S. 4715

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4715 Introduced in Senate (IS)]

<DOC>

119th CONGRESS
2d Session
S. 4715

To amend the Outer Continental Shelf Lands Act to establish fitness to 
operate standards and decommissioning escrow accounts for offshore oil 
and gas operators, and for other purposes.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

June 9, 2026

Mr. Schiff (for himself and Mr. Padilla) introduced the following bill; 
which was read twice and referred to the Committee on Energy and 
Natural Resources

_______________________________________________________________________

A BILL

To amend the Outer Continental Shelf Lands Act to establish fitness to 
operate standards and decommissioning escrow accounts for offshore oil 
and gas operators, and for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Offshore Leasing Standards and 
Accountability Act of 2026''.

SEC. 2. 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:

``SEC. 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''.

SEC. 3. DECOMMISSIONING ESCROW ACCOUNTS.

Section 5 of the Outer Continental Shelf Lands Act (43 U.S.C. 1334) 
is amended by adding at the end the following:
``(k) Escrow Account for Decommissioning Liability.--
``(1) In general.--The holder of an oil and gas lease 
shall, in accordance with this subsection, make payments to an 
interest-bearing escrow account, established and administered 
by the Secretary, in order to fully meet the total cost of 
decommissioning the oil and gas infrastructure located on the 
area subject to the lease.
``(2) Decommissioning cost estimate.--
``(A) In general.--For each oil and gas lease, the 
Secretary, or an independent third-party entity 
designated by the Secretary, shall calculate and 
periodically update a probabilistic estimate of the 
total cost of decommissioning existing and proposed oil 
and gas infrastructure, including platforms, wells, and 
pipelines, located on the area subject to such lease.
``(B) Initial estimate.--The Secretary, or the 
independent third-party, shall calculate an initial 
estimate of the total costs described in subparagraph 
(A) prior to the issuance of a new lease.
``(C) Reevaluation and updates.--The Secretary, or 
the independent third-party, shall reevaluate and, if 
necessary, update the estimate of the total costs 
described in subparagraph (A) at a minimum--
``(i) not less frequently than once every 2 
years, to reflect any changes in such total 
costs;
``(ii) prior to the approval of a 
development and production plan pursuant to 
section 25;
``(iii) prior to the end of the schedule 
for payments established under paragraph (3); 
and
``(iv) following the disbursal of funds 
from the escrow accounts for a use approved 
under paragraph (4).
``(3) Payment schedule.--
``(A) In general.--The Secretary shall establish a 
mandatory schedule for payments required by paragraph 
(1).
``(B) Deadlines to establish schedules.--
``(i) New leases.--With respect to the 
issuance, extension, or transfer of an oil and 
gas lease after the date of enactment of this 
subsection, the Secretary shall establish the 
schedule for payments prior to such issuance, 
extension, or transfer.
``(ii) Existing leases.--With respect to 
any lease in effect as of the date of enactment 
of this subsection, the Secretary shall 
establish the schedule for payments by not 
later than 1 year after such date of enactment.
``(C) Minimum payments by 5 years.--Each schedule 
of payments established under subparagraph (A) shall 
provide that the total amount of payments made to the 
escrow account by the date that is 5 years after the 
schedule is established be not less than the total 
decommissioning costs for all oil and gas 
infrastructure located on the area of the applicable 
lease.
``(D) Initial payments.--No lease may be issued, 
and no development and production plan may be approved 
under section 25, unless the recipient responsible 
party or leaseholder makes a payment to the escrow 
account in an amount equal to the greater of--
``(i) 25 percent of the average cost to 
decommission oil and gas infrastructure located 
on a typical lease at similar depths; and
``(ii) 25 percent of the total 
decommissioning costs for all oil and gas 
infrastructure proposed to be installed on the 
area subject to the lease pursuant to the plan.
``(E) Lease extensions and transfers.--
``(i) Missed payments.--The Secretary may 
not extend the term of, or approve the transfer 
of, a lease if the holder of the lease owes any 
outstanding payments to the escrow account.
``(ii) Adoption of payment schedule.--The 
Secretary may not approve the transfer of a 
lease unless the recipient responsible party 
agrees to adopt the schedule for payments 
established for the lease.
``(F) Adjustments.--The Secretary shall adjust a 
schedule for payments established under subparagraph 
(A) to reflect any update to the applicable cost 
estimate under paragraph (2)(C).
``(G) Supplemental financial assurances.--If the 
combined amount of the funds in an escrow account for a 
lease and any supplemental financial assurances 
provided by the holder of the lease exceeds the total 
decommissioning cost estimate calculated by the 
Secretary pursuant to paragraph (2), the Secretary 
shall correspondingly reduce the supplemental financial 
assurances required until the combined figure is 
equivalent to the decommissioning cost estimate.
``(H) Interest.--Any interest paid on funds in an 
escrow account established under paragraph (1) shall 
become part of the principal funds in the account.
``(I) Amounts from joint and several liability.--
All funds accrued from previous holders of an oil and 
gas lease as a result of joint and several liability 
for the purposes of decommissioning shall be deposited 
into the corresponding escrow account.
``(J) Return of remaining funds after 
decommissioning.--After decommissioning is complete, 
any funds remaining in an escrow account for a lease 
established under paragraph (1) shall be returned to 
any parties that made payments to the escrow account, 
excluding any amounts deposited pursuant to 
subparagraph (I), based on the proportion of the 
payments made by the respective party.
``(4) Use of funds.--
``(A) In general.--The holder of a lease may only 
use funds in an escrow account established under 
paragraph (1)--
``(i) for the purposes of decommissioning 
the oil and gas infrastructure located on the 
area subject to the lease; and
``(ii) if the use is approved by the 
Secretary.
``(B) No use as collateral.--No person may commit 
funds held in an escrow account established under 
paragraph (1) as collateral.
``(5) Penalties.--If the required payments into an escrow 
account established under paragraph (1) are delinquent by more 
than 60 days, the Secretary shall--
``(A) raise the royalty rate for the applicable 
lease at a rate sufficient to recover the delinquent 
amount within 6 months and deposit the recovered amount 
into the applicable escrow account established under 
paragraph (1); or
``(B) suspend the lease, pursuant to section 
5(a)(2), until the holder of the lease provides the 
delinquent amount.
``(6) Definitions.--In this subsection, the terms 
`decommissioning', `parent company', and `recipient responsible 
party' have the meanings given such terms, respectively, in 
section 34.''.

SEC. 4. RESTRICTION ON TEMPORARY ABANDONMENT OF WELLS.

Section 5 of the Outer Continental Shelf Lands Act (43 U.S.C. 1334) 
is amended by adding at the end the following:
``(l) Restriction on Temporary Abandonment of Wells.--
``(1) In general.--The Secretary--
``(A) may not approve the placement of an oil well 
in temporary abandonment status for a period longer 
than 3 years; and
``(B) may only approve such placement after 
submission and validation of an accompanying economic 
analysis verifying the potential for temporary 
abandonment to improve operational stability of the oil 
well or mitigate environmental impacts of operating the 
oil well.
``(2) Extension.--Notwithstanding paragraph (1)(A), the 
Secretary may, on a one-time basis for an oil well, extend the 
maximum period the oil well may be placed in temporary 
abandonment status to 5 years if the Secretary determines such 
extension is necessary to ensure operational stability or 
environmental safety.''.
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