The Bureau of Ocean Energy Management (“BOEM”) has backed away from its proposed rulemaking regarding financial assurance requirements for the Outer Continental Shelf (“OCS”). On August 19, 2014, BOEM published an Advance Notice of Proposed Rulemaking (“ANPR”) seeking input on “risk management, financial assurance, and loss prevention,” all designed to overhaul the agency’s method of determining how much money a company must pledge or tie up to ensure compliance with financial and performance obligations arising from an offshore lease.
Even after it published the ANPR, the agency warned it would issue a new Notice to Lessees (“NTL”) in the interim while the rulemaking was pending. Now, the agency has confirmed its intent to modify its financial assurance criteria – but it apparently no longer intends to do so through a rulemaking. This means that new regulations will be issued through a revised NTL, without any corresponding changes to the Code of Federal Regulations. This allows the agency to tighten the screws on industry without implementing any of the other industry-recommended improvements. Continue Reading