Agency Records Show New Rule May Stem from Big Oil Ask.
(Washington, DC) – Today, government watchdog Functional Government Initiative (FGI) released newly obtained records showing a series of private meetings early in the Biden administration between Interior officials and representatives from the major oil companies. While not unusual in itself, the private meetings represent a stark contrast from public perceptions pushed by the administration of its principled opposition to the oil and gas industry.
President Biden made clear in his 2020 campaign that he intended to restrict all new oil and gas development on public lands. However, access to his senior decision-makers at the Department of the Interior (DOI) and its sub-agency, the Bureau of Ocean Energy Management (BOEM), appears to have been business-as-usual for the world’s largest oil producers. The newly obtained records also reveal that a complex but consequential set of government bonding requirements was of primary interest to the major oil companies. They sought regulatory changes that could shield their bottom line from the potential decommissioning liability of independent oil producers and small businesses operating in the Gulf of Mexico, while foisting additional costs to the small oil and gas operators. They also appeared to recognize the danger of their coordination being exposed, with one of their representatives asking BOEM officials at one point whether their comments would be made available to public scrutiny.
Big Oil’s wish appears to have been granted by the Biden administration. On June 29, 2023, BOEM published a proposal to amend bonding requirements in a way that many believe creates a new scheme to relieve the world’s biggest oil producers from billions in potential liability for clean-up costs under the leases. The proposal may also accomplish the President’s goals of restricting, as some small business advocates project that it may have the effect of putting many of these same smaller independent oil and gas producers who make up 76 percent of oil and gas operators in the Gulf out of business. The proposed rule would force non-publicly traded operators to incur more than $6 billion in insurance costs that even the surety industry itself claims would not be financially viable.
The public comment period on the new rules closed in September, and the Interior Department is currently reviewing comments from various stakeholders. The strange bed fellows in favor of the rules include major oil companies and their trade association, the American Petroleum Institute (API), along with a variety of large environmental NGOs who have generally been supportive of Interior’s efforts to reduce or eliminate all oil and gas production.
Peter McGinnis, spokesman for FGI, issued the following statement:
“These records paint a picture of the Biden Administration saying one thing publicly while appearing to do another behind closed doors. Ironically, in this instance it seems that coziness between senior political appointees at Interior and representatives of Big Oil may be the driver of BOEM’s latest rule on offshore bonding. Given the devastating impact projected by the BOEM bonding proposal on small oil and gas operators in the Gulf, the latest salvo may also be hitting two birds with one stone. Beyond just fulfilling Big Oil’s goal of crushing smaller competitors with new surety costs, the environmentalist lobby opposed to all drilling also appears to come out a winner since the rule could mean total dysfunction in the long-term viability of the Gulf’s energy industry.”