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Camille Sippel

26th April 2024

Blog

What Biden’s new oil and gas rules mean for zombie wells

Across the United States, fossil fuel companies have abandoned millions of 'zombie wells' that, even long after they have stopped producing oil or gas, continue to silently pollute the environment and saddle taxpayers with cleanup bills totaling billions of dollars. The Biden administration's recent update of oil and gas bonding rules is a crucial step toward ensuring that fossil fuel companies are held financially and legally accountable for the cleanup of these wells.

One of the key reasons why fossil fuel corporations have been able to abandon more than 2 million zombie wells across the US is because the cash bonds they were required to post were too low. In this context, a bond is a financial guarantee that companies provide to ensure they have the funds to ‘plug’ a well once it's no longer in use and ensure it no longer pollutes. Historically, however, these amounts have been far too low to cover the true cost of safely cleaning up these sites.

Now, for the first time in over 60 years, the bonds required of oil and gas corporations drilling for fossil fuels on federal lands have been revised to better reflect the true costs of plugging the wells. Key updates include a substantial increase in the minimum bond amounts — from $10,000 to $150,000 for individual leases, and from $25,000 to $500,000 for statewide bonds. Additionally, the administration has eliminated nationwide bonds, shifting the focus towards more localized and responsible environmental management.

Our landmark lawsuit over zombie wells highlighted this problem earlier this year. Our case exposed how oil and gas corporations routinely transfer nearly depleted wells to shell companies that are destined to go bankrupt, effectively dodging the responsibility to safely plug these wells.

Higher bonds would help to change that. By forcing oil and gas corporations to post higher bonds, it not only helps ensure there is enough money to plug the wells in the event that the oil and gas companies go bankrupt or dissolve, but it also deters the fossil fuel industry from intentionally using bankruptcy to fraudulently avoid cleanup costs.

Overall, the Biden administration's updates to bonding requirements mark an important step in our fight against the scourge of zombie wells, but there is still work to be done.

These new rules only apply to oil and gas wells on federal land, which account for just 11% of all oil and 9% of all fossil gas produced in the United States. The rest of the oil and gas that is not produced offshore is from private and state lands, where bonding amounts are often still insufficient.

These regulatory changes complement our ongoing legal efforts, which seek to hold fossil fuel companies accountable responsible to clean up their mess. Our lawsuit aims to establish stronger legal precedents that prevent companies from evading their responsibilities through bankruptcy and other loopholes, and create the opportunity for communities across the country to pursue oil and gas companies for historical cleanup costs.

Together, these regulatory and legal measures are crucial in eradicating the problem of zombie wells. Sign up below to stay up to date with the latest updates on our zombie wells work.

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