US Interior Department announces ‘rollback’ of supplemental financial assurance rule
The Department of the Interior is proposing updates to reduce “costly regulations” on the offshore oil and gas industry, a move that is expected to free up billions of dollars for investment, exploration, production and job growth.
The proposal would roll back requirements from a 2024 rule that forced companies to set aside about $6.9 billion in supplemental financial assurance. Roughly $6 billion of that burden would have fallen on small businesses, which make up most of the operators on the Outer Continental Shelf. The change is expected to save industry about $484 million each year in compliance costs.
“For too long, Washington red tape has strangled American energy producers and held back small businesses,” said Interior Secretary Doug Burgum. “President Trump is delivering on his promise to put American workers first, cut burdensome regulations and unleash our vast energy potential. These updates will free up billions of dollars for exploration and development, create good-paying jobs and unlock domestic energy production so we are never forced to rely on foreign adversaries for the resources that power our economy.”
The DOI said that the Bureau of Ocean Energy Management (BOEM) is acting in response to President Trump’s Executive Order 14154, “Unleashing American Energy.” Department officials said that the new proposal would modernize how BOEM evaluates financial risks and lower the amounts companies must set aside for future decommissioning.
By using updated risk metrics and data from the Bureau of Safety and Environmental Enforcement, BOEM says that it will ensure that taxpayer protections remain in place while allowing companies to invest more capital in new projects.
DOI says that the proposal maintains strong accountability for lessees and grant holders under the Outer Continental Shelf Lands Act but reduces “excessive financial barriers” that have slowed growth.
The proposed changes will be published in the Federal Register with a 60-day public comment period. Further information is available at BOEM’s financial assurance webpage.
The Independent Petroleum Association of America (IPAA) issued a statement supporting the change. IPAA EVP and Chief Policy Officer Dan Naatz said: “We applaud the Trump Administration for taking steps to roll back the flawed financial assurance rule promulgated during the Biden Administration. Had it been fully implemented, the Biden rule would have disproportionately affected independent offshore oil and gas producers and had them bear most of the associated costs. The Biden financial assurance rule was misguided from the start, and we applaud the Trump Administration for acting on this important issue and listening to the concerns of independent producers. We look forward to further reviewing the Notice of Proposed Rulemaking in more detail and plan to provide robust comments to the Bureau of Ocean Energy Management in the coming weeks.”