Bill would set cleanup rules for federal oil and gas leases

Interior would require operators to provide a bond or other financial backing before starting work that disturbs the surface of a covered lease. The rules would cover federal onshore oil and gas leases, and operators could not use one nationwide guarantee for all leases. The guarantee must be enough for complete and timely cleanup, with minimums of $200,000 per lease or $650,000 for an operator’s leases within one state. An operator whose idled wells make up at least half of its wells would need a bond covering the estimated cleanup costs for all its operations. Interior could require higher amounts based on risks and could release a guarantee after inspection confirms that the covered cleanup and other federal requirements are complete. Interior would adjust minimums for inflation within one year and at least yearly afterward. Nationwide, statewide, and individual-lease bonds would meet the rules within one, two, and three years, respectively.

Interior would refuse to issue a lease to, or approve a lease transfer or assignment to, an operator that materially fails or refuses to meet standards on another lease. The restriction would also cover the operator’s subsidiaries, affiliates, and people or entities under common control. Before making the noncompliance finding, Interior would have to give the operator or other entity notice and an opportunity to comply. The restriction would last during the period of material noncompliance determined by Interior.

Interior would issue rules aimed at reducing long-idle federal wells, oversee temporarily abandoned and shut-in wells, and publish a public database each year. The rules would cover federal wells that are long-idle, temporarily abandoned, or shut in but still mechanically capable of production or injection. A temporary-abandonment request would need a detailed reason, proof that the well is mechanically sound, and isolation of completed sections. Interior could grant a one-year delay when it finds a legitimate future use and the operator confirms that use and shows progress toward it. Temporary-abandonment approvals would last one year and could be renewed. Within four years, affected wells generally would need cleanup, renewed production or use, or an approved future-use plan; shut-in wells would also need a mechanical check within three years.

A leaseholder would need Interior’s approval before transferring a covered lease, and a seller would remain responsible for duties that arose before an approved transfer. The approval rule would cover federal oil and gas leases under the two named federal leasing laws, including leases issued before enactment. Interior would require added bonding for financial risks found during review. Interior would deny a transfer if the buyer has filed for bankruptcy, lacks the required investment-grade credit rating, lacks a recent safe and compliant operating record, or fails the bill’s debt test without a parent-company guarantee. Interior would issue liability rules within 60 days after enactment. A proposed transfer would receive at least 30 days of public comment, with a decision due within 90 days after the application arrives.

Interior would certify companies as fit before issuing, extending, or approving transfers of covered federal oil and gas approvals, then check compliance every year. The requirement would cover leases, rights-of-way, permits, and other approvals for oil and gas work on covered federal land, including specified related companies and contractors. Certification would consider the company’s and related entities’ past safety and environmental compliance, financial health, and ability to cover shutdown and cleanup duties. If a holder fails the standards, Interior would suspend certification and impose one or more measures, such as suspending an approval, issuing a fine, requiring added cleanup backing, or ordering shutdown work. The bill would allow Congress to provide $30 million each year from fiscal years 2028 through 2032, but it would not itself provide that money. Interior would issue or revise the fitness rules within one year after enactment. Reports to Congress would begin within one year after those rules and continue annually.