U.K. Enacts Disclosure Demands on Oil, Gas Companies

The United Kingdom’s Parliament agreed to new disclosure requirements for companies that pay governments for extraction rights and access to natural resources It is the first country to pass legislation enacting European Union directives that require member states to impose those new requirements on oil, gas, mining, and lumber companies.

The EU Parliament passed its Accounting and Transparency Directives in 2013, giving its 28 member states until July 2015 to codify them as national law. The Accounting Directives require large public companies incorporated in the EU to report their payments. The Transparency Directives, expected to be passed in the UK soon, will similarly require any company listed on EU-regulated stock exchanges to report their payments. The first public reports will be released in 2016 and cover government payments made in 2015. The UK is the first EU country to enact the directives into law. Legislators in France are currently considering draft legislation.

The European requirements are based on similar transparency demands included in the United States' Dodd-Frank Act, although rulemaking by the U.S. Securities and Exchange Commission, hit by a legal challenge, remains in limbo. “We applaud the UK government not only for their leadership in setting a global standard, but also for getting this done ahead of schedule,” Ian Gary, senior policy manager for Oxfam America’s extractive industries program, said in a statement. “Since many covered companies are cross-listed in the US, these requirements now set the example that the SEC should follow in its own rules that we hope will be released next year.”

Oxfam America is suing the SEC for “unlawfully withholding” a final rule implementing extraction payment disclosures. The SEC issued a final rule requiring companies to report aggregated project payments that exceed $100,000 in 2012. The following year, after the American Petroleum Institute and the U.S. Chamber of Commerce sued to block implementation, Judge John Bates of the Federal District Court of the District of Columbia vacated the rule and sent it back to the SEC for a rewrite. Among the court’s issues with the rule was its lack of an exemption for companies that face disclosure restrictions put in place by other governments. According to the SEC’s latest regulatory agenda, a rough timeline for upcoming rulemaking, it has pushed back the projected date of a new notice of a proposed rulemaking from March until October.