Oil and gas companies are celebrating, while anti-corruption advocates are left reeling over legislation President Donald Trump has signed repealing controversial rules designed to heighten transparency in the oil and natural gas industry.
The legislation repeals implementing rules, finalized by the Securities and Exchange Commission in June 2016, for the “Cardin-Lugar” provision (also known as Section 1504) of the Dodd-Frank Act. The rules would have required public companies involved in the extraction of natural resources to annually report payments they, subsidiaries, and entities they control make to governments for the commercial development of oil, natural gas, or minerals.
The rule was repealed using the rarely used Congressional Review Act, passed into law in 1996, which empowers Congress to review and invalidate through an expedited legislative process a broad range of regulatory rules issued by federal agencies by enacting a joint “resolution of disapproval.” To qualify for expedited consideration, a disapproval resolution must be submitted within 60 days after Congress receives the rule.
On Feb. 1, the U.S. House of Representatives passed House Joint Resolution 41 (H.J.Res.41) to annul the Extraction Payment Disclosure Rule. It then passed the Senate on Feb. 3 by a 52-47 vote. The resolution then went to President Trump, who signed it Feb. 14.
API, a national trade association representing all facets of the oil and natural gas industry, praised the measure. “Our industry offered a model for an SEC rule that would achieve disclosure requirements without putting U.S., publicly-listed energy producers at a disadvantage to foreign competitors around the world who are not subject to any disclosure,” API President and CEO Jack Gerard said in a statement.
“We look forward to continuing these efforts and working with the SEC, Congress, and the new administration to achieve reforms that do not harm our nation’s businesses and workers,” Gerard added.
API’s proposed model of payment transparency would have required the SEC to publish an annual compilation of company payment data in a clear and user-friendly format while disclosing payments received by a citizen’s federal and local government by resource type, the location of the extractive activity, and the method of extraction.
The Financial Accountability and Corporate Transparency (FACT Coalition)—a non-partisan alliance of more than 100 state, national, and international organizations that promote policies to combat the harmful impacts of corrupt financial practices—condemned the measure. “Signing this measure into law will undermine anti-corruption efforts around the world, hamper U.S. national security, and likely drive up compliance costs on industry,” Clark Gascoigne, deputy director of the FACT Coalition responded in a statement.
“It’s astonishing that Congress and the president would move to undermine American efforts to combat violent extremism abroad by rolling back this important transparency safeguard, which protects American companies and democratic interests around the globe,” Gascoigne said. “It is especially surprising given that the measure will likely drive up the regulatory costs on American businesses.”
In a previous letter, the FACT Coalition argued that Cardin-Lugar would have resulted in “negligible compliance costs” for U.S. companies. “The rule requires disclosure of payments that companies track in the normal course of doing business,” the letter stated.
Oxfam also condemned the measure. “President Trump is signing his name to a bill with only one clear purpose: to make it easier to get away with corruption,” Isabel Munilla, Oxfam America’s senior policy advisor for the extractive industries, said in a statement. “We are exploring all options to ensure the rule is implemented whether through legal, legislative, or regulatory action.”