After decades of grassroots organizing, the Bureau of Land Managment (BLM)’s new oil and gas bonding standards will help ensure taxpayers and frontline communities no longer have to suffer from the environmental impacts of abandoned wells or pay for well cleanup. In the first significant update to the federal oil and gas bonding program in over 60 years, the BLM finalized their Onshore Leasing Rule on April 12, 2024.

“At last with the release of the finalized rule, BLM has taken the common-sense step to ensure that oil and gas operators shoulder the fiscal responsibility that was theirs in the first place,” said Dr. Barbara Vasquez, WORC Vice Chair and Western Colorado Alliance member from Cowdrey, Colorado. “These rules will help solve the orphaned well crisis that has been spiraling out of control for decades.”

For more than a half-century, insufficient bond requirements incentivised oil and gas companies to walk away from their cleanup obligations on our public and Tribal lands and minerals, leaving behind a toxic legacy of orphaned wells. Consequently, the burden of cleanup has largely fallen on taxpayers and frontline communities. “I’ve lived here through several boom-and-bust cycles and seen formerly open country transformed into industrial wasteland with unplugged wells, abandoned waste ponds, and no reclamation of roads or drilling sites,” said Maria Katherman, Powder River Basin Resource Council Board Member from Converse County, Wyoming.

Orphaned wells are a significant source of leaking methane, a greenhouse gas 87x more potent than CO2 over a 20-year period as well as volatile organic compounds known to cause cancer and respiratory illnesses. Leaking wells can also contaminate groundwater used for drinking and watering livestock.

“I’ve seen firsthand what happens when developers skip town without cleaning up their mess once drilling is complete, including hospital visits from ingesting leaking methane and concerns about benzene and arsenic in our soil and groundwater,” said Kirk Panasuk, Bainville, Montana, rancher and member of Northern Plains Resource Council.

“The recently finalized oil and gas bonding and reclamation reforms are a big deal for tribal communities like mine (Fort Berthold Reservation),” said Representative Lisa Finley-DeVille (ND4a), co-founder and VP of Fort Berthold POWER and Dakota Resource Council board member from Mandaree, North Dakota . “These rules will help protect tribal communities like Fort Berthold Reservation from having to pay to clean up big oil’s mess.”

The new rule requires operators to post bonds that adequately cover the costs of plugging federal wells and reclaiming the impacted landscapes, as required by the Mineral Leasing Act. Adequate bonding amounts incentivize companies to honor their cleanup obligations or, if they fail to do so, cover the costs ensuring taxpayers or frontline communities aren’t stuck with the bill.

Under the new standards, operators will be required to post bonds that cover the costs of plugging federal wells and restoring the affected areas. Operators will now be required to post a minimum bond amount of $500,000 for all their wells in a state, a significant increase from the current $25,000.

Additionally, the minimum bond amount for all wells on a single lease will be raised to $150,000, up from $10,000. The updated bonding program will ensure that operators are incentivized to plug and reclaim the wells and the land disturbed during operation.This puts the financial burden where it belongs, on the oil and gas companies and not on the communities and taxpayers.

The new rules will also implement provisions in the Inflation Reduction Act that expedite the plugging and reclamation of inactive wells, put an end to non-competitive leasing practices, and increase royalties paid to the federal government and shared with states. The final rule also makes it more difficult for non-compliant companies or “bad actors” to receive new leases by defining a “qualified bidder” and “qualified lessee.”

While the final rule is a ray of hope for residents of western oilfield communities, it may not be the end of the story. Western Colorado Alliance and WORC members now call on the BLM for quick implementation and enforcement of the new standards and for Congress to protect these rules from attempts of repeal.