Biden's unfair rollback rule will kill jobs and harm U.S. energy security, oil and gas trade groups say.

World Oil

(WO) – The Gulf Energy Alliance (GEA) has joined the states of Louisiana, Texas and Mississippi in a legal challenge to the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) decommissioning rule ( DOI) imposing unnecessary and burdensome financial requirements targeting independent offshore oil and natural gas producers.

The new regulations are a solution in search of a problem, imposing unnecessary financial burdens that will have far-reaching consequences for many small and medium-sized energy producers and all Americans.

If implemented, the Biden administration’s regulations will put thousands of good-paying jobs at risk and reduce competition in the industry, investments in local communities, state and local tax revenue generated by operations offshore, and will ultimately weaken U.S. energy security.

GEA is joined by the Independent Petroleum Association of America (IPAA), the Louisiana Oil & Gas Association (LOGA), and the US Oil & Gas Association (USOGA) in supporting this petition.

In federal offshore oil and gas development, all companies in the chain of title are jointly and severally liable for decommissioning obligations. This system has protected the American taxpayer for over 70 years and continues to work to this day.

Of more than 7,000 offshore platforms, more than 5,300, or about 75 percent, have been retired, almost entirely by independent oil and gas companies.

American taxpayers have paid less than $73 million in decommissioning costs over the 75-year history of offshore oil and gas production, while benefiting from more than $208 billion in revenue for the federal government in the form of taxes, royalties and rents over the last 40 years.

BOEM estimates that 76% of Gulf of Mexico businesses subject to this rule are small businesses. This unnecessary financial burden poses an existential threat to many of these small businesses.

According to an analysis by independent experts, this rule threatens approximately 36,000 jobs, more than $570 million in federal government fees and $9.9 billion in U.S. GDP.

Critically, the surety market said it could not meet the $6.9 billion in newly required additional financial insurance imposed by the new rule.

GEA and several allies released the following statements on this challenge to the Biden administration’s regulatory overreach:

“Today, we are taking action to challenge the DOI’s unwarranted actions to further restrict U.S. access to energy in the Gulf of Mexico,” said Kevin Bruce, Executive Director of GEA.

“Despite Congress’s clear intentions outlined in the Outer Continental Shelf Lands Act of 1953, the Biden Administration is launching a clear attack on the offshore oil and gas industry with this rule. Working with the states of Louisiana, Texas, and Mississippi, we intend to use all legal tools at our disposal to challenge these actions. This rule is completely unnecessary to protect the American taxpayer despite the administration’s claims, and it is nothing more than a pretext to prevent small and medium-sized independent oil and gas companies from operating in the Gulf.

Additionally, Mr. Bruce said, “It is critical that financial assurance requirements – or any regulations for that matter – are achievable, achievable and do not create unnecessary burdens on continued investment in the Gulf of Mexico . Implementation of the new rule is impossible. The new rule leverages the bonding market to provide an additional $7 billion in additional new bonds. »

“But throughout the rulemaking process, the surety market has been clear: The surety market will not and cannot provide the newly required sureties. Even if the bonding market could, it would be prohibitively expensive for producers, ultimately crowding out small and medium-sized businesses that employ thousands of hard-working Americans, and lessening competition in the offshore industry of the Gulf.

“Once again, Joe Biden is illegally attempting to kill Louisiana jobs and American energy security by making the financial burden on offshore producers so exorbitant that they can no longer operate,” said the attorney general of Louisiana, Liz Murrill.

“Furthermore, it is extremely concerning that BOEM, Interior, and the Office of Management and Budget have completely ignored the more than two thousand comments submitted in response to the rulemaking, emphasizing that this rule – as it stands drafted – is simply inapplicable. This includes serious concerns raised by the State of Louisiana, President Biden’s Small Business Administration and the surety industry, in addition to service companies and suppliers throughout the supply chain that support oil production and offshore gas.

“Simply put, this rule solves a problem that doesn’t exist,” said USOGA President Tim Stewart. “And in this case, the ‘solution’ will be devastating for independent producers, discourage new investment and threaten our energy and natural security. Over the past 70 years, our members have made critical business decisions relying on the system of joint and several liability – a well-established legal system well known to all parties involved. The implications of this rule fundamentally change the basis on which these business decisions were made, duplicate financial assurances already given by the industry, and potentially expose taxpayers to greater risk. It is important to note that the true cost of this rule goes well beyond a simple dollar figure. This puts good-paying jobs, federal revenues, community support and our national security at risk.