Offshore Leasing Standards Act

Summary#

This bill would amend the Outer Continental Shelf Lands Act to set new rules for offshore oil and gas leasing, operator certification, and decommissioning money. It requires the Department of the Interior (the Secretary) to certify that a person seeking a lease, extension, or transfer is "fit to operate" before approval. Fitness criteria in the bill include past compliance with environmental and safety laws, financial solvency, disclosure of decommissioning liabilities, credit ratings, and the absence of recent bankruptcy or overdue fees. The Secretary must issue regulations within one year, perform annual compliance checks, and can suspend certifications and take enforcement actions for noncompliance.

The bill also creates Secretary‑administered, interest‑bearing escrow accounts for decommissioning liability. The Secretary (or a designated third party) must estimate decommissioning costs for each lease, update those estimates periodically, and set mandatory payment schedules. Schedules must ensure that total escrow payments reach the full estimated decommissioning cost within five years of the schedule being established. No lease or approval of a development plan may occur unless an initial escrow payment is made equal to the greater of 25% of a typical comparable lease decommissioning cost or 25% of the lease's total estimated decommissioning cost. Escrow funds may be used only for decommissioning with Secretary approval; interest earned becomes part of the account. If payments are more than 60 days delinquent, the Secretary may raise the royalty rate to recover the delinquent amount or suspend the lease.

The bill limits temporary abandonment of offshore oil wells to no more than three years, with a one‑time extension to five years allowed if the Secretary finds it necessary for operational stability or environmental safety and the operator submits a validated economic analysis. The bill also requires annual reports to Congress listing noncompliant holders, decommissioning cost estimates, and amounts held in decommissioning escrow accounts. It authorizes $30,000,000 per year for fiscal years 2027–2031 to carry out the fitness provisions.

What it means for you#

• If you are an oil and gas leaseholder or prospective leaseholder on the outer Continental Shelf: you must get certified as fit to operate before getting, extending, or transferring a lease after the Secretary issues required regulations. You will need to provide disclosures about decommissioning liabilities, past inspections, wells, and incidents, and meet financial and compliance tests described in the bill.
• If you operate or contract on offshore facilities: covered entities (parents, subsidiaries, contractors, predecessors, and entities sharing key personnel) are included in fitness reviews and disclosures.
• If you are a member of the public or a congressional office: the Secretary must report annually to Congress with lists of noncompliant leaseholders, enforcement actions, decommissioning cost estimates, and escrow account balances.
• If you hold an existing lease: the Secretary will set a payment schedule within one year after enactment to fund decommissioning and may suspend leases or increase royalty rates if escrow payments are delinquent.

Expenses#

• The bill authorizes $30,000,000 per year for fiscal years 2027 through 2031 to carry out the fitness-to-operate section (section 34).
• The bill requires leaseholders to make payments into Secretary‑administered escrow accounts to fully meet estimated decommissioning costs for each lease. The Secretary will calculate initial and periodic probabilistic decommissioning cost estimates and set payment schedules.
• The bill specifies an initial escrow payment requirement before lease issuance or approval of a development plan equal to the greater of: 25% of a typical comparable lease decommissioning cost or 25% of the lease's total estimated decommissioning cost.
• No publicly available information on the total federal cost beyond the authorized appropriations or on aggregate industry payments is included in the bill text provided.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.