Trump Freezes Orphaned Well Cleanup Funds: What It Means for Oil States
- Randle Communications
- 18 hours ago
- 2 min read
In a major shift, the Trump administration has paused billions in federal funding designated to plug orphaned and abandoned wells.
The move comes as part of President Trump’s “Unleashing American Energy” Executive Order, which freezes the disbursement of funds from the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA). States such as California, New Mexico, Wyoming, and Montana have used these funds to address legacy wells that pose environmental and safety risks.
The halt targets a $4.7 billion program created under the Biden administration to help states remediate orphaned wells. The Department of the Interior had already distributed over $500 million, with some states plugging hundreds, even thousands, of wells in just a year. Yet more than $3 billion remains undistributed, and the program is now under review with no clear guidance provided to the states.
Critics argue the pause undermines job creation, methane emission reduction, and public safety. Multiple Democratic attorneys general, including California’s Rob Bonta, have filed lawsuits claiming the Trump administration cannot lawfully suspend funding already approved by Congress.
California began using the grants in concurrence with raising bonding requirements on producers. The higher costs and stricter standards will remain for producers, but the federal funds will likely not be available to augment the producers’ ongoing contribution to the current remediation goals at CalGEM.
The good news is CIPA members have deposited nearly $30 million into the Hazardous Idle and Deserted Well Abatement Fund (HIDWAF) that CalGEM has at its disposal to plug oil and gas wells all over the state without restrictions.
That $30 million is on top of the current $7 million producers send to Sacramento annually to plug orphan wells, and then there’s the oil producers who are required to plug their own idle well stock annually. Over one hundred million dollars each year are spent by the industry to plug their own idle oil and gas wells and no tax dollars are used.
CIPA will continue monitoring how these policy changes unfold and the legal outcomes that may determine whether this initiative continues or the funds are diverted to other priorities.