Oil and Gas Bonding Reform and Orphaned Well Remediation Act

II 116TH CONGRESS 2D SESSION S. 4642 To amend the Mineral Leasing Act to ensure sufficient bonding and complete and timely reclamation of land and water disturbed by Federal and Indian oil and gas production, and for other purposes. IN THE SENATE OF THE UNITED STATES SEPTEMBER 22, 2020 Mr. BENNET introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources A BILL To amend the Mineral Leasing Act to ensure sufficient bond- ing and complete and timely reclamation of land and water disturbed by Federal and Indian oil and gas pro- duction, and for other purposes. 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; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Oil and Gas Bonding Reform and Orphaned Well Reme- 5 diation Act’’. 6 (b) TABLE OF CONTENTS.—The table of contents of 7 this Act is as follows: 8 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4642 IS Sec. 1. Short title; table of contents. Sec. 2. Findings. TITLE I—ORPHANED WELL REMEDIATION Sec. 101. Orphaned well remediation program. TITLE II—FEDERAL ONSHORE OIL AND GAS RECLAMATION BONDING PROGRAM Sec. 201. Declaration of policy. Sec. 202. Regulation of surface-disturbing activities. TITLE III—MISCELLANEOUS Sec. 301. Cost recovery. Sec. 302. Regulations. SEC. 2. FINDINGS. 1 Congress finds that— 2 (1) according to the Interstate Oil and Gas 3 Compact Commission, there are in existence not 4 fewer than 56,600 orphaned well sites, and as many 5 as 746,000 undocumented orphaned well sites, 6 across the United States on Federal, State, Tribal, 7 and private land; 8 (2)(A) orphaned well sites— 9 (i) pose significant public health, safety, 10 and environmental risks; and 11 (ii) should be remediated; but 12 (B) there are no identified responsible parties 13 to provide for the remediation of those sites; 14 (3) it is reasonable for the Federal Govern- 15 ment— 16 (A) to provide financial resources to States 17 and Indian Tribes to rectify the long-term pub- 18 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4642 IS lic health, safety, and environmental risks de- 1 scribed in paragraph (2)(A)(i); 2 (B) to support the creation of jobs relating 3 to the remediation and reclamation of orphaned 4 well sites; and 5 (C) to update policies to ensure that wells 6 are not orphaned in the future; 7 (4) under the Mineral Leasing Act (30 U.S.C. 8 181 et seq.), the Secretary of the Interior (referred 9 to in this Act as the ‘‘Secretary’’) is required— 10 (A) to ensure the complete and timely rec- 11 lamation of all Federal onshore oil and gas 12 lease tracts; and 13 (B) to secure financial assurances in the 14 form of bonds, sureties, or other approved fi- 15 nancial arrangements for remediation, reclama- 16 tion, and well closure; 17 (5) with respect to the Federal onshore oil and 18 gas leasing program, the Secretary— 19 (A) is required— 20 (i) regularly to review existing onshore 21 oil and gas financial assurances; and 22 (ii) to increase the amount of those 23 assurances, as necessary; but 24 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4642 IS (B) in practice, often fails to carry out the 1 activities described in subparagraph (A); 2 (6) the Secretary— 3 (A) implements well and financial assur- 4 ance adequacy review policies inconsistently 5 across field offices of the Department of the In- 6 terior; 7 (B) has failed to track systematically data 8 relating to potential liabilities and the adequacy 9 of financial assurances; and 10 (C) does not maintain information relating 11 to actual reclamation costs incurred for inac- 12 tive, orphaned, or inadequately reclaimed wells 13 and lease tracts; 14 (7) due to the shortcomings in the required 15 minimum financial assurance amounts and the inef- 16 fectiveness of the Secretary in tracking and review- 17 ing those financial assurances, the cost of reclaiming 18 existing Federal onshore oil and gas wells and lease 19 tracts far exceeds the amounts posted as financial 20 assurance; and 21 (8) the inadequacy of the Secretary in the ad- 22 ministration of financial assurances for Federal on- 23 shore oil and gas activities— 24 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4642 IS (A) poses a threat to land, water, and 1 other resources; and 2 (B) is a major financial liability to the tax- 3 payers of the United States, who are often re- 4 sponsible for the costs of reclaiming onshore oil 5 and gas wells and lease tracts that are inactive, 6 orphaned, or inadequately reclaimed by lessees. 7 TITLE I—ORPHANED WELL 8 REMEDIATION 9 SEC. 101. ORPHANED WELL REMEDIATION PROGRAM. 10 (a) IN GENERAL.—Section 17 of the Mineral Leasing 11 Act (30 U.S.C. 226) is amended by adding at the end the 12 following: 13 ‘‘(q) ORPHANED WELL REMEDIATION PROGRAM.— 14 ‘‘(1) DEFINITIONS.—In this subsection: 15 ‘‘(A) INACTIVE.—The term ‘inactive’, with 16 respect to a well under an oil or gas lease 17 issued under this Act, has the meaning given 18 the term in subsection (g)(1). 19 ‘‘(B) ORPHANED.—The term ‘orphaned’, 20 with respect to a well or well site under an oil 21 or gas lease issued under this Act, means that 22 the owner or operator of the well or well site— 23 ‘‘(i) cannot be located; or 24 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 4642 IS ‘‘(ii) is unable to plug and abandon 1 the well. 2 ‘‘(C) RESPONSIBLE PARTY.—The term ‘re- 3 sponsible party’, with respect to a well under a 4 lease issued under this Act, has the meaning 5 given the term in subsection (g)(1). 6 ‘‘(D) SECRETARY.—The term ‘Secretary’ 7 means the Secretary of the Interior. 8 ‘‘(2) ESTABLISHMENT.—Not later than 90 days 9 after the date of enactment of this subsection, the 10 Secretary shall establish, in accordance with this 11 subsection— 12 ‘‘(A) in cooperation with the Secretary of 13 Agriculture, a program to remediate, reclaim, 14 and close orphaned oil and gas wells and well 15 sites located on land administered by the land 16 management agencies of the Department of the 17 Interior and the Department of Agriculture, re- 18 spectively; and 19 ‘‘(B) a program under which the Secretary 20 shall distribute 75 percent of the amounts made 21 available under paragraph (9) to States and In- 22 dian tribes that have submitted to the Secretary 23 an application to remediate, reclaim, and close 24 orphaned oil and gas wells and well sites on 25 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 4642 IS land under the jurisdiction of the States and 1 Indian tribes. 2 ‘‘(3) ACTIVITIES.—The programs established 3 under paragraph (2) shall— 4 ‘‘(A) use existing and updated inventories 5 of orphaned well sites to establish priority for 6 the distribution of funds under the programs 7 for activities, including— 8 ‘‘(i) remediating, reclaiming, and clos- 9 ing orphaned wells and well sites; 10 ‘‘(ii) remediating and reclaiming re- 11 lated well pads; 12 ‘‘(iii) reclaiming related access roads; 13 and 14 ‘‘(iv) restoring land, water, and habi- 15 tat impacted by orphaned wells and the 16 prior operation of the wells; 17 ‘‘(B) provide a public accounting of the 18 costs of remediation, reclamation, and closure 19 for each applicable orphaned oil or gas well and 20 well site; and 21 ‘‘(C) after remediation, reclamation, and 22 closure of an orphaned well or well site, seek— 23 ‘‘(i) to determine the identity, if un- 24 known, of any potential responsible party 25 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 4642 IS associated with the orphaned well or well 1 site, or a surety or guarantor of such a re- 2 sponsible party, to the extent such infor- 3 mation can be ascertained; and 4 ‘‘(ii) to obtain from responsible par- 5 ties reimbursement for applicable expendi- 6 tures, to the maximum extent practicable. 7 ‘‘(4) COOPERATION AND CONSULTATION.—In 8 carrying out the programs established under para- 9 graph (2), the Secretary shall— 10 ‘‘(A) work cooperatively with— 11 ‘‘(i) the Secretary of Agriculture; and 12 ‘‘(ii) each State, local government, 13 and Indian tribe within the jurisdiction of 14 which an orphaned well site on Federal 15 land is located; and 16 ‘‘(B) consult with— 17 ‘‘(i) affected States, local govern- 18 ments, and Indian tribes; 19 ‘‘(ii) the Secretary of Energy; and 20 ‘‘(iii) the Interstate Oil and Gas Com- 21 pact Commission. 22 ‘‘(5) REPORT TO CONGRESS.—Not later than 1 23 year after the date of enactment of this subsection, 24 and not less frequently than once every 2 years 25 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 4642 IS thereafter, the Secretary, in cooperation with the 1 Secretary of Agriculture and in consultation with af- 2 fected States and Indian tribes, shall submit to Con- 3 gress a report describing the expenditures under, 4 and the progress and achievements of, the programs 5 established under paragraph (2). 6 ‘‘(6) USE OF FUNDS.— 7 ‘‘(A) INITIAL PERIOD.—For the first 2 fis- 8 cal years beginning after the date of enactment 9 of this subsection, the funds made available to 10 remediate, reclaim, and close orphaned wells 11 and well sites under the program established 12 under paragraph (2)(B) shall be allocated based 13 on a demonstration of— 14 ‘‘(i) identified orphaned wells and well 15 sites in need of remediation, reclamation, 16 or closure, with a priority for sites posing 17 the greatest adverse impacts to— 18 ‘‘(I) public health and safety; and 19 ‘‘(II) land, water, and other re- 20 sources; and 21 ‘‘(ii) adequate programmatic and ad- 22 ministrative capacity to expend the funds 23 in a timely and effective manner. 24 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 4642 IS ‘‘(B) SUBSEQUENT FISCAL YEARS.—For 1 the third fiscal year beginning after the date of 2 enactment of this subsection, and each fiscal 3 year thereafter, the Secretary shall make funds 4 available under the program established under 5 paragraph (2)(B) based on— 6 ‘‘(i) the factors described in subpara- 7 graph (A); and 8 ‘‘(ii) a determination by the Secretary 9 that an affected State or Indian tribe is— 10 ‘‘(I) using bonds or other finan- 11 cial assurances that will fully cover 12 costs associated with remediating and 13 reclaiming orphaned oil and gas wells 14 under the jurisdiction of the State or 15 Indian tribe; or 16 ‘‘(II) adopting and using— 17 ‘‘(aa) bonds described in 18 subclause (I); or 19 ‘‘(bb) other financial assur- 20 ances. 21 ‘‘(C) UNUSED FUNDS.—In any case in 22 which the Secretary determines that, for any 23 fiscal year, a State or Indian tribe cannot effec- 24 tively use any portion of the funds that other- 25 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 4642 IS wise would be made available to the State or 1 Indian tribe under subparagraph (A) or (B), 2 the Secretary shall use those funds— 3 ‘‘(i) to remediate, reclaim, and close 4 orphaned wells and well sites on land ad- 5 ministered by the Secretary or the Sec- 6 retary of Agriculture; 7 ‘‘(ii) to review and update any inven- 8 tory of orphaned or inactive wells, includ- 9 ing wells previously identified as idle or 10 abandoned, on land described in clause (i); 11 ‘‘(iii) to carry out subsection 12 (g)(6)(E); 13 ‘‘(iv) to carry out paragraph (8); or 14 ‘‘(v)(I) to determine the identity of 15 any potential responsible party associated 16 with an orphaned well or well site, or a 17 surety or guarantor of such a responsible 18 party, to the extent such information can 19 be ascertained; and 20 ‘‘(II) to obtain from such a respon- 21 sible party reimbursement for applicable 22 expenditures, to the maximum extent prac- 23 ticable. 24 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 4642 IS ‘‘(7) LIMITATION ON RE-LEASING.—Before con- 1 ducting any oil or gas development or production 2 leasing of Federal land that contains a well or well 3 site that was remediated, reclaimed, or closed pursu- 4 ant to this Act, the Secretary, or the Secretary of 5 Agriculture with respect to National Forest System 6 land, shall determine that— 7 ‘‘(A) re-leasing and development of the 8 land will not degrade the restored conditions ac- 9 complished pursuant to the remediation, rec- 10 lamation, or closure; 11 ‘‘(B) the land achieves compliance with all 12 applicable standards adopted pursuant to sub- 13 section (g)(5) prior to being re-leased; and 14 ‘‘(C) the party seeking to re-lease the land 15 has provided to the Secretary a specific jus- 16 tification of the reasons why the land should be 17 re-leased. 18 ‘‘(8) DATA COLLECTION.— 19 ‘‘(A) IN GENERAL.—Not later than 2 years 20 after the date of enactment of this subsection, 21 the Secretary and the Secretary of Agriculture 22 shall jointly develop, and make publicly avail- 23 able, a computer database to provide centralized 24 data relating to operations, reclamation activi- 25 VerDate Sep 11 2014 23:09 Oct 10, 2020 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4642.IS S4642 pbinns on DSKJLVW7X2PROD with BILLS 13 •S 4642 IS ties, and financial assurances for each oil and 1 gas lease in effect under this Act. 2 ‘‘(B) INCLUSIONS.—The database under 3 subparagraph (A) shall include, with respect to 4 each lease described in that subparagraph, in- 5 formation relating to— 6 ‘‘(i) the number, location, and status 7 of each well subject to the lease; 8 ‘‘(ii) the number, location, and status 9 of each inactive and orphaned well subject 10 to the lease, and the length of time that 11 each such well has not been producing; 12 ‘‘(iii) the names of all responsible par- 13 ties for [Text truncated for display. 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