Renewing US Leadership in Transparency & Anti-Corruption Efforts

The Trump Administration has been quietly eroding anti-corruption initiatives in the natural resources sector. From attacks on the Dodd-Frank Act to withdrawal of the US as an Extractive Industries Transparency Initiative (EITI) implementing country, the political undercurrent is undeniable: anti-corruption and revenue transparency initiatives are under siege. In previous decades, the US has led the charge in battling corruption and set the bar for other nations to follow. Regardless of political preference, the US must resume its leadership role and model best international practice through implementing standards such as the EITI. Abdication of such standards can only undermine corporate and governmental responsibility and accountability.

While the EITI and Dodd-Frank share underlying principles that promote transparency and elimination of corruption, they function in entirely different manners. The EITI is a global standard for good governance of oil, gas, and mineral resources; membership is voluntary, with participation from 52 countries around the world. The EITI Standard, led by multi-stakeholder groups in each implementing country, promotes transparency and accountability for revenues paid to and received by government in extractive processes. Dodd-Frank, particularly sections 1502 and 1504 (discussed in further detail below) also regulate transparency in extractive processes. However, as national legislation in the US, adherence to Dodd-Frank regulations is only mandatory for US corporations. While this provides greater opportunity for enforcement and oversight, Dodd-Frank is particularly vulnerable to repeal or amendment.

Emboldened by support from the Trump Administration, the Republican-led Senate has increased its efforts to dismantle Dodd-Frank and the market safeguards that come with it. In February of 2017, Congress voted to repeal section 1504, which required the petroleum industry to disclose payments to foreign entities and governments. This was accomplished via the Congressional Review Act (CRA), which allows Congress to review specific sections of agency rules and invalidate them by simple majority vote. Action under the CRA is immune to judicial review. Sound too unbelievable to be true? Unfortunately, it’s not. Furthermore, the CRA bars future administrations from creating a new rule that is “substantially similar” to a rule invalidated under the CRA.

Similarly, in 2017, President Trump threatened to issue a directive targeting Dodd-Frank section 1502, a section known as the “conflict minerals” provision. Section 1502 requires publicly traded US companies to ensure, through tracing and auditing their supply chains, that the raw minerals (namely tin, tungsten, tantalum, and gold) in their products are not tied to conflict in the Democratic Republic of Congo (DRC). Section 1502 is the first attempt at US legislation to address the link between mining operations and armed violence in the region.

This is not the first time Dodd-Frank has come under fire. From its inception, Dodd-Frank has been attacked by conservative politicians and industry executives as “hampering” economic growth. As a bit of background, the Dodd-Frank Act was born following the chaos of the Great Recession, which began in 2007 and lasted until 2009. The financial calamity led to stocks plummeting worldwide, a paralysis of the market, and the collapse of both banks and businesses. Millions of Americans were left destitute, unemployed, and in some cases homeless. According to experts, the smoking gun leading to this disaster was mostly due to a lack of oversight on financial institutions, leading to predatory lending and overextension on investments.

In an effort to prevent this from happening again, and to reform Wall Street business practices, the Obama Administration proposed legislation eventually revised by Senator Chris Dodd and Representative Barney Frank, which was signed into law in 2010. The Dodd-Frank Act, as it became known, was the largest attempt at financial reform since the Glass-Stegall Act that followed the stock market crash of 1929.

Sections 1502 and 1504 are the most humanitarian of the policies promulgated under Dodd-Frank, aimed squarely at undercutting corrupt practices and bolstering industry transparency. The now defunct section 1504 worked similarly to voluntary disclosures under EITI, allowing citizens to track how payments to governments were allocated and spent. The petroleum industry lobbied heavily to kill implementation of this rule, arguing that it would violate confidentiality agreements and weaken the bargaining power of US companies.

Section 1502 is not without flaws, chief among them administrative overburdening and lack of enforcement. While the Securities and Exchange Commission (SEC) requires that all publicly-traded US companies trace and report whether tin, tungsten, tantalum, and gold were obtained from conflict areas, the “due diligence” process is unclear. Additionally, in the event conflict minerals are identified, companies must simply report their existence, but may continue their purchase. Furthermore, a range of interests in the DRC and broader region argue that Dodd-Frank makes legitimate minerals trade, a driver of and social progress in the region, all the more difficult.

However, Section 1502 does drive efforts to make important information about conflict minerals and their supply chains available to the public. The US conflict mineral policy has significantly shifted awareness and global interactions in the DRC region. Both China and the EU have adopted regulations similar to US Section 1502, while the DRC and Rwanda have enacted national policies of compliance with reporting. Perhaps the greatest victory of 1502 has been the international attention it has drawn to the issue of conflict minerals and the need for sustainable development of the DRC region.

At the same time the Trump Administration was making efforts to dismantle Dodd-Frank, the US ceased implementation of the EITI. On November 2, 2017, Gregory J. Gould, director of the Office of Natural Resources Revenue (ONRR), announced that “effective immediately” the US would withdraw as an implementing country from EITI. While the ONRR created a revenue search mechanism as a replacement, it is wholly insufficient, providing only basic information on royalties and disbursement.

The EITI promotes transparency and accountability in managing revenue from oil and gas, mining, and potentially other natural resource and energy sectors, establishing standards for auditing, reporting, and multi-stakeholder oversight. The loss of US implementation of the EITI undermines our international credibility while limiting the global reach of this important initiative. The EITI increases public access to information about extractive industry company payments to governments in some of the poorest parts of the world; this information increases public discourse and opportunities for civil society to demand that such revenue be used for economic and social development instead of fueling corruption. The EITI has a direct and positive impact on natural resource governance at local, national, and international levels that would only expand with renewed implementation by the US.

We urge the US to renew commitment to transparency and anti-corruption initiatives, including implementation of the EITI and Dodd-Frank Section 1502. Where these initiatives can be improved, we urge US leadership to step up to the challenge and promote reform and continued progress instead of abandoning our commitment to transparency and accountability. In order to restore international credibility, the US must renew its commitment to being an example of best practice for other nations.


Brad Cummings, LLM Candidate, University of Denver Sturm College of Law, Legal Extern, Sustainable Development Strategies Group

Kristi Disney Bruckner, Executive Director, Sustainable Development Strategies Group


Sustainable Development Strategies Group (SDSG) is a Colorado-based nonprofit organization that promotes equitable and ecologically-sound approaches to poverty reduction through sustainable management of natural resources. We provide research, assessment, education and facilitation services in the US and around the world. SDSG has completed 15 EITI Validation Reports, one under the 2011 EITI Rules, and the remaining reports as the EITI Secretariat’s first Independent Validator under the 2016 EITI Standard and Validation Guide. Learn more about SDSG at www.SDSG.org.