A federal judge in Louisiana has denied a request by three Republican-led states and oil industry groups to block a Biden administration rule requiring offshore oil and gas companies to secure nearly $7 billion in financial assurances for decommissioning old infrastructure. U.S. District Judge James Cain ruled that the phased implementation of the 2024 regulation mitigates immediate harm to smaller firms, allowing companies until mid-2025 to begin posting bonds.
The Bureau of Ocean Energy Management (BOEM) rule, applicable to operations in the Gulf of Mexico (recently renamed the Gulf of America under President Donald Trump), mandates bonds to cover future cleanup costs. Louisiana, Mississippi, Texas, and industry plaintiffs argued the rule would cripple small- and mid-sized companies, but Cain noted the three-year phase-in period—requiring only a third of the total upfront—reduces urgency. “Potential harm must be imminent for an injunction,” he stated.
The plaintiffs, challenging the rule’s legality under the Outer Continental Shelf Lands Act, claim the Biden administration overstepped its authority. Judge Cain, a Trump appointee, declined to halt the rule but expedited the case to resolve it before bond demands begin. The regulation aims to prevent taxpayers from footing the bill for abandoned wells, a priority amid Biden’s climate and fiscal accountability agenda.