Legacy Liabilities for Oil and Gas Wells under the Mineral Leasing Act

By Martin Lockman, Romany M. Webb, Ashwin Murthy.

The federal government is the largest landowner in the United States. The bulk of federal land is controlled by the Bureau of Land Management (“BLM”), an agency within the Department of the Interior (“DOI”) that manages more than 245 million acres or approximately 10% of the land in the United States. Below the ground, BLM’s authority reaches even further. In total, BLM controls around 700 million acres of minerals — 30% of the onshore mineral resources in the United States, spanning an area larger than Argentina. The enormous scale of oil and gas production on federal land has created a similarly enormous demand for environmental remediation. In the United States, the owners and operators of oil and gas infrastructure often have obligations “to clean up after themselves — to remove their installations at the end of their useful lives and make their abandoned sites safe.”

Over the past century, Congress and DOI have established a complex set of environmental repair laws that govern oil and gas production on federal land. While these rules primarily target the current owners of oil and gas wells, they also allow BLM to pursue the former owners and operators of these assets for unpaid environmental repair costs. However, BLM has sometimes struggled to enforce these environmental repair laws, and thousands of abandoned, ownerless, and leaking oil and gas wells pollute federal lands. In recent years, as the federal government has dedicated hundreds of millions of dollars towards cleaning up these “orphaned” wells, BLM has increasingly needed to enforce its trailing liability standards.

This report examines the laws and regulations that allow BLM to pursue the prior owners and operators of oil and gas wells on federal land for the costs of environmental repair, which the authors refer to as “legacy liabilities.” Section II provides an overview of oil and gas leasing on federal land, outlines the environmental hazards posed by idled, abandoned, and orphaned oil and gas wells, and briefly discusses the challenges well abandonment has posed to BLM. Section III outlines the statutes and regulations that create legacy liability for oil and gas well-plugging obligations, and discusses the way that BLM’s legacy liability laws have been addressed by the courts. Finally, Section IV highlights key gaps in the MLA’s legacy liability rules, and offers high-level suggestions to reform the environmental repair laws governing well-plugging on federal land.

Read the report, Legacy Liabilities for Oil and Gas Wells under the Mineral Leasing Act, in Columbia Law School's Scholarship Archive.