The Biden administration has introduced new regulations to increase insurance bonds for offshore drilling cleanup, targeting companies deemed financial risks by the Bureau of Ocean Energy Management.
The new rule mandates supplemental insurance for costs related to decommissioning offshore oil and gas infrastructure.
It aims to protect taxpayers from bearing the financial burden if oil companies default on their cleanup responsibilities.
Estimates suggest the rule could generate $6.9 billion in new insurance bonds to cover potential bankruptcies of offshore operators.
Key quote:
"The American taxpayer should not be held responsible when oil and gas companies are unable to clean up after their own operations."
— Deb Haaland, Interior Secretary
Why this matters:
Offshore drilling carries inherent environmental risks, including oil spills and habitat destruction. In the past, the burden of cleaning up oil spills has often fallen on taxpayers when drilling companies lack the financial resources to cover the full extent of the damage. Increasing insurance bonds seeks to rectify this by shifting more of the financial responsibility back to the companies conducting the drilling operations.
