With
the E..U. having enacted legislation mandatory disclosure of resource
extractions payments to governments, and impending fast-track implementation by
the U.K., two global energy companies have urged the SEC to commit to rework
Dodd-Frank resource extraction regulations struck down last year by a federal
judge. In a letter
to SEC Chair Mary Jo White, the Controller of ExxonMobil
and the CFO of Royal Dutch Shell emphasized that the public interest of
achieving a coordinated and harmonized global transparency regime for resource
extraction paymemts, which will best serve the interests of all stakeholders.
The EU Accounting & Transparency Directives must be
implemented by legislation adopted individually in each EU Member State. The U.K. is moving quickly on implementation,
having already issued draft legislation for public comment with a current goal
of meeting the October 2014 window for final adoption.
The energy companies understand that the U.K. government would
like to know the probable direction of SEC rulemaking under Section 1504, the
resource extraction provision of Sarbanes-Oxley. If the SEC were able to
indicate their willingness to consider the proposed new rules under Section
1504 before the U.K. legislation is finalized, they noted, the U.K. government
could take the SEC approach into account in implementing its own transparency
legislation. Since the U.K. will be the first E.U. Member State to implement
the EU Accounting & Transparency Directives, thus setting a precedent for
other E.U. Member States’ implementation. This is especially important for
purposes of equivalency between the E.U. and U.S. reporting regimes.
Equivalency, they believe,
is critical as the EU member states move to implement the transparency reporting
directives. No one benefits from an outcome under which multinational resource
companies are required to file multiple reports in multiple jurisdictions
providing substantially the same information in different forms. On the other
hand, we believe all stakeholders would benefit from seeing the direction of
SEC rulemaking under 1504 as transparency reporting is implemented around the
world. An ideal solution to the issue might be that compliance with the
reporting rules in one country would be deemed to satisfy the reporting
requirements in another country notwithstanding variations in detail.
The energy companies recognize
that it would be impractical to expect regulatory action from the SEC in time
to influence the U.K. on the current U.K. timetable. However, they believe that
if the SEC were to take concrete steps to indicate it will take up Section 1504
rulemaking this year, the U.K. government might be willing to defer
implementation of its transparency legislation from the October 2014 schedule
to the April 2015 timeframe. This would provide sufficient time for the SEC to
discuss with the U.K. implementing authority (Department for Business,
Innovation & Skills) how best to take into account the SEC rules before any
EU Member State finalizes its transparency legislation.