THE BLOG
05/29/2013 12:47 pm ET Updated Jul 29, 2013

Should the U.S. Join the Extractive Industries Transparency Initiative?

The U.S. is gearing up to officially join a multinational movement for transparency in extractive industries, that offers bold and flexible powers for open, democratic public debate about extractive industries, in order to achieve goals of sustainable development, poverty reduction, and public accountability. The name of this movement is the Extractive Industries Transparency Initiative (EITI). It started in 2003, with groups concerned about violence, oppression and poverty in Central and West Africa fueled by huge oil profits and political corruption. But, EITI has grown rapidly around the world (For details, see www.eiti.org). Over three dozen countries have officially entered the EITI, and, this May, France and England announced their intention to join.

We urgently need the public to participate in designing this process! I am a member of the Multistakeholder Group which is setting up the USEITI. Under the principles of EITI, we are mandated to seek broad public engagement, diverse perspectives and stakeholders, to create a USEITI process that fits American realities and needs. (The views in this article are my own, however, and do not necessarily reflect the Multistakeholder Group, or its civil society members.)

What would it mean if the U.S. joins EITI? The core activity of EITI is annual assessment of revenues from extractive industries (conducted by an independent auditor), with meticulous tracking of what government gets. The key goal of EITI is regular and transparent monitoring of extractive industries that helps public debate about best choices for sustainable development and prudent use of natural resources for the long-term well-being of citizens -- in order to avoid "negative economic and social impacts" when extractive industries are "not managed properly" (quotes taken from EITI PRINCIPLES).

Dangers & possibilities: The beauty and the danger of EITI is that it sets powerful, universal principles, and lets individual countries develop protocols for implementation that are adapted to national values and realities. The admirable EITI goals of democracy and accountability can be undercut if the public, in its diversity, are not truly at the table when national EITI protocols are designed. Also, there is a danger that the vast wealth and political power of extractive industries will tilt the table towards corporate interests. However, now that I understand the EITI international rules, I have concluded they are democratic enough to make EITI an exceptionally useful platform for communities and regions directly affected by extraction.

The first two meetings of the USEITI Multistakeholder Group (MSG) focused primarily on logistics, technicalities and group process. (See minutes of meetings and information on members of the group). But, on May 1-2 in Washington DC, our third meeting leapt into profound and urgent questions about the basic structures of U.S. economy and polity, especially regarding its energy infrastructures. We urgently need the general public, communities directly affected by extractive industries (such as coal, natural gas, uranium, etc.), and other stakeholders to help to catalyze broad and vibrant public debate about these complex questions. The next meeting of the USEITI Multi-Stakeholder Group, scheduled for June 12-13, will likely see discussion of the following critical questions:

  • Should revenues to state, local and federal government be included in annual USEITI monitoring? So far, industry, government and civil society representatives have agreed that federal revenues from federal lands should be included. But, many civil society representatives want to scope out whether state revenues should be included, and there may also be reason to consider including more local and municipal revenues.
  • What commodities should be included? So far, everyone agrees on oil, gas, and coal. However, at the request of the Civil Society Sector in the May meeting, we kept hard rock mineral mining, forestry and renewables on the table for more discussion. There will be pressure in the June meeting to finalize choices.
  • Should physical production and pricing information be monitored and compared to revenue information? If yes, why? Is there any evidence that there are gaps or inaccuracies in the current systems for reporting? Can production data and pricing data be analyzed with revenue stream data?
  • Should the USEITI only monitor revenues at the point of extraction or should it also monitor upstream (prospecting, land rights and tenure, etc.) and downstream (transport, processing, refining, etc.) activities? Should we also explore questions regarding 'social accounting' -- e.g., the calculation of the cost of the externalities resulting from extractive industry development?
  • Should the USEITI require an audit (in-depth verification of physical production and revenues) or merely a reconciliation (aggregation of existing corporate and government records) of information reported? The former would be more accurate but much more costly -- so is only needed if there is uncertainty regarding the reliability of existing data. If we argue for the former, it would be helpful to have good documentation of need. If there is a need for audited data, do we need initial, selective and targeted audits to supplement the reconciliation process -- or, is a full audit of all reported information needed?
  • Do you have any ideas about participatory processes to engage stakeholders at the regional, state and local levels (since many of the impacts of extractive industry are at subnational scale)?
  • The international EITI standards require that participating countries monitor financial revenues, but they also require the Multistakeholder Group to consider whether non-financial benefits flowing from industry to government are significant enough that they should be included in the annual assessment. These can be "barter exchanges" (such as donation of physical infrastructure, schools, commodities, etc.), or they could be "social payments" (such as health, educational, or other services). Are these non-financial benefit streams important in U.S. extractive industries relationship with governments?

EITI is not a treaty, but it is a form of participatory governance -- and one that is growing and changing as it is adapted to fit unique circumstances within diverse countries. The USEITI is being coordinated by the Department of Interior, under the rules of the Federal Advisory Committee Act which mandates that deliberations be open to the public, and that the public be able to participate. I invite you to contact me directly with answers to the questions above, or any other ideas or concerns about the EITI (MY EMAIL). In addition, there is always time allotted for public comment at our D.C. meetings -- in person, or by telephone. The U.S. Dept of Interior maintains a website with information about USEITI. Here is information as to how you can suggest new nominees to serve on the Multi-Stakeholder Group. Currently there are vacancies for government and industry representatives; civil society is also seeking reserve candidates to fill future vacancies. We need representation from communities and regions directly affected and grassroots movements.

Subscribe to Must Reads.
The internet's best stories, and interviews with their authors.