What started in 2020 as a proposed joint rulemaking between the DOI’s Bureau of Safety and Environmental Enforcement (“BSEE”) and Bureau of Ocean Energy Management (“BOEM”) was recently finalized as a stand-alone BSEE rule addressing decommissioning. BSEE’s new regulations focus on Rights-of-Use and Easements (“RUEs”) and predecessor enforcement practices. At a later date, BOEM intends to issue a new proposed rule that addresses risk management, financial assurance, and loss prevention issues that were originally part of the proposed joint rulemaking.

BSEE’s final rule for the first time includes in the agency’s decommissioning regulations RUEs and RUE grant holders. RUE grants are authorizations from BOEM to use a portion of the seabed not encompassed by the holder’s lease to construct, modify, or maintain platforms, artificial islands, facilities, installations, and other devices that support exploration, development, or production of oil and gas or other energy resources from another lease. Historically, RUEs have been absent from BSEE’s Subpart Q decommissioning regulations, which addressed decommissioning obligations for lessees and ROW grant holders. In the final rule, BSEE amended its regulations to add a new regulatory definition of RUE and to incorporate RUEs, RUE holders, and prior RUE holders throughout the decommissioning regulations located at 30 C.F.R. § 250.1700, et seq. BSEE added a new paragraph (c) to 30 C.F.R. § 250.1701 providing that RUE holders and prior lessees or owners of operating rights of the parcel on whose leases there existed facilities or obstructions that remain on the RUE are jointly and severally liable for meeting accrued decommissioning obligations.

BSEE’s final rule also formally adds a new regulation at 30 C.F.R. § 250.1708, which formalizes BSEE’s procedures for enforcement of decommissioning orders issued to predecessors when a subsequent assignee defaults on its decommissioning obligations. When BSEE issues an order to predecessors, it requires them to monitor, maintain, and decommission all wells, pipelines, and facilities to minimize safety hazards, environmental harm, and interference with navigation or other uses of the OCS. Proposed 30/60/90-day timeframes were extended to 30/90/150-days in the final rule per commenter requests so that predecessors in receipt of a decommissioning order must now: (1) initiate maintenance and monitoring within 30 days of receiving the order; (2) designate an operator or agent for decommissioning activities within 90 days; and (3) submit a decommissioning plan to BSEE within 150 days. BSEE retains discretion to extend or shorten these timeframes under extenuating circumstances. The new regulations also make clear that a predecessor’s filing of an appeal and obtaining a stay of enforcement of a decommissioning order only precludes BSEE from proceeding with enforcement actions against that entity; all other predecessors that did not appeal remain subject to enforcement.

BSEE chose not to promulgate previously proposed regulations that would have required any party appealing a BSEE decommissioning order to file an appeal bond as part of the appeal procedure. Similarly, BSEE withdrew its proposal to require proceeding up the chain of title in “reverse chronological order” against predecessor lessees, grant holders, and owners of operating rights, in the event subsequent assignees fail to perform. Instead, BSEE decided to retain the current framework, under which BSEE’s position is that it may issue decommissioning orders to any or all jointly and severally liable parties in the chain of title on a case-by-case basis.

BSEE’s final rule can be found at 88 Fed. Reg. 23569 (April 18, 2023). The new regulations take effect on May 18, 2023.

Disclaimer: This Blog/Web Site is made available by the law firm of Liskow & Lewis, APLC (“Liskow & Lewis”) and the individual Liskow & Lewis lawyers posting to this site for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice as to an identified problem or issue. By using this blog site you understand and acknowledge that there is no attorney-client relationship formed between you and Liskow & Lewis and/or the individual Liskow & Lewis lawyers posting to this site by virtue of your using this site. The Blog/Web Site should not be used as a substitute for legal advice from a licensed professional attorney in your state regarding a particular matter.

Privacy Policy: By subscribing to Liskow & Lewis’ E-Communications, you will receive articles and blogs with insight and analysis of legal issues that may impact your industry. Communications include firm news, insights, and events. To receive information from Liskow & Lewis, your information will be kept in a secured contact database. If at any time you would like to unsubscribe, please use the SafeUnsubscribe® link located at the bottom of every email that you receive.