The US District Court for the District of Columbia's July 2 ruling vacating the US Securities and Exchange Commission's foreign expenditures disclosure requirement under the Dodd-Frank law was good news for the oil and gas industry. But the situation still isn't resolved.
It's not certain whether the SEC will draft a new requirement that addresses shortcomings the court identified. Oxfam America and other groups supporting more extensive foreign transaction disclosure requirements want it to. US oil and gas companies don't, since they feel this would give foreign competitors not bound by such a requirement an unfair advantage.
The requirement under Section 1504 of the Dodd-Frank law clearly is aimed at keeping US oil, gas, and mineral extraction companies from making secret deals with corrupt officials in overseas governments. It's already causing problems closer to home.
The US House passed legislation on June 27 enacting terms of a February 2012 agreement Mexico and the US signed to govern how to explore, develop, and share revenue from oil and gas resources along the countries' maritime border in the Gulf of Mexico.
HR 1613 now awaits the US Senate's consideration following the House's bipartisan approval by 256 to 171 votes, the measure's sponsors said. But the White House will likely oppose it because it includes a provision which would waive Dodd-Frank Section 1504.
The measure would open about 1.5 million acres in the gulf containing an estimated 172 million bbl of crude oil and 304 bcf of natural gas while requiring that all operations there follow US safety standards, according to its main sponsor, US Rep. Jeff Duncan (R-SC).
"Simply put, [it's] a win-win for our country, and I am proud that it received strong bipartisan support," he said following the June 27 vote.
Waiving Section 1504
Khary Cauthen, API's senior federal relations director, said HR 1613 would increase certainty for US producers by establishing a process for managing oil and gas reservoirs along the gulf's boundary region. It also would not subject them to requirements under Section 1504 of the Dodd-Frank law which API considers anticompetitive, he added.
The provision, as implemented by the SEC, damages US businesses by requiring them to report proprietary information which their foreign competitors could then obtain, he said. "The rule could cost American jobs by limiting our access to energy resources abroad," Cauthen said.
The next few months could be crucial as federal policymakers weigh whether keeping US oil and gas companies away from overseas corruption is more important than helping this country's southern next door neighbor start to realize its possibly significant deepwater potential. Deciding what matters most won't be easy.