Policy Reversal Could Lead to Taxpayers Being on the Hook for $753 Billion
In 2024, the Bureau of Land Management (BLM) updated its oil and gas bonding requirements to more closely reflect the actual plugging and clean-up costs for orphaned wells, thus protecting taxpayers from industry bad actors who skip out on their promise to plug and clean-up their wells once done producing. The Trump Administration just announced that it is rolling back those reforms, thus putting the cost of dealing with orphaned wells back on American taxpayers.
“Protecting taxpayers is the sole purpose of the 2024 bonding reforms. By rolling them back, this administration is siding with industry cheats and scammers over hard-working American taxpayers,” said David Jenkins, President of Conservatives for Responsible Stewardship.
Jenkins continued: “One has to ask, why? Why allow the oil and gas industry’s worst actors to syphon out all the profit from a public resource while offloading the cost of doing business onto you and me. It’s a binary choice, and the Trump administration is choosing corporate cheats over honest taxpayers.”
“Given the unprecedented drilling mandates enacted by Congress last year, this move presents a fiscal nightmare, leaving taxpayers and the U.S. Treasury holding the bag for up to $753 billion in potential plugging and clean-up costs.”
“There is nothing remotely conservative about subsidizing dishonesty and failure within the oil and gas industry, worsening the national debt, and saddling the American taxpayer with up to a trillion dollars in clean-up cost. This is swamp politics at its worst,” Jenkins said.
Currently, more than 130,000 abandoned oil and gas wells litter our public lands, despite the fact that companies — as a condition for their drilling permit — promise to plug and clean up the wells once they are done producing. The bonding reforms being trashed by this Trump Administration rollback were put in place to prevent that number, and the resulting taxpayer burden, from growing.
BACKGROUND
Bonding
Bonding functions like an insurance policy. If a company declares bankruptcy or finds another way to shed its obligation, the plugging and clean-up costs are covered by the bond. But for it to actually work, the bond amount needs to actually cover the clean-up costs.
The government has required that companies secure these bonds since 1920, but the costs covered by the bond have not kept up with the actual cost of plugging and cleaning up the wells. In fact, until the most recent bonding reforms, they only covered a tiny fraction of the costs.
The new bonding requirements enacted a couple years ago narrowed the huge gap between the actual cost of plugging and cleaning up a well site today and the paltry 1960s era bonding rates.
Prior to 2024, the average bond the BLM held per well was about $1,707, yet the average cost to plug and reclaim a single modern is about $71,000 on average ($35,000 - $300,000).
The Scam
Once a well is almost tapped out, bigger oil companies will often sell those wells to smaller — sometimes undercapitalized — companies. Those smaller companies then extract what remaining oil they can get, then transfer the wells to another entity that only exists to take these wells and then declare bankruptcy. It’s a giant shell game, designed specifically to defraud taxpayers.
This Trump Rollback Isn’t Conservative
By rolling back the new bonding rates, the Administration is giving a massive subsidy to cheats and scammers, directly enabling them to profit on the backs of American taxpayers and add to our national debt. Not only is such a subsidy fiscally irresponsible, it serves only to reward bad behavior. Just as it is conservative to demand personal responsibility for one’s bad acts, it is conservative to require corporate responsibility for a company’s bad acts.
Abandoned and Orphaned Wells Are an Environmental Threat to Public Lands
These abandoned wells can leak oil and oily or other chemically toxic water into area streams and rivers. They also emit methane pollution into the air, contributing to poor air quality, including smog, and contributing to climate change.
While 130,000 orphaned wells have been documented across 27 states, the actual number has been estimated by EPA to be as much as 4 million.
Conservatives for Responsible Stewardship (CRS)
CRS is a national nonprofit grassroots organization founded on the premise that environmental stewardship and natural resource conservation are inherently conservative, and that true conservatives endeavor to be good stewards of the natural systems and resources that sustain life on earth.
Learn more about CRS at the organization’s website: https://www.conservativestewards.org
David Jenkins
A lifelong traditionalist conservative, David has worked for CRS, or its predecessor organization Republicans for Environmental Protection (REP), since 2005. He served as Vice President for Government & Political Affairs for REP until taking the helm of CRS in 2012.
In addition to leading CRS and being instrumental in numerous policy accomplishments, David has written and spoken extensively about many of today’s most pressing environmental issues, conservatism, our nation’s conservation heritage and American politics. He is a frequent voice on news talk radio and his writing has appeared in countless newspapers and other publications.
David has an extensive background in public policy and politics. Prior to CRS, he served as Vice President of Government and Political Affairs at Republicans for Environmental Protection (REP), as Director of Public Policy for the American Canoe Association, and as a legislative aid for Senator Pete Dominici. He has also worked on numerous political campaigns, including those of John McCain, Bob Dole, and Ronald Reagan. He holds a B.A. in Political Science from Furman University.
Conservatives for Responsible Stewardship
