HOUSTON (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 funds to cover costs of dismantling old infrastructure.

The rule, which would go into effect later this year, applies to companies that do not have investment grade ratings or sufficient proven oil reserves. It could hit around three quarters of operators in the Gulf of Mexico, according to the U.S. Bureau of Ocean Energy Management (BOEM).