Sep 7, 2023 Association Letter Re: Risk Management and Financial Assurance for OCS Lease and Grant Obligations, (RIN 1010-AE14)
Dear Ms. Spence:
The Gulf Energy Alliance (“GEA”), the Independent Petroleum Association of America (“IPAA”), the U.S. Oil and Gas Association (“USOGA”), the Southeast Oil and Gas Association (“SOGA”), the Mississippi Energy Institute (“MEI”), and the Louisiana Oil and Gas Association (“LOGA”) respectfully submit the following comments on the Bureau of Ocean Energy Management’s (“BOEM”) proposed rule entitled The Risk Management and Financial Assurance for OCS Lease and Grant Obligations1 (the “Proposed Rule”). …
We are deeply concerned that BOEM failed to consider or adequately address the devastating financial impacts the Proposed Rule will have on the U.S. economy and the domestic oil and gas industry, the environment, national security interests, and the American people. The Proposed Rule ignores the feasibility of securing further financial assurance in the current struggling surety market and marks a radical shift from the reliance on the bedrock joint and several liability framework, which holds both predecessors and current lessees in the chain of title accountable for decommissioning obligations.
The Proposed Rule aims to solve a problem that does not exist. Although the agency claims to undertake this rulemaking for to benefit the American taxpayer, the Proposed Rule ignores how the longstanding joint and several liability system has successfully shielded taxpayers from decommissioning costs. Although the liability that American taxpayers have actually absorbed from decommissioning is quite minimal, in its wake, the Proposed Rule will impose significant burdens on the current lessees who are largely independent oil companies. Which will, in turn, delay decommissioning activity and harm the environment, weaken domestic oil and natural gas production, strengthen the positioning of other oil producing countries who pose national security risks to the U.S., increase oil prices and related consumer costs, and ultimately damage the U.S. economy and the American people. …
