United States Joins EITI to Further Transparency in the Extractive Industries

Extractive industries face challenges worldwide in transparency and governance.  In Africa, some governments lose significant revenues due to unreported payments, while in Latin America, social protests over mining operations have resulted in project closures.  Is it any different in developed countries? In fact, the challenges are similar: they come down to the need to generate trust among stakeholders.  This is behind the recent United States government decision to become a “candidate country” seeking to adhere formally to the Extractive Industries Transparency Initiative (EITI).

EITI is a global coalition of governments, companies and civil society working together to improve openness and accountable management of revenues from natural resources. The EITI maintains the EITI Standard, which calls for full disclosure of taxes and other payments made by oil, gas and mining companies to governments. These payments are disclosed in an annual EITI Report (to see all such national reports, visit data.eiti.org), which allows citizens to see for themselves how much their government is receiving from their country’s natural resources.

"U.S. EITI implementation underscores President Obama’s continued and unwavering commitment to leading by example in promoting transparency, accountability, and good governance, both domestically and globally,” said Sally Jewel, U.S. Secretary of the Interior.  “As stewards of the natural resources owned by every American citizen, the U.S. Department of the Interior is proud to lead the USEITI effort to build on the existing transparency and accountability reforms to our natural resource management.” 

On March 18, a U.S. application for candidacy for EITI was approved by the EITI Board, although it did have to overcome some hurdles due to the country´s exceptionally complex federal system that entails diverse regulatory environments.   By joining EITI, the U.S. federal government commits itself to assuring full transparency of extractive revenues from federal lands onshore and offshore on the outer continental shelf.  (This includes one-fifth of the country’s land mass and 1.7 billion acres off U.S. shores.)  The U.S. government is also pledging to work together with business and civil society organizations to ensure an informed debate about how its natural resources are being managed.  

“Citizens in the United States of course expect that government-owned natural resources are managed properly and that the revenues are put to good use,” said Clare Short, Chair of EITI. “Through the USEITI, they will be able to follow the natural resource money from the ground into government coffers and use this information to hold the government to account.”

As for state participation, the U.S. Department of the Interior cannot mandate sub-national government participation but is encouraging it through on-going outreach and communication and by inviting them to all EITI Multi-Stakeholder Group meetings.  Currently, the government sector representation in the group includes four state-level representatives.   The U.S. Department of the Interior anticipates that sub-national participation in USEITI will grow voluntarily state-by-state, and the information the states provide will be added to that provided as part of the federal USEITI effort.   

“U.S. candidacy will serve as a role model for other countries interested in implementing EITI that are dealing with complex federal systems,” said Paulo de Sa, Manager of World Bank’s Sustainable Energy, Oil, Gas, and Mining Unit.  “Hopefully the U.S. experience will increase interest in countries like Mexico and Brazil, among others.” 

Under EITI, the U.S. Department of Interior and participating state governments will work hand-in-hand with company and civil society representatives to produce reports that help citizens understand how the government manages its extractive sectors. The reports include parallel public disclosures by both governments and companies of the payments that companies have made to governments for their oil, gas, and mining development. In addition to increased transparency, EITI strengthens accountability and empowers citizens by enhancing the accessibility of information available about the revenues generated from natural resource development.   

With approval of its candidacy application, the U.S. will now move to produce its first USEITI report within the next two years and complete the remaining requirements to become an EITI compliant country.  The timeline for completion of the USEITI report is a rigorous one. It includes Multi-Stakeholder Group meetings every quarter, publication of the first USEITI report in December 2015, and publication of the second report in December 2016, with validation commencing soon thereafter. 

“Our Multi-Stakeholder Group brings together 21 primary and 21 alternate members representing   industry, civil society, and government sectors in robust dialogues that generate lively debate and, consequently, a greater understanding among stakeholders,” said Rhea Suh, USEITI National Coordinator and Assistant Secretary for Policy, Management and Budget at the U.S. Department of the Interior.  U.S. Multi-Stakeholder Group members range from the Project on Government Oversight to the American Petroleum Institute and from the United Steelworkers to Newmont Mining.   

The Extractive Industries Transparency Initiative was launched in 2004. Its first two candidate countries achieved “compliant” status in 2009 (Azerbaijan and Liberia), and the total number reached 19 countries in 2012 and 26 in 2014.  These compliant countries are complemented by 18 candidate countries, one of which is the United States, for a total of 44 countries working toward EITI compliance.  Four additional OECD countries have announced their interest in joining the initiative.    EITI is not only growing, but it is diversifying to different regions and development levels. 

The World Bank Group works to support EITI implementing countries through technical assistance funded by the EITI Multi-Donor Trust Fund (MDTF).  The EITI MDTF Management Committee met directly after the EITI Board meeting in March 2014 (see EITI MDTF Management Committee meeting minutes) to agree on support to new developing countries that are working toward EITI compliance.

EITI Countries

As of April 2014