President Trump’s first legislative act was to sign into law a repeal of a transparency rule aimed at keeping public oil companies in check with regard to their international operations and limiting the scope for bribery and corruption.
Part of the so-called Dodd-Frank Act, devised after the 2008 financial crisis to avoid a repeat of the events that led to it, the rule stipulated that U.S. public oil companies must declare all payments made to the U.S. and foreign governments and agencies in the form of royalties and taxes, starting from their financial year ending in or after September 2018.
It was an Act that Big Oil was very vocally against, saying the rule put it at a disadvantage to its foreign peers. Many of these foreign competitors are based in Europe, however, and are bound by similar regulations issued by the EU, supporters of Dodd-Frank have argued. Public companies in Canada and Norway are also required by their stock market regulators to disclose this information.
Another point of contention was the costs associated with collecting the data required under the rule, to be reviewed by the U.S. Securities and Exchanges Commission (SEC). According to a conservative advocacy group quoted by USA Today, the costs would run at between US$173 million and US$385 million per year. Related: Passing On The Permian: Has The Bubble Grown Too Big?
According to a Lugar Center analyst, senior fellow Jay Branegan, this is “grossly inflated”. The Lugar Center’s founder, Senator Richard Lugar, was one of the authors of the transparency rule.
Earlier this month, the House and the Senate both approved the repealment of the rule, using a 1996 piece of legislation, the Congressional Review Act, which allows them to cancel legislation that had been introduced within the last six months with a simple majority.
Since its appearance, the Act has only been used once but Trump himself and members of his administration, as well as congressmen, have suggested it is likely to be invoked much more often from now on.
By Irina Slav for Oilprice.com
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