President Trump and many congressional Republicans have made no secret of their strong interest in dismantling “Dodd-Frank,” a law signed in the wake of the 2008 financial crisis to strengthen regulation of the financial industry in the United States. But it’s a small, seemingly peripheral, transparency provision focused on developing countries that’s poised to be one of the law’s earliest casualties. Congress quietly voted last week to torpedo implementation of a rule that would require U.S. firms to disclose payments made to foreign governments for the commercial development of oil, natural gas, or minerals.
Section 1504 of the Dodd-Frank Act aimed to increase the transparency of extractive industry operations in foreign countries to empower citizens to hold their governments accountable and ensure natural resource revenues are spent wisely. This aim made the provision a priority for transparency advocates, but it also attracted the attention and support of development experts. CGD scholars followed the (mis)fortunes of Dodd-Frank Section 1504 along the way, occasionally chronicling its progress toward implementation.
But more telling than the sporadic blog post is that on not one, but two occasions, CGD bestowed its then-annual “Commitment to Development ‘Ideas in Action’ Award” to champions of the provision. In 2010, CGD honored Publish What You Pay, highlighting the civil society coalition’s work on section 1504. And then, in 2012, CGD gave the award to Senator Dick Lugar (R-IN)—praising a decades-long commitment to international development, including sponsorship of Section 1504—also known as the Cardin-Lugar Transparency Provision. In celebrating the provision, CGD recognized its potential to yield outsize impact as a “beyond aid” approach to development.
How did Section 1504 fall so quickly in these early days of the Trump Administration? The provision always faced strong opposition from US industry interests, and litigation plagued the rulemaking process and delayed implementation of the provision from the start. It wasn’t until June of last year that the Securities and Exchange Commission (SEC) published a revised final rule—mandated disclosures were slated to begin with fiscal year 2018. Unfortunately the late promulgation date left the rule vulnerable to reversal using the Congressional Review Act (CRA)—and that’s just what happened. (The rarely used CRA gives Congress the ability to abolish major rules finalized within a specified time period.)
At the moment, the ultimate fate of Section 1504 remains something of a mystery. Despite the fact that the transparency provision is still on the books, under the CRA, the SEC cannot promulgate a disclosure rule “substantially the same” as what Congress voted to repeal in the absence of new legislation. We’ll keep watch—and hope the bipartisan support for transparency and development we’ve seen from Congress in recent years propels action to salvage this award-winning provision.