Parliament’s Legislative Function

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Legislating for effective natural resource management

Through its legislative function, parliament is responsible for reviewing and passing legislation designed to steer effective natural resources management and reform.  It has a number of ways to help shape the extractive industries sector: it can introduce laws to open up trade, encourage or create incentives for private sector development, and establish regulatory frameworks that control the operation of private cooperations in a country.  

Additionally, legislatures can introduce legislation that requires extractive companies to disclose the revenue they earn as a condition for being listed on stock exchanges. This was recently done by the United States Congress in 2010 with the Dodd- Frank Bill. In some countries, legislators have strengthened the implementation of Extractive Industry Transparency Initiative (EITI) by enshrining the implementation in law (see box).  Finally, the annual appropriation process is yet another avenue through which legislators can influence the management of extractive revenues.

Extractive Industries Transparency Initiative
The EITI is a global standard that promotes revenue transparency. It has a robust yet flexible methodology for monitoring and reconciling company payments and government revenues at the country level. Each implementing country creates its own EITI process which is overseen by participants from the government, companies and national civil society. The international EITI Board and the International Secretariat are the guardians of the EITI methodology internationally.

An EITI law strengthens the legislature's role in EITI as well. In the process of drafting, debating and reviewing the law, legislators can shape the program to ensure that it reflects country circumstances, accurately articulates citizens' needs, and complements other laws and programs related to extractive industries. Most importantly, a law will strengthen the formal legislative oversight role over EITI.

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The regulatory framework

Mining or oil codes specify procedures and rules for granting concessions, conditions for exploitation, royalties, and taxes.  Corporate tax structures and laws regarding employment and the environment have implications for extractive industry management as well.  As a result, the regulatory frameworks for the management of natural resources are often spread across different pieces of legislation and government policies.  

Given this complexity, and given the multidisciplinary nature of the sector, a close coordination among different government entities is necessary to avoid regulatory gaps.  Legislators are uniquely positioned to support the kind of reform processes that strengthens such frameworks by streamlining the different rules and guidelines in place, thereby creating an enabling environment for the sustainable and accountable management of extractives.