Federal Report Highlights Reclamation Challenges, Sparks Legislation

Sep 20, 2019

An outdated regulation within the U.S. Bureau of Land Management (BLM) is allowing the majority of oil and gas operators on federal land to put down money for clean-up that doesn't reflect actual cost; that's according to a new report from the U.S. Government Accountability Office (GAO).

The GAO report reads, "bonds held by BLM have not provided sufficient financial assurance to prevent orphaned oil and gas wells."

It explains this is a problem because most bonds are set at their regulatory minimum values, which haven't changed since the mid-20th century. The federal office found abandoned wells have increased by over 50 percent from 2009 to 2017. If an operator doesn't pay the legally required cost, the expense falls on taxpayers.

The GAO made two recommendations to the BLM: update the minimum requirements and allow the BLM to obtain funds from operators. The BLM agreed with the first, but not the second.

The report also prompted bipartisan legislation introduced by Congressman Alan Lowenthal (CA-47) this week. The Bonding Reform and Taxpayer Protection Act of 2019 would update oil and gas bond amounts to reflect both inflation and modern-day costs of reclamation. The bill would also call for a three-year adjustment cycle to reflect inflation.

Lowenthal said he's raised this issue in the past to Congress, but this time he expects to see more success.

"Now with the GAO report, now with data supporting it, now with a bipartisan bill talking about the rates... I think we're on the verge of really dealing with protecting America's public lands and making sure that those that do extract fossil fuels pay their fair share," he said.

Lowenthal added this isn't an attack on the oil and gas industry.

Utah Congressman Ben McAdams spoke in favor of the legislation as well, saying it's a commonsense answer to the problem.

"The motivation in introducing the bill is fairness to taxpayers. They deserve to be fairly compensated," he said.

The bill would also require reclamation plans alongside each drilling permit application.

Have a question about this story? Contact the reporter, Cooper McKim, at cmckim5@uwyo.edu.