Differences Between Phase 1 & Phase 2 of Orphaned Wells Grant Guidance

Introduction

The issue of orphaned wells poses significant environmental and health risks, particularly on tribal lands. These wells, often abandoned without proper sealing, leak harmful pollutants into the air and water, affecting local communities and ecosystems. To address this, the Bipartisan Infrastructure Law provides substantial funding through the U.S. Department of the Interior (DOI) to plug, remediate, and reclaim these wells.

This article explores the differences between Phase 1 and Phase 2 of the orphaned wells grant guidance for tribal governments, highlighting key changes and new requirements. The table below outlines the differences in the guidance for each phase based on the compliance requirements.

Compliance Requirements	Phase 1 Guidance¹	Phase 2 Guidance²
Funding Restrictions: Administrative Costs	Limited to 10% of the funds received, with exceptions for program development grants.	Same 10% limitation for Implementation Grants. This limitation does not apply to Tribal Program Development Grant proposals.

Compliance Requirements	Phase 1 Guidance³	Phase 2 Guidance⁴
Funding Restrictions: Pre-Award Costs	Allowable with written approval from the DOI’s Orphaned Wells Program Federal Assistance Office (FAO).	Allowable with written approval from the DOI’s Orphaned Wells Program FAO if incurred within 90 days before the federal award effective date.
Eligible Activities	Activities included plugging, remediation, reclamation, soil remediation, habitat restoration, decommissioning of associated infrastructure, cost accounting, and program development.	Activities must be explicitly limited to planning and implementation for plugging, remediation, and reclamation of orphaned wells on tribal land. Lands owned by individual Indians in trust or restricted status are not eligible.
Plugging & Remediation Standards	Tribes with established well-plugging standards are required to follow their regulations. For those without such standards, the Bureau of Land Management standards for drilling abandonment, specifically Onshore Oil and Gas Order No. 2 Section III.G, are to be followed. This allows for a baseline level of safety and environmental protection.	Proposed plugging, remediation, and reclamation of orphaned wells or wells sites on tribal land must follow tribal standards, or, if a tribe does not have established well-plugging standards, the “Drilling abandonment” standards that are found at 43 CFR 3172.12, at minimum. Proposed plugging, remediation, and reclamation of orphaned wells or well sites on tribal land also must include pre- and post-plugging inspection of each site to measure or estimate contamination of surface water and groundwater and to measure or estimate emissions of methane, hydrogen, and other gases. Methane measurement must follow the DOI’s methane measurement protocol.⁵ Proposed plugging, remediation, and reclamation of orphaned wells and well sites may not include costs associated with conditioning wells as a water supply source.
National Historic Preservation Act (NHPA) Compliance	Activities are subject to review under the NHPA. Grantees must contact their State Historic Preservation Office (SHPO) or the Tribal Historic Preservation Office (THPO)⁶ to undergo this review. More details on the consultation process can be found at achp.gov.⁷	Subject to review under the NHPA and its implementing regulations, 36 CFR part 800. This is because the activities have the potential to affect historic properties. The recipient must conduct the initial steps of the Section 106 progress, which includes identifying and evaluating historic properties within the area of potential effects associated with specific projects and assessing affects, 36 CFR 800.4-.5. 11. Grantees must contact their SHPO or the THPO⁸ to undergo this review. More details on the consultation process can be found at achp.gov.⁹
Endangered Species Act (ESA) Compliance	Must assess that activities do not jeopardize endangered species or their habitats.	Required to make sure that activities funded under this opportunity, in whole or in part, are not likely to: jeopardize species listed on the Federal List of Endangered and Threatened Wildlife and Plants or result in the destruction or adverse modification of critical habitat designated for Federal Endangered and Threatened Wildlife and Plants. Compliance with ESA §7(a)(2), including exploring whether a tribe should be designated a non-federal representative to assist with compliance, under the ESA §7 implementing regulations at 50 CFR §402.08. is a requirement under Phase 2.
Financial & Performance Reporting Requirements	The below reports are required under Phase 1. Semi-Annual Reports: Financial and performance reports every six months. Final Reports: Financial and performance reports within 120 days of the end of the grant period.	Similar reporting requirements for Phase 2.
Data Collection Reporting Requirements	Track and report data on well locations, types, emissions, contamination, and costs.	Phase 2 introduces comprehensive data reporting requirements. For Program Development Grants, recipients must report new inventory and assessment data to the DOI beginning 12 months from the award effective date and with each performance report thereafter. For Implementation Grants, detailed data must be tracked and reported for each well plugged, remediated, and/or reclaimed. This includes well identification, emissions measurements, contamination status, habitat restoration, and costs. These requirements allow for consistent and transparent reporting, facilitating better oversight and evaluation of the program’s effectiveness.
Training & Capacity Building	Phase 1 does not include specific provisions for training and capacity building, potentially limiting the development of local expertise and workforce capabilities.	Phase 2 addresses this by including provisions for training programs and registered apprenticeships for workers engaged in well-plugging or site remediation. It also emphasizes local and economic hiring agreements to support opportunities for all workers, including those underrepresented in well-plugging or site remediation. This focus on training and capacity building aims to develop a skilled workforce and promote economic benefits within tribal communities.
Coordination With Federal & State Agencies	In Phase 1, tribes were encouraged to coordinate with relevant state or federal land management agencies to look for efficiency and cost-effectiveness in well-plugging and site remediation.	Phase 2 makes this coordination a requirement. Tribes must coordinate with federal and state agencies to determine whether efficiencies may exist by combining field surveys, plugging, or surface remediation work across private, state, federal, and tribal land. This requirement aims to enhance the effectiveness and efficiency of remediation efforts through better collaboration and resource sharing.

Conclusion

The transition from Phase 1 to Phase 2 of the orphaned wells grant guidance for tribal governments introduces several key enhancements. These include more detailed standards for measurement and remediation, mandatory ESA compliance, comprehensive data reporting requirements, provisions for training and capacity building, and required coordination with federal and state agencies. These changes aim to improve the effectiveness, accountability, and environmental protection of the orphaned wells remediation program, benefiting tribal communities and their lands. While the transition requirements may be daunting, our team has the experience to help you navigate the nuances efficiently.

How Forvis Mazars Can Help

Our dedicated Grants Management team at Forvis Mazars has extensive experience with federal, state, and local grants. We assist clients throughout the grant life cycle, from researching and applying for grants to help managing awarded funds. Whether you need help with one part of the process or in-depth support, our team is ready to assist.

If you have questions or need assistance, please reach out to a professional at Forvis Mazars.