The Biden administration on Monday finalized a new rule it says will reduce taxpayer responsibility for the process of decommissioning offshore oil and gas platforms.
The decommissioning process is the final step in offshore fossil fuel extraction and involves dismantling the drilling platforms and returning the area to its predrilling state.
Under existing regulations, taxpayers are responsible for any costs associated with the process that the companies themselves do not cover.
The final rule would amend the regulation, simplifying the process by which it assesses a fossil fuel company’s finances and its responsibility for decommissioning. The Bureau of Ocean Energy Management (BOEM) estimated the rule would require $6.9 billion in new financial guarantees from the fossil fuel industry.
Earlier estimates from the Government Accountability Office (GAO) project that the full decommissioning process costs about $40 billion to 70 billion, while the government had only secured about $3.5 billion in industry assurances under the existing rules.
“This final rule updates, simplifies and strengthens outdated requirements to ensure that taxpayers are protected and current operators are held responsible for their end-of-lease cleanup obligations on the Outer Continental Shelf,” Interior Secretary Deb Haaland said in a statement.
However, the advocacy group Earthjustice criticized the rule for not going far enough in addressing the outstanding costs, noting that the additional $6.9 billion would still leave about $30 billion unaccounted for.
“This rulemaking is a step in the right direction and will alleviate the financial burden on American taxpayers who foot the bill for cleaning up after the oil industry in our oceans,” Earthjustice attorney Ava Ibanez Amador said in a statement. “But more reforms are needed. The oil industry continues to get away with paying far too little up front, extracting maximum profit, and leaving the rest of us on the hook. The oil industry has shown itself to be an irresponsible tenant in our public waters and it should be required to pay a much larger security deposit before it can start drilling.”
The rule won measured praise from the American Petroleum Institute (API), the top fossil fuel trade group.
“BOEM’s final rule appropriately balances the need to safeguard taxpayers from paying for decommissioning obligations while promoting the development of the Outer Continental Shelf’s abundant energy resources,” API VP of Upstream Policy Holly Hopkins said in a statement to The Hill.
— Updated April 16 at 10:12 a.m.