HB 3416
New oil and Gas Well Plugging Assurance Act
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- Passed House of Delegates
- Passed Senate
- To Governor
- Became Law
Bill overview
This bill, the New Oil and Gas Well Plugging Assurance Act, aims to prevent oil and gas wells with no current or foreseeable use from becoming ‘orphaned’ – left unplugged and posing risks to landowners and the environment. It requires operators of new horizontal wells (filed for permits after July 1, 2026) to either post a full-cost plugging bond or establish an escrow account to ensure wells are properly plugged when production ceases. The bill also establishes rules for managing these escrow accounts, including investment strategies and fee structures, to guarantee funds are available for plugging.
Key provisions
- Requires new horizontal oil and gas wells to have a single-well plugging bond or an escrow account established.
- The bonding amount is determined by the Chief of the Office of Oil and Gas, considering well characteristics.
- Escrow accounts must be held with a federally insured bank or similar institution.
- Escrow funds are invested in market money funds and will be used to pay for well plugging.
- The rate of payment into the escrow account is determined by the Chief of the Office of Oil and Gas, considering production estimates and inflation.
- Operators must report annually on escrow account activity.
- Failure to comply with the bill can result in forfeiture of the operator’s bonding.
- The State Treasurer can propose rules to support the implementation of the act.
Who is affected
- Oil and gas operators
- Surface landowners
- The Office of Oil and Gas
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