President Trump signed his first legislation Tuesday, scrapping an anti-corruption measure that requires oil and mining companies to disclose their payments to foreign governments.
“This is a big signing, very important signing," Trump said in the Oval Office as he signed the legislation. "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."
Employing a legislative tactic called the Congressional Review Act, lawmakers overturned the rule earlier this month, following aggressive lobbying from energy companies, including Exxon Mobil. Rex Tillerson, Exxon's former CEO, is now the Secretary of State.
The rule, implemented by the Securities and Exchange Commission, was mandated in 2010 by the Wall Street Reform and Consumer Protection Act, better known as Dodd-Frank. After a court battle, the SEC introduced it last year in June.
At the time of the rule's introduction, the SEC said it was devised "to advance U.S. policy interests by promoting greater transparency about payments related to resource extraction."
It requires public companies that extract oil, natural gas or minerals abroad to disclose in an annual report any payments made to a foreign government or the U.S. federal government. Companies were not required to comply with the rule until their first fiscal year ending on or after Sept. 30, 2018.
The Congressional Review Act authorizes Congress to review and cancel regulations that were introduced by federal agencies in the last six months. Congress must complete the review process within 60 legislative days after a federal agency submits a rule for review. Only one "resolution of disapproval" has been signed into law since 1996, when it was created. But the Trump administration and the Republican-controlled Congress have signaled that the tactic will be used more frequently to scrap Obama-era laws in their bid to roll back business regulations.
The resolution on resource extraction disclosures – H.J.Res. 41 – was passed by both chambers of Congress earlier this month. After Trump's signature, the SEC can no longer enforce or reissue it.
The oil industry, in particular, fought vigorously to eliminate the rule, arguing that compliance is costly and erodes U.S. companies' global competitiveness.
The ongoing compliance costs of the resource extraction rule would between $173 million and $385 million annually, according to conservative advocacy group Americans for Tax Reform.
“The oil and natural gas industry strongly supports transparency," said Jack Gerard, CEO of the American Petroleum Institute. "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. We look forward to continuing these efforts."
But the compliance costs estimated by the industry is "grossly inflated," says Jay Branegan, senior fellow at The Lugar Center, a think-tank founded by former U.S. Senator Richard Lugar.
The stock markets in the European Union, Canada and Norway already require similar data from extraction companies. The SEC rule would have posed "minimal burden" on oil companies, he said. "They are already required to collect this data."
The rule, proposed by Lugar and other lawmakers in 2008, was aimed at engendering more information about extraction companies' payments to foreign nations that are afflicted by what Lugar called "the resource curse."
"Large reserves of oil or other resources often negatively affect a country's economic growth, corruption level and stability," Lugar wrote in a report in 2008. "Overcoming the impacts of this curse helps promote U.S. policy goals of poverty alleviation, good governance and energy security."
Having more information about how much money their governments receive from oil and gas companies would enable citizens to question how incoming revenues are spent and fight corruption and fraud, Branegan said. "Transparency is not panacea, but sunlight is the best disinfectant," he said.