BOEM Proposed Rule Includes Significant Changes To 2024 Financial Assurance Regulations

On Monday, March 9, 2026, the U.S. Department of the Interior (“DOI”), acting through the Bureau of Ocean Energy Management's (“BOEM”), published in the Federal Register a proposed Risk Management and Financial Assurance for OCS Lease and Grant Obligations rule (the “2026 Proposed Rule”) that would substantially revise certain provisions of the current Risk Management and Financial Assurance of OCS Lease and Grant Obligations rule implemented in 2024 (the “2024 Final Rule”). The 2026 Proposed Rule, among other proposed revisions to the 2024 Final Rule, would impact when federal offshore oil and gas lessees and grant holders must post supplemental financial assurance to backstop decommissioning obligations, the amount of security that must be posted, and the types of financial assurance acceptable to BOEM. According to DOI, in comparison to the 2024 Final Rule, the 2026 Proposed Rule, if finalized, is expected to save oil and gas lessees operating on the Outer Continental Shelf (“OCS”) around $484 million each year in financial assurance compliance costs, thereby increasing the amount of capital for oil and gas production on the OCS. 

The 2026 Proposed Rule is not the first attempt by President Trump to revise BOEM's financial assurance regulations. In October 2020, near the end of President Trump's first administration, BOEM published the 2020 Proposed Rule in the Federal Register, which was never finalized. Instead, under the Biden administration, DOI undertook a new rulemaking, resulting in the finalization of President Biden's 2024 Final Rule, containing the current financial assurance regulations, which became effective on June 29, 2024. The 2024 Final Rule, however, was never fully implemented, as in May 2025, shortly after President Trump's inauguration and issuance of Executive Order 14154, Unleashing American Energy, DOI announced its intent to review and revise the 2024 Final Rule, stating that it would develop a new rule consistent with President's Trump's 2020 Proposed Rule. 

The 2026 Proposed Rule includes provisions that were first contemplated in the 2020 Proposed Rule, such as continuing the prior BOEM practice of considering the financial strength of jointly and severally liable predecessors when evaluating the amount of supplemental financial assurance that must be provided to backstop decommissioning obligations. In addition, the 2026 Proposed Rule, like the 2020 Proposed Rule, contemplates BOEM using a revised credit rating threshold when evaluating grantees and lessees' financial health. 

The most salient provisions of the 2026 Proposed Rule, in comparison to the current 2024 Final Rule, are as follows:

• When determining whether supplemental financial assurance is required, as previously noted, BOEM will consider the financial strength of the jointly and severally liable predecessors;
• The credit rating threshold used for evaluating grantees and lessees' financial health will be revised from BBB to BB and from S&P Global Ratings or Baa3 to Ba3 from Moody's Investor Service Inc.—or other equivalent credit rating from a Nationally Recognized Statistical Rating Organization;
• The level of the Bureau of Safety and Environmental Enforcement's probabilistic estimates of decommissioning costs used for determining the amount of supplemental financial assurance will be revised from P70 to P50;
• The list of acceptable supplemental financial assurance instruments for leases will be revised to explicitly include dual-obligee financial assurance instruments;
• When determining supplemental financial assurance requirements for grant holders, the Regional Director will now have the option to consider the use of the 3-to-1 proved reserves to decommissioning liabilities ratio for ROW for grant holders (that also have the associated lease rights) to the proved reserves;
• An alternative option, for circumstances where decommissioning activities will be performed within 1 year of issuance of a supplemental financial assurance demand, would allow the BOEM Regional Director discretion to accept third-party decommissioning contracts and decommissioning schedules in lieu of supplemental financial assurance;
• A 3-year phase in period for existing leaseholders would be allowed beginning with the effective date of the new supplemental financial assurance requirements; and
• Lessees would no longer be required to provide an appeal bond in the amount of the demand as a condition of staying the demand during the IBLA appeal process.

What comes next? Publication of the 2026 Proposed Rule in the Federal Register has opened a 60-day public comment period. Between now and May 8, 2026, BOEM is accepting comments from the public and stakeholders on the proposed final rule. Notably, the 2026 Proposed Rule acknowledges that, while the total amount of supplemental financial assurance that may be required by oil and gas lessees and grantees operating on the OCS would decrease, certain companies may still face a financial impact because BOEM never fully implemented the 2024 Final Rule. 

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