05.16.17

As GOP Pushes Deregulation, Taxpayers Potentially on the Hook for Billions in Decommissioned Oil Rig Cleanups, GAO Will Testify

Washington, D.C. – A Government Accountability Office (GAO) witness at tomorrow’s House Natural Resources Committee hearing on the fate of decommissioned offshore oil rigs will testify that taxpayers could be required to pay billions of dollars to meet cleanup requirements ignored or abandoned by oil companies. The hearing comes as Republicans argue for less stringent federal oversight of efforts like the Bureau of Safety and Environmental Enforcement’s Rigs-to-Reefs Program, which converts decommissioned offshore oil rigs to artificial reefs.

When a drilling lease in the Outer Continental Shelf expires or production ceases at a drilling site, a company is legally obligated to decommission and remove its facilities and clear the seabed of obstructions. That process is meant to be paid for by the companies themselves, but a December 2015 GAO report found that of $38.2 billion in decommissioning liabilities as of October 2015, the Department of the Interior (DOI) held or required only $2.9 billion in bonds and other financial assurances and had waived about $33 billion in bonding requirements for most of the remaining liabilities. That left $2.3 billion in potential decommissioning costs unaccounted for – a cost that may eventually have to be borne by American taxpayers.

GAO at the time recommended that DOI revise its financial assurance procedures. Interior issued revised financial assurance procedures in July 2016 and sent letters to companies later that year requesting additional financial assurances, but this process has recently been put on hold.

Based in part on concerns that companies fail to account for cleanup and decommissioning costs, more than 100 House Democrats and three House Republicans sent Interior Secretary Ryan Zinke a letter May 11 urging him not to reopen the Atlantic and Pacific oceans to new oil and gas drilling leases. That letter, led by Subcommittee on Energy and Mineral Resources Ranking Member Alan Lowenthal (D-Calif.) and Rep. Don Beyer (D-Va.) and signed by full Committee Ranking Member Raúl M. Grijalva (D-Ariz.), has not received a response from Zinke or anyone else in the administration.

Tomorrow’s hearing will feature testimony from GAO’s Frank Rusco, who will point out that DOI’s decision to waive decommissioning costs based on a company’s perceived overall financial strength has put taxpayers at risk of bailing out drilling companies after they abandon their rigs.

A witness for the Republican majority representing the Texas-based Center for Sportfish Science and Conservation is expected to testify that all oil and gas platforms should be left in the water to serve as artificial reefs, despite concerns that these structures are contributing to overfishing of red snapper and other reef fish by making them too easy to catch, are not increasing red snapper biomass and are facilitating the spread of invasive species like lionfish in the Gulf of Mexico. The Center for Sportfish Science and Conservation was established with a $500,000 grant from the Coastal Conservation Association (CCA), a fringe group representing a narrow subset of anti-government fishing interests who have launched a misinformation campaign to discredit federal science-based management and catch limits for red snapper.

CCA’s advocacy for states to go out of compliance with federal fisheries regulations and its refusal to acknowledge and address the serious lack of accountability for the catches of private boat recreational anglers has led directly to the shortening of the Gulf of Mexico red snapper season to three days this year.

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