Bill would tighten rules for federal oil and gas operators

Interior would require operators to post a financial guarantee before starting activities on a federal oil or gas lease. The guarantee would cover complete and timely cleanup of land, water, and other resources harmed by lease operations after oil or gas work ends. The minimum would be $200,000 for one lease or $650,000 for all of an operator’s leases in one state. An operator whose idled wells make up at least half of all wells it and its subsidiaries own or operate would need a bond covering the estimated cleanup costs for all operations. Interior could require more based on risks such as well depth, violations, site conditions, and the operator’s ability to complete the work. A guarantee could be released only after inspection confirms that covered work and other federal requirements are complete. Existing nationwide guarantees would be replaced within one year of enactment, deficient statewide bonds within two years, and deficient individual-lease bonds within three years. Interior would adjust minimums for inflation at least yearly and review new guarantees at least every five years and before transfers.

Interior could not issue or approve a lease transfer or assignment to an operator or entity it finds materially noncompliant. The restriction would cover the operator or entity and its subsidiaries, affiliates, controlled businesses, and people or businesses under common control. The finding must involve a material failure or refusal to meet a cleanup requirement or another standard that applies to a different lease. Before making the finding, Interior must give the operator or entity notice and a chance to comply. The restriction would last for the period when Interior determines that the material failure or refusal continues.

Operators would need Interior’s approval to keep wells temporarily abandoned for more than 30 consecutive days. The rules would cover idled, temporarily abandoned, and shut-in wells on federal land. Interior would publish an updated public database each year. A request must explain the temporary abandonment, verify the well’s mechanical integrity, and isolate its completed sections. Operators could seek repeated one-year temporary-abandonment approvals without a limit on the number of requests. A one-year delay after the four-year deadline would require Interior to find a legitimate future use and the operator to confirm that use and show progress. A temporary-abandonment approval would last one year. Shut-in wells would need an integrity check and proof of production ability within three years, and both well categories would face follow-up requirements within four years.

Interior would oversee responsibility and approval when covered federal oil and gas leases change hands. Continuing responsibility would apply to Mineral Leasing Act leases. Transfer reviews would also cover leases issued under the Mineral Leasing Act for Acquired Lands, including interests in those leases. A leaseholder would remain responsible until Interior approves the transfer, and the former holder would keep responsibility for obligations that arose earlier, even if no one identified them before the transfer. Applicants would provide financial information, lists of wells and leases, and records of legal violations. The public would have at least 30 days to comment. Interior would require added bonding when its review finds financial risks. Interior would deny a transfer if the proposed holder has filed for bankruptcy, lacks qualifying investment-grade credit, lacks a safe and compliant operating record during the prior five years, or fails the stated debt test without a parent-company guarantee. Interior would issue the responsibility rules within 60 days of enactment. For a transfer request, it would allow at least 30 days for comments and decide within 90 days after receiving the application.

After setting fitness rules, Interior could approve federal oil and gas rights only for applicants certified as fit to operate. The certification would cover applicants seeking to receive, extend, or take over federal oil and gas leases, rights-of-way, permits, or similar approvals, along with specified related businesses and contractors. Certification would consider the applicant’s and related businesses’ safety and environmental compliance, financial strength, and ability to meet expected shutdown and cleanup costs. Interior would check compliance each year. Failures could lead to suspension, civil penalties, a guarantee covering expected shutdown costs, or an order to begin closing operations. The bill would authorize Congress to provide Interior $30 million in each fiscal year from 2028 through 2032; it would not itself provide that money. Interior would issue or revise the rules within one year of enactment. Certification requirements would begin when those rules take effect, and reports to Congress would begin one year later and continue annually.