The Biden administration announced on Monday a finalized rule aimed at decreasing taxpayer liability for decommissioning offshore oil and gas platforms, shifting more financial responsibility onto the fossil fuel industry.
This process involves dismantling outdated drilling platforms and restoring the marine environment to its pre-drilling condition.
Historically, taxpayers have shouldered the costs that companies do not cover for decommissioning. As per the Bureau of Ocean Energy Management (BOEM), the new rule mandates an additional $6.9 billion in financial guarantees from the industry.
Joe Biden (Credits: The Hill)
This is in response to a Government Accountability Office (GAO) report estimating total decommissioning costs could reach $40 billion to $70 billion, while the industry had only secured about $3.5 billion under previous regulations.
Interior Secretary Deb Haaland emphasized that the rule updates and strengthens outdated requirements, ensuring operators are accountable for their environmental responsibilities and protecting taxpayers from undue financial burden.
Earthjustice criticized the rule for not fully addressing the outstanding gap in secured funds despite this progress. Earthjustice attorney Ava Ibanez Amador commended the administration for reducing taxpayer burden but called for further reforms, arguing that the oil industry should pay higher upfront costs to mitigate risks to public finances.
Joe Biden (Credits: Asharq Al-Awsat)
Conversely, the American Petroleum Institute (API) praised the rule for balancing taxpayer protections with the promotion of energy development on the Outer Continental Shelf.
API’s VP of Upstream Policy, Holly Hopkins, expressed approval of the administration’s approach to safeguarding taxpayer interests while fostering the sector’s growth.
The new regulation represents a pivotal shift in policy, aiming to ensure that the oil and gas companies bear the environmental cleanup costs of decommissioning more heavily than the American public.
