The Benefits of Transparency in Mineral Extraction Malka Pattison: Good afternoon, I'm Malka Pattison. I'd like to welcome you all to the first of this year's seminars. We're going to do something a little different this year. Policy analysis always had a speaker we featured, this time we have a whole panel for you. The reason is, we want perspectives. We're focusing in on an important initiative of the administration, government transparency. We're looking into a special field of transparency in minerals, both energy and non energy minerals. Our distinguished panel today includes Paul Mussenden, Interiors Deputy Assistant Secretary of Natural Resources Revenue Management. Marty Flex the Deputy Director, Bureau of Energy Resources for the State Department, and Marty may just be making a cameo appearance, and then turning things over to Claire Murphy, also Transparency Advisor at State Department. Danielle Brian is the Executive Director for the Project on Government Oversight. Last but not least, Veronika Kohler, the Director of International Policy at the National Mining Association. With that, panel, begin. Paul Mussenden: Thank you Malka, and thanks to the Office of Policy Analysis for putting this together. My name is Paul Mussenden, as Margot said, Deputy Assistant for Office of Natural Resources Revenue. With me, we have members of the multi stakeholder group for the U.S. Extractive Industries Transparency Initiative. We'll be going over a little bit more of what that means. Just extending a warm welcome to you. This is the first presentation we have after the United States submitted its application to the International Board, to become an EITI candidate country, so it's very timely and gives us an opportunity to put out some more information, about what the Initiative is all about and the content of our application. I'm going to go over a little bit overview of what EITI is all about, and then the rest of the panel will go over more details of our candidate application. First of all, the topic here says, "How Does U.S. EITI Benefit Americans," and that's an issue that, quite frankly, we're still grappling with in terms of getting input from the public. Certainly, for the US government, we see clear benefits that tie into our reforms here at Interior, and we'll go over a little bit more about what the other sectors see as benefits. What we're doing is, we're opening it up, as we have these presentations, to what others see as potential benefits. In terms of what EITI is all about, for those of you who haven't heard much of it, which we're finding, when we do these presentations, that there are a lot of folks who haven't heard of the initiative. The initiative was basically a response to what was commonly referred to as a resource rich curse. That refers to an economic paradox, where a lot of resource rich countries were finding themselves underperforming, compared to countries that were resource poor. That was due to a variety of factors. A lot of that included mismanagement, lack of accountability systems, corruption. The Initiative was launched in 2002, by British Prime Minister, Tony Blair, as one of the tools in a toolbox, to bring some attention to that problem, but also to bring some transparency to the revenue flows from extractive activity in certain countries. The basic framework is fairly straightforward. Once a country decides that they're going to implement EITI, they form a multi stakeholder group comprised of government, civil society, or NGOs, the public, and industry. Together they decide how the program will be implemented. But the core features of the program is the development of EITI report. What that report consists of, is a report and disclosures from companies that operate in that country, telling what revenues they have provided to the government. Those disclosures are made to an independent reconciler. Separately, the government reports what receipts they received from companies, to that same reconciler, and the numbers should match. To the extent there are discrepancies, that reconciler then works with the multi stakeholder group, with the companies, and the government, to figure out where those leaks are. Over a program of a number of years, they are to develop systems to address those discrepancies. That's the basic framework. Certainly, one of the features of the initiative, in countries that this kind of participation with government is not the norm, one of the main features, is this multi stakeholder nature of coming together, and deciding how it should be implemented. In the US that is represented by a Faca Committee, that represents and serves as the US EITI multi stakeholder group of which we have members here in the panel. I'm going to turn it over to Marty to talk a little about the global perspective, in terms of the number of countries that are participating in some of our diplomatic agendas and in implementing. Marty Flacks: All right, thank you Paul. Thank you. The US has been a supporter of the EITI since it was created in 2002, and has participated actively internationally in promoting EITI in other countries. We sit on the international board. We contribute to the finances that help keep the organization running and implemented in a number of countries around the world. One of the exciting things that we've seen over the last few years is, the truly global reach that EITI has now achieved. EITI is now being implemented in 41 countries around the world. That's many of the natural resource rich countries around the world are now either EITI candidate countries, or compliant countries. Paul mentioned that we're in the process of becoming a candidate country which is the first step. Then a number of countries after they've fulfilled the requirements of EITI, become compliant with the full set of EITI rules. One of the things we've seen over the last few years is, a movement away from only developing countries implementing EITI. Originally it was conceived very much as an initiative for countries that are struggling with, as Paul said, mismanagement, lack of capacity, corruption issues, as a tool to address that. Increasingly seen as a tool that's useful for countries at all levels of development, and in all parts of the world. The reason for that is partially what Paul hinted at which is there is a substantive piece of EITI which is the information, the data, that it produces for citizens to use to hold their government accountable. The process piece of EITI which is the structure that the country has to set up to work with civil society groups, and industry groups directly in decision making, around how that country will manage its natural resources. That perspective has led a whole host of additional countries to express interest in implementing EITI. The United States, when we announced we would implement EITI, was only the second developed country to do so after Norway, and really set a standard for other developed countries to meet in choosing to do this as a domestic initiative. That commitment inspired the rest of the G8 to make EITI commitments this year. We were very excited this past summer when a number of G8 countries including the United Kingdom, Italy, Germany and France committed to implement or pilot the EITI in their own countries as well. We've really seen a growth of EITI around the world, from all continents and countries at all levels of development. That helps the EITI standard of transparency that Paul talked about in terms of revenues and sector management, to become really a global standard that we now increasingly expect countries to meet. Danielle Brian: I'm Danielle Brian, with the Project On Government Oversight. I'm the chair of the Civil Society Sector for this effort. Civil Society is a term that's more used actually in other countries, than it is in the United States. For those of us in the United States, it means essentially everyone who is not either industry or government. It's non profits. We also have academics, labor and a representative of tribal organizations. We have a wide array in my sector of interests that are engaged in working on this effort. The three sectors are also replicated at the international level when they came up with and modernized their standards, their 12 standards of principles. Where you're looking at all the different sectors interests, and why are we doing this, the ones that I thought were the most important to highlight in the US for us were that a country's natural resources belong to all its citizens. These are public lands and public resources. The citizens should be seeing the benefit from them. Insuring this requires high standards of transparency and accountability. Compliance calls for full disclosure of government revenues from their extractives in a national commission, which is essentially what we are for the United States, to oversee the process. Ultimately, what we are doing is to help better inform the public, so that we can have an informed public debate on our public resources. If you want to see all 12 of those principles, the website at the bottom actually lists all of them. Those were actually determined at the international level, and then we in the United States then have to make sure that as we move forward making decisions, that we're keeping in mind these principles. Could you do it for me? Thank you. We're actually all going to speak to this next slide which is the benefits, why are we doing this. Obviously, every sector has sort of a different interest, but to some extent there is some overlap. From the civil society perspective, obviously there's a budget crisis in the United States, and we have a real fiscal debate. Many people don't realize, the revenues collected from extractives on public land, is essentially the second largest source of revenue behind taxes for the United States. The public gains tremendous revenues streams, and we'll talk about how those are distributed in the next slide. There's a real public interest in making sure that we're collecting everything that's so. You can so across this slide, by having increased transparency from the public perspective, we're going to make sure that we're getting a fair return on the half of the citizens for the use of these public resources. In the end, that's going to mean that the public has a better sense and is better informed and whether the policies that are directing this process, are what we think are the smartest uses of our public lands. I wanted to share with my colleagues at this point, if you have other points you think are important to highlight. Paul: I'll chip in for the government in addition to the leading by example, which was one of the main objectives of the president deciding that US would implement, which as Marty explained has already seen benefits with other developed countries joining. For the department of interior, we've gone through a series of reforms with how we manage natural resources on public lands. One of those reforms was the formation of Honor. One of the focal points was to bring more transparency awareness and accountability for the revenues that we collect. By implementing EITI that sinuously aligns with that effort, we have an opportunity to put out this data in even more accessible formats, once the ETI report is published. We have an opportunity to work more closely with stakeholders that have an interest in what we do; both civil society and industry. We saw multiple levels of benefits with implementing EITI from the government side. Danielle: Thank you. For the industries perspectives, industry's been participating in EITI implementing countries for a long time since its inception. Historically, industry has reaped benefits from working in EITI compliant countries. We are encouraged at the United States joining EITI trying to be a candidate country, and enjoyed being part of the solution. As for specific benefits of the industry we'll reap by US signing on to EITI, that is something that I think we will learn, as we progress down this road of implementation. As Marty mentioned, we are the second developed country to sign on or start the road towards candidacy. Norway was the first and so, we are really the largest and most unique in our development in extractive industries that we have here in our geography, in our legal frameworks. We are enthusiastic to participate finding a successful way forward for EITI, and seeing what benefits do come out of us implementing EITI. Transparency has been on the radar for a couple of years now in legislation, domestically and internationally. One benefit of EITI is that, it keeps the responsibility of transparency on the government side as part of the program. Some of the legislations don't do that. We see many benefits to come out of it. Some of them haven't been realized for us yet, and so we look forward to seeing what they are. Marty: One more thing I would add to this point because well, people in this, who are physically here at the department of interior are obviously familiar with some of the not such distant past history of concerns about integrity in the collection process with MMS, and which is the predecessor organization that used to be responsible for revenue collections. There is something to explain to those who may be watching through live stream from the public, that when Paul referenced an organization named Honor that is the opposite of Natural resources revenue collection, which is a new organization, which has sort of evolved out of those concerns. A big part of why we see this as a very valuable effort is, it's going to bringing more public trust in the process, which is benefiting all three sectors. Danielle: Well Paul talked about the disclosure of revenue. We also see the main point of , our report possibly will be the narrative that will help the public understand what real contributions, communities and our country gets because of extractive industries here in the United States. Not only what revenues are coming but, what social and contributions are being brought to light by industry. Painting the full picture that has made it more understandable for the public so they can use something, they can use this information. Danielle: On the next slide, if one of you could help me with that. I think most people are aware that the US in a global leader in the production of oil, gas and coal. I think many people don't realize the extent of the number of commodities where the US is actually a global leader. In addition to oil, gas and coal, we're number two in copper, number three for gold and steel, number four for aluminum and zinc, and so on. I think this was something that's one of the important elements of education, that people will gain from this process is getting a better sense of the extent of the number of commodities that are involved. What's also important to point out is, when it comes to coal, oil and gas, significant parts of that production is on federal lands. 42 percent of all coal produced in the United States is on federal land, and 31 for oil, and 25 for natural gas. You can see why we see this as a really significant process, because we're really dealing with significant parts of the extractive industries through just the public lands. I mentioned before about the revenues collected, so you see 12 billion which is about the average that is collected in revenues every year. Here we have a slide that breaks it down. This is over a 30 year period, for the total amount, so about a quarter trillion dollars that are being collected and dispersed, through the revenues produced, as was referred to before. In this case it's actually just energy resources produced on federal land. You can see in the blue, I'm not even going to try to do that, let's see if this works. No it's not. Now it is, here we go, all right. As you can see the majority are of the significance of quarter trillion over 30 years, a significant amount is going back to the Federal Treasury. But what many people don't realize are these different funds that these resources are being distributed to. The Historic Preservation Fund, Land and Water Conservation Fund, Reclamation Fund, American Indian Tribes, and I'll be able to speak to the specifics for just this past year because we were just receiving those, and then the states themselves. When you have extractives taking place, for example, in the State of California, a significant part, even though it's on Federal Land, a significant part of that money is actually going back to the state of origin, and in many of these states, in fact most of the states, these funds are directly going into the public education system. It's a very direct and public benefit to the collection of these resources. In the past year, the FY2013 disbursement, it's about 14 billion, nearly nine billion went to the Federal Treasury and some of these numbers are really quite extraordinary. Even 895 million to Land and Water Conservation Fund, 150 million to Historic Preservation. People really aren't aware of some of these things. Nearly a billion has gone to 34 Indian Tribes and approximately 30,000 individual Indians. This is why it matters to make sure we're collecting everything that we can from this process. I'm going to turn it over to my colleague, Veronika. Veronika Kohler: Thank you Danielle. Again my name is Veronika Kohler and I am the co chair of the industry portion of the Multi Stakeholder Group. We will go over the stakeholder representation, who is on our MSG. Thank you. We have civil society, government, and industry on the MSG. We have 21 members and we have 20 alternates. There is a broad spectrum of stakeholders represented on the MSG, and it's really to get the biggest picture painted for group discussion. As we mentioned before, decisions are made by consensus, and so no decision can be made until, unless all of the stakeholder groups are happy with it going forward, and would be willing to participate if it went forward with these decisions. We have several different types of stakeholder groups that are on the MSG. For the civil society, transparency, environment, indigenous groups, investors. For the government we have federal agencies, state commissions, and state governments. Two seats have been left vacant, because we don't know what direction EITI will go yet in the United States, and we want to make sure that there's still room on the MSG for participation in case we, it decides to be broadened. In industry, we have currently oil, gas and mining companies, and then we have associations. I, for example, work for the National Mining Association. We have several oil, gas and mining companies who are participating. I want to remind everybody that EITI, it's a voluntary framework which is why we put so much emphasis on the participation, and the broad spectrum again of stakeholders that participate. Because this will not move forward unless we all choose to continue participating in the framework, because it is voluntary. We keep it voluntary, and internationally it's been kept voluntary, because that's really why it's been successful moving forward when governments decide to voluntarily sign onto it. It's about transparency, and therefore obviously all of the meetings are transparent as well, so all of the MSG meetings, the Multi Stakeholder Group meetings, are public. You can participate. You can come to the meetings. You can also listen to them, and there is a queue on question and answer, or question period, open comment period, at each of the meetings twice per meeting for public to be able to provide comments. The candidacy application that Paul mentioned, that we submitted in December, was also sent out for public comment. The point is really to get everybody's eyes on what it is that we're doing, because that's the reason why we think we can be successful in implementing in the United States. Paul: Just one comment on how we went about deciding how this Multi Stakeholder Group would be constituted in the US. It actually took us awhile to decide how we would comply with that component. What we did was we did an extensive period of stakeholder assessments. We went around the country holding meetings and getting input on what might be the best configuration, and the best organizational structure for the group. There were a number of proposals put on the plate. But because of the role the government plays, FACA ended up being about the right fit for it, not perfect, but we have developed a charter for this FACA committee that is sensitive to the participatory nature, and the ability of each sector to volunteer their own candidates for representation on the group. We've developed a system where, under even on a FACA we can be responsive to that need. It was quite an extensive, almost up to a year, process of stakeholder engagement on it, and I think it's one of the reasons why we've gotten a group that is both aware of what we're doing but is, as Veronika says, voluntarily contributing both their time and their efforts to the initiative. Danielle: One thing I just want to add, for the members of the public who aren't familiar with the government acronyms. FACA stands for the Federal Advisory Committee Act which has a whole set of transparency rules, and we are actually holding ourselves to a standard of transparency that's even higher than what the FACA law requires, so that when we have subcommittee meetings we actually take notes from those meetings, and put those online as well to make sure that we are honoring the spirit, even beyond the letter of the law, and being as transparent as possible. Veronika: All of those meeting summaries and minutes are available on the DUI.gov EITI website. While we don't have all the decisions made, we do have some decisions made that the MSG has been working on for the past year and a half. As we mentioned, our candidacy application, we approved it and sent it in December of 2013. What the candidacy application does, it shows our commitment to address the country's specific issues. The candidacy application does not require the breadth of decisions to be made as we will have to make to move this initiative forward. We have made several decisions that the application did not require. We thought that we would go over some of the decisions that we have made that will help frame out this framework. Our initial discussion was on scope, and we've identified commodities that will be included and some that will not be included, and then tabled some for further discussion. You'll see from the columns behind me, you'll see the middle column identifies the decisions that we've already reached, and then the far right column the pending MSG decisions. The scope of commodities that will be included is oil, gas, coal and other leasable minerals, non fuel hardrock, sand and gravel and geo and other renewable, solar and wind. As we move forward with EITI implementation, you'll see that the report has very many different types of information. We'll go into that in detail. Some of it is more the narrative, and some of it is information revenue that is being reconciled, because they've been identified as material. The revenue streams that we've identified to be in the report are rents, royalties, bonuses and fee and those are collected by the Department of Interior. We have a new standard that was put out in 2013, and this new standard guides implementing countries what to put in their report and how to move this framework forward. It has been somewhat challenging to have a new standard that has not been tested, and striving to be a candidate country. It has a requirement to have corporate income tax, for example, to be in the report which is something that is new. We have decided to include it, but the details for how it'll be included is something that the MSG still has to agree upon. We're hoping to be consistent with US legislation, SEC Dodd Frank legislation Section 1504 specifically, which has not been written yet. We have a couple of things on the table on the back burner, for ease of change, shift change. For the implement to be successful, the government and industry have decided on something that they'll actually be able to do, and so we're hoping to align ourselves with current and future legislation, so that this initiative is not duplicative in nature and overly burdensome. We've had to identify materiality threshold for reconciliation, and at the beginning of our presentation today, Paul mentioned companies report what they pay, the government reports what they've received, and a third party reconciles those two. This is for the reconciliation. We had to identify materiality threshold, that would bring in a number of companies and represent the majority, the overflowing majority, of revenues coming from the extractive industries, and that is one of the basis historically for EITI implementation. Again, we are, our report will have an unprecedented level of disclosure. We're very excited about that. We already have a robust reporting mechanism here in the United States. We have a robust legal framework, and the reporting mechanisms that are in place are already audited. We are again one of the first countries having to deal with these legal frameworks already in place and the mechanisms in place, and how do you improve upon them for the benefit of our public. We will have many different levels of disclosure in this report. We will have publicly sourced narrative, and that will be information from data that is already public to help bring it together and synthesize it, and make it understandable for the public. We will have unilateral disclosure that the government has amazingly decided to bring to this report, which will have 100 percent disclosure from the commodities that have been identified to be in, as material, to be in the report. Paul, did you want to talk about the benefits? Paul: Yeah, just a little bit for clarity there. The materiality threshold decision is a pretty significant decision for countries, because it defines what, how much of the revenue that's generated in the country will be required to end up in the report. Depending on what level of materiality, what that means is the number in terms of the amount of revenues, whether that's in our initial candidate application, we chose 50 million. Any company that's generating that amount of revenue/year, they will have to report, and submit their revenues into the report. By unilateral disclosure, what honor will do is all the revenues that we collect, we will include in that report, regardless of whether they meet the materiality threshold. We will do so at what we call the disaggregated level. Meaning, one of the things that the MSG has decided, and maybe Veronika will go over this, is that, we will be reporting at the company level. All the revenues that a company reports, we will at that level include that information in the report. We will use the same level of disaggregation for all the revenues that honor collects. Comparatively speaking, with other countries that implement that, it goes far beyond what we normally see in EITI reports. It will be very significant that the US is doing this, and that honor has agreed to produce that information. Malka: There's one point also, I think, was an important decision that was made. That actually haven't been reflecting in this presentation, which is, the definition of the companies, the parent companies. We're actually going to be capturing all the revenues that are collected from some of the smaller companies that are owned by these larger parent companies. This is part of why it's going to be as extensive as we expect it to be. Veronika: I think we anticipate for the materiality threshold of the companies that will be reconciling their data. That would be about 80 percent of total revenue collected by Department of Interior. That will be reconciled and audited. Then the narrative will also include the 100 percent disclosure of all of the revenue that Department of Interior receives. Third party reconciliation, we've discussed that. That was the materiality threshold. $50 million and it will be 40 companies. But again those are the parent companies, and they own many other companies that are operating in the Unites States. Our breadth is much further than those 40 companies. I am not sure reporting is in the new standard. This is something that has been more challenging for the MSG to tackle. It's required by the new standard, and it was not easy to identify a path forward, for how to get states that are extractive industries, have extractive industries in them, to participate voluntarily. Because again, this is that voluntary initiative, and therefore the federal government cannot obligate states to participate. Part of the new standard, we have an opportunity for adapted implementation. Now that has been going on for a long time. When countries decide to implement EITI, they have to find unique solutions, and they cannot implement EITI the way that other countries have, because of the unique circumstances in their countries. We find this is the case for our states, in the Unites States, and our sub national reporting in the Unites States. We will be seeking for adaptive implementation, which is really our justifying the unique circumstance that we have in the United States, and what we think is going to be successful moving EITI forward. We don't even have to seek for total adaptive implementation request. It's really only a partial adaptive implementation request that we'll be seeking. Because again, the Department of Interior, our government, because of our robust mechanisms for reporting have a lot of information available. It's just about putting it together in a way that is easily understood. Paul: To supplement that a little bit. If you can think of a country like the US, where if each state that has significant revenues were to join the initiative, that's a significant amount of information. Each state will then have to develop a materiality threshold, for example. The companies that operate on state lines within that state will have to sort that out. Now the new standard actually has that as a requirement. For our candidate application to be successful, we had to essentially ask for a waiver, and that's what adaptive implementation is. But, that said, we have been engaged with a lot of states, that's shown some interest. We developed what we are referring to an opt in procedure, where once states figure out a little bit more about what this is about and what it will entail, and what benefits they see, they can then opt in to our reporting process. We will include that in the report as one way of doing it. The other part of that, I want to add is that, we will be disclosing the revenues that we share with states, and those amounts within each state. By doing so, we will actually have a level of sub national reporting, based on the information that we collect and then share with the states. We'll be in partial compliance on that. But there's quite a bit of work to be done, in figuring out how states can be brought into this reporting. Malka: It strikes me at least for the public, maybe not for the people from Interior, who are likely very familiar with this. What we're talking about in this particular case is that, in these resource rich states, there is all the activity that is taking place, not on federal land. They have excise or severance taxes, and other revenue streams coming from that activity. This is the information that is potentially out there, or which is out there at the state level. Much of which is already actually transparent at the state level. We need to figure out how to best work with them, to encourage states to opt in, to add that information to the discussion that's happening on federal land in the states. Veronika: Project level reporting will be included, and it's also a new requirement for the 2013 standard. We have not decided what the definition of project level reporting will be. Again, we hope to align ourselves with US legislation, and that is anticipated to be in SECs 1504 as well. Contract disclosure is included in the 2013 standard, and is encouraged. We have not had that discussion in the multi stakeholder group yet. But anticipate those discussions to happen this next year as we make concrete decisions on what will be included in the report, how we will be reporting, and how we will use the narrative to be most useful for the public. Looking ahead, this is our timeline. If you guys would like to look ahead, as well. We are hoping to achieve candidacy in February of 2014, as we said. Paul: March. Veronika: March. Malka: No problem. Just the board meeting date changed. Veronika: I've not gone crazy then, if you know. It's been a stressful year. We are hoping to achieve candidacy in March of 2014. We submitted our application in December of 2013. We will be having our next MSG meeting in April. We plan to have four in 2014, which is significantly less from last year. We had about double that last year. But this year we realized that a lot of work on the ground will need to happen in between the MSG meetings as we put together. What we need to have in the report, we and hiring processes about who will be writing the report, and how we gather this information. Some key decisions need to be made. The 2014 work plan is attached to the application, which you will find online as well. The work plan is a fluid document. It potentially can change every year as the MSG adapts the work plan. That's something that is not set in stone, but can be changing. We anticipate producing out first report in 2015. That report actually will not be validated. What happens with reports? We submit them; we have a validator, an international validator. Did you want to talk a little bit about the international process? Malka: Sure. I'd be happy to do so. While the report itself is produced by the participating country, as of when some tweaks to the requirements were agreed in May of this past year, the validation process, which is the process by which you have an external company come in and take a look at the processes you have in place, and quality of your report, will make recommendations to the board about whether or not a country has met all of the EITI's requirements. That is run at the international level, and it will be a different company than the one the US would work with to produce that report. Veronika: Our 2015 report, we're not going to submit for validation. But our second report which will be... Malka: ...Typically the validators would do, is look at not only the fresh report but the most recent report in determining compliance. Often it takes countries few years to get completely up and running. Veronika: Then, our report that we submit in 2016, that will be submitted as well, and validated, on which we will receive compliance. Malka: We hope. Veronika: First we are looking to have our candidacy application approved. Step by step but we are hopeful. We've really come together and done a lot of hard work this past year and a half, and only see next year as more work and more detailed work. But, the successes that we have reached thus far and civil society, government and industry coming together to make these challenging decisions is something that is unprecedented here in the United States. I think it's something we can all be proud of. Paul: I think now we have an opportunity to do some Q and A. Malka: Let's start with questions from the Internet. OK. Any questions in the room? I have a travelling lunch. Ethan Taylor: Thanks Malka! I'm Ethan Taylor with the Office of International Affairs here at Interior. I had heard Marty indicate before she had to step out, that Untied States had been a big supporter of EITI since its inception in 2002. I am just curious to know, why it has taken 11 plus years for us to actually become compliant. Malka: I'm sorry, I can start. I think it's an international and domestic question. It's really 11 years to become a candidate even, right? In terms of the last couple of years, since 2011 and when this announcement was made, Interior has done a thorough process of going around the country. I think since that announcement, we have been moving at a pace that is what's working best for this group. But, it took the EITI a fair number of years to mature as an organization. We are still at the point where our participation really is leading the way and setting the example. Paul may be able to speak a bit to the immediate impetus for EITI in around 2011, when the announcement was made. Paul: In part of the recognition that only Norway was in terms of developed countries, the only one that was setting an example. Since we were supporting this from the very beginning financially essentially, and being represented on the international board, the main goal was to lead by example. It was to walk the walk, talk the talk. We also saw at the time some significant synergies, as I mentioned, with the reforms that we were doing because we were talking about more transparency. I think it was timely. Depending on who you talk to, it probably could have been done sooner. But certainly that was the impetus. Fortunate for us, we have already seen a lot of those benefits with the UK, France, Germany deciding this summer to come on. Only after a couple of years of us being announcing and getting into it. Hope that's responsive to your question. Anyone else want to add? Malka: I know also the significant timing for the US, was that the President made the announcement at the UN as part of his first National Action Plan, for the open government partnership commitments. There is an international framework within which the President, or this administration will chose to include EITI in one of their openest and transparency commitments across the federal government two years ago, and have actually strengthened that commitment this year. That was clearly the specific impetus. But I do think the US deserves credit in recognizing that this had been an effort, a very important effort. It was mostly though the developed countries telling the developing countries what to do. With the US coming forward it really was an important leadership position for the US to say, 'We need to as Paul was saying to walk the walk.' Veronika: We have to remember that EITI was developed historically for developing countries that are mineral resource rich. Where there wasn't a lot of capacity in the governments, and there was a lot of corruption in governments. This was to reduce that corruption. A group of OECD countries came together with civil society and with industry, to help developing countries that are mineral resource rich reduce that corruption, and allow the governments and the people in those countries to reap the benefits of living in mineral resource rich countries. They hadn't been reaping the benefits, because there was a level of corruption within the government. Revenues going to the government from the extractive industries wasn't getting to the people, or wasn't even improving life in the government or on the ground with infrastructure building or anything. Historically, this is not for a developed country that has legal frameworks in place and reporting mechanisms in place. As Danielle mentioned, this only really changed as the international cohort decided, why the developed countries are pushing this for the developing countries. Maybe they should be implementing, as well. It's not just good to support and pressure other countries to voluntarily participate. That's why there was this gap of 10 years, because there was this support. It's just as Claire mentioned, it's the evolution of EITI. Now donor governments, or developed governments are signing on, as well. But that's why you will see different frameworks, because historically this was meant for different type of country. You will see different frameworks of candidate countries coming out that are OECD countries, because we are going to see for ourselves how we can make this be beneficial for us, and what's going to improve access to this information for us on the ground here. Which is why, we hope that you'll be seeing different candidacy applications, and we're pioneering this frontier of really developed countries signing on to EITI. David Downs: Thanks Malka. I'm David Downs, also with the International Affairs Office at Interior. I had a question about the way costs would be disclosed, or the revenues would be disclosed in a disaggregated way by the companies. I know that sometimes companies are sensitive about disclosing internal cost information. Because it can be something that competitors find useful, and US law does actually provide that certain information collected by the government is confidential for business reasons. Could you say a little more about how that played out, with respect to both public and privately held companies? Thank you. Malka: Thank you for that question. Yes, there are many laws in place in the Unites States that protect companies, and lots of different groups of people. We will not be making any decisions to include information in the report that would, number one, not be legal. Two, influence negatively the competitiveness of companies. While we have talked about the level of disclosure, we'll be having in the project level disclosure. The reason why we haven't made some of those decisions, is because we are still working through what will be legal, and what would give enough disclosure and enough information, but keep everybody interested in participating and feeling comfortable to participate. That's the happy balance that we are always trying to keep. We've always said that we are going to go down to a level of disclosure, as far down as possible, as descriptive as possible, without breaking any laws, and without influencing negatively the competitor for companies. Paul: That's exactly right. There was specific discussion at the multi stakeholder group level about this. We actually had some presentation by the Solicitor's Office lawyers, about the Trade Secrets Act and other laws that come into play with protecting proprietary information. We're being very careful about that. One, in part, because we have to, because the law requires it. But also as Veronika mentioned, we want to make sure that the companies and the government for that matter are comfortable with balancing, trying to get out as much information as possible, while addressing the concern you referenced in your question. Malka: The other thing too, as Veronika has mentioned a couple of times before. We're very aware that the SEC is working through the 1504 language, and so we are sort of watching that making sure that we're going to be compliant with where that goes. We have a question from the Internet. Audience Member: The question is, is China showing an interest in EITI, specifically related to rare earths? Malka: With China we have found because we would get this question pretty often. It's a good question. Chinese companies have been quite willing to participate in these processes in the countries in which Chinese companies operate. I understand that they also serve on some of the domestic multi stakeholder groups in other countries. We found they've actually been quite willing to be helpful and cooperative. I'm not aware of China looking very closely at itself implementing the EITI or specifically with respect to rare earth. Malka: ...is in the room? Audience Member: I have another question if nobody else does. OK, great. Actually I have two quick questions. One was a follow up to the Internet question we just received. Paul, you may recall that you and I were in Brazil about a year and a half ago with Secretary Salazar to encourage the Rousseff administration to sign on to EITI. At the time we thought there were good signs leading that way, or indicating they were going to join on. I didn't see their name on any of the lists that you had showed us earlier, so I was curious to know about that, and some of the other BRICKs, for example Russia or India, in addition to China. My second question was, how come fisheries and timber are not included the EITI. It seems to me that that would be, or is, a bit of a missed opportunity for talking about extractive industries. Paul: International question. I will say that domestically we have already received a lot of interest in countries that are now taking a look, that don't yet show up on these lists. Greg Gu was down in Columbia, and asked to present there. Actually a lot of countries in this hemisphere, quite a few are taking a closer look. But I'll let Claire talk a little bit more about the scope of that expansion. Claire Murphy: Sure. I'll say for the U.S. and from a diplomatic perspective we're in a much different position talking about EITI, now than we were even a couple of years ago. We can be out and talking about the specific benefits that we are already seeing domestically to ourselves in the U.S., and that's a much different conversation than suggesting to another country, that an initiative in which we don't participate would be beneficial to them. We can really show how we specifically are benefiting and why we think it's worth it for us, not just that we think it would be worth it for a different country. We are already seeing more interest. I will say with respect to Brazil and the BRICS that certainly the Initiative would love to have different, kind of even more diverse representation around the world, and its goal really is to be a global standard, and those are really individual country decisions. Part of, I think, what the USEITI can do as we evolve is start trying to help make linkages between, not just to the government level promoting EITI, but between our civil society representatives, and civil society representatives abroad. Between our companies and their companies, so that it can be multiple, informed voices able to discuss EITI and its benefits with governments. Veronika: On the question of Fisheries and Forestry, this was something that was discussed. One of the decisions that was made in one of the earlier meetings was to keep them on the table for the second year. Part of the reason for that was the representation around the table, the Multi Stakeholder Group. For example, in civil society we didn't have good enough representation of people who could speak knowledgeably about those sectors, but that was very true, even more so in a way, both in the government and industry sectors. They weren't being represented and so we would need to evolve, as I'm sure will be happening over the next year, who's sitting at the table. I would point out that the president in this year's national action plan said that, he is supportive of including timber in the second year as well. I think it's, at least from the government sector also, they're interested in including it. Marty: We also, those of us who are on the MSG, have assumed the responsibility to have EITI moving forward, be successful in the United States. We always have to weigh that with the urge to include a lot of other stakeholder groups or even sectors, because the broader that you push the initiative, especially from the beginning, the probability that you won't be successful in implementing increases dramatically. We really have to watch ourselves, monitor ourselves to make sure that the decisions that we make we can be successful on, because ultimately we're trying to be successful. Once we have a successful framework in place we can see how other commodities to be included, or how that can be adapted to improve the overall understanding in the United States for the public good. To be unsuccessful because we've put in too many commodities initially wouldn't be good for anybody. Paul: It's good to distinguish also, the reconcile portion of our report, from the portion of the report that's publicly sourced or narrative data. The standard by design specifically makes that kind of narrative contextual information part of the requirement in the new standard. The reason being that, there's a lot of information we can put out there in a much more accessible way. Even if it's not reconciled that speaks to you the contributions of these other industries. It's just that the companies will have to be reporting, and the government reporting and having to reconcile and reconcile numbers. But, we can still put that information out there to put them in context with the rest of the extractive sector, and that is something we are committed to do and have a lot of latitude in doing Malka: in the room from the Internet, well then I thank you all and I thank our panelists. Paul: Thanks for coming. Transcription by CastingWords
The EITI is a global standard that promotes revenue transparency and accountability in the extractive sector. Forty-one countries are in various stages of implementing EITI, and many more have committed to sign up. The USEITI is a signature initiative of the U.S. National Action Plan for the Open Government Partnership. The panelists will offer their perspectives on the benefits of implementing this voluntary framework for governments and companies to publicly disclose the revenues paid and received.