Senate votes to repeal transparency rule for oil companies

Senate votes to repeal transparency rule for oil companies
© Greg Nash

The Senate voted strictly along party lines Friday morning to repeal a regulation requiring disclosures for the payments that energy companies make to foreign governments.

The measure passed 52-47 in a pre-dawn vote.

The Securities and Exchange Commission’s (SEC) foreign payments rule was mandated by a key provision of the 2010 Dodd-Frank financial reform bill and was meant to reduce corruption in resource-rich countries by detailing the royalties and other payments that oil, natural gas, coal and mineral companies make to governments.

But the rule, made final last year, fell victim to a push by congressional Republicans to erase large portions of former President Barack ObamaBarack Hussein ObamaReport: FCC chair to push for complete repeal of net neutrality Right way and wrong way Keystone XL pipeline clears major hurdle despite recent leak MORE’s legacy by repealing major regulations through the Congressional Review Act. The move followed a late Thursday vote against the Interior Department’s stream protection rule for coal mining.

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The House voted Wednesday to repeal the SEC transparency rule, so the Senate’s action sends the measure to President Trump’s desk.

The White House said Wednesday that Trump would sign the resolution and other measures to overturn Obama-era rules. The SEC rule, the White House said, would “impose unreasonable compliance costs on American energy companies that are not justified by quantifiable benefits” and could put those companies at a disadvantage to their foreign competitors.

The vote on the SEC rule is a major win for oil producers and other companies in extractive industries.

Senate Banking Committee Chairman Mike CrapoMichael (Mike) Dean CrapoScott Garrett poses real threat to EXIM Bank, small businesses Usually friendly, GOP may anger big banks with tax plans Overnight Finance: Trump calls for ObamaCare mandate repeal, cuts to top tax rate | Trump to visit Capitol Hill in tax reform push | CBO can't do full score before vote | Bipartisan Senate bill would ease Dodd-Frank rules MORE (R-Idaho) said on the Senate floor Thursday that the SEC’s own research did not show a strong connection between transparency and improving the lives of citizens in countries where mineral extraction revenues fuel government corruption. 

“Unlike the potential benefits, though, the costs of this rule are reasonably certain,” he said. “The SEC estimated up to $700 million in initial costs, and up to $590 million on ongoing annual costs.” 

Crapo warned that numerous small companies would be hurt in addition to major oil companies.

“We cannot view these costs as only affecting the largest companies, but must consider the plight of the smaller ones,” he said. 

Sen. Sherrod BrownSherrod Campbell BrownScott Garrett poses real threat to EXIM Bank, small businesses Class warfare fight erupts over tax bills Senators Hatch, Brown have heated exchange on GOP tax plan MORE (Ohio), the top Democrat on the Banking Committee, framed the resolution as a vote for corruption.

“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,” he said on the floor. “This kind of transparency is essential to combating waste, fraud, corruption and mismanagement.” 

The oil industry has made it a priority to lobby against the SEC rule. Exxon Mobil Corp., whose former CEO, Rex Tillerson, was confirmed this week as secretary of State, was one of the most outspoken opponents, owing in part to its business operations in scores of countries around the world.

“The SEC’s rule requires disclosure for American companies but not foreign entities, fundamentally harming American workers and shareholders,” Stephen Comstock, head of tax policy for the American Petroleum Institute, said in a statement. 

Anti-corruption advocates slammed the move by Congress.

“Voting to roll-back basic transparency rules provides zero benefit for the public but will instead allow corrupt elites to continue to stuff their pockets with oil money and steal from their citizens,” said Isabel Munilla, senior policy adviser for extractive industries at Oxfam America.

Under the Congressional Review Act, the Senate only needs 51 votes to pass repeal resolutions, a lower bar than the 60 needed to pass most legislation. 

The vote does not repeal the provision in the 2010 law that mandates that the SEC write a transparency rule.

But under the CRA, the agency will be prohibited from writing another rule that is “substantially the same” as the one overturned by Congress.