in court because it was challenged by one of the companies
that did not want to have transparency in international payments. Then
folks went to work again and produced a rule that went into effect this
last year. Unfortunately, we are about to strike that down.
I was thinking about how one of the champions for this was Senator
Dick Lugar of Indiana. I was so impressed by his thoughtfulness when I
came to the Senate. He had been here quite a while, and he worked to
really understand issues, and he worked to solve problems. He didn't
work to obstruct an administration because it was of a different party.
He didn't work to sabotage the work of this body because one party or
the other was in the majority. He worked to solve problems. He had
really a deep understanding of the challenges in the world.
He could see this from his considerable experience. He was on foreign
relations for a very long time, and he served as its chair. He knew
from his own work in that committee, from his own studies, from his own
travels, and his own conversations--overseas conversations with foreign
governments and conversations with our State Department and our Defense
Department--that we had a significant issue in which contracts with
large companies are used to defeat government of, by, and for the
people in nations around the world. He wanted to do something about it.
He had partnerships, and Members of our own body who are still serving
here today were deeply involved in this.
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It was a tremendous provision, but the American Petroleum Institute
wasn't happy about it because it has worked really well for oil
companies to not disclose and to make deals with ruling dictators and
ruling families or ruling governing groups, whether they be in a so-
called elected form or unelected form.
Well, finally, last year the rule was completed in June. They crafted
a rule that, for the most part, made various stakeholders happy and it
won broad international support. Dozens of other countries--including
Canada, Norway, and countries of the European Union--followed American
leadership. They adopted similar laws. So our particular law made it
clear that if a company was listed on our stock exchange--on any of our
exchanges--and it made a significant payment--$100,000 or more--it had
to disclose that payment. That wasn't just U.S. companies. It wouldn't
just have been U.S. companies. It was any company listed on our
exchange, no matter where it was based. Other companies followed suit.
So companies based in other countries were affected. So, basically, it
was a vision that in short order took over the entire world, with
developed countries coming together and saying that we are going to
stop this process that destroys governments for the people in so much
of the world.
It isn't just kind of a theoretical question of some liberal vision
of how governments work. We are talking about the difference between
the decisions of dictators to stash billions of dollars overseas or
build health care clinics. We are talking about the difference between
dictators buying hundreds of the world's most expensive sports cars or
developing an education system in their countries. We are talking about
the fundamental quality of life for millions and millions of people
around the world. This provision, this resource extraction rule, went
in an enormous direction in terms of making the world a better place.
Shouldn't that be what we are about?
This challenge of foreign contracts with money diverted into the
pockets of the dictators and the ruling class--the money that should go
to the development of the country--is particularly a problem in
resource rich countries with weak institutions. They have weak courts.
They have weak investigative branches to find corruption. They have
courts that essentially exorcise the ability to try people for which
there is evidence, who should be charged and should be convicted. So
the same corruption that affects the decisions that are made protects
those who make those decisions. This means that if you have someone who
grows up in this country and says: We have hundreds of billions of
dollars of resources and nothing to show for it; so let's change that
system; let's change that system and enable the people of this country
to benefit from schools and health care and transportation; let's
develop our nation, they are stymied by this complex web of undisclosed
corruption. So that is what this bill is all about, and that is what
this rule stemming from the section of the bill is all about.
Let's take, for example, a poster child for this resource curse. In
many countries, it is known as the oil curse. Oil is a particularly
prominent case. But the Democratic Republic of the Congo has not just
some oil but a lot of minerals. It is a significant producer of the
world's cobalt, diamonds, tin, gold, and other minerals. This problem
of a corrupt dictator goes way back to decades ago. His name was well
known around the world: Mobutu Sese Seko. He ruled from 1965 to 1997,
so 32 years, three decades. It is estimated that he diverted from the
country $4 billion to $15 billion. That is a lot of roads being built
in a poor country. That is a lot of food for people who are near
starvation. That is a lot of public school education. That is a lot of
health care clinics. So one very rich man was stashing money in Swiss
bank accounts rather than that money going to the government to do
fundamental responsibilities for the people. The country has an
estimated $24 trillion in mineral deposits. When we think about that,
the $4 billion to $15 billion doesn't sound like very much.
Often, the way it works is these corrupt payments enable companies to
get contracts far below cost, which is not a good thing, obviously, for
these impoverished nations, to be essentially giving away their money
because they are being bribed to do so.
So that is extremely disturbing to me, this particular issue being
done here late in the evening, with very few of my colleagues here--
mostly colleagues who are trying to fight this rule. Those who are
supporting the multilateral corporations, the multinational
corporations that don't like to have disclosure, they are not here to
talk about how this is damaging the lives of millions of people in the
poorest countries around the world. Maybe we need to have a rule in the
Senate that if you are going to damage the lives of millions of people,
you have to actually be here to hear the debate.
This debate is limited to just 10 hours, 5 hours on either side. If
one side gives back their time, it is just 5 hours. There are not a
whole lot of conversations. Maybe we could limit the conversation to 20
minutes a person or 10 minutes a person so we get a lot of voices in.
Before we go about the process of destroying the lives of millions of
people all around the world, maybe, instead of just listening to the
lobbyists for a multinational bank in your office, you should be here
on the floor to have a conversation about the damage you are
contemplating doing. Maybe then we would have an actual debate here in
the U.S. Senate--a place that used to be a place where people did come
and listen to each other debate issues. Perhaps there are good
arguments to the contrary that I haven't heard because my colleagues
aren't here presenting them. And maybe out of that mutual exchange, we
would find a path to do something other than using this crude and
destructive tool to strike down this very important provision.
There are three groups who benefit from this disclosure rule. The
first group who benefits is the investors in a company who want to
invest in companies that have responsible practices. The disclosure
gives them the ability to have that information.
The second group who benefits is consumers who want to buy products
from companies that engage in responsible practices, and disclosure
enables them to do that.
The third group, though, really is the most important group, and that
is a group of citizens in the country who are being corrupted by these
payments because when they hear that a company has a contract and has
paid X amount of billion dollars for that contract, then the newspapers
of that country and the citizens of that country can try to get
additional information: Did you take the percentage of that that was
supposed to go to the regional government and actually get it disbursed
to the regional government? Did you take the percentage of that that
was supposed to go to the local city or province and did it get there?
They can start to see that there is this lump of money that is supposed
to be serving the citizens, and they can ask questions about how it
serves the citizens. What bank account did it go into--so they can
follow the money and track the money. But they have no ability to do
that if these payments are hidden. That is what this is about.
So it is about investors who want to do the right thing, consumers
who want to use their marketing and purchasing power to do the right
thing, but it is really about the citizens of that country not having
their resources diverted when they desperately need the fundamental
things, such as transportation and education and health care.
Well, Senator Lugar said recently that if we allow this rule to be
repealed, it would be ``a real tragedy for democracy and human
rights.''
I agreed with Senator Lugar when he said, ``It is hard to believe
that this would be such a high priority right now.'' We have a lot of
issues in the world that we are challenged by, including security
issues. We have a lot of nominations to address and debate. Why is it
such a high priority at this moment to tear down a provision that
improves the quality of life for millions of people in some of the
poorest countries in the world? Why is it so important at this moment
to tear down a law that reduces corruption in governments around the
world? Why is it so important right now to destroy this provision that
helps create an opportunity for ``we the people,'' a government that we
profess to believe in?
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It is well known that the CEO of ExxonMobil traveled to Washington to
personally lobby Senator Lugar on this section. He wanted this
provision scrapped, and that individual is now our Secretary of State.
That certainly disturbs me, that the day after he became Secretary of
State, the provision he lobbied for as an oil executive is being
accomplished here on the floor.
Because of his testimony in committee, there was some hope that he
would stand up and fight for the fundamental visions of our country,
the fundamental values and principles of our country, and if so, he
would be sending out information right now saying: Stop what you are
doing because I know how this works around the world and how it
destroys ``we the people'' governments, and we shouldn't be doing it;
that is, we should keep the provision we have right now.
Nigeria is another nation that has had a resource curse or oil curse.
Last year, a deal was struck between ExxonMobil and the Nigerian
Government--or it came under investigation last year by that country's
anti-corruption and law enforcement agency, the Economic and Financial
Crimes Commission. The investigation surrounds a 2009 agreement where
an Exxon subsidiary and the Nigerian Government agreed to renew a 40-
percent share in three new oil licenses. Exxon reached a deal to pay
$600 million for those licenses, and it built a powerplant at a cost of
$900 million, so it made a $1.5 billion investment. So a $1.5 billion
investment--that sounds like a pretty high sum for a contract.
However, an outside group who was investigating corruption found that
the Nigerian Government had valued those contracts at $2.15 billion--in
other words, $1 billion more than what Exxon was paying. Furthermore,
they found that wasn't just in theory because another bidder offered
$3.75 billion, and that is more than twice what Exxon paid. But the
Exxon deal was chosen.
Isn't there some sense that something is wrong when a government
rejects a payment that is $2.25 billion more than the offer that was
accepted? That is what happens with corrupt payments between powerful
companies and dictators. That is what destroys government of, by, and
for the people around the world.
It is estimated that over time--that is, since 1960, so after the
last 57 years--$400 billion of Nigerian oil revenues have disappeared
due to corruption--$400 billion disappeared. What would $400 billion do
to improve the lives of Nigerians?
That is why transparency in these payments is so important. It
affects impoverished people all over the world. We can have all of our
aid programs, we can have our Food for Peace Program, we can have our
Millennium Corporation, but this type of deal does so much more damage
than all the good we do through our programs that we budget for and put
money into.
If we enable, if we promote corruption around the world, we do
enormous damage. That is why a bipartisan group of Senators, including
Dick Lugar leading it, took this on.
How about Equatorial Guinea. It is one of Sub-Saharan Africa's
largest oil producers, and it, like many other oil countries, has the
oil curse. President Obiang has been in power since he ousted his uncle
in a military coup in 1979 and declared himself President for life.
Let's just say what he is: He is a dictator. His government has been
known to detain arbitrarily and torture critics, to disregard
elections. It has been prosecuted for using oil profits for financial
gain of the President's family. The result is, although this country is
one of the wealthiest African nations per capita, the majority of the
Nation's citizens survive on less than $2 a day. Let me clarify that.
It is one of the richest African nations per capita, but a large
percent of the citizens survive on less than $2 a day because President
Obiang and his extended network--his extended corrupt network--are
stealing the resources of the country, and they are doing it often
through contracts with oil companies like Exxon, which happens to be a
major partner in exploiting the resources of Equatorial Guinea.
Less than half of Equatorial Guinea has access to clean drinking
water, a fundamental need and a fundamental factor in health. Twenty
percent--that is one out of every five children--die before reaching
the age of 5. This is because of the corruption that is facilitated by
undisclosed sums, reinforcing a dictator--a dictator whose family owns
fleets of fancy sports cars, luxury yachts, private jets, massive
properties in Europe, massive properties in Brazil, and properties
right here in the United States. But one-fifth of the children die
before age 5. That is why this is so important.
Let me conclude by saying that what we are doing here tonight in
putting this forward with no real debate because my colleagues are not
here--a few colleagues are here to give speeches like I am giving to
say ``Stop, this is wrong,'' but our colleagues are not here to hear
us. What is happening tonight is an enormous travesty. It is an
enormous blight on the United States, which led the world in taking on
this problem and now is abandoning not just that leadership but is
abandoning the principle. The world is worse off for it.
I hope that my colleagues will somehow come to an inspiration or a
revelation, that those who are not here listening to this will come to
an understanding that something is wrong with this and will oppose this
effort to repeal this very important provision. But I know that the
heavy hand of corporate lobbying is behind the fact that this is on the
floor tonight, and I am not optimistic. That saddens me a great deal.
Let us strive to have a process that honors the importance of the
issues before us. This short debate, with virtually no one present,
does not honor it and does enormous damage, and it is just wrong.
The PRESIDING OFFICER. The Senator from Massachusetts.
Ms. WARREN. Mr. President, for the first time in more than a decade,
the Republican Party controls the House, the Senate, and the White
House. This week they are starting to roll out their legislative
agenda.
So now that they have complete control of the agenda, what do the
Republicans have in store? Something to bump up wages for working
families or something to create more jobs? Something to tackle the
student debt crisis? Maybe something to deal with all the jobs that get
shipped overseas? No, one of the Republican Party's first orders of
business is a giveaway to ExxonMobil that will help corrupt and
repressive foreign regimes and make it easier to funnel money to
terrorists around the world.
Here is the problem. Big corporations like Exxon--or other oil, gas,
and mining companies--often pay millions of dollars to foreign
governments to access natural resources located in these countries.
Many of these foreign regimes are corrupt, and Exxon's massive payouts
regularly end up in the pockets of government officials rather than in
the hands of the people. These corrupt officials get filthy rich while
their citizens face punishing poverty and dangerous working conditions.
Worse still, some of these undisclosed payments can end up financing
terrorists.
Just over 6 years ago, Congress passed a bipartisan provision to help
tackle this problem. With the strong support of Senator Dick Lugar, the
leading Republican on the Senate Foreign Relations Committee, Congress
required oil, gas, and mining companies to disclose any payments they
make to governments to extract natural resources. Republicans and
Democrats agreed that shining a light on these payments would help
combat corruption and terrorism around the globe and help citizens in
some of the very poorest nations in the world hold their own
governments accountable.
Disclosing these foreign payments also helps investors right here in
the United States so they can make more informed investment decisions.
Some investors may want to stay away from companies that could face
expensive lawsuits for violating the Foreign Corrupt Practices Act or
other anti-corruption laws. Other investors, quite frankly, may just
prefer not to invest in companies that could be helping prop up corrupt
foreign governments or indirectly financing terrorism.
Congress directed the Securities and Exchange Commission to write the
rule, and the SEC spent years soliciting input from investors, from
human rights advocates, from anti-corruption experts, and from oil,
gas, and mining companies. The agency ultimately issued a ruling last
year, and it
[[Page S649]]
worked. The rule gained the support of faith groups, human rights
groups, development organizations, and anti-corruption advocates all
around the world. The rule also earned the support of investors who
collectively controlled more than $10 trillion in assets, and--we
should really be proud--it set an international standard, with the
European Union, Canada, and other countries adopting similar standards
for companies in their own countries.
But it didn't go down well with everyone. A handful of powerful oil
and gas companies have been after this requirement from the start, and
Exxon has been leading the pack on this. In fact, Rex Tillerson, the
CEO of Exxon at the time, personally lobbied against the requirement
back in 2010. His reason? What was his objection? The foreign payments
rule would undermine Exxon's ability to do business in Russia. Listen
to that again. If Exxon has to tell the world about the millions of
dollars it hands over to the Russian Government, Exxon wouldn't be able
to do as much business in Russia. So now the Republican Congress wants
to rush in to help out poor Exxon so they can keep the secret money
flowing to these Russian officials.
This Exxon giveaway shows just how bankrupt the Republican agenda is.
They don't have any ideas for helping working families. It is just one
corporate giveaway after another--making their big business donors
happy and keeping the campaign contributions flowing for the next
election. But the economic lives of our working families, our moral
leadership in the world, the safety of our financial system, and the
water we drink and the air we breathe--all of those--are just
afterthoughts to the corporate wish list.
If you are a corrupt foreign dictator, Republicans rolling back the
rules is great for you. If you are an oil company executive,
Republicans rolling back the rules is great for you. But if you are
anyone else, you should be outraged that the Republican Congress is so
willing to throw you under the bus to please these groups.
I urge all of my colleagues to vote against this resolution.
I yield the floor.
The PRESIDING OFFICER. The Senator from Ohio.
Heroin and Prescription Drug Abuse Epidemic
Mr. PORTMAN. Mr. President, I rise tonight to talk about a problem
that is affecting every single one of the States represented in this
Chamber and every one of our communities. It is one that folks back
home are, unfortunately, experiencing and, frankly, we don't talk
enough about this in Washington. It is this epidemic of heroin and
prescription drug abuse.
How bad is it? We just learned very recently that for the first time
in 23 years, life expectancy in the United States has gone down, and
there is no question that the surge in heroin and prescription drug
addiction is one of the reasons. In fact, the demographic that saw the
biggest drop in life expectancy was among middle-aged White women--the
very group that has been hardest hit by the heroin and prescription
drug epidemic in overdoses and overdose deaths. Unbelievably, this
epidemic is actually driving down life expectancy in our great country.
It has been pretty dramatic. The number of heroin users in the United
States has tripled since 2007, and the number of heroin overdoses has
tripled just since 2012. It has gotten to the point where we are now
losing one American life about every 12 minutes to this epidemic. So
during this talk today, which will be about 12 minutes, we expect
another American to die of a heroin overdose.
Congress has begun to act, and I applaud the House and the Senate for
that. We have acted over the last year to do a couple things. One is
that, in the appropriations bill that passed at the end of last year,
we put more money aside for treatment. So States are now receiving
grants--$500 million this year, $500 million next year. These grants
are needed. It is going to the hardest hit States. It is going to
States based on their need, which I think is very important, because
some States are hit harder than others. My colleague from Ohio is here
on the floor, and he has been very involved in this issue as well. My
State has been one of those States hardest hit. Some think that Ohio
now has the highest number of overdoses when we add prescription drugs,
heroin, and synthetic heroin, like fentanyl.
Second, last summer Congress took what I think is the biggest step we
have taken in decades in terms of fighting this issue when we passed
the Comprehensive Addiction and Recovery Act. The President signed it
into law. It is already helping with regard to providing more
prevention efforts, treatment, and long-term recovery. It is also
helping our law enforcement and other first responders to be able to
handle this growing crisis.
We fully funded this Comprehensive Addiction and Recovery Act--also
called CARA--this year, and now we need to ensure that the new
administration that has just come in continues to effectively implement
this program as quickly as possible.
Just in the last few weeks, three of CARA's grant programs got up and
running. One is funding for drug courts. Those who are involved with
drug courts back home already know this, but it is a very effective way
to take those who are in the criminal justice system because of a drug
issue--prescription drug and heroin issues in particular--and get them
into a diversion program where they can get treatment, with the risk of
going back to incarceration if they do not stay clean. This is really
working well in some of our communities in Ohio. They are also using
interesting new techniques, including a medication called VIVITROL, to
keep people off of their addiction.
Second, we have just put in place for the first time ever programs
for recovery support services. Again, in this legislation, CARA, we
funded long-term recovery. So it is not just a detox center, not just a
treatment center that might be short term, which they usually are, but
longer term recovery, including getting people into sober housing,
providing them with people who will support them and encourage them.
That, we have found out, keeps people from relapsing and is incredibly
powerful.
Third, there has been a grant to empower States and local governments
to help fight this epidemic.
This is all-important. It is real progress. But our work is far from
done. In fact, there are five more CARA grant programs yet to be
implemented.
Again, I call on the new administration to do so urgently. I know
they are focused on this issue. We just need to get these programs up
and going to help our communities right now.
Near my hometown of Cincinnati, OH, the Winemiller family of Wayne
Township had a pretty tough Christmas. They were missing a son and a
daughter because of heroin. Over Easter weekend last year, Roger
Winemiller found his daughter Heather dead of a heroin overdose in
their bathroom. She left behind an 8-year-old son. Then, just 5 days
before Christmas, Heather's brother Gene--a father of three children
under 18--died of a heroin overdose. Gene started abusing painkillers
when he was in his early twenties. He became addicted, and when the
pills were too expensive, he switched to heroin, which is cheaper and,
really, more accessible.
Unfortunately, this is a fairly common story in my home State and
around the country. We are told this is how four out of five heroin
addicts in the United States started on heroin--prescription drugs.
Heather and Gene both got clean several times. Heather was clean for
3 years before she relapsed and died. These were vibrant people; they
loved life. Heather loved gardening, and she was a huge Ohio State
Buckeyes fan. Gene loved rock music, hunting, and fishing. But they
both made the tragic mistake of trying these drugs, and it changed
their lives forever.
Gene Winemiller's funeral took place at Blanchester Church of Christ
in Blanchester, OH. I know Blanchester, OH, pretty well. It is a small
community of about 4,000 people. The very next day, there was another
funeral in that same church in this small town of 4,000 people for a
heroin overdose. As Gene's dad Roger puts it, ``I can't emphasize
enough: No one--no one--is immune from this epidemic.''
Unfortunately, he is right. It knows no zip code. It is in the rural
areas. It is in the suburban areas. It is certainly in our inner
cities. It is everywhere.
[[Page S650]]
Take Cleveland, in Northeast Ohio, for example. Cleveland medical
examiner Thomas Gilson said that ``2016 was an unprecedented year.''
The number of overdoses in Cleveland doubled in 2016 compared to 2015--
doubled. Overdoses are happening all over the Cleveland area. More than
150 heroin overdose deaths happened in the city and another 150
happened in the suburbs, kind of evenly split. It is everybody, every
group, every age group--African American, White, Hispanic.
Take Dayton, OH, in Southwest Ohio, as another example. In Dayton
last year, there were more than 2,500 overdoses, about 7 a day. About
half of the victims were men, and about half were women--some in the
cities and some in the suburbs, with 60 percent in their thirties and
forties and 40 percent who were either younger or older than that. So
this is happening all over our State and all over our country--in
cities, suburbs, inner cities, and rural areas and to rich and poor,
old and young alike.
In 2015, Ohio statewide experienced a record 3,050 drug overdose
deaths, which is a 20-percent increase from 2014, and more than
quadruple the number of overdose deaths in 2000. In 2015, we lost an
Ohioan every 3 hours to this epidemic. Sadly, the toll was even higher
in 2016. We don't have the final numbers yet.
One of Ohio's economic assets, of course, is our location. We are
centrally located. It is great for transportation. They say half of
America's consumers are within 1 day's drive from Cincinnati,
Cleveland, and Columbus. Unfortunately, that central location also
makes us very vulnerable to drug traffickers.
Last year, Ohio State troopers confiscated nearly 160 pounds of
heroin. Depending on the potency, that could be equivalent to more than
$50 million--or more than 180,000 injections--of heroin. That is nearly
triple the amount of heroin seized the year before. The Ohio State
Highway Patrol also confiscated a record-level number of illegal
painkillers and methamphetamines last year.
We have to thank our law enforcement officers because they are saving
lives every day by keeping this poison out of our communities,
certainly, but also helping to reverse the overdoses with this miracle
drug called naloxone or Narcan. In 2015, the last year we have numbers
for, Narcan was administered 16,000 times. Think about that: 16,000
people were saved who could have died of an overdose, thanks to our
first responders and their professionalism. We don't have numbers yet
for 2016, but, again, it is going to be, unfortunately, far higher than
that.
The Washington Post recently published a report on the heroin
epidemic in Chillicothe, OH, where there were more than 300 overdoses
last year, and where a single police officer, Officer Ben Rhodes, says
that he used naloxone to reverse an overdose more than 50 times. One
church in Chillicothe, Zion Baptist Church, recently had funerals for
three overdose victims in 1 week. I know Chillicothe. It is a small
town of about 21,000 people.
Heroin and prescription drug painkillers are flooding our communities
to meet a rise in demand. CARA, this legislation I talked about, will
reduce that demand by increasing access to treatment for those who need
it and preventing new addictions from starting in the first place
through better prevention and education efforts.
After CARA became law, I introduced bipartisan legislation to take
another step. This is called the Synthetics Trafficking and Overdose
Prevention Act, or the STOP Act. Again, it builds on CARA because it
helps reduce the supply of drugs coming into our communities.
Some of the deadliest drugs coming into Ohio are synthetics--drugs
such as fentanyl, carfentanil, or U4, essentially synthetic heroin that
is made in a laboratory somewhere. Guess where these drugs are coming
from: overseas. Boy, they are incredibly powerful. Fentanyl can be more
than 50 or even 100 times as powerful as heroin. According to the Drug
Enforcement Agency, it takes about 2 milligrams to kill you.
Carfentanil is even more powerful than that--up to 10,000 times as
powerful as morphine. It is so powerful that it is used primarily as a
tranquilizer for large animals like elephants.
Heroin bought on the street today in Ohio and elsewhere is often
laced with these drugs to make it more potent. Roger Winemiller, the
Dad I talked about a few moments ago who lost his two kids, compares
buying heroin to playing Russian roulette because you never know the
potency of the drug that you are buying. Many of these spates of
overdoses in our urban areas in Ohio are because of the mix with
fentanyl and carfentanil.
These fentanyl deaths in Ohio have increased nearly fivefold in the
last 3 years. Three years ago we had about 1 in every 20 overdoses in
Ohio because of fentanyl. Now it is one in five. We expect it soon to
be one in three. You can see where this is going.
I talked a minute ago about the trafficking of drugs on our
interstate highways. That is a serious problem, but so is the problem
of traffickers shipping these drugs through our mail system to our
communities to meet this growing demand.
Just yesterday the U.S.-China Commission released a report about the
trafficking of Chinese fentanyl into this country. The report says:
The majority of fentanyl products found in the United
States originate in China. . . . Chinese law enforcement
officials have struggled to adequately regulate the thousands
of chemical and pharmaceutical facilities [laboratories]
operating legally and illegally in the country, leading to
increased production and export of illicit chemicals and
drugs. Chinese chemical exporters . . . covertly ship drugs
to the Western hemisphere.
That is from a report just yesterday. Right now these drugs are
difficult to detect before it is too late. Part of the reason is that,
unlike private carriers such as UPS or FedEx, the Postal Service does
not require information about packages. If you are a private carrier,
you have to have electric customs data for packages coming into the
country, saying where it is from, what is in it, where it is going.
This means the U.S. Postal Service is a more attractive way for
traffickers to get these dangerous drugs like fentanyl or carfentanil
into our country. It shouldn't be this way. It doesn't have to be this
way.
The STOP Act would close that loophole and make the Postal Service
require advanced electronic data. Where is it coming from? What is in
it? Where is it going? That information on these packages before they
cross our borders would be incredibly helpful. It is common sense. It
would help stop these dangerous synthetic drugs from being trafficked
into the United States, and it would save lives. That is what our law
enforcement officials are telling us.
I know the scope of this epidemic is daunting. It is in your State of
Indiana. It is in my State of Ohio. Its consequences are hard to even
think about because it is about the overdose deaths, but it is far more
than that. It is about people not being able to live out their dream.
It is about higher costs for law enforcement. It is about crime. It is
about our workforce and people not being able to go to work and not
being able to find workers who are drug free. It is about so much that
affects our communities.
Yet there is hope. We have to work here in Congress to continue to
promote legislation and policies that will help us to achieve the dream
of turning this tide around. The STOP Act that I talked about is going
to help keep some of that poison out of our communities and increase
the cost of heroin. That is good.
These synthetic heroin increases are really concerning. Treatment is
incredibly important, and it can work. I have met so many people across
Ohio who have beaten their addiction--people who are now back on their
feet, back with their kids, back with their families. It is hard, but
with treatment and a supportive environment, particularly this longer
term recovery, it can be done.
Last year I met with Aaron Marks in Columbus, OH, at a conference
held by the Ohio Association of County Behavioral Health Authorities.
Aaron is from Cleveland, a suburb called Beachwood. He began using
prescription painkillers as a freshman at Beachwood High School. He was
just 13 years old.
Again, it is a story that is all too common. Often because of an
accident or injury, people start using these pain pills.
He was smart, had good grades. He got into the University of
Cincinnati, a great school. One day at UC he ran out
[[Page S651]]
of pills. A fellow student who was living in the same dorm room offered
him something else. He said: It is cheaper; it is called heroin.
He tried it. Soon, he had sold virtually everything he owned to buy
more. Finally, with the help of Glenbeigh treatment center in
Cleveland, OH, Aaron got clean and has stayed that way for more than a
decade. Aaron is now a successful manager of business development at
American Express.
We can have a lot more success stories like Aaron's if we all
engage--all of us. Washington, DC, is not going to solve this problem.
It will be solved in our communities. It is going to be solved in our
families. It is going to be solved in our hearts.
Washington, DC, can play a more constructive role. In passing this
legislation, it makes sense to give people the tools they need to be
able to fight this scourge. The role is put the right policies in
place, like the STOP Act, like fully funding treatment, like fully
funding CARA in the coming months. We can then bring down the demand
for these dangerous drugs, and we can keep these poisons from coming
into our communities and build on the progress that Congress has made
over the past year. Let's not let up until we finally turn the tide of
this epidemic and begin to save lives.
I yield back.
The PRESIDING OFFICER. The Senator from Alaska.
Mr. SULLIVAN. Mr. President, I want to begin by complimenting my
colleague, the Senator from Ohio, Mr. Portman. He has been the leader
in the U.S. Senate on addressing this issue that literally is impacting
every single one of our States--whether it is Ohio or Alaska or Indiana
where the Presiding Officer is from--and it is a killer.
The opioid epidemic that is happening is something we all have to
work together on, but we have hope, as Senator Portman said. I believe
we have hope because of communities, because of brave Americans like
those he is talking about.
We also have hope because of guys like Rob Portman, and we would be a
lot less further along in this country in turning around this epidemic
and highlighting it for Americans if it weren't for him. I really want
to commend my colleague from Ohio. He has done such a great job and is
so passionate about this issue.
Tribute to Andrew Kurka
Mr. President, in the last few weeks I have come to the floor to
recognize an exceptional Alaskan--someone who spends time giving back
to our community by sharing their time and talents up north. There are
thousands of these people, of course, in my great State, and I would
love to recognize every single one of them. They do so much for all of
us.
We Senators are not humble about our States. I certainly believe my
State is the most beautiful place in America. It is probably the most
beautiful place in the world. I ask anyone who is watching to come
visit us, you will love it--guaranteed.
It is the people that make my State so special--kind, generous
people, full of rugged determination, full of patriotism, full of
compassion. Many of them are willing to go the extra mile, literally,
in some of the most difficult terrain and extreme conditions of the
world to help friends and neighbors and use their strength and skills
to inspire us all.
I wish to tell you a little bit about Andrew Kurka, an extraordinary
Alaskan from Palmer, which is a beautiful community about 45 miles
outside of Anchorage. In his younger years, Andrew was a wrestler. He
put his heart into it. For his efforts, he was very successful. He was
a six-time Alaska State champion in freestyle and Greco-Roman
wrestling.
When he was 13, he suffered a spinal cord injury in a four-wheeler
accident. His physical therapist urged him to keep going, to keep
trying, to stay active, and actually paid for his first skiing lesson
with a group called Challenge Alaska, a nonprofit Paralympic sports
club.
According to an article in the Alaska Dispatch News, Andrew is
``willing to give just about anything a try--bodybuilding, water-
skiing, ultra-marathon, handcycling.'' He even raced in the Arctic Man
ski and snow machine race in Alaska--a race that is not for the faint
of heart. It is one tough race.
It is in sit skiing where he truly excels. He has been a longtime
member of the U.S. Paralympic team and has won numerous medals. Just
last month, he won three medals, including the Gold for the men's
downhill race at the World Para Alpine Championships in Italy--the Gold
for the whole world.
His accomplishments are amazing enough, but his willingness to serve
and be a role model for others is what makes him a true Alaska
treasure. He is involved in numerous organizations for great causes,
and he travels all across Alaska and the country, visiting with
children with medical problems and urging them to dream big the way he
has.
``I have spent my life hoping to be an example to others,'' Andrew
said. ``Having the chance and being put in a position where I can make
a difference means the world to me.'' That is Andrew.
For his determination against all odds, for his accomplishments, for
his compassion, and for making the United States and Alaska proud last
month in Italy at the World Para Alpine Championships, Andrew Kurka is
this week's Alaskan of the Week.
Congratulations, Andrew, from all of your supporters. You are a great
inspiration to all of us.
I yield the floor.
The PRESIDING OFFICER. The Senator from Ohio.
Opioid Addiction
Mr. BROWN. Mr. President, I appreciate the comments of my friend from
Alaska--also from Cleveland--and those of my friend from Cincinnati,
Senator Portman, about opioids. I appreciate his leadership in my
State, the work he has done, and the work we have done together on
opioid addiction. It is a tragedy, and I don't go much of anywhere in
the State without finding someone who is affected, someone who is
addicted in a family, or a close friend who has died.
As Senator Portman said, Ohio has more opioid deaths than any State
in the country. We are the seventh largest State, but the State with
the most deaths. It is troubling, and clearly we are not dealing with
it as well as we should.
Mr. President, I rise to close the debate on this motion today on the
Congressional Review Act to wipe out the SEC rule. I rise in opposition
to the bill, as a number of colleagues on my side of the aisle have
very strong feelings on it. With the exception of my friend from Idaho,
the chairman of the Banking Committee, there weren't many Republicans
who wanted to come to the floor for this, in part because I think it is
just the supporters they have on their side don't make you want to rush
to the floor and support them. Some called this the Kleptocrat Relief
Act. I will give you a real quick history before I wrap up.
There is a provision in Dodd-Frank to deal with giving the President
and others the best anticorruption tools we could have around the
world, where countries that have lots of natural resources have been
countries with all the wealth from natural resources. They are some of
the most corrupt governments with some of the worst poverty anywhere on
Earth.
This legislation in Dodd-Frank, and the rule that came out of it from
the SEC, was going a long way to preventing corruption. What we saw was
the support. Thirty countries in the world followed suit from our
country. The companies that were affected, with a few very notable
exceptions, were beginning to do what they knew they needed to do and
should have done and that the rule called for. As a result, we were
going in the right direction until this new administration, this new
Congress.
I ask unanimous consent to have printed in the Record relevant
letters from investors.
There being no objection, the material was ordered to be printed in
the Record, as follows:
August 14, 2013.
Mary Jo White,
Chairman, U.S. Securities and Exchange Commission,
Washington, DC.
Dear Chairman White: As investors representing more than
US$5.6 trillion in assets under management, we commend the
U.S. Securities and Exchange Commission (SEC) for its
leadership in producing final rules for the implementation of
Section 1504 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Section 1504). The
[[Page S652]]
rules were carefully considered and reflected investors'
substantial interest in oil, gas and mining industry payment
transparency. The SEC's leadership encouraged the development
of a public global disclosure standard that includes the
European Union Transparency Directive and regulation under
development in Canada.
On July 2, the U.S. District Court for the District of
Columbia made a ruling in American Petroleum Institute et al.
vs. Securities and Exchange Commission vacating the rules for
the implementation of Section 1504 and requiring the
Commission to review them. We encourage the SEC to continue
its vigorous defense of the Section 1504 rules as it responds
to the'U.S. District Court's decision.
It is in the interest of investors and companies subject to
both the U.S. and EU requirements that the reporting
obligations in these jurisdictions are as uniform as
possible. Consistent and predictable regulations may lower
compliance costs and enhance the salience of disclosures.
Therefore, we hope that the SEC will take all necessary steps
to ensure that the rules go into effect as early as possible
and that they maintain continuity with regulations in other
jurisdictions. In doing so, the SEC should have due regard to
the lengthy deliberations it conducted before the
promulgation of the rules, and the inputs from diverse
constituencies including many investors.
Payment disclosure regulations, such as Section 1504 and
the European Union Transparency Directive, play a critical
role in encouraging greater stability in resource-rich
countries, which benefits both the citizens of those
countries and investors. The Extractive Industries
Transparency Initiative (EITI) Board Chair Clare Short has
stated that mandatory payment disclosure regulations would
``strengthen the local accountability EITI provides.'' In
fact, the latest revision of the EITI standard explicitly
made project level payment disclosure contingent on alignment
with SEC and EU regulation. We encourage the SEC to keep the
complementary nature of regulations such as Section 1504 and
EITI in mind as it considers its response to the U.S.
District Court.
Investors depend on the SEC's leadership and deliberate
consideration of disclosure requirements that protect
investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation. We commend the Commission on
issuing rules for the implementation of Section 1504 that
reflect thorough contemplation of these factors and are
confident the SEC will continue to act in the interest of
investors as it responds to the U.S. District Court's July 2
ruling in API vs. SEC.
____
April 28, 2014.
Mary Jo White,
Chair, U.S. Securities and Exchange Commission, Washington,
DC.
Re: Section 1504 of the Dodd--Frank Wall Street Reform and Consumer
Protection Act
Dear Chair White: We write on behalf of the 34 undersigned
institutional investors to convey our strong support for the
leadership the U.S. Securities and Exchange Commission (SEC)
has shown in producing final rules for the implementation of
Section 1504 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act [Section 13(q) of the Securities
Exchange Act of 1934]. This letter follows up on a prior
submission made to the SEC on August 14th 2013 on this
subject and signed by many of the institutions below.
By way of introduction, the signatories of this submission
manage assets that collectively total more than US$ 6.40
trillion, and our mandate is to deliver sustainable long-term
returns to our pensions, insurance and savings clients. It is
in this spirit that we wish to contribute our views on the
value to investors of improving transparency and governance
in the extractives sector through regulations such as Section
1504. We also welcome the parallel submission by Calvert
Investment Management et al, and note the common objectives
our respective groups of signatories share in promoting high
standards of transparency in the extractives sector.
We would like to highlight that we have only belatedly
become aware of the detailed submission made on April 15,
2014 by the American Petroleum Institute (API) on this
subject. Inasmuch as we had produced this statement, and
secured approvals from the undersigned institutions, well
before having had an opportunity to review the API
submission, we wish to draw your attention to a brief
supplementary comment that several of our signatories will
shortly be submitting by way of parallel submission in order
to address any additional points that are relevant to the
API's arguments.
The undersigned signatories strongly support the Extractive
Industries Transparency Initiative (EITI). As such, we not
only welcome the US's involvement as an EITI Supporting
Country since the Initiative's inception in 2003, but are
particularly pleased to note its recent admission as an EITI
Candidate Country. We regard the United States' decision as
instrumental in establishing the de facto global standard for
transparency in the extractives sector, and see the steady
progress being made as a critical factor in helping to reduce
volatility in the oil and other vital hard commodity markets,
with beneficial impacts on global financial markets and the
real economy.
In line with our support for the EITI, we also highlight
that we regard the mandatory project-level reporting
provision contained in Section 1504 as entirely consistent
with, and complementary to, the goals of the EFL As such, we
wish to underscore the important revisions made in 2013 to
the EITI Standard that aim specifically to ensure convergence
with the disclosure standard pioneered by Section 1504. These
are now echoed in similar legislation already passed by the
European Union (Transparency and Accounting Directives) and
in progress in Canada (Canadian Mandatory Reporting in the
Extractive Sector).
In short, Section 1504 started a process that has now been
embraced by the world's other key jurisdictions: where
initially it could have placed US listed companies at a
commercial disadvantage, this risk has been reduced. As
institutions based in numerous international jurisdictions,
with both customers and assets spread around the globe, we
welcome this virtuous development, and consider that
regulations favouring not only high, but just as importantly,
globally consistent standards of transparency, are essential
to safeguarding the effective functioning of the financial
markets.
Finally, we highlight that our portfolios have substantial
exposure to the global extractives sector, through both
equity and fixed income instruments, and that many of the
undersigned also invest actively in the sovereign debt of
resource-dependent emerging nations whose fiscal governance
has a direct bearing on the quality of the credits they hold.
It is therefore specifically with a view to safeguarding and
enhancing our clients' portfolio returns that we contribute
the following comments.
Chair White, your fellow SEC Commissioner Michael Piwowar
has recently been reported to have voiced the concern that
Section 1504 may have involved a degree of legislative
overreach, by allowing ``special interests, from all parts of
the political spectrum that are trying to co-opt the SEC's
corporate disclosure regime to achieve their own
objectives.'' Commissioner Piwowar raises a valid point that
merits discussion: as investors whose interests are
inextricably bound with the commercial interests of the oil
and mining companies in which we invest, we wish to clarify
that we fully agree that the remit of the SEC is, and should
remain, that of safeguarding the efficient functioning of
financial markets. We also agree that legislative and
regulatory tools aimed at achieving purely social aims
properly belong within instruments other than SEC
regulation.
However, it is our contention that Section 1504, in line
with the broader purpose of the Dodd Frank Act, i.e.
mitigating systemic financial market risk, plays an essential
role in containing behaviours related to extractive sector
activity that contribute to damaging levels of financial and
economic instability.
As you know, Section 1504 calls for the provision of
detailed publicly-available information regarding payments to
government. The purpose of such disclosure is to: a) defuse
suspicions by civil society; b) curb the incidence of
corruption and fiscal mismanagement; c) and thereby reduce
the social and political risk factors that drive high levels
of operating risk in resource-dependent emerging nations. The
latter notably exacerbates the volatility and risk in the
commodities markets. It is precisely because of its role in
helping to counteract these damaging pressures that we regard
Section 1504 as very much in the interests of investors, and
consistent with the basic mission of the SEC.
Nevertheless, as investors, we are sympathetic to the
concerns of industry regarding the practical impacts of any
new legislation in terms of potential administrative
complexity and cost burden, particularly in respect of
companies that operate in multiple jurisdictions. As such, it
is imperative that the disclosure regulations introduced by
Section 1504 reflect alignment between the US, EU and
Canada--all key jurisdictions for extractive industry
issuers. Firstly, this would simplify compliance for
extractive companies, particularly for those that already
have dual listings. Secondly, it would lift overall
transparency standards while deterring less scrupulous
issuers from actively seeking out more opaque regulatory
regimes. Such `forum-shopping' would not only harm well-
governed companies through unfair competition, but expose
investors to higher risk, and the general public to greater
systemic risk.
Our strong interest as investors is therefore to achieve
both consistency across competing jurisdictions and high
standards, rather than regarding them as necessarily mutually
exclusive. In this regard, the moves by the EU and Canada to
follow in Dodd Frank 1504's footsteps signal a clear trend
that is now very difficult to reverse: transparency has
firmly taken hold, and it would be a mistake to roll
backwards.
As a large group of diverse investment institutions, we
acknowledge that different investors may make greater or
lesser use of the granular data produced through such
disclosure for individual stock decision purposes, depending
on the nature of their portfolios and investment processes.
However, while individual investment strategies may differ,
we are strongly of the view that disclosure of the type
called for by Section 1504 affords the following benefits to
investors:
Putting such information in the public domain is of major
indirect benefit to investors, thanks to its impact on the
overall quality of the business climate: better transparency
helps to build trust with the citizenry, deter corruption
through better scrutiny of revenues and spending, and reduce
[[Page S653]]
the likelihood of contract rescissions. An anonymous
compilation of the submissions required by Section 1504 would
likely not provide the information necessary to serve this
purpose.
The value of such a standard lies in its consistent
application across all global markets: this means that
country exemptions should not be granted in cases where
foreign jurisdictions wish to impose secrecy--otherwise, such
exemptions, often referred to as the ``tyrant's veto'', will
merely serve to encourage such governments to introduce anti-
transparency standards, thereby undermining the very object
of this regulation.
The impact of such disclosure on competitiveness has been
overstated, as demonstrated by the strong support afforded to
Section 1504's Canadian equivalent by the leading trade
associations in the Canadian mining sector (Mining
Association of Canada and Prospectors and Developers
Association of Canada), and the more nuanced position of the
Canadian Association of Petroleum Producers relative to the
American Petroleum Institute. We also note that this
information can be easily obtained by purchasing specialist
research--which merely ensures that it is available to
competitors who can afford to pay, but not to citizens who
cannot. More importantly, as investors, we stand to benefit
more from efficient, competitive markets that enable ethical
behaviour than we do from isolated instances of companies
gaining a temporary negotiating advantage through secrecy.
The impact on companies' compliance costs should be given
due consideration, and we would therefore urge that with
regard to the definition of `project', the disclosure
framework in Section 1504 be consistent with best practice
for disclosing disaggregated production information that
references the legal relationship between individual projects
and host governments. Such an approach may be modeled on the
project-level disclosures that have been developed under the
EU Directives and also made by Statoil, the large Norwegian-
based international oil company, as well as Tullow Oil, the
FTSE100 UK oil company. These base their definition, either
implicitly or explicitly, on economic rather than geological
entities (so-called `payment liability'), which we regard as
a cost-efficient way of mirroring internal corporate
reporting. We recommend a single consistent standard in
preference to allowing companies to self-define project
boundaries for two reasons: 1) a multiplicity of reporting
standards would cause confusion and drive up compliance
costs; 2) flexibility for companies would also risk
undermining the aim of the regulation. Such a standard should
also require a consistent and reasonable degree of
disaggregation, as this would meet the aims of the
regulation, namely improving fiscal governance at both
national and subnational level.
In conclusion, we are pleased to signal our strong support
for the SEC's leadership in establishing a mandatory
reporting standard in the extractives sector that is
complementary to the EITI, aligned with equivalent standards
in the EU and Canada, and designed pragmatically to deliver
the very real benefits that we see coming from enhancing
fiscal transparency and accountability in resource-dependent
emerging nations. The SEC has demonstrated great diligence in
appreciating the changing needs of investors through the
implementation of Section 1504. We remain confident that the
Commission will see the process through to a conclusion that
fulfills its mission and advances the interests of all its
stakeholders.
We thank you for your attention to this submission, and
remain at your disposal for any further information or
clarification.
____
April 28, 2014.
Mary Jo White,
Chair, U.S. Securities and Exchange Commission, Washington,
DC.
Dear Chair White: As investors representing more than $2.85
trillion in assets under management, we applaud the U.S.
Securities and Exchange Commission (SEC) for its leadership
in producing final rules for the implementation of Section
1504 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act [Section 13(q) of the Securities Exchange Act
of 1934]. The rules the SEC adopted for the implementation of
Section 13(q) on August 22, 2012 would protect investors and
promote efficient capital markets by providing investors with
valuable factual information on risk profiles and company
performance. Delay in implementation of these rules or their
significant revision would continue to deny investors this
valuable information.
The opportunities and challenges of both operating and
investing in the oil, gas and mining industries have changed
significantly in recent decades as companies have been
increasingly compelled to explore and produce in countries
with challenging governance and business environments,
including some with pervasive corruption. We believe that
Section 13(q) creates a chance for disclosure requirements to
evolve in a manner that reflects the changing dynamics of
these industries.
Investors' decisions regarding the oil, gas and mining
industries and the efficient functioning of markets in
general rely on the public disclosure of relevant information
from issuers that is comprehensive and consistent. Therefore,
we agree with the Commission's August 2012 rules for Section
13(q) that require issuer-by-issuer, government-level, and
project-level public disclosures and believe that these are
beneficial to investors.
Issuers' annual public Exchange Act reporting is an
indispensable factor for investment decision-making. It must
be done on a basis that allows investors to make decisions
about the securities of individual issuers. An anonymous
compilation of the submissions required by Section 13(q)
would likely not provide the information necessary to serve
this purpose. It is in the interest of both investors and
issuers that the data disclosed pursuant to Section 13(q)
maintains consistency across each issuer's operations.
Following the enactment of Section 13(q), other jurisdictions
have responded with complementary regulatory efforts, most
notably the European Union Accounting and Transparency
Directives and Canada's commitment to establish mandatory
payment transparency reporting standards. Consistency with
these reporting mandates requires payment information for all
countries in which issuers operate, without exception.
Section 13(q) and its complementing regulations also
require project-level disclosure. It would be most beneficial
to investors if this disclosure were consistent with best
practice for disclosing disaggregated production information
that references the legal relationship between individual
projects and host governments. Such an approach may be
modeled on the project-level disclosures made by Statoil, the
large Norwegian-based international oil company, as well as
Tullow Oil.
The SEC has demonstrated great diligence in appreciating
the changing needs of investors through the implementation of
Section 13(q). We also welcome the parallel comment submitted
by Allianz Global Investors et al., and note the common
objectives our respective groups of signatories share in
promoting high standards of transparency in the extractives
sector. We remain confident that the Commission will see the
process through to a conclusion that fulfills its obligations
and advances the interests of all parties.
Mr. BROWN. Mr. President, on one side of this argument, one side of
this rule, we see in the end--and this kind of sums it up. We have
these 30 countries that followed us and passed the rules and the laws
the same as we did. We have on our side, the American Catholic Bishops,
the Conference of Bishops, the Presbyterian Church, groups like the One
Campaign and Oxfam--public interest groups that made their mission
trying to end corruption and deal with the economic and social distress
and devastation brought on by some of these companies and some of these
kleptomaniacal--for want of a better term--governments. That is on the
one side.
On the other side, we have my Republican friends in the Senate and
House. We have Rex Tillerson, the new Secretary of State, who lobbied
vigorously and unceasingly against this rule as president of Exxon. We
have Exxon on the other side. We have the Chamber of Commerce and the
American Petroleum Institute. And on that side for this bill--against
the rule--we have autocrats in places like Russia, Iran, Venezuela. You
can bet on this vote tomorrow morning, if 7 a.m. comes out the way it
looks like it will, you can bet there will be celebrations in Russia,
in Iran, and Venezuela, in all these countries where these kleptocrats,
where these leaders who are so corrupt, where they benefited so much.
I think that really sums it up, how important it is that we defeat
this bill, how important it is that this President, who came to town
and has been in office less than about 2 weeks, his second week in
office--his campaign was all about drain the swamp, and one of the
first things he did, with his Republican House and Senate Members
following along like sheep, they have done this. It is just incredible
how they moved so quickly to side with the autocrats, to side with the
Russians, to side with Big Oil, to side with ExxonMobil and these
autocrats in places like Iran and Russia. It is not a good commentary
on this body. I am sorry to see it.
I ask my colleagues to vote no.
I yield back my time.
Mr. CRAPO. Mr. President, I yield back the remaining Republican time.
The PRESIDING OFFICER (Mr. Sullivan). Without objection, the majority
time is yielded back.
____________________