The revision marks a dramatic shift from the Biden administration’s April 2024 rule, which had imposed stricter financial requirements on offshore operators. The previous rule would have required $6.9 billion in additional bonding and resulted in $665 million in annual premium costs for offshore operators.
Secretary Doug Burgum stressed that the revision would “enable our nation’s energy producers to redirect their capital toward future leasing, exploration, and production while financially protecting the American taxpayer.”
However, the original rule, announced on April 16, 2024, was developed in response to concerns raised by the Government Accountability Office (GAO) about inadequate decommissioning practices that could potentially burden taxpayers. It introduced new metrics for assessing company risks, including evaluation of financial health and reserve values.
Under the previous framework, companies lacking investment-grade credit ratings or sufficient proved reserves would have faced additional financial assurance requirements. The rule also included provisions for phased-in payments over three years to help companies meet these obligations.
The Department’s new direction maintains the requirement for operators on the Outer Continental Shelf to provide financial assurance for decommissioning obligations but aims to implement what it describes as a more “balanced regulatory approach.” The Department expects to finalize the revised rule in 2025 and will open it for public comments.
