A bill to amend the Outer Continental Shelf Lands Act to establish fitness to operate standards and decommissioning escrow accounts for offshore oil and gas operators, and for other purposes.

produced under any Federal or State lease held by the recipient responsible party, or any covered entity of the recipient responsible party, during the period of 10 years ending on (as applicable) the date on which the request for certification was made or the date on which the Secretary makes an assessment under paragraph (4)(B); (vi) the recipient responsible party, and any parent company of the recipient responsible party, possess an investment grade credit rating from a nationally recognized statistical rating organization, as such term is defined in section 3(a)(62) of the Securities Exchange Act of 1934; (vii) the recipient responsible party, and any parent company of the recipient responsible party, have not filed a petition for bankruptcy under title 11, United States Code, during the period of 10 years ending on (as applicable) the date on which the request for certification was made or the date on which the Secretary makes an assessment under paragraph (4)(B); and (viii) the recipient responsible party, and any covered entity of the recipient responsible party, have sufficient financial capacity to— (I) fulfill all current and projected decommissioning liabilities, including demonstration that the liabilities disclosed under subparagraph (B)(i)(I) are fully collateralized or otherwise financially secured; (II) implement and maintain up-to-date risk mitigation technologies, environmental protection measures, and worker safety measures, including the use of effective blow-out preventer systems and well-control processes pursuant to the requirements specified in section 250.730 of title 30, Code of Federal Regulations (or any successor regulations); and (III) support a sufficient amount of staff needed for maintenance and oversight of oil and gas infrastructure on the outer Continental Shelf in accordance with environmental, health, and safety requirements; and (B) provides to the Secretary a disclosure of— (i) current and projected decommissioning liabilities of the recipient responsible party, and any covered entity of the recipient responsible party, related to all leases, easements, and rights-of-way administered by a Federal or State authority, including— (I) domestic and global oil and gas decommissioning liabilities; and (II) the value of decommissioning obligations relative to the proven value of oil and gas reserves of the areas subject to such leases, easements, and rights-of-way; (ii) past results of inspections of oil and gas infrastructure operated by the recipient responsible party and any covered entity of the recipient responsible party; (iii) the number, length of ownership, and decommissioning status of each non-producing oil and gas well located on an area subject to a State or Federal oil and gas lease held by the recipient responsible party or any covered entity of the recipient responsible party; and (iv) the number of worker safety incidents, oil spills or other unauthorized pollutant discharges, and infrastructure failures or disruptions that have occurred on areas subject to State and Federal oil and gas leases held by the recipient responsible party, or any covered entity of the recipient responsible party, during the period of 15 years ending on (as applicable) the date on which the request for certification was made or the date on which the Secretary makes an assessment under paragraph (4)(B). (3) 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 (5). (4) Maintenance of certification (A) Requirement A certification that the holder of a lease, easement, or right-of-way for oil or gas exploration, development, or production on the outer Continental Shelf issued, extended, or transferred after the date on which the Secretary issues or revises regulations under paragraph (5) 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, easement, or right-of-way described in subparagraph (A) remains in compliance with standards established pursuant to paragraph (5). (ii) Suspension of certification If the Secretary determines under subparagraph (A) that a holder of a lease, easement, or right-of-way described in subparagraph (A) is not in compliance with the standards established pursuant to paragraph (5), the Secretary shall suspend the certification and impose one or more of the following penalties until such holder complies with such standards: (I) Suspend the applicable lease, easement, or right-of-way pursuant to section 5(a)(1). (II) Issue fines or other civil penalties. (III) Require supplemental financial assurance in an amount equal to the total expected cost of decommissioning. (IV) Issue an order to the holder of the lease, easement, or right-of-way to commence decommissioning, including a requirement that such entity develop and submit a decommissioning plan pursuant to section 250.1704 of title 30, Code of Federal Regulations (or successor regulations), for approval by the Secretary, and issue a notice to any previous holders of the lease, easement, or right-of-way to commence joint and several liability proceedings. (5) Regulations Not later than 1 year after the date of enactment of this section, the Secretary shall issue or revise regulations to— (A) establish standards which the Secretary shall use to determine whether to certify a recipient responsible party as fit to operate; (B) establish a process for recipient responsible parties to request such certification; and (C) carry out any other requirements of this section. (c)Report to CongressNot later than 1 year after the Secretary issues or revises regulations under subsection (b)(5), and annually thereafter, the Secretary shall submit to Congress a report that includes—(1)a summary of the most recent assessments made under subsection (b)(4)(B), including a list of—(A)each person that holds an active or inactive lease, easement, or right-of-way for oil or gas exploration, development, or production on the outer Continental Shelf that failed to meet any of the standards established pursuant to subsection (b)(5);(B)the specific standards for which the person is or was non-compliant, disaggregated by—(i)person; and(ii)lease, easement, and right-of-way; and(C)enforcement actions taken by the Department of the Interior against each person identified under subparagraph (A);(2)decommissioning cost estimates for each lease, easement, and right-of-way for oil or gas exploration, development, or production on the outer Continental Shelf, as calculated by the Secretary pursuant to section 5(k)(2), and any modifications to such estimates since the previous report; and(3)the amount of funds currently held in each decommissioning escrow accounts established pursuant to section 5(k).(d)Authorization of appropriationsThere is authorized to be appropriated to the Secretary $30,000,000 for each of fiscal years 2027 through 2031 to carry out the requirements of this section.(e)DefinitionsIn this section:(1)Covered entityThe 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 that the recipient responsible party enters into a contract with to construct, develop, or operate a facility on the outer Continental Shelf; and(D)any entity that—(i)shares officers, directors, or key managerial personnel with any entity specified in subparagraph (A) or (B); or(ii)is a predecessor to any entity specified in subparagraph (A) or (B).(2)DecommissioningThe term decommissioning, with respect to oil and gas infrastructure on the outer Continental Shelf, means—(A)ending oil and gas operations;(B)permanently plugging all wells;(C)monitoring the efficacy of activities to end such operations, including monitoring the safety and soundness of plugged wells; and(D)returning the area subject to the lease, easement, or right-of-way to a condition that meets the environmental reclamation requirements of the Department of the Interior and any other Federal agency that has jurisdiction over such operations.(3)Parent companyThe term parent company means a company that directly or indirectly controls another company.(4)Recipient responsible partyThe term recipient responsible party means a person seeking the issuance, extension, or transfer of a lease, easement, or right-of-way for oil or gas exploration, development, or production on the outer Continental Shelf.(5)Subsidiary companyThe 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)Conforming amendmentSection 5(b) of the Outer Continental Shelf Lands Act (43 U.S.C. 1334(b)) is amended by inserting , including the regulations issued or revised under section 34 relating to fitness to operate after regulations issued under this Act.3.Decommissioning escrow accountsSection 5 of the Outer Continental Shelf Lands Act (43 U.S.C. 1334) is amended by adding at the end the following:(k)Escrow account for decommissioning liability(1)In generalThe holder of an oil and gas lease shall, in accordance with this subsection, make payments to an interest-bearing escrow account, established and administered by the Secretary, in order to fully meet the total cost of decommissioning the oil and gas infrastructure located on the area subject to the lease.(2)Decommissioning cost estimate(A)In generalFor each oil and gas lease, the Secretary, or an independent third-party entity designated by the Secretary, shall calculate and periodically update a probabilistic estimate of the total cost of decommissioning existing and proposed oil and gas infrastructure, including platforms, wells, and pipelines, located on the area subject to such lease.(B)Initial estimateThe Secretary, or the independent third-party, shall calculate an initial estimate of the total costs described in subparagraph (A) prior to the issuance of a new lease.(C)Reevaluation and updatesThe Secretary, or the independent third-party, shall reevaluate and, if necessary, update the estimate of the total costs described in subparagraph (A) at a minimum—(i)not less frequently than once every 2 years, to reflect any changes in such total costs;(ii)prior to the approval of a development and production plan pursuant to section 25;(iii)prior to the end of the schedule for payments established under paragraph (3); and(iv)following the disbursal of funds from the escrow accounts for a use approved under paragraph (4).(3)Payment schedule(A)In generalThe Secretary shall establish a mandatory schedule for payments required by paragraph (1).(B)Deadlines to establish schedules(i)New leasesWith respect to the issuance, extension, or transfer of an oil and gas lease after the date of enactment of this subsection, the Secretary shall establish the schedule for payments prior to such issuance, extension, or transfer.(ii)Existing leasesWith respect to any lease in effect as of the date of enactment of this subsection, the Secretary shall establish the schedule for payments by not later than 1 year after such date of enactment.(C)Minimum payments by 5 yearsEach schedule of payments established under subparagraph (A) shall provide that the total amount of payments made to the escrow account by the date that is 5 years after the schedule is established be not less than the total decommissioning costs for all oil and gas infrastructure located on the area of the applicable lease.(D)Initial paymentsNo lease may be issued, and no development and production plan may be approved under section 25, unless the recipient responsible party or leaseholder makes a payment to the escrow account in an amount equal to the greater of—(i)25 percent of the average cost to decommission oil and gas infrastructure located on a typical lease at similar depths; and(ii)25 percent of the total decommissioning costs for all oil and gas infrastructure proposed to be installed on the area subject to the lease pursuant to the plan.(E)Lease extensions and transfers(i)Missed paymentsThe Secretary may not extend the term of, or approve the transfer of, a lease if the holder of the lease owes any outstanding payments to the escrow account.(ii)Adoption of payment scheduleThe Secretary may not approve the transfer of a lease unless the recipient responsible party agrees to adopt the schedule for payments established for the lease.(F)AdjustmentsThe Secretary shall adjust a schedule for payments established under subparagraph (A) to reflect any update to the applicable cost estimate under paragraph (2)(C).(G)Supplemental financial assurancesIf the combined amount of the funds in an escrow account for a lease and any supplemental financial assurances provided by the holder of the lease exceeds the total decommissioning cost estimate calculated by the Secretary pursuant to paragraph (2), the Secretary shall correspondingly reduce the supplemental financial assurances required until the combined figure is equivalent to the decommissioning cost estimate.(H)InterestAny interest paid on funds in an escrow account established under paragraph (1) shall become part of the principal funds in the account.(I)Amounts from joint and several liabilityAll funds accrued from previous holders of an oil and gas lease as a result of joint and several liability for the purposes of decommissioning shall be deposited into the corresponding escrow account.(J)Return of remaining funds after decommissioningAfter decommissioning is complete, any funds remaining in an escrow account for a lease established under paragraph (1) shall be returned to any parties that made payments to the escrow account, excluding any amounts deposited pursuant to subparagraph (I), based on the proportion of the payments made by the respective party.(4)Use of funds(A)In generalThe holder of a lease may only use funds in an escrow account established under paragraph (1)—(i)for the purposes of decommissioning the oil and gas infrastructure located on the area subject to the lease; and(ii)if the use is approved by the Secretary.(B)No use as collateralNo person may commit funds held in an escrow account established under paragraph (1) as collateral.(5)PenaltiesIf the required payments into an escrow account established under paragraph (1) are delinquent by more than 60 days, the Secretary shall—(A)raise the royalty rate for the applicable lease at a rate sufficient to recover the delinquent amount within 6 months and deposit the recovered amount into the applicable escrow account established under paragraph (1); or(B)suspend the lease, pursuant to section 5(a)(2), until the holder of the lease provides the delinquent amount.(6)DefinitionsIn this subsection, the terms decommissioning, parent company, and recipient responsible party have the meanings given such terms, respectively, in section 34..4.Restriction on temporary abandonment of wellsSection 5 of the Outer Continental Shelf Lands Act (43 U.S.C. 1334) is amended by adding at the end the following:(l)Restriction on temporary abandonment of wells(1)In generalThe Secretary—(A)may not approve the placement of an oil well in temporary abandonment status for a period longer than 3 years; and(B)may only approve such placement after submission and validation of an accompanying economic analysis verifying the potential for temporary abandonment to improve operational stability of the oil well or mitigate environmental impacts of operating the oil well.(2)ExtensionNotwithstanding paragraph (1)(A), the Secretary may, on a one-time basis for an oil well, extend the maximum period the oil well may be placed in temporary abandonment status to 5 years if the Secretary determines such extension is necessary to ensure operational stability or environmental safety..