Bonding Reform and Taxpayer Protection Act of 2021

IB Union Calendar No. 453 117TH CONGRESS 2D SESSION H. R. 1505 [Report No. 117–629] To amend the Mineral Leasing Act to make certain adjustments to the regulation of surface-disturbing activities and to protect taxpayers from unduly bearing the reclamation costs of oil and gas development, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 2, 2021 Mr. LOWENTHAL (for himself, Mr. GRIJALVA, Mr. LEVIN of California, Mr. CARTWRIGHT, Ms. LEE of California, Ms. BARRAGA´N, and Mr. HUFFMAN) introduced the following bill; which was referred to the Com- mittee on Natural Resources DECEMBER 14, 2022 Additional sponsors: Mr. BLUMENAUER, Ms. DEGETTE, Ms. MCCOLLUM, Mr. COHEN, Mr. QUIGLEY, Mr. HASTINGS, Ms. PORTER, Ms. LEGER FERNANDEZ, and Mr. CASTEN DECEMBER 14, 2022 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on March 2, 2021] VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 1505 RH A BILL To amend the Mineral Leasing Act to make certain adjust- ments to the regulation of surface-disturbing activities and to protect taxpayers from unduly bearing the rec- lamation costs of oil and gas development, and for other purposes. VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 1505 RH Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be referred to as the ‘‘Bonding Reform 4 and Taxpayer Protection Act of 2021’’. 5 SEC. 2. SURFACE DISTURBANCE AND RECLAMATION. 6 Section 17(g) of the Mineral Leasing Act (30 U.S.C. 7 226(g)) is amended to read as follows: 8 ‘‘(g) BONDING REQUIREMENTS.— 9 ‘‘(1) DEFINITIONS.—In this subsection: 10 ‘‘(A) INTERIM RECLAMATION PLAN.—The 11 term ‘Interim Reclamation Plan’ means an on- 12 going plan specifying reclamation steps to be 13 taken on all disturbed areas covered by any lease 14 issued under this Act that are not needed for ac- 15 tive operations. 16 ‘‘(B) FINAL RECLAMATION PLAN.—The term 17 ‘Final Reclamation Plan’ means a plan describ- 18 ing all reclamation activity to be conducted for 19 all disturbed areas, including locations, facili- 20 ties, trenches, rights-of-way, roads, and any 21 other surface disturbance covered by a lease 22 issued under this Act prior to final abandon- 23 ment. 24 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 1505 RH ‘‘(C) OPERATOR.—The term ‘operator’ 1 means, with respect to an oil or gas operation, 2 any entity, including the lessee or operating 3 rights owner, that has stated in writing to a rel- 4 evant authority that such entity is responsible 5 for any portion of such operation. 6 ‘‘(D) SECRETARY CONCERNED.—The term 7 ‘Secretary concerned’ means— 8 ‘‘(i) the Secretary of the Interior for 9 public lands administered by such Sec- 10 retary; 11 ‘‘(ii) the Secretary of Agriculture for 12 forest service lands. 13 ‘‘(2) IN GENERAL.—The Secretary concerned 14 shall regulate all surface-disturbing activities con- 15 ducted pursuant to any lease issued under this Act, 16 and shall determine reclamation and other actions as 17 required in the interest of conservation of surface re- 18 sources. 19 ‘‘(3) RECLAMATION PLANS REQUIRED.— 20 ‘‘(A) ANALYSIS AND APPROVAL RE- 21 QUIRED.—No permit to drill on an oil and gas 22 lease issued under this Act may be granted with- 23 out the analysis and approval by the Secretary 24 concerned of both an interim reclamation plan 25 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 1505 RH and a final reclamation plan covering proposed 1 surface-disturbing activities within the lease 2 area. 3 ‘‘(B) PLANS OF OPERATIONS.—All Federal 4 plans or permits submitted pursuant to this Act 5 with the potential to create surface disturbance 6 shall include an Interim and Final Reclamation 7 Plan. 8 ‘‘(C) SECRETARIAL REVIEW.—The Secretary 9 concerned shall review each Interim Reclamation 10 Plan at regular intervals and shall require such 11 plans to be amended as warranted, subject to the 12 approval of such Secretary. 13 ‘‘(4) BONDING.— 14 ‘‘(A) IN GENERAL.— 15 ‘‘(i) REGULATION.—Not later than 180 16 days after the date of enactment of the 17 Bonding Reform and Taxpayer Protection 18 Act of 2021, the Secretary concerned shall, 19 by regulation, require that an adequate 20 bond, surety, or other financial arrange- 21 ment be established prior to the commence- 22 ment of surface-disturbing activities on any 23 lease under this Act. 24 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 1505 RH ‘‘(ii) AMOUNT OF BOND.—In deter- 1 mining the adequacy of a bond, surety, or 2 other financial instrument required by reg- 3 ulation under clause (i), the Secretary shall 4 find that such arrangement is adequate if it 5 is not less than the greater of— 6 ‘‘(I) the amount necessary for— 7 ‘‘(aa) the complete and time- 8 ly reclamation of the lease tract; 9 ‘‘(bb) the restoration of any 10 lands or surface waters adversely 11 affected by lease operations after 12 the abandonment or cessation of 13 oil and gas operations on the 14 lease; or 15 ‘‘(cc) in the case of an idled 16 well, the total plugging and rec- 17 lamation costs for each idled well 18 controlled by the same operator; 19 ‘‘(II) $150,000 in the case of an 20 arrangement for an individual surface- 21 disturbing activity of each entity on 22 an oil or gas lease; or 23 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 1505 RH ‘‘(III) $500,000 in the case of an 1 arrangement for all surface-disturbing 2 activities of each entity in a State. 3 ‘‘(iii) ADJUSTMENT FOR INFLATION.— 4 ‘‘(I) IN GENERAL.—In the appli- 5 cation of clause (ii), the Secretaries 6 concerned shall jointly at least once 7 every three years, at the beginning of 8 the fiscal year, adjust the dollar 9 amounts in clause (ii) to account for 10 inflation based on the Consumer Price 11 Index for all urban consumer published 12 by the Department of Labor. 13 ‘‘(II) ROUNDING.—If any amount 14 as adjusted under subclause (I) is not 15 a multiple of $1,000, such amount 16 shall be rounded to the next higher 17 multiple of $1000. 18 ‘‘(B) PROHIBITION.—The Secretary con- 19 cerned shall not issue or approve the assignment 20 of any lease under the terms of this section to 21 any person, association, corporation, or any sub- 22 sidiary, affiliate, or person controlled by or 23 under common control with such person, associa- 24 tion, or corporation, during any period in 25 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 1505 RH which, as determined by the relevant Secretary, 1 such entity has failed or refused to comply in 2 any material respect with the reclamation re- 3 quirements and other standards established 4 under this section for any prior lease to which 5 such requirements and standards applied. 6 ‘‘(C) NOTICE AND OPPORTUNITY FOR COM- 7 PLIANCE.—Prior to making a determination not 8 to issue or approve the assignment of a lease 9 under subparagraph (B) with respect to an enti- 10 ty the Secretary concerned shall provide such en- 11 tity with adequate notification and an oppor- 12 tunity to comply with such reclamation require- 13 ments and other standards and shall consider 14 whether any administrative or judicial appeal is 15 pending. Once the entity has complied with the 16 reclamation requirement or other standard con- 17 cerned each oil or gas lease may be issued to 18 such entity under this Act. 19 ‘‘(D) REVIEW UPON TRANSFER.—The Sec- 20 retary concerned shall review the adequacy of a 21 bond, surety, or other financial instrument any- 22 time a lease or well under this Act is transferred. 23 The Secretary shall find such bond, surety, or 24 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 1505 RH other financial instrument adequate if such ar- 1 rangement— 2 ‘‘(i) meets the requirement described in 3 subparagraph (A)(ii); and 4 ‘‘(ii) is not for a lesser amount than 5 the amount maintained by the current oper- 6 ator. 7 ‘‘(E) REQUIRING HIGHER BOND 8 AMOUNTS.—The Secretary concerned shall, at 9 any time that such Secretary determines that a 10 bond, surety, or other financial instrument re- 11 quired by a regulation issued pursuant to sub- 12 paragraph (A) no longer meets the requirements 13 of clause (ii) of such subparagraph, increase the 14 required amount of such financial arrangement 15 to the level required by subparagraph (A). 16 ‘‘(F) PHASING-IN BOND INCREASES.—With 17 respect to a bond increased under subparagraph 18 (E), the Secretary concerned shall require the op- 19 erator to meet the following deadlines in posting 20 the amount of the increase that results from the 21 operation of such paragraph: 22 ‘‘(i) 25 percent of the increase by not 23 later than 1 year after the date on which 24 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 1505 RH the determination was made under subpara- 1 graph (D). 2 ‘‘(ii) 75 percent of the increase by not 3 later than 2 years after such date. 4 ‘‘(iii) 100 percent of the increase by 5 not later than 3 years after such date. 6 ‘‘(5) STANDARDS.—Not later than 180 days after 7 the date of enactment of the Bonding Reform and 8 Taxpayer Protection Act of 2021, the Secretary of the 9 Interior and the Secretary of Agriculture shall, by 10 regulation, establish uniform standards for all In- 11 terim and Final Reclamation Plans. The goal of such 12 plans shall be the restoration of the affected ecosystem 13 to a condition approximating or equal to that which 14 existed prior to the surface disturbance. Such stand- 15 ards shall include restoration of natural vegetation 16 and hydrology, habitat restoration, salvage, storage 17 and reuse of topsoils, erosion control, control of 18 invasive species and noxious weeds and natural 19 contouring. 20 ‘‘(6) MONITORING.—The Secretary concerned 21 shall not approve final abandonment and shall not 22 release any bond required by this Act until the stand- 23 ards and requirement for final reclamation estab- 24 lished pursuant to this Act have been met. 25 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 1505 RH ‘‘(7) FINANCIAL ASSURANCES.—The Secretary 1 concerned shall not release the financial assurance es- 2 tablished for a lease until the operator has paid the 3 inspection fees required under section 4 for the lease 4 covered by the financial assurance instrument. 5 ‘‘(8) BOND ADEQUACY REVIEW.—The Secretary 6 shall conduct bond adequacy reviews as required 7 under paragraph (4)(D) in accordance with Bureau 8 of Land Management Instruction Memorandum No. 9 2019-014, dated November 15, 2018. 10 ‘‘(9) ORPHANED WELL FEE.—The Secretary of 11 the Interior shall collect a per barrel of oil equivalent 12 fee of not less than $0.10 on oil and gas produced 13 from Federal lands for the use of plugging and rec- 14 lamation of orphaned wells.’’. 15 SEC. 3. CHANGES TO THE BLM PERMIT PROCESSING IM- 16 PROVEMENT FUND. 17 (a) NAME OF FUND.—Section 35(c)(2)(B) of the Min- 18 eral Leasing Act (30 U.S.C. 191(c)(2)(B)) is amended by 19 striking ‘‘BLM Permit Processing Improvement Fund’’ and 20 inserting ‘‘BLM Administration and Accountability 21 Fund’’. 22 (b) ADDITIONAL USES.—Section 35(c)(3)(A) of such 23 Act (30 191(c)(3)(A)) is amended by adding at the end the 24 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 1505 RH following: ‘‘Such coordination and processing shall in- 1 clude— 2 ‘‘(i) the coordination and review proc- 3 ess for financial assurances for oil and gas 4 leases and bond releases for oil and gas 5 leases; 6 ‘‘(ii) the inventory of orphaned wells 7 and coordinate the processing of requests for 8 delays in the permanent closure of inactive 9 wells; and 10 ‘‘(iii) coordination and processing re- 11 lated to environmental and cultural re- 12 sources reviews applicable to oil and gas ac- 13 tivities.’’. 14 SEC. 4. INSPECTION FEES. 15 (a) IN GENERAL.—Section 108 of the Federal Oil and 16 Gas Royalty Management Act of 1982 (30 U.S.C. 1718) is 17 amended by adding at the end the following: 18 ‘‘(d) INSPECTION FEES.— 19 ‘‘(1) IN GENERAL.—Except as provided in para- 20 graph (5), the designated operator under each oil and 21 gas lease on Federal or Indian lands, or each unit 22 and communitization agreement that includes one or 23 more such Federal or Indian leases, that is subject to 24 inspection under subsection (b) and that is in force 25 VerDate Sep 11 2014 22:25 Dec 14, 2022 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6203 E:\BILLS\H1505.RH H1505 kjohnson on DSK79L0C42PROD with BILLS 13 •HR 1505 RH at the start of the fiscal year 2021, shall pay a non- 1 refundable annual inspection fee in an amount that, 2 except as provided in paragraph (2), is established by 3 the Secretary by regulation and is sufficient to re- 4 cover the full costs incurred by the United States for 5 inspection and enforcement with respect to such 6 leases. 7 ‘‘(2) AMOUNT.—Until the effective date of regula- 8 tions under paragraph (1), the amount of the fee shall 9 be— 10 ‘‘(A) $700 for each lease or unit or 11 communitization agreement with no active or in- 12 active wells, but with surface use, disturbance or 13 reclamation; 14 ‘‘(B) $1,225 for each lease or unit or 15 communitization agreement with 1 to 10 wells, 16 with any combination of active or inactive wells; 17 ‘‘(C) $4,900 for each lease or unit or 18 communitization agreement with 11 to 50 wells, 19 with any combination of active or inactive wells; 20 and 21 ‘‘(D) $9, [Text truncated for display. 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