Taking Venezuela’s Oil: Nullifying the Claims of American Companies

Given Trump’s tirades about Chávez’s theft of American property, it’s worth spotlighting the cynicism.

Author’s note: This is the second of a three-part series on President Trump’s de facto seizure of Venezuelan oil reserves. See part one.

I n the first installment of this series, we covered background about the Venezuelan regime and the Trump administration’s dealings with it. Now, let’s turn to federal law and the abuse thereof.

In invading Venezuela, the Trump administration relied on the Noriega precedent established by President George W. Bush. In that episode, U.S. forces extracted a head of state who had been indicted by the Justice Department on felony drug charges, whisking him to the U.S. for criminal prosecution. As I said when Maduro was seized, although it would have been preferable to seek congressional authorization, Trump was justified in forcibly extracting Maduro without congressional approval. The Noriega precedent explains why administration officials referred to the invasion, carried out by our armed forces, as a mere law enforcement operation.

But that was flim-flam because the Noriega precedent does not support the president’s invasion for the purposes of establishing de facto control of the Venezuelan government and seizing Venezuelan assets. In the same vein, the president’s lawless use of lethal force against suspected drug boats in the Caribbean, initially portrayed as a response to Maduro’s supposed acts of war in flooding the U.S. with cocaine, did not support an invasion unauthorized by Congress. Putting aside the administration’s retreat from claims that Maduro controlled the drug cartels, federal law regards drug trafficking as a crime fit for courtroom prosecution, not an act of war. Nor is the case advanced by Trump’s dubious designation of Venezuelan cartels as terrorist organizations — drug trafficking is not terrorist activity under federal law; a terrorism designation does not equate to an authorization of military force; and again, Maduro’s connection to the drug activity has not been proven, even if there is plenty of reason to believe it.

Of course, Congress could constitutionally declare war or otherwise authorize force in response to a foreign regime’s drug trafficking. That hasn’t happened. The president has no such power.

In January 2026, following the extraction of Maduro, the Trump administration took de facto control of the Venezuelan oil sector, announcing that it would oversee what companies were authorized to conduct transactions. In essence, the administration would orchestrate sales of Venezuelan oil and control the proceeds from those sales — generating revenue, making payments to the Venezuelan regime so it could govern that country under Trump administration guidance, and enabling payments to participating companies (and, presumably, to the U.S. government), all without congressional authorization. Toward that end, the president issued an executive order (EO 14373) that, under the guise of a “national emergency,” purported to immunize the proceeds of Venezuelan oil sales from seizure or other legal claims by the American oil companies victimized by Chavez’s expropriation.

To be sure, the president’s power to declare a national emergency under the International Emergency Economic Powers Act is virtually unreviewable (because the legislative veto Congress initially included in the IEEPA has been repealed). Moreover, in Zivotofsky v. Kerry (2015), the Supreme Court held that the president’s authority to recognize a regime as the legitimate government of a foreign power is nigh plenary. Ergo, even though (a) Delcy Rodríguez is a key member of the very regime whose illegitimacy and anti-Americanism previously prompted the Trump administration to refuse to recognize it, and (b) that refusal was claimed to be for the benefit of the democratically elected faction that Trump is now freezing out while empowering Rodríguez, no one can stop Trump from recognizing the nominally Rodríguez-led regime as Venezuela’s government. As night follows day, the administration has made clear to Rodríguez that her retention as president (i.e., her avoidance of a fate similar to Maduro’s) hinges on her concession to Trump’s demands regarding control of the oil reserves.

In sum, rather than facilitate the ouster of the Marxist regime whose illegitimacy, complemented by Maduro’s alleged drug trafficking, was the pretext for invading Venezuela, Trump cut a deal with the Marxist regime: Accommodate the White House’s demands on control of Venezuela’s oil, and the regime gets to stay in power. At bottom: Instead of forging a stable legal system and a free market for the development of Venezuela’s valuable reserves, that development now hinges on whether companies can make deals with the corrupt Rodríguez regime while navigating Trump-structured arrangements that have no foundation in federal law.

Since last week’s announcement of an administration scheme to have the Defense Department take a de facto equity stake in Venezuela’s oil reserves, much has been said about how complicated the arrangement is. But it’s always complicated when the government (a) tries to do something that is not legal, and, (b) quite cognizant that it is not legal, structures the arrangement with an eye toward denying naysayers standing to sue over the illegality. Here, Trump’s challenge is that, absent congressional authorization, American presidents lack constitutional authority to buy interests in private or foreign entities, generate revenue, or make payments.

While that is simply said, a willful president still has cards to play. After all, we are in the arena of foreign affairs, where Trump can claim that national security hangs in the balance. Nowhere in Supreme Court jurisprudence is more deference given to the president than in steering international relations; and in this quintessentially political realm, the current Supreme Court prefers to leave it to Congress to address executive excesses — the Constitution gives Congress, not the Court, express foreign affairs authorities, enabling it to check the executive . . . if it has the will to do so.

In Dames & Moore v. Regan (1981), the Court upheld an executive agreement that President Carter made with Iran (i.e., there was neither a Senate-approved treaty nor statutory authorization): In exchange for return of the American hostages held by Tehran, Carter decreed the suspension of millions of dollars in legal claims based on which American litigants had sought to seize Iranian assets. The president purported to rely on the IEEPA. Under the agreement, Iran’s assets were insulated by the U.S. government while the litigants’ claims against its regime were channeled to an international tribunal for resolution.

Again, given Trump’s tirades about Chávez’s theft of American property, it’s worth spotlighting the cynicism: According to the administration, the “national emergency” here is that the victims of Chávez’s expropriation — the American oil companies — might recover their losses. Can’t have that. Indeed, despite having railed about Venezuelan perfidy, Trump reportedly told Ryan Lance, the chief executive officer of ConocoPhillips, that the administration is “not going to look at what people lost in the past, because that was their fault.”

Hence, the administration’s predictable reliance on Dames & Moore as authority to nullify the companies’ claims against Rodríguez’s regime. The reliance is questionable. The Dames & Moore Court admonished that its ruling was specific to the hostage crisis — triggered by an undeniable Iranian act of war against the United States. The majority opinion of then–Chief Justice William Rehnquist was emphatic: The Court’s ruling should not be assumed to control different factual contexts. In addition, Trump is purporting to immunize Venezuela from commercial claims; Congress, not the president, has constitutional authority to regulate interstate commerce, and Congress — in the Foreign Sovereign Immunities Act — left if to the courts, not the president, to determine whether foreign countries have immunity when engaging in commerce. Plus, unlike Carter, Trump has not set up a tribunal in which claimants — who’ve already won judgments against Venezuela — can try to execute against Venezuelan funds that are in U.S. custody. Instead, the administration is holding the funds and plans to decide, unilaterally, who gets paid and how much.

Note, furthermore, that Trump’s arrangement is the antithesis of transparency with Congress, the branch constitutionally responsible for government generation and disposition of funds.

In January, after Rodríguez dutifully pushed through hydrocarbon “reforms” that enable her to cede Venezuelan oil reserves to foreign (American) control (which she probably lacked authority to do under Venezuela’s constitution), what did the “America First” administration do? Well, it retained two foreign commodities traders to manage the oil sales — Vitol (of Switzerland) and Trafigura (of Singapore), both of which have Houston hubs, but neither of which is publicly traded or beholden to federal securities-law disclosure requirements. A senior Vitol trader, John Addison, happens to have donated $6 million to Trump’s 2024 campaign. And, to hold the sale proceeds, the administration opened a bank account, not in the United States but in Qatar (a frequent partner in Trump administration and Trump family business). Mind you, this was done explicitly to insulate the proceeds from American creditors and the reach of the federal courts — Secretary of State Marco Rubio acknowledged as much in Senate testimony.

Flash forward, the Financial Times (whose reporting was picked up by the International Business Times) calculates that $13 billion worth of Venezuelan oil has been moved through these arrangements. The administration in April represented that it had authorized the disbursement of $3 billion to Rodríguez’s regime, but the FT reported in July that only $300 million appears to have been transferred. That sum roughly matches what the administration described as humanitarian relief sent to Venezuela after the devastating June earthquakes there, in which at least 3,000 people were killed and the country sustained nearly $7 billion in damage.

The administration says it stopped using the Qatar account in February, switching to accounts vaguely described as under the management of the U.S. Treasury Department. But whether that happened, how the money has flowed, who has been paid what, and the current state of play are impossible to say given that the administration has turned a deaf ear to congressional calls (from Democrats, naturally) seeking an explanation of what the administration claims as its legal authority, plus an audit.

In the final installment, we’ll turn to the Trump administration’s just-announced taking of control over Venezuelan oil reserves.