,,ii #aaith ,,congress #b;d ,session ,s4 #dgae ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #i1 #bjbf,mr4 ,schiff 7for himself and ,mr4 ,padilla7 introduced the following bill2 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 operators1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,offshore ,leasing ,standards and ,accountability ,act of #bjbf4 #b4 ,fitness to operate standards for oil and gas operators on the outer continental shelf 7a7 ,in general ,the ,outer ,continental ,shelf ,lands ,act 7#dc ,u4,s4,c4 #acca et seq47 is amended by adding at the end the following3 #cd4 ,fitness to operate standards for offshore oil and gas activities 7a7 ,requirement for approvals ,beginning on the date on which the ,secretary issues or revises regulations under subsection 7b77#e71 the ,secretary may not issue1 extend the term of1 or approve the transfer of a lease1 easement1 or right-of-way for oil or gas exploration1 development1 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 7b74 7b7 ,certification of fitness ,to operate 7#a7 ,in general ,the ,secretary shall certify a recipient responsible party as fit to operate based on-- 7,a7 the past compliance of the recipient responsible party1 and any covered entity of the recipient responsible party1 with ,federal1 ,state1 and local environmental and safety laws and regulations1 including deadlines and requirements related to environmental reclamation1 decommissioning1 and worker safety2 7,b7 the financial solvency and capacity of the recipient responsible party1 and any covered entity of the recipient responsible party1 to weather market shocks and fulfill current and projected decommissioning liabilities2 and 7,c7 any other criteria with respect to the recipient responsible party1 and any covered entity of the recipient responsible party1 the ,secretary may establish by regulation4 7#b7 ,minimum qualifications ,the ,secretary may not certify a recipient responsible party as fit to operate unless the recipient responsible party-- 7,a7 demonstrates1 and the ,secretary verifies1 that-- 7i7 the recipient responsible party1 and any covered entity of the recipient responsible party1 did not violate any deadline or requirement of ,federal1 ,state1 or local environmental or safety laws or regulations related to environmental reclamation1 decommissioning1 or worker safety during the period of #aj years ending on 7as applicable7 the date on which the request for certification was made or the date on which the ,secretary makes an assessment under paragraph 7#d77;,b72 7ii7 the recipient responsible party1 and any covered entity of the recipient responsible party1 are not in violation of this ,act or any other ,federal1 ,state1 or local environmental or safety law or regulation1 including with respect to any overdue decommissioning orders for oil and gas infrastructure located on the outer ,continental ,shelf2 7iii7 the recipient responsible party1 and any covered entity of the recipient responsible party1 took timely and effective corrective actions to address any worker safety incidents1 oil spills1 or other unauthorized pollutant discharges1 and infrastructure failures or disruptions disclosed under paragraph 7,b77iv72 7iv7 the recipient responsible party1 and any covered entity of the recipient responsible party1 do not owe any rentals1 royalties1 or other fees for any ,federal or ,state lease1 easement1 or right-of-way2 7v7 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 party1 or any covered entity of the recipient responsible party1 during the period of #aj years ending on 7as applicable7 the date on which the request for certification was made or the date on which the ,secretary makes an assessment under paragraph 7#d77;,b72 7vi7 the recipient responsible party1 and any parent company of the recipient responsible party1 possess an investment grade credit rating from a nationally recognized statistical rating organization1 as such term is defined in section #c7;a77#fb7 of the ,securities ,exchange ,act of #aicd2 7vii7 the recipient responsible party1 and any parent company of the recipient responsible party1 have not filed a petition for bankruptcy under title #aa1 ,united ,states ,code1 during the period of #aj years ending on 7as applicable7 the date on which the request for certification was made or the date on which the ,secretary makes an assessment under paragraph 7#d77;,b72 and 7viii7 the recipient responsible party1 and any covered entity of the recipient responsible party1 have sufficient financial capacity to-- 7,i7 fulfill all current and projected decommissioning liabilities1 including demonstration that the liabilities disclosed under subparagraph 7,b77i77,i7 are fully collateralized or otherwise financially secured2 7,,ii7 implement and maintain up-to-date risk mitigation technologies1 environmental protection measures1 and worker safety measures1 including the use of effective blow-out preventer systems and well-control processes pursuant to the requirements specified in section #bej4gcj of title #cj1 ,code of ,federal ,regulations 7or any successor regulations72 and 7,,iii7 support a sufficient amount of staff needed for maintenance and oversight of oil and gas infrastructure on the outer ,continental ,shelf in accordance with environmental1 health1 and safety requirements2 and 7,b7 provides to the ,secretary a disclosure of-- 7i7 current and projected decommissioning liabilities of the recipient responsible party1 and any covered entity of the recipient responsible party1 related to all leases1 easements1 and rights-of-way administered by a ,federal or ,state authority1 including-- 7,i7 domestic and global oil and gas decommissioning liabilities2 and 7,,ii7 the value of decommissioning obligations relative to the proven value of oil and gas reserves of the areas subject to such leases1 easements1 and rights-of-way2 7ii7 past results of inspections of oil and gas infrastructure operated by the recipient responsible party and any covered entity of the recipient responsible party2 7iii7 the number1 length of ownership1 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 party2 and 7iv7 the number of worker safety incidents1 oil spills or other unauthorized pollutant discharges1 and infrastructure failures or disruptions that have occurred on areas subject to ,state and ,federal oil and gas leases held by the recipient responsible party1 or any covered entity of the recipient responsible party1 during the period of #ae years ending on 7as applicable7 the date on which the request for certification was made or the date on which the ,secretary makes an assessment under paragraph 7#d77;,b74 7#c7 ,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 7#e74 7#d7 ,maintenance of certification 7,a7 ,requirement ,a certification that the holder of a lease1 easement1 or right-of-way for oil or gas exploration1 development1 or production on the outer ,continental ,shelf issued1 extended1 or transferred after the date on which the ,secretary issues or revises regulations under paragraph 7#e7 is fit to operate shall be maintained in accordance with subparagraph 7,b74 7,b7 ,annual compliance verification 7i7 ,in general ,the ,secretary shall annually assess whether each holder of a lease1 easement1 or right-of-way described in subparagraph 7,a7 remains in compliance with standards established pursuant to paragraph 7#e74 7ii7 ,suspension of certification ,if the ,secretary determines under subparagraph 7,a7 that a holder of a lease1 easement1 or right-of-way described in subparagraph 7,a7 is not in compliance with the standards established pursuant to paragraph 7#e71 the ,secretary shall suspend the certification and impose one or more of the following penalties until such holder complies with such standards3 7,i7 ,suspend the applicable lease1 easement1 or right-of-way pursuant to section #e7;a77#a74 7,,ii7 ,issue fines or other civil penalties4 7,,iii7 ,require supplemental financial assurance in an amount equal to the total expected cost of decommissioning4 7,,iv7 ,issue an order to the holder of the lease1 easement1 or right-of-way to commence decommissioning1 including a requirement that such entity develop and submit a decommissioning plan pursuant to section #bej4agjd of title #cj1 ,code of ,federal ,regulations 7or successor regulations71 for approval by the ,secretary1 and issue a notice to any previous holders of the lease1 easement1 or right-of-way to commence joint and several liability proceedings4 7#e7 ,regulations ,not later than #a year after the date of enactment of this section1 the ,secretary shall issue or revise regulations to-- 7,a7 establish standards which the ,secretary shall use to determine whether to certify a recipient responsible party as fit to operate2 7,b7 establish a process for recipient responsible parties to request such certification2 and 7,c7 carry out any other requirements of this section4 7c7 ,report to ,congress ,not later than #a year after the ,secretary issues or revises regulations under subsection 7b77#e71 and annually thereafter1 the ,secretary shall submit to ,congress a report that includes-- 7#a7 a summary of the most recent assessments made under subsection 7b77#d77;,b71 including a list of-- 7,a7 each person that holds an active or inactive lease1 easement1 or right-of-way for oil or gas exploration1 development1 or production on the outer ,continental ,shelf that failed to meet any of the standards established pursuant to subsection 7b77#e72 7,b7 the specific standards for which the person is or was non-compliant1 disaggregated by-- 7i7 person2 and 7ii7 lease1 easement1 and right-of-way2 and 7,c7 enforcement actions taken by the ,department of the ,interior against each person identified under subparagraph 7,a72 7#b7 decommissioning cost estimates for each lease1 easement1 and right-of-way for oil or gas exploration1 development1 or production on the outer ,continental ,shelf1 as calculated by the ,secretary pursuant to section #e7k77#b71 and any modifications to such estimates since the previous report2 and 7#c7 the amount of funds currently held in each decommissioning escrow accounts established pursuant to section #e7k74 7d7 ,authorization of appropriations ,there is authorized to be appropriated to the ,secretary #cj1jjj1jjj for each of fiscal years #bjbg through #bjca to carry out the requirements of this section4 7e7 ,definitions ,in this section3 7#a7 ,covered entity ,the term covered entity1 with respect to a recipient responsible party1 means-- 7,a7 any parent company of the recipient responsible party2 7,b7 any subsidiary company of the recipient responsible party2 7,c7 any entity that the recipient responsible party enters into a contract with to construct1 develop1 or operate a facility on the outer ,continental ,shelf2 and 7,d7 any entity that-- 7i7 shares officers1 directors1 or key managerial personnel with any entity specified in subparagraph 7,a7 or 7,b72 or 7ii7 is a predecessor to any entity specified in subparagraph 7,a7 or 7,b74 7#b7 ,decommissioning ,the term decommissioning1 with respect to oil and gas infrastructure on the outer ,continental ,shelf1 means-- 7,a7 ending oil and gas operations2 7,b7 permanently plugging all wells2 7,c7 monitoring the efficacy of activities to end such operations1 including monitoring the safety and soundness of plugged wells2 and 7,d7 returning the area subject to the lease1 easement1 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 operations4 7#c7 ,parent company ,the term parent company means a company that directly or indirectly controls another company4 7#d7 ,recipient responsible party ,the term recipient responsible party means a person seeking the issuance1 extension1 or transfer of a lease1 easement1 or right-of-way for oil or gas exploration1 development1 or production on the outer ,continental ,shelf4 7#e7 ,subsidiary company ,the term subsidiary company-- 7,a7 means any company that is owned or controlled directly or indirectly by another company2 and 7,b7 includes any subsidiary of the company that is so owned or controlled4 4 7b7 ,conforming amendment ,section #e7;b7 of the ,outer ,continental ,shelf ,lands ,act 7#dc ,u4,s4,c4 #accd7;b77 is amended by inserting 1 including the regulations issued or revised under section #cd relating to fitness to operate after regulations issued under this ,act4 #c4 ,decommissioning escrow accounts ,section #e of the ,outer ,continental ,shelf ,lands ,act 7#dc ,u4,s4,c4 #accd7 is amended by adding at the end the following3 7k7 ,escrow account for decommissioning liability 7#a7 ,in general ,the holder of an oil and gas lease shall1 in accordance with this subsection1 make payments to an interest-bearing escrow account1 established and administered by the ,secretary1 in order to fully meet the total cost of decommissioning the oil and gas infrastructure located on the area subject to the lease4 7#b7 ,decommissioning cost estimate 7,a7 ,in general ,for each oil and gas lease1 the ,secretary1 or an independent third-party entity designated by the ,secretary1 shall calculate and periodically update a probabilistic estimate of the total cost of decommissioning existing and proposed oil and gas infrastructure1 including platforms1 wells1 and pipelines1 located on the area subject to such lease4 7,b7 ,initial estimate ,the ,secretary1 or the independent third-party1 shall calculate an initial estimate of the total costs described in subparagraph 7,a7 prior to the issuance of a new lease4 7,c7 ,reevaluation and updates ,the ,secretary1 or the independent third-party1 shall reevaluate and1 if necessary1 update the estimate of the total costs described in subparagraph 7,a7 at a minimum-- 7i7 not less frequently than once every #b years1 to reflect any changes in such total costs2 7ii7 prior to the approval of a development and production plan pursuant to section #be2 7iii7 prior to the end of the schedule for payments established under paragraph 7#c72 and 7iv7 following the disbursal of funds from the escrow accounts for a use approved under paragraph 7#d74 7#c7 ,payment schedule 7,a7 ,in general ,the ,secretary shall establish a mandatory schedule for payments required by paragraph 7#a74 7,b7 ,deadlines to establish schedules 7i7 ,new leases ,with respect to the issuance1 extension1 or transfer of an oil and gas lease after the date of enactment of this subsection1 the ,secretary shall establish the schedule for payments prior to such issuance1 extension1 or transfer4 7ii7 ,existing leases ,with respect to any lease in effect as of the date of enactment of this subsection1 the ,secretary shall establish the schedule for payments by not later than #a year after such date of enactment4 7,c7 ,minimum payments by #e years ,each schedule of payments established under subparagraph 7,a7 shall provide that the total amount of payments made to the escrow account by the date that is #e 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 lease4 7,d7 ,initial payments ,no lease may be issued1 and no development and production plan may be approved under section #be1 unless the recipient responsible party or leaseholder makes a payment to the escrow account in an amount equal to the greater of-- 7i7 #be percent of the average cost to decommission oil and gas infrastructure located on a typical lease at similar depths2 and 7ii7 #be 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 plan4 7,e7 ,lease extensions and transfers 7i7 ,missed payments ,the ,secretary may not extend the term of1 or approve the transfer of1 a lease if the holder of the lease owes any outstanding payments to the escrow account4 7ii7 ,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 lease4 7,f7 ,adjustments ,the ,secretary shall adjust a schedule for payments established under subparagraph 7,a7 to reflect any update to the applicable cost estimate under paragraph 7#b77;,c74 7,g7 ,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 7#b71 the ,secretary shall correspondingly reduce the supplemental financial assurances required until the combined figure is equivalent to the decommissioning cost estimate4 7,h7 ,interest ,any interest paid on funds in an escrow account established under paragraph 7#a7 shall become part of the principal funds in the account4 7,i7 ,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 account4 7,j7 ,return of remaining funds after decommissioning ,after decommissioning is complete1 any funds remaining in an escrow account for a lease established under paragraph 7#a7 shall be returned to any parties that made payments to the escrow account1 excluding any amounts deposited pursuant to subparagraph 7,i71 based on the proportion of the payments made by the respective party4 7#d7 ,use of funds 7,a7 ,in general ,the holder of a lease may only use funds in an escrow account established under paragraph 7#a7-- 7i7 for the purposes of decommissioning the oil and gas infrastructure located on the area subject to the lease2 and 7ii7 if the use is approved by the ,secretary4 7,b7 ,no use as collateral ,no person may commit funds held in an escrow account established under paragraph 7#a7 as collateral4 7#e7 ,penalties ,if the required payments into an escrow account established under paragraph 7#a7 are delinquent by more than #fj days1 the ,secretary shall-- 7,a7 raise the royalty rate for the applicable lease at a rate sufficient to recover the delinquent amount within #f months and deposit the recovered amount into the applicable escrow account established under paragraph 7#a72 or 7,b7 suspend the lease1 pursuant to section #e7;a77#b71 until the holder of the lease provides the delinquent amount4 7#f7 ,definitions ,in this subsection1 the terms decommissioning1 parent company1 and recipient responsible party have the meanings given such terms1 respectively1 in section #cd4 4 #d4 ,restriction on temporary abandonment of wells ,section #e of the ,outer ,continental ,shelf ,lands ,act 7#dc ,u4,s4,c4 #accd7 is amended by adding at the end the following3 7l7 ,restriction on temporary abandonment of wells 7#a7 ,in general ,the ,secretary-- 7,a7 may not approve the placement of an oil well in temporary abandonment status for a period longer than #c years2 and 7,b7 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 well4 7#b7 ,extension ,notwithstanding paragraph 7#a77;,a71 the ,secretary may1 on a one-time basis for an oil well1 extend the maximum period the oil well may be placed in temporary abandonment status to #e years if the ,secretary determines such extension is necessary to ensure operational stability or environmental safety4 4