Trump Repeals Regulations on Disclosure of Payments by Oil and Gas Companies
On February 14, 2017, U.S. President Donald J. Trump signed into law a joint resolution under the Congressional Review Act disapproving Rule 13q-1 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and certain amendments to Form SD, which required disclosure of any payment made by a U.S. listed company to a government for the purpose of the commercial development of oil, natural gas or minerals. Rule 13q-1 was going to be applicable for fiscal years ending on or after September 30, 2018.
While Rule 13q-1 was a reflection of U.S. foreign policy interest in supporting global efforts to improve transparency and combat corruption, it was criticized for its high costs of compliance and a perception of being anti-competitive for American oil and gas companies. The oil industry, in particular, fought vigorously to eliminate the rule, arguing that compliance is costly and erodes U.S. companies’ global competitiveness. “The SEC’s rule forces U.S. companies to disclose proprietary information to its competitors while foreign entities do not. This can give some large industry players an advantage on future business projects,” said the American Petroleum Institute.
We expect the disapproval of Rule 13q-1 and the amendments to Form SD will be the first of many steps the Trump administration takes to reduce the regulatory burden on U.S. companies. President Trump has signed an executive order requiring every federal agency to form a regulatory reform task force that would root out regulations for repeal. The President believes that “unnecessary” and “burdensome” regulations are “killing jobs” and “driving companies out of our country like never before.” His view is that reducing the regulatory burden will “unleash economic activity.”