Stop Orphaned Wells Act

following: ``(6) Failure or refusal to comply.-- ``(A) In general.--The Secretary shall not issue, or approve the transfer or assignment of, any lease under this section to any operator or other entity, or any subsidiary, affiliate, or person controlled by or under common control of that operator or other entity, during any period in which, as determined by the Secretary, the operator or other entity has failed or refused to comply in any material respect with a reclamation requirement or other standard established under this section that is applicable to any other lease of the operator or other entity.''; (4) by striking the third sentence and inserting the following: ``(4) Financial assurances.-- ``(A) Requirement.-- ``(i) In general.--The Secretary shall promulgate regulations to require that a financial assurance shall be provided by an operator prior to the commencement of activities on any lease issued under this Act to ensure the complete and timely remediation and reclamation of any land, water, or other resources (including resources with recreation, range, timber, mineral, watershed, fish or wildlife, natural scenic, scientific, or historical value) adversely affected by lease activities and operations after the abandonment or cessation of oil and gas operations on the lease. ``(ii) Elimination of nationwide financial assurances.-- ``(I) In general.--An operator may not provide a financial assurance under clause (i) on a nationwide basis for all leases of the operator in the United States. ``(II) Requirement.--With respect to any nationwide financial assurance in effect on the date of enactment of the Stop Orphaned Wells Act, the Secretary shall require that, not later than 1 year after that date of enactment, operators shall post replacement financial assurances in accordance with this Act. ``(B) Amount.-- ``(i) In general.--Subject to clause (ii) and (iii), the amount of a financial assurance required under this paragraph shall be the amount determined by the Secretary to be sufficient to ensure the complete and timely remediation and reclamation required under subparagraph (A)(i). ``(ii) Minimum amounts.-- ``(I) In general.--Subject to subclause (II), the minimum amount of a financial assurance required under this paragraph shall be not less than, as applicable-- ``(aa) $200,000, in the case of a financial assurance for surface-disturbing activities on an individual oil or gas lease; or ``(bb) $650,000, in the case of a financial assurance for all oil and gas leases of an operator in a State. ``(II) Idled wells.--Whenever the total number of idled wells of an operator equals or exceeds 50 percent of the total wells owned or operated by the operator, including wells owned or operated by a subsidiary of the operator, the Secretary shall require from that operator a full liability bond for the estimated reclamation and remediation costs associated with all of the operations of the operator. ``(III) Increased minimum amounts for additional categories of operations.-- ``(aa) Establishment by regulation.--In promulgating regulations to carry out this Act, the Secretary shall determine whether higher minimum amounts of financial assurance should be required for any other categories of operations that pose heightened risks of abandonment or environmental harm. ``(bb) Public petition.-- ``(AA) In general.--Any individual may, at any time, file a petition with the Secretary, in such a manner and containing such information as the Secretary may require, to establish an increased minimum amount of financial assurance for a specific category of operations. ``(BB) Findings.-- On receipt of a petition under subitem (AA), the Secretary shall make detailed findings and provide the petitioner a written response and determination not later than 90 days after receipt of the petition. ``(CC) Publication.--If the Secretary determines that a specific category of operations requires an increased minimum amount of financial assurance under subitem (BB), the Secretary shall publish in the Federal Register the determination with the increased amount required not later than 30 days after making that determination. ``(IV) Adjustments for inflation.-- Not later than 1 year after the date of enactment of the Stop Orphaned Wells Act, and not less frequently than annually thereafter, the Secretary shall adjust for inflation the minimum amounts under subclauses (I) and (III), as applicable. ``(iii) Additional factors.--The Secretary shall establish the level of a financial assurance required under this paragraph above the applicable minimum level required under clause (ii) as the Secretary determines to be appropriate or necessary to ensure the complete and timely remediation and reclamation required under subparagraph (A)(i), after taking into consideration the following factors: ``(I) The depth of each relevant proposed wellbore. ``(II) The presence of other resources (including resources with recreation, range, timber, mineral, watershed, fish or wildlife, natural scenic, scientific, or historical value). ``(III) The number of wells to be drilled on the lease. ``(IV) The number and percentage of idled wells on-- ``(aa) the applicable lease; and ``(bb) any other leases held by each applicable operator. ``(V) Any current or past violations by each operator. ``(VI) The anticipated condition of the applicable well site and the extent of the remediation and reclamation to be required. ``(VII) The ability of each operator to fully carry out that remediation and reclamation. ``(VIII) Such other factors as the Secretary determines to be relevant. ``(C) Review.-- ``(i) Prospective.-- ``(I) In general.--With respect to any financial assurance provided after the date of enactment of the Stop Orphaned Wells Act, not less frequently than once every 5 years, and prior to approving an assignment, transfer, or change in operator of a lease, the Secretary shall review the financial assurance to determine, after taking into consideration the factors described in subparagraph (B)(iii), whether the amount of the financial assurance is adequate to ensure the complete and timely remediation and reclamation required under subparagraph (A)(i). ``(II) Authority to increase.--If the Secretary determines under subclause (I) that the amount of a financial assurance is not adequate, the Secretary shall increase the amount of the financial assurance in accordance with subparagraph (B), including making an adjustment for inflation, as appropriate. ``(ii) Retrospective.-- ``(I) In general.--Operators shall increase or replace all bonds that do not meet the appropriate minimum amount of financial assurance required under subparagraph (B)(ii) not later than-- ``(aa) for nationwide bonds, which shall be replaced with individual lease or Statewide bonds, 1 year after the date of enactment of the Stop Orphaned Wells Act; ``(bb) for Statewide bonds, 2 years after the date of enactment of the Stop Orphaned Wells Act; and ``(cc) for individual oil and gas lease bonds, 3 years after the date of enactment of the Stop Orphaned Wells Act. ``(II) Authority to increase.--If the Secretary determines under subclause (I) that the amount of a financial assurance is not adequate, the Secretary shall increase the amount of the financial assurance in accordance with subparagraph (B), including making an adjustment for inflation, as appropriate. ``(D) Release.--On request, and after inspection by the Secretary, the Secretary may release, in whole or in part, the financial assurance required for a lease under this paragraph if the Secretary determines that-- ``(i) the remediation, reclamation, or permanent plugging covered by the financial assurance has been completed in accordance with applicable standards; and ``(ii) all other applicable Federal requirements have been met. ``(E) Consultation.--The Secretary shall consult with the Secretary of Agriculture prior to making any determination under paragraphs (4), (5), or (6) related to activities on National Forest System land. ``(F) Authority.--Nothing in this section prevents the Secretary of Agriculture from requiring additional financial assurances with respect to activities on National Forest System land. ``(5) Temporarily abandoned and shut-in wells.-- ``(A) In general.--The Secretary shall promulgate regulations to reduce the inventory of idled wells and temporarily abandoned and shut-in wells on Federal land, including by enhancing oversight of wells that have been temporarily abandoned or shut-in. ``(B) Requirements.-- ``(i) Temporarily abandoned wells.-- ``(I) In general.--The Secretary shall review and may approve a request from an operator to designate a well as temporarily abandoned for a period greater than 30 consecutive days. ``(II) Designation.-- ``(aa) In general.--A well designated as temporarily abandoned under subclause (I) shall retain that designation for a 1-year period, subject to renewal under item (bb). ``(bb) Renewal.-- ``(AA) In general.--Not earlier than 10 days before a designation under subclause (I) is set to expire, an operator may submit to the Secretary a subsequent request to designate the well for another 1-year period as temporarily abandoned. ``(BB) Limit.-- There is no limit on the number of subsequent requests an operator may submit under this item for approval by the Secretary under subclause (I). ``(III) Requests.--In submitting a request under subclause (I), an operator shall-- ``(aa) include-- ``(AA) adequate and detailed justification for temporarily abandoning the well; and ``(BB) verification of the mechanical integrity of the well; and ``(bb) isolate the completed intervals prior to temporarily abandoning the well. ``(IV) Follow-up.-- ``(aa) In general.--Not later than 4 years after the temporary abandonment of a well under subclause (I), the operator shall-- ``(AA) fully complete reclamation, as required by applicable requirements, unless the Secretary has approved a request to delay under item (bb)(BB); ``(BB) resume production in paying quantities or commence using the well for injection or disposal; or ``(CC) submit to the Secretary a detailed plan and timeline for future beneficial use of the well. ``(bb) Beneficial use.--On submission of a plan and timeline to the Secretary under item (aa)(CC), the Secretary shall-- ``(AA) make a determination regarding whether there is a legitimate future beneficial use of the well; and ``(BB) subject to a determination that there is a legitimate future beneficial use of the well under subitem (AA), grant the operator a 1-year delay, subject to the condition that the operator confirms the future beneficial use of the well and is making verifiable progress on returning the well to that beneficial use. ``(ii) Shut-in wells.-- ``(I) Verification and confirmation.--Not later than 3 years after a well is designated as shut-in, the operator shall submit to the Secretary a verification of the mechanical integrity of the well and confirm that the well remains capable of producing in paying quantities. ``(II) Follow-up.-- ``(aa) In general.--Not later than 4 years after a well shut-in, the operator shall-- ``(AA) permanently abandon the shut-in well, unless the Secretary has approved a request to delay under item (bb)(BB); ``(BB) resume production in paying quantities; or ``(CC) submit to the Secretary a detailed plan and timeline for future beneficial use of the well. ``(bb) Beneficial use.--On submission of a plan and timeline to the Secretary under item (aa)(CC), the Secretary shall-- ``(AA) make a determination regarding whether there is a legitimate future beneficial use of the well; and ``(BB) subject to a determination that there is a legitimate future beneficial use of the well under subitem (AA), grant the operator a 1-year delay, subject to the condition that the operator confirms the future beneficial use of the well and is making verifiable progress on returning the well to that beneficial use. ``(C) Publication.--The Secretary shall annually update and publicly publish a database of idled wells and temporarily abandoned and shut-in wells under the jurisdiction of the Secretary.''; (5) in the second sentence-- (A) by striking ``Secretary concerned'' and inserting ``Secretary, or the Secretary of Agriculture with respect to National Forest System land,''; and (B) by striking ``No permit'' and inserting the following: ``(3) Analysis and approval required.--No permit''; and (6) by striking the subsection designation and all that follows through ``the Secretary of Agriculture,'' and inserting the following: ``(g) Regulation of Surface-Disturbing Activities.-- ``(1) Definitions.--In this subsection: ``(A) Idled well.--The term `idled well' means a well-- ``(i) that has been nonoperational for not less than 4 years; and ``(ii) for which there is no anticipated beneficial future use. ``(B) Operator.--The term `operator', with respect to an oil or gas operation, means any individual or entity (including a lessee or operating rights owner) that has provided to a relevant authority a written statement that the individual or entity is responsible for the operation (or any portion of the operation). ``(C) Orphaned well.--The term `orphaned well', with respect to a well or well site under an oil or gas lease issued under this Act, means a well-- ``(i)(I) that is not used for an authorized purpose, such as production, injection, monitoring, or another approved beneficial use; and ``(II) for which no operator can be located; or ``(ii) the operator of which is unable-- ``(I) to plug the well; or ``(II) to remediate and reclaim the well site. ``(D) Secretary.--The term `Secretary' means the Secretary of the Interior. ``(E) Shut-in.--The term `shut-in' means a non- operational well that is mechanically capable of producing or injecting by opening a valve or activating existing equipment. ``(F) Temporarily abandoned.--The term `temporarily abandoned', with respect to the status of a well, means a non-operational well that-- ``(i) is not physically or mechanically capable of production or injection without additional equipment or servicing of the well; but ``(ii) may have a future beneficial use. ``(2) Regulation of activities.--The Secretary, or the Secretary of Agriculture with respect to National Forest System land,''. SEC. 4. PREDECESSOR LIABILITY. Section 17 of the Mineral Leasing Act (30 U.S.C. 226) is amended by adding at the end the following: ``(r) Predecessor Liability.-- ``(1) In general.--Not later than 60 days after the date of enactment of the Stop Orphaned Wells Act, the Secretary shall promulgate regulations addressing lessee and sublessee responsibility and liability for performing all obligations relating to plugging a well drilled, and removing a facility installed, pursuant to-- ``(A) a lease issued under this Act; and ``(B) other applicable law. ``(2) Requirements.--In carrying out paragraph (1), the Secretary shall require that-- ``(A) the lessee or sublessee, as applicable, shall remain responsible for performing all obligations under the lease until the date that the Secretary approves an assignment of record title interest or transfer of operating rights; and ``(B) after the Secretary approves the assignment or transfer under subparagraph (A), the assignor or transferor will continue to be responsible for lease obligations that accrued before the approval date, whether or not those obligations were identified at the time of the transfer, including-- ``(i) paying compensatory royalties for drainage; ``(ii) responsibility for plugging drilled wells; and ``(iii) removing facilities installed or used before the effective date of the assignment or transfer.''. SEC. 5. LIMITATIONS ON TRANSFER OF LEASES. (a) Definitions.--In this section: (1) Covered lease.--The term ``covered lease'' means-- (A) an oil or gas lease issued pursuant to the Mineral Leasing Act (30 U.S.C. 181 et seq.), and any interest in that lease; and (B) an oil or gas lease issued pursuant to the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), and any interest in that lease. (2) Parent company.--The term ``parent company'' means a company that directly or indirectly controls another company. (3) Secretary.--The term ``Secretary'' means the Secretary of the Interior. (4) Subsidiary company.--The term ``subsidiary company''-- (A) means any company that is owned or controlled, directly or indirectly, by another company; and (B) includes any subsidiary of the company that is so owned or controlled. (b) Limitations.-- (1) In general.--A leaseholder may not transfer a covered lease to any person, regardless of whether the lease was issued before, on, or after the date of enactment of this Act, unless the Secretary approves the transfer under paragraph (2). (2) Application.-- (A) In general.--Prior to transferring a covered lease, a leaseholder shall submit to the Secretary an application containing-- (i) a financial risk assessment of the proposed lessee, including an assessment of the adequacy of the proposed financial assurances, credit rating (or lack thereof), and bonding of the lessee; (ii) a complete list of oil and gas leases and wells owned or operated by the proposed lessee, along with the operational status of the wells, including whether any of the wells are idled wells, temporarily abandoned, or shut-in (as those terms are defined in section 17(g) of the Mineral Leasing Act (30 U.S.C. 226(g))); (iii) a complete list of past and ongoing violations of Federal, State, or local laws and regulations applicable to any of the oil and gas operations of the proposed lessee; and (iv) any other information that the Secretary may require. (B) Approval or denial.--After receiving an application submitted under subparagraph (A), the Secretary shall, subject to subparagraphs (D) and (E)-- (i) immediately post the proposed transfer on the website of the Department of the Interior; (ii) invite public comment on the proposed transfer for not less than 30 days; and (iii) not later than 90 days after receiving the application-- (I) approve, conditionally approve, or deny that application; and (II) publicly post on the website of the Department of the Interior the reasoning for the approval, conditional approval, or denial, to include whether the decision was based on information provided by the public under clause (ii). (C) Notice.--Not later than 5 days after making a decision under subparagraph (B), the Secretary shall-- (i) notify the leaseholder of that decision; and (ii) post the decision on the website of the Department of the Interior. (D) Additional bonding.--The Secretary shall conditionally approve an application under subparagraph (B), subject to the condition that the leaseholder acquires additional bonding to offset any financial risks identified during the review of the application by the Secretary. (E) Mandatory denial.--The Secretary shall deny an application under subparagraph (B) if the proposed lessee-- (i) has filed a petition for bankruptcy under title 11, United States Code; (ii) does not, along with any parent company of the proposed lessee, possess an investment grade credit rating from a nationally recognized statistical rating organization (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); (iii) has no prior record of safe and compliant oil or gas production operations within the preceding 5 years; or (iv) is a subsidiary company of a parent company and fails to demonstrate a debt-to- equity ratio of less than 2 to 1, unless the parent company provides an unconditional corporate guarantee for all liabilities under the covered lease. SEC. 6. FITNESS TO OPERATE STANDARDS. The Mineral Leasing Act is amended by inserting after section 37 (30 U.S.C. 193) the following: ``SEC. 38. FITNESS TO OPERATE STANDARDS FOR OIL AND GAS ACTIVITIES. ``(a) Definitions.--In this section: ``(1) Covered entity.--The term `covered entity', with respect to a recipient responsible party, means-- ``(A) any parent company of the recipient responsible party; ``(B) any subsidiary company of the recipient responsible party; ``(C) any entity with which the recipient responsible party enters into a contract to construct, develop, maintain, or operate a facility on Federal land subject to this Act; and ``(D) any entity that-- ``(i) shares officers, directors, or key managerial personnel with any entity described in subparagraph (A) or (B); or ``(ii) is a predecessor to any entity described in subparagraph (A) or (B). ``(2) Decommissioning.--The term `decommissioning', with respect to oil and gas infrastructure on Federal land subject to this Act, means-- ``(A) ending an oil and gas operation; ``(B) permanently plugging a well; ``(C) monitoring the efficacy of activities to end an oil and gas operation, including monitoring the safety and soundness of a plugged well; and ``(D) returning the area subject to the lease, right-of-way, permit, or other authorization to a condition that meets the environmental reclamation requirements of the Department of the Interior and any other Federal agency that has jurisdiction over the oil and gas operation. ``(3) Parent company.--The term `parent company' means a company that directly or indirectly controls another company. ``(4) Recipient responsible party.--The term `recipient responsible party' means an entity seeking the issuance, extension, or transfer of a lease, right-of-way, permit, or other authorization for oil or gas exploration, development, or production on Federal land subject to this Act. ``(5) Secretary.--The term `Secretary' means the Secretary of the Interior. ``(6) Subsidiary company.--The term `subsidiary company'-- ``(A) means any company that is owned or controlled, directly or indirectly, by another company; and ``(B) includes any subsidiary of the company that is so owned or controlled. ``(b) Requirement for Approvals.--Beginning on the date on which the Secretary issues or revises regulations under subsection (c)(4), the Secretary may not issue, extend the term of, or approve the transfer of, a lease, right-of-way, permit, or other authorization for oil or gas exploration, development, or production on Federal land subject to this Act with respect to a recipient responsible party, unless the recipient responsible party is certified as fit to operate in accordance with subsection (c). ``(c) Certification of Fitness To Operate.-- ``(1) In general.--The Secretary shall certify a recipient responsible party as fit to operate based on-- ``(A) the past compliance of the recipient responsible party, and any covered entity of the recipient responsible party, with Federal, State, and local environmental and safety laws and regulations, including deadlines and requirements related to environmental reclamation, decommissioning, and worker safety; ``(B) the financial solvency and capacity of the recipient responsible party, and any covered entity of the recipient responsible party, to weather market shocks and fulfill current and projected decommissioning liabilities; and ``(C) any other criteria with respect to the recipient responsible party, and any covered entity of the recipient responsible party, as the Secretary determines appropriate. ``(2) Initial request for certification.--A recipient responsible party may request to be certified as fit to operate pursuant to the process established by regulation under paragraph (4). ``(3) Maintenance of certification.-- ``(A) Requirement.--A certification that the holder of a lease, right-of-way, permit, or other authorization for oil or gas exploration, development, or production on Federal land subject to this Act issued, extended, or transferred after the date on which the Secretary issues or revises regulations under paragraph (4) is fit to operate shall be maintained in accordance with subparagraph (B). ``(B) Annual compliance verification.-- ``(i) In general.--The Secretary shall annually assess whether each holder of a lease, right-of-way, permit, or other authorization described in subparagraph (A) remains in compliance with standards established pursuant to paragraph (4). ``(ii) Suspension of certification.--If the Secretary determines under subparagraph (A) that a holder of a lease, right-of-way, permit, or other authorization described in subparagraph (A) is not in compliance with the standards established pursuant to paragraph (4), the Secretary shall suspend the certification and impose 1 or more of the following penalties until that holder complies with the standards: ``(I) Suspend the applicable lease, right-of-way, permit, or other authorization pursuant to section 5(a)(1). ``(II) Issue a fine or other civil penalties. ``(III) Require supplemental financial assurance in an amount equal to the total expected cost of decommissioning, as applicable. ``(IV) Issue an order to the holder of the lease, right-of-way, permit, or other authorization to commence decommissioning, including a requirement that the entity develop and submit a decommissioning plan pursuant to section 3162.3-4 of title 43, Code of Federal Regulations (or a successor regulation), for approval by the Secretary, and issue a notice to any previous holders of the lease, right- of-way, permit, or other authorization to commence joint and several liability proceedings. ``(4) Regulations.--Not later than 1 year after the date of enactment of the Stop Orphaned Wells Act, the Secretary shall promulgate or revise regulations-- ``(A) to establish standards, in accordance with this section, that the Secretary shall use to determine whether to certify a recipient responsible party as fit to operate; ``(B) to establish a process for recipient responsible parties to request such certification; and ``(C) to carry out any other requirements of this section. ``(d) Report to Congress.--Not later than 1 year after the Secretary issues or revises regulations under subsection (c)(4), and annually thereafter, the Secretary shall submit to Congress a report that includes a summary of the most recent assessments made under subsection (c)(3)(B), including a list of-- ``(1) each person that holds an active or inactive lease, right-of-way, permit, or other authorization for oil or gas exploration, development, or production on Federal land subject to this Act that failed to meet any of the standards established pursuant to subsection (c)(4); ``(2) the specific standards for which the person is or was non-compliant, disaggregated by-- ``(A) person; and ``(B) lease, right-of-way, permit, and other authorizations; and ``(3) enforcement actions taken by the Secretary against each person identified under paragraph (1). ``(e) Authorization of Appropriations.--There is authorized to be appropriated to the Secretary to carry out this section $30,000,000 for each of fiscal years 2028 through 2032.''. <all>