Fitness to operate standards for oil and gas operators on the outer continental shelf

(a) In general The Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) is amended by adding at the end the following: 34. Fitness to operate standards for offshore oil and gas activities (a) Requirement for approvals Beginning on the date on which the Secretary issues or revises regulations under subsection (b)(5), the Secretary may not issue, extend the term of, or approve the transfer of a lease, easement, or right-of-way for oil or gas exploration, development, or production on the outer Continental Shelf with respect to a recipient responsible party unless the recipient responsible party is certified as fit to operate in accordance with subsection (b). (b) Certification of fitness To operate (1) In general The Secretary shall certify a recipient responsible party as fit to operate based on— (A) the past compliance of the recipient responsible party, and any covered entity of the recipient responsible party, with Federal, State, and local environmental and safety laws and regulations, including deadlines and requirements related to environmental reclamation, decommissioning, and worker safety; (B) the financial solvency and capacity of the recipient responsible party, and any covered entity of the recipient responsible party, to weather market shocks and fulfill current and projected decommissioning liabilities; and (C) any other criteria with respect to the recipient responsible party, and any covered entity of the recipient responsible party, the Secretary may establish by regulation. (2) Minimum qualifications The Secretary may not certify a recipient responsible party as fit to operate unless the recipient responsible party— (A) demonstrates, and the Secretary verifies, that— (i) the recipient responsible party, and any covered entity of the recipient responsible party, did not violate any deadline or requirement of Federal, State, or local environmental or safety laws or regulations related to environmental reclamation, decommissioning, or worker safety 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); (ii) the recipient responsible party, and any covered entity of the recipient responsible party, are not in violation of this Act or any other Federal, State, or local environmental or safety law or regulation, including with respect to any overdue decommissioning orders for oil and gas infrastructure located on the outer Continental Shelf; (iii) the recipient responsible party, and any covered entity of the recipient responsible party, took timely and effective corrective actions to address any worker safety incidents, oil spills, or other unauthorized pollutant discharges, and infrastructure failures or disruptions disclosed under paragraph (B)(iv); (iv) the recipient responsible party, and any covered entity of the recipient responsible party, do not owe any rentals, royalties, or other fees for any Federal or State lease, easement, or right-of-way; (v) a Federal or State authority did not reduce the rate for royalties on oil or gas 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 Congress Not 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 appropriations There 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) Definitions In this section: (1) Covered entity The 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) Decommissioning The 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 company The term parent company means a company that directly or indirectly controls another company. (4) Recipient responsible party The 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 company The 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 amendment Section 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.