Environmental groups are defending a new federal rule that Louisiana, Texas and Mississippi are suing to overturn in a legal fight that will determine who pays the cost to decommission oil and gas wells in the Gulf of Mexico.
The Center for Biological Diversity, Health Gulf, Oceana and Ocean Conservancy filed an amicus brief on Aug. 20 in a lawsuit filed by the three states and oil industry groups. In the brief, the environmental groups urge the court to uphold a rule authorized by the Department of the Interior requiring energy companies operating in the outer continental shelf to have adequate “financial assurance” bonds set aside to shut down and remove drilling infrastructure from the marine environment when necessary.
“The regulatory framework governing this decommissioning process is severely flawed, federal oversight and enforcement is weak, and industry compliance with decommissioning deadlines is poor,” the amicus brief states. “As a result, infrastructure is left in the water without proper decommissioning, and thousands of wells are left unplugged to the tune of billions of dollars in cleanup costs.”
The Interior Department published the new rule in April, arguing that increasing the level of financial assurances in advance of drilling will provide the Bureau of Ocean Energy Management (BOEM) with an estimated $6.9 billion to protect U.S. taxpayers from having to foot the bill for oil-industry decommissioning costs in the Gulf.
The lawsuit filed in the Western District for Louisiana argues the rule will effectively price small and mid-sized oil and gas lessees out of offshore energy development, since they won’t be able to afford the government requirement for additional bonds. These companies produce about one-third of the oil and gas in the outer continental shelf, according to the lawsuit, and shutting them out from offshore leases would put tens of thousands of jobs at risk, the original complaint filed in June states.
But the environmental groups say the rule will not only save taxpayer dollars but will create up to 49,138 direct jobs in Louisiana alone through decommissioning work needed to cap unplugged wells that are both in the ocean and on land.
“We’re defending this rule because it’s a commonsense measure to hold companies that extract oil from public waters accountable for cleaning up after themselves, instead of American taxpayers,” Earthjustice attorney Ava Ibanez Amador, one of the authors of the amicus brief, said in a statement emailed to the Louisiana Record. “Still, this is only a first step in fixing the regulatory framework that has enabled the oil industry to degrade our oceans for decades.”
Overturning the rule would create more decommissioning delays, leading to continuing environmental harm to coastal communities and their fishing and tourism industries that depend on a productive marine environment, according to the amicus brief.
“The American taxpayer should not be held responsible when oil and gas companies are unable to clean up after their own operations,” Interior Secretary Deb Haaland said in a prepared statement when the final rule was announced. “This final rule updates, simplifies and strengthens outdated requirements to ensure that taxpayers are protected and current operators are held responsible for their end-of-lease cleanup obligations on the outer continental shelf.”
The lawsuit advanced by Louisiana and other states argues that the Biden administration has attempted to “throttle” oil production in the nation since Joe Biden took office. But the complaint later acknowledges that the industry has produced hundreds of billions of barrels of oil and gas in the Gulf, making the nation an “energy superpower.” The U.S. last year produced record amounts of crude oil, according to the U.S. Energy Information Administration.