Oil and Gas: Bureau of Indian Affairs Could Improve Lease Management of Trust and Restricted Land
Fast Facts
Companies can lease trust or restricted land for their oil and gas wells, which then generate revenue for Tribes and tribal citizens.
When the wells stop producing, companies have to plug them and restore the land to its natural state. If they don't, Tribes can face environmental, health, and safety risks.
Companies buy bonds and give them to the government as a promise to finish the job—but don't always do it. And the amounts of the bonds aren't always sufficient to cover the work.
Our recommendations are to help the Bureau of Indian Affairs get more information about these bonds and improve its bond policies to ensure the land gets restored.
Highlights
What GAO Found
GAO could not fully assess the Bureau of Indian Affairs' (BIA) implementation of bonding for oil and gas leases because BIA does not collect and maintain comprehensive information on bonds. For example, BIA generally does not have bond amounts or information on bond claims readily available without examining files. Without a process to compile or maintain bond information, BIA does not know if bonds are sufficient to fulfill their purpose or how often bond claims occur.
Agency guidance is not sufficient to ensure BIA can effectively manage bonding. Guidance to BIA staff is not detailed enough to direct key actions at certain points in the life cycle of a lease, including when setting initial bond amounts. As a result, BIA offices generally do the minimum to adhere to agency regulations and guidance—for example, setting bonds at the regulatory minimum.
BIA's bond minimums are insufficient to cover the costs of plugging and reclaiming a typical well (restoring lands to as close to the original natural state as possible), according to many tribal, BIA and BLM officials GAO interviewed. These minimums are also significantly lower than Interior now requires for leases on federal lands. BIA still allows nationwide bonds—covering all a lessee's leases across the country—which Department of Interior no longer accepts for federal lands. However, Tribes in GAO's review had disparate views on increasing minimum bond amounts. Several Tribes expressed concern that increased bond amounts would discourage companies from leasing on their land.
Bureau of Indian Affairs (BIA) and Bureau of Land Management (BLM) Bond Minimums for Certain Oil and Gas Leases on Trust or Restricted Land and Federal Lands
|
Bond type |
Standard leases on trust or restricted land |
Leases on federal lands |
|---|---|---|
|
Individual bond (covering one lease) |
No minimum |
$150,000 |
|
Statewide or collective bond (covering all leases in one state or reservation) |
$75,000 |
$500,000 |
|
Nationwide bond (covering all leases nationwide) |
$150,000 |
No longer allowed |
Source: GAO analysis of BIA and BLM documentation. | GAO-25-106307
Note: For more details, see fig. 2 in GAO-25-106307.
When a bond is not adequate to cover the costs, abandoned wells may remain unplugged. The number of abandoned wells is unknown. BIA is working on compiling an abandoned well inventory. Some states use funding mechanisms in addition to bonds to plug and reclaim wells on state or private land, such as collecting fees from industry. However, Interior does not collect fees from lessees of trust or restricted land. Consequently, if bonds are not adequate to cover the costs of abandoned wells, Tribes or the federal government will be left to fund plugging and reclamation or wells will remain unaddressed.
Why GAO Did This Study
About 15,000 active oil and gas wells on trust or restricted land contribute to the economies of some Tribes. Interior's BIA assists tribal governments and citizens in managing, protecting, and developing their land and natural resources. Interior requires lessees to provide bonds to help ensure they meet the responsibilities of their leases—including plugging wells and reclaiming the land.
Lessees may not be able or willing to reclaim the well site at the end of a lease, despite the consequence of losing the bond. When well sites are not fully reclaimed, Tribes may face environmental impacts on their lands or health and safety risks to their people.
GAO was asked to review the status of oil and gas bonding for trust or restricted land. This report examines (1) BIA's information about bonds and bond claims, (2) BIA's guidance and processes for managing bonding, (3) the sufficiency of bond minimums, and (4) funding mechanisms to plug and reclaim wells when bonds are inadequate. GAO reviewed laws and regulations, analyzed agency policies and guidance related to bonds, conducted site visits, and interviewed tribal and Interior officials.
Recommendations
GAO is making six recommendations including that BIA compile and maintain information on bonds and bond claims, improve bonding policies and procedures, and—in consultation with Tribes—assess bond minimums and make changes to guidance or regulations to ensure lessees conduct plugging and reclamation. Interior agreed with all six recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Bureau of Indian Affairs | The Director of BIA should compile comprehensive bond information for oil and gas leases—including bond amounts, bond types, and leases covered by each bond—and develop and implement an approach to maintain a record of bond information over time. (Recommendation 1) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Bureau of Indian Affairs | The Director of BIA should compile comprehensive information on bond claims for oil and gas leases and develop and implement an approach to maintain a record of bond claims over time. (Recommendation 2) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Bureau of Indian Affairs | The Director of BIA should provide greater specificity in current guidance or develop additional policy or guidance for BIA offices related to their responsibilities for bonding including setting initial bond amounts for lessees, when and how to increase existing bond amounts, collecting bonds, and requiring bonds for non-lessee operators. (Recommendation 3) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Bureau of Indian Affairs | The Director of BIA should establish a policy for bond reviews that includes clear guidance on the frequency of reviews or specific triggers for reviews and factors to be included in reviews. (Recommendation 4) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Bureau of Indian Affairs | The Director of BIA should, in consultation with Tribes, assess its bond requirements to determine if they are sufficient to ensure lessees do not abandon wells and make changes, accordingly, to guidance or regulations, including considering if changes are needed to minimum bond amounts. (Recommendation 5) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Bureau of Indian Affairs | The Director of BIA, to help ensure that bond amounts are sufficient to meet their intended purpose, should provide information to Tribes on options for tailoring bond amounts to their needs, including mechanisms to require bond amounts higher than the regulatory minimum. (Recommendation 6) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|