Extractives Revenue Openness Initiative Holds First Meeting

Project On Government Oversight Executive Director Danielle Brian was among the representatives from civil society, industry, and government who came together last week to plan how to make the government’s collection of royalty payments from natural resources companies more transparent.

The advisory committee is part of the global Extractive Industries Transparency Initiative (EITI), to which the President committed the United States as part of his Open Government Partnership. The members of the committee are tasked with coming up with a work plan to make the United States compliant with international natural resources revenue reporting standards.

Ultimately, the goal of EITI compliance is for U.S. taxpayers to see the maximum return of royalties from natural resources that companies extract from public lands.

Thirty-seven counties already implement the international EITI standards, which require both the country and the extractive companies with operations in that country to disclose information on royalties and revenues from natural resources.

It is up to the advisory committee to recommend to the Secretary of the Interior which extractive industries (e.g., oil, gas, coal, gas shale, uranium, timber, renewable energy) will be covered by its new reporting standards. Furthermore, the committee will recommend to which lands these revenue transparency standards will apply. For example, the U.S. government collects natural resources royalties from federal and tribal lands; the advisory committee could recommend that the Department of the Interior also monitor revenues collected from extraction on state, local, and even private lands.

The U.S. government’s collection of royalties from natural resources extracted from public lands has long been mired in corruption. As POGO reported for years, the federal government routinely failed to collect its fair share of royalties—as a result, taxpayers missed out on billions of dollars in revenues.

Following the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, others also questioned Interior’s independence from the industries it is supposed to regulate. The Department was reorganized in 2011 to create a separate office to oversee royalty collection.

The new Office of Natural Resources Revenue (ONRR) will play a large role in the EITI process. ONRR Associate Director Greg Gould serves on the advisory committee as a representative of the government, and ONRR staff will be responsible for implementing the committee’s recommendations.

According to the President’s action plan for the Open Government Partnership, “The Administration has already made important strides in reforming the management of our natural resources to ensure that there are no conflicts of interest between the production and the collection of revenues from these resources. Signing onto the EITI initiative will further these objectives by creating additional ‘sunshine’ for the process of collecting revenues from natural resource extraction.”

Established under the Federal Advisory Committee Act (FACA), the EITI advisory committee is required to be accessible to the public. For instance, all FACA committees must promptly publish transcripts or agendas of meetings.

At Wednesday’s public meeting at Interior, advisory committee members from the three sectors drafted the group’s “terms of reference,” which establish openness protocols that go beyond those required by FACA. We at POGO are hopeful that the terms of reference will go even further and include additional transparency measures, such as requiring that meetings be webcast and recorded, and that the public have access to records of subcommittee meetings.

Additionally, POGO has submitted a link to its IRS financial disclosures to be posted on the Department of the Interior’s website.

Ultimately, we hope that the EITI advisory committee can act as a model of openness that future FACA committees can emulate. For more of our recommendations, see the list of best practices on openness we prepared with the Union of Concerned Scientists.

The advisory committee also discussed its timeline for the coming year, which tentatively establishes six public meetings. The advisory committee plans to submit an application to the international EITI board late this summer to take the next step in becoming compliant with the international reporting standards.