House GOP Would Have Taxpayers Pay for Cleanup When Fracking Boom Goes Bust

A House committee is considering legislation introduced by Colorado Republican Rep. Lauren Boebert that could leave taxpayers on the hook for up to $17.7 billion in costs associated with cleaning up oil and gas wells abandoned on public lands by fracking companies and other polluters, according to a new report from the watchdog group Public Citizen.

Oil and gas industry lobbyists and their allies on Capitol Hill are working to defeat a Biden administration proposal that would strengthen federal requirements designed to force fossil fuel companies to plug wells and clean up drilling sites on federal lands after extraction. Boebert’s bill would direct the federal Bureau of Land Management (BLM) to withdraw its proposal, and the House Natural Resources Committee considered the bill for markup on Wednesday.

“The boom-and-bust nature of the oil and gas industry puts taxpayers at higher risk for well cleanup because, when prices fall for oil and gas, bad actors have an economic incentive to just walk away from their wells, leaving taxpayers in the lurch,” Alan Zibel, a Public Citizen research director, said in a statement.

The BLM manages vast swaths of land in the Western U.S. and a leasing program that allows fossil fuel companies to extract oil and gas from more than 89,000 wells across 23.7 million acres. Public Citizen reports that the industry has for decades exploited loose federal rules for drilling on public lands while the government charges “woefully inadequate royalties” to compensate the public for extraction. The industry then exports the oil and gas overseas or sells it back to U.S. consumers.

President Joe Biden pledged on the campaign trail that his administration would not offer new leases allowing fossil fuel extraction to expand on public lands, but industry lawsuits quickly tied up the administration’s efforts in court as Republicans blamed Biden for rising gasoline prices during his first year in office. The president instead signed legislation hiking royalties for fossil fuel leases and directed federal regulators to develop tougher rules to reduce pollution and ensure that taxpayers don’t get stuck paying for cleanup after fracking booms go bust.

Under federal rules, fossil fuel companies are required to post a bond in order to obtain a lease for drilling on federal land. If an oil and gas company abandons an exploration site, goes bankrupt, or fails to “plug” a well securely to prevent pollution from leaking out, the posted bond covers the government’s cost of cleaning up the drilling site. If the company cleans up after extraction, then the bond is returned.

These rules are decades old, however, and current bonds are often insufficient to cover cleanup costs, according to Public Citizen. The BLM proposal Boebert and other Republicans are pushing to block would update the rules to ensure bond payments are high enough to prevent taxpayers from being forced to cover the cost of cleanup.

Boebert’s office did not respond to a request for comment before this article was published, but during Wednesday’s hearing, she accused the Biden administration of waging “war on domestic energy” and claimed that smaller oil and gas companies cannot afford to pay updated royalties and bonds. (Again, the bonds are returned to operators if they clean up the public lands after using them for profit.)

Using three different estimates for the average cost of plugging oil and gas wells and cleaning up an extraction site ranging from $35,000 on the low end to $200,000, Public Citizen estimates that abandoned wells on federal public lands could cost taxpayers $2.9 billion to $17.7 billion. These figures include the current required bond payment of $2,122 per well, which the Biden administration is pushing to increase.

Boebert said small oil and gas companies are upset about new costs of doing business on public land. Large fossil fuel corporations can easily absorb the costs and often support Biden-era regulations to save face during the climate crisis and gain a competitive advantage over smaller competitors.

“These increases will impact smaller producers who can’t operate in the market,” Boebert said on Wednesday.

Smaller oil and gas extractors in particular are notorious for abandoning “orphaned wells” and declaring bankruptcy when oil and gas prices drop or wells simply go dry. In Louisiana, where the oil and gas industry has been around for a century, more than 4,600 wells abandoned years ago have become the cash-strapped state’s responsibility and are known to pose a danger to children and the public while leaking pollution into sensitive ecosystems.

Western states, such as Texas, New Mexico and Boebert’s home state of Colorado are currently experiencing a massive fracking boom and will likely face the same problem years down the line. There are currently more than 81,000 documented orphaned wells nationwide, according to the Environmental Defense Fund. Inactive and abandoned wells are often left to rust and are capable of releasing more climate-warming emissions into the atmosphere than active wells.

Rep. Raul Grijalva, a progressive Arizona Democrat and former chair of the House Natural Resources Committee, introduced an amendment that would block Boebert’s bill from taking effect until “30 days after the Comptroller General of the United States certifies that its implementation is necessary to subsidize the oil and gas industry in light of its aggregate profits over the past 5 fiscal years.”

Grijalva defended the Biden administration’s efforts to reform the oil and gas leasing program for public lands, warning that abandoned mines and oil and gas drilling sites across the Western U.S. cost state governments and local communities billions of dollars. He told the committee that royalties are being updated “for the first time since the 1920s is a huge benefit to American taxpayers.”

In an email to Truthout, Grijalva said Big Oil raked in record profits last year, and soaring production this year all but guarantees more profits.

“This is clearly not an industry that needs government subsidies. Nor is it one that deserves them — fossil fuel companies have been polluting communities across the country for decades and then leaving American taxpayers with the clean-up bill, which we now know is in the upwards of $18 billion,” Grijalva said. “What we need is commonsense reforms to our oil and gas leasing program that give the American people a fairer return on public resources and hold industry accountable for the messes they make.”

Indeed, the U.S. fossil fuel industry is posting massive profits amid record levels of extraction, but Republicans have railed against the Biden administration’s efforts to curb climate-warming pollution and reform the federal oil and gas leasing program, which is built on decades-old regulations. Zibel said industry lobbyists and the GOP have consistently made “misleading attacks” on the administration’s “modest, sensible efforts.”

“We already allow far too much drilling on public lands,” Zibel said. “The least we can do is ensure taxpayers don’t get stuck subsidizing the fossil fuel industry’s cost of doing business.”