Document Type
Report
Publication Date
10-2024
Abstract
For more than a century, American fossil fuel companies have extended their operations offshore to exploit the vast oil and gas reserves that lie under the seafloor. Since 1953, the Department of the Interior (DOI) has operated a complex system of offshore leasing that allows private oil and gas companies to operate in federal waters. DOI’s leasing regime requires companies to plug wells, remove offshore platforms, and generally return their operation sites to a safe and stable condition when their leases end. This process, known as “decommissioning,” can cost tens or hundreds of millions of dollars for each offshore platform. If offshore oil and gas facilities are not promptly and properly decommissioned, they represent serious ongoing environmental risks—metal rusts, concrete decays, and storms and natural disasters threaten to release oil and natural gas into sensitive ocean environments.
The long life and complex corporate structure of oil and gas assets can complicate the process of enforcing decommissioning obligations. Oil and gas production facilities may operate for many decades, changing hands between multiple owners along the way. However, DOI’s decommission regulations contain a broad set of liability rules that allow regulators to hold prior owners and operators of offshore leases responsible for decommissioning obligations. These rules, known as “joint and several trailing liability,” give regulators the authority to pursue predecessor companies for the costs of decommissioning if the current owner defaults on its obligations.
This white paper examines these legacy decommissioning liabilities. Part I reviews the sources and scope of DOI’s authority to hold predecessor oil and gas companies liable for decommissioning obligations. Part II assesses the impact of these legacy liabilities on the parent companies of predecessor oil and gas operators, and identifies strategies to hold these companies liable for decommissioning obligations if their subsidiaries are unable to pay them. Part III concludes.
Disciplines
Business Organizations Law | Energy and Utilities Law | Environmental Law | Law
Recommended Citation
Martin Lockman & Romany M. Webb, Legacy Environmental Liabilities for Offshore Oil and Gas Infrastructure, Sabin Center for Climate Change Law (2024).
Available at: https://scholarship.law.columbia.edu/sabin_climate_change/234
For information and resources from the Sabin Center for Climate Change Law, please visit us here.
Included in
Business Organizations Law Commons, Energy and Utilities Law Commons, Environmental Law Commons