WASHINGTON – U.S. Senator Bill Cassidy, M.D. (R-LA) led Senators Joe Manchin (D-WV), Ted Cruz (R-TX), and John Kennedy (R-LA) in calling on the U.S. Department of the Interior (DOI) to extend the public comment period for the Outer Continental Shelf (OCS) financial assurance proposed rule. As written, the rule disproportionately hurts small businesses which produce over one-third of energy developed in the Gulf of Mexico. In addition, the Biden DOI acknowledges the rule will deter new exploration, development, and production offshore. The senators argue that extending the public comment period would allow for a more detailed and robust public record.
“As Members of Congress concerned about our domestic energy supply and production, in addition to the well-being of small businesses, we respectfully request you extend the comment period deadline for the Notice of Proposed Rulemaking titled Risk Management and Financial Assurance for OCS Lease and Grant Obligations (the proposed rule) from 60 to 120 days,” wrote the senators.
“The proposed rule would make changes to the financial assurance regime to secure decommissioning obligations for the offshore oil and gas industry and would impose additional bonding requirements on small businesses. These small businesses, which are disproportionately impacted by the proposed rule, produce 35% of the oil and gas from the Gulf of Mexico, contribute billions of dollars to the Treasury and U.S. economy, and employ thousands of men and women from across the nation,” continued the senators.
“There is no imminent need for BOEM to finalize the proposed rule,” concluded the senators. “BOEM should extend the public comment period to 120 days in order to allow for a detailed and robust public record on the workability and effects of the proposed rule.”
Read the full letter here or below:
As Members of Congress concerned about our domestic energy supply and production, in addition to the well-being of small businesses, we respectfully request you extend the comment period deadline for the Notice of Proposed Rulemaking titled Risk Management and Financial Assurance for OCS Lease and Grant Obligations (the proposed rule) from 60 to 120 days.
The proposed rule would make changes to the financial assurance regime to secure decommissioning obligations for the offshore oil and gas industry and would impose additional bonding requirements on small businesses. These small businesses, which are disproportionately impacted by the proposed rule, produce 35% of the oil and gas from the Gulf of Mexico, contribute billions of dollars to the Treasury and U.S. economy, and employ thousands of men and women from across the nation. Given this and that the Department acknowledges “any action taken by BOEM to ensure financial responsibility of lessees would necessarily significantly impact smaller companies” and “creates a disincentive to additional exploration, development and production”, we believe they need more than 60 days to evaluate the effects of the proposed rule.
Additionally, the proposed rule requires the offshore energy industry to determine whether the international surety market can support the significant amount of new bonding that would be required to be issued to the Bureau of Ocean Energy Management (BOEM) under the proposed rule. This effort requires analysis and discussion with the surety market that currently issues bonds to secure decommissioning obligations offshore. Simply put, a 60-day extension of the comment period for the proposed rule is reasonable. Doing so can help ensure proper due diligence is taken to supply BOEM with meaningful comments.
There is no imminent need for BOEM to finalize the proposed rule. Recent bankruptcies in the offshore industry have not resulted in U.S. taxpayers paying for decommissioning of offshore wells and infrastructure. In fact, the proposed rule actually acknowledges taxpayer liability for decommissioning offshore infrastructure is “rare.” BOEM should extend the public comment period to 120 days in order to allow for a detailed and robust public record on the workability and effects of the proposed rule.
We thank you for your attention to this important matter.
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