"Today, I can announce that the United States will join the global initiative in which these industries, governments and civil society all work together for greater transparency so that taxpayers receive every dollar they’re due from the extraction of our natural resources.” — President Obama, September 20, 2011 
In remarks at the opening of the U.N. General Assembly session, President Obama announced that the U.S. will formally become an implementing country in the Extractive Industries Transparency Initiative (“EITI”). The EITI announcement was made as part of a broader set of U.S. commitments announced under the newly-formed Open Government Partnership, which consists of eight founding governments: Brazil, Indonesia, Mexico, Norway, the Philippines, South Africa, the United Kingdom, and the United States.
The Extractive Industries Transparency Initiative
The Extractive Industries Transparency Initiative (the “EITI”), the formation of which was announced in 2002 by then-British Prime Minister Tony Blair, seeks to require disclosure, by natural resources companies and the governments with which they do business, of certain payments in order to heighten public awareness and promote more equitable dispersal of resource extraction payments by such governments to the inhabitants of resource-rich countries.
The EITI is composed of a voluntary coalition of oil, natural gas, and mining (OGM) companies (60), foreign governments (35), and investor groups and international organizations (over 300) such as the World Bank Group, that are committed to fostering and improving revenue transparency and accountability in resource-rich countries. 
OGM companies and governments that follow the EITI process agree to publish what the company pays for, and the government receives from, certain extractive activities. The process includes a validation component where company payments are matched with government revenues by an independent auditor. The hope of the EITI’s participants is that disclosure will strengthen governance, and reduce poverty, corruption, and conflict, by improving transparency and accountability in the extractives sector. 
The United States, previously a “supporting” country in EITI, would become the first member of the Group of Eight economic forum (G8) to commit to fully implementing the EITI within its own borders.
Federal Management of Public Resources
The implementation of the EITI is seen by the Administration as part of an open government initiative to manage public resources more effectively. The U.S. collects approximately $10 billion in annual revenues from the development of oil, gas, and minerals on federal lands and offshore. The bulk of these revenues are disbursed to the U.S. Treasury, with smaller portions distributed to five federal agencies, 35 states, 41 American Indian tribes, and approximately 30,000 individual Indian mineral owners. By implementing the standards set by the EITI, President Obama envisions increased transparency to guarantee “that taxpayers receive every dollar they’re due from the extraction of our natural resources.” 
In a concurrently released document announcing the U.S. government’s commitments to the Open Government Partnership, the Administration noted that certain recent bureaucratic shifts in the organization of the federal government were made “to ensure that there are no conflicts of interest between the production and the collection of revenues” from U.S. oil, gas, and mineral resources.  The Administration also mentions that since the OGM industry provides revenue data to the federal government, that same data should be shared with the public at large. As a result, the federal government will work with industry and citizens to develop a sensible plan for disclosing relevant information and enhancing the accountability and transparency of U.S. revenue collection efforts. It is anticipated that this planning process will span the next two years.
Dodd-Frank’s Payment Disclosure Provision
The President’s remarks connect the plan to implement the EITI to a “global effort against corruption” including U.S. “legislation that now requires oil, gas, and mining companies to disclose the payments that foreign governments demand of them.”
The President is referring to a provision of the Dodd-Frank Act  that requires SEC-regulated OGM companies to disclose information on payments made to governments in connection with activities that range from exploration and development to extraction, processing, and export. 
Specifically, Section 1504 applies to “resource extraction issuers” that file Form 10-K, 20-F, or 40-F annual reports (“Issuers”), requiring them to disclose, in their annual reports and electronically, certain information regarding payments to either the U.S. government or a foreign government for the purpose of the commercial development of oil, gas, or minerals.
The EITI envisions that all OGM companies operating in an implementing country will undertake to make disclosures of payments made to the government of that country.  Therefore, implementing the EITI in the United States will provide public disclosures not only from the Issuers affected by Section 1504, but also disclosures about payments made to the U.S. government by both foreign and privately-held U.S. companies. Disclosures made under the EITI, however, need not be made on a project-level basis , a level of detail that the SEC has proposed for Issuers reporting in accordance with Section 1504. 
OGM Industry Reacts
OGM companies typically favor the EITI’s approach of voluntary disclosure as compared to the types of mandatory disclosures required of them by the Dodd-Frank Act. The EITI framework is designed to provide a clear global minimum standard, while retaining the flexibility to accommodate local challenges and opportunities.  With the SEC due to issue final rules interpreting Section 1504's requirements as soon as this month, some organizations seized upon the President’s announcement as an opportunity to push for the SEC to adopt the EITI’s disclosure framework in implementing Dodd-Frank’s payment disclosure provision.
The American Petroleum Institute’s (API) federal relations director, Khary Cauthen, stated that “[t]he Obama administration has recognized the value of [the EITI] framework as the most effective way to promote transparency while protecting commercially sensitive project-level data and ensuring U.S. companies are not placed at a competitive disadvantage.” The National Mining Association’s (NMA) spokeswoman, Carol Raulston, reports that the NMA’s “member companies are reporting through EITI and believe transparency is valuable domestically, as it is internationally.”
International efforts to alter local approaches to the management of revenues from the extraction of oil, natural gas, and minerals are evolving quickly. It remains to be seen, however, whether high-level efforts to improve revenue transparency and accountability in resource-rich nations, like the EITI, will take hold without additional country-level commitments to alter local royalty management practices.
OGM companies are increasingly aware that effective local royalty management can greatly improve a company’s “social license” to operate in the community, lessen the company’s business risk, and ensure the sustainability of its investment. As the OGM industries evolve to embrace the importance of sustainability to investors and shareholders, and the advantages it can bring, such as increased profitability, look for more companies to include sustainability measures adopted for long-term benefits in their strategic plans. 
Just as OGM companies have taken an active interest in the SEC comment process surrounding the proposed payment disclosure rules, companies with the potential to be affected should become involved early in the multi-stakeholder process that will lead to the implementation of the EITI standards in the U.S. The collaborative nature of the EITI process is designed to provide affected companies with opportunities to craft the disclosure standards in a way that the SEC comment process does not afford. The experiences of OGM companies operating in other countries that have implemented the EITI standards will be valuable in shaping the largest national implementation yet.
Though industry organizations (API and NMA) are likely to take the lead in the multi-stakeholder implementation process, each company will have strategic interests that differ slightly from those of its peers. OGM companies would be wise to seek their own seat at the table and acquire the expertise necessary to advocate for their individual interests in the multi-stakeholder process.