States sue US to block rule that oil firms guarantee payment to dismantle old wells

HOUSTON, June 17 (Reuters) – Texas, Louisiana and Mississippi on Monday sued the U.S. government to block the Biden administration’s proposed rule that would require the offshore oil and gas industry to provide nearly $7 billion in financial assurances to cover costs of dismantling old infrastructure.

The rule, which would take effect later this year, will predominantly affect smaller companies that do not have investment grade ratings or sufficient proven oil reserves. Oil majors are more likely to meet the credit criteria or have large reserves.