President Donald Trump last week signed into law a repeal of an Obama-imposed regulation that would have required oil and gas companies to disclose their payments to foreign governments. The legislation marked the first instance in 16 years that the Congressional Review Act (CRA) was utilized to repeal a regulation, and only the second time in the 20 years that act has been law. The repeal was the third bill Trump signed since assuming office a month ago.
The US oil industry greeted Trump’s election with hope and optimism that thus far has proven warranted. The deregulatory overtures sounded during the campaign, and the pro-industry appointments to head the Energy Department (former Texas Governor Rick Perry) and State Department (former Exxon CEO Rex Tillerson), as well as the presence of Continental Resources CEO Harold Hamm as a top energy advisor, bode well for an industry that for the last eight years had been subject to increasing regulations and for four of those years was challenged by the added weight of low oil prices.
The repeal of the disclosure regulation last week will likely be the first in a series of measures pursued by the Trump administration to scale back and/or repeal regulations on the US domestic industry. The resolution repealed a Security and Exchange Commission (SEC) regulation that was part of the Dodd-Frank financial reform law that took effect in 2010. Dodd-Frank was intended to reduce corruption in resource-rich nations by requiring companies on US stock exchanges to reveal the royalties and other payments that oil and gas companies render to governments.
During the Oval Office signing ceremony last week, President Trump said the rollback was part of a broader regulatory overhaul aimed at increasing jobs and facilitating economic recovery. “This is a big signing, very important signing,” he said. “We’re bringing back jobs big league. We’re bringing them back at the plant level, we’re bringing them back at the mine level. The energy jobs are coming back. A lot of people going back to work now.”
Trump then asked House Representative Bill Huizenga (R-Mich.), the bill’s sponsor, to comment on the measure and its broader context. Huizenga said, “Over 20 years, there’s been 56,000 rules that have been put in place, with very little legislative input or oversight, and it’s time that changed.”
Trump and congressional Republicans argue that the SEC regulation imposes unnecessary and massive costs on US oil and gas companies, ultimately placing them at a significant competitive disadvantage to foreign companies that are not required to comply. Relatedly, White House Press Secretary Sean Spicer said, “Misguided federal regulations such as the SEC rule addressed by H.J.R. 41 inflict real cost on the American people and put our businesses, especially small businesses, at a significant disadvantage.” He added, “It’s a priority for the Trump administration to fix our broken regulatory system so that it enhances American productivity and well-being without imposing unnecessary costs and burdens.”
The House passed the measure earlier in February, followed shortly thereafter by the Senate. Predictably, Democrats vehemently oppose the repeal of the rule. Senator Sherrod Brown (D-Ohio), the ranking Democrat on the Senate Banking Committee, said, “The rule they’re trying to repeal protects U.S. citizens and investors from having millions of their dollars vanished into the pockets of corrupt foreign oligarchs…This kind of transparency is essential to combating waste, fraud, corruption and mismanagement.”
The SEC is still required per the Dodd-Frank law to write a transparency rule for energy and mining companies. However, under the CRA, the agency cannot write a rule that is “substantially the same” as the overturned one. Additionally, both the House and the Senate have passed a CRA resolution overturning the Interior Department’s stream protection rule for coal mining. The Trump administration has said it supports this repeal.
It’s not only the US oil and gas sector that is experiencing renewed vigor amid Trump’s presidency. The conditional reinstatement of the Keystone XL Pipeline project has prompted Canadian industries and politicians to at least in this instance give a nod to Trump.
However, this attitudinal posture is not held by Iran, sanctions against which were lifted last year allowing for foreign participation in the country’s oil and gas sector. How might Trump’s harder approach to Iran impact investment in the country’s energy space? Iran’s deputy oil minister Amir Hossein Zamaninia said recently that the aggressive stance taken by Trump on the Iranian nuclear deal is a ‘passing hiccup’ that would not affect foreign investment in Iran’s oil and gas sector.
Iranians “can overcome the uncertainties created by this dynamic in Washington,” he told reporters at the CWC Iran LNG and Gas Partnerships Summit in Frankfurt, Germany. “As far as the oil and gas industry and the credibility of JCPOA [the nuclear deal] is concerned, this may be a passing issue and we can overcome the uncertainties created by this dynamic in Washington,” Zamaninia said, adding that $70 billion worth of oil contracts were currently available.