The US withdrew as an implementing country under the Extractive Industries Transparency Initiative on Nov. 2. This mattered because the domestic oil and gas industry said voluntary reporting under EITI was a good alternative when it opposed compulsory disclosure of payments to foreign governments under Section 1504 of the Dodd-Frank law before the requirement was repealed early in 2017.
"While the US government remains committed to fighting corruption in the extractive industries sector, and the ideals of transparency enshrined in the EITI Principles and the EITI Framework, it is clear that domestic implementation of EITI does not fully account for the US legal framework," US Office of Natural Resources Revenue Director Gregory J. Gould said in the letter notifying EITI Board Chair Fredrik Reinfeldt of the action.
Aaron Padilla, a senior advisor for international policy at the American Petroleum Institute, told OGJ after Gould sent the letter that it leaves API and its member companies strongly supporting EITI, including ways the US government started for producers to report revenue and production more fully.
"We continue our strong support of EITI as a transparency mechanism around revenue because it has the benefit of all companies reporting revenue. The EITI component it noted in the withdrawal letter was with regard to tax payments in the US, which are not disclosed by every company," he explained.
Privately held companies can report this information voluntarily, but are not required to do so, Padilla said. "We continue to support EITI. We've always preferred it because it creates a level playing field for all companies, both private and public," he added.
Checks and balances
"We also think the US remains in a strong position to support revenue transparency because strong checks and balances assure the public revenues our companies pay to the government match what the government receives," Padilla said. "Even if the US doesn't continue to implement EITI, those checks and balances are still in place not just at Interior but also at the Treasury Department, where there are audit and verification protocols."
Gould said that possibly the biggest US accomplishment since 2011, when it announced it would become an EITI-compliant country, was creating an open source, open code interactive web portal (https://useiti.doi.gov), where the Interior Department unilaterally disclosed 2013, 2014, and 2015 revenues by company, commodity, and revenue type, as well as production data across all commodities.
"ONRR remains fully committed to institutionalizing the EITI principles of transparency and accountability consistent with US law," Gould said. The US State Department will continue to lead the US commitment as a supporting country, a role the US has played since the initiative began, he said.