Bonding Reform and Taxpayer Protection Act of 2021

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. 1. Short title This Act may be referred to as the Bonding Reform and Taxpayer Protection Act of 2021 2. Surface disturbance and reclamation Section 17(g) of the Mineral Leasing Act ( 30 U.S.C. 226(g) (g) Bonding requirements (1) Definitions In this subsection: (A) Interim reclamation plan The term Interim Reclamation Plan (B) Final reclamation plan The term Final Reclamation Plan (C) Operator The term operator (D) Secretary concerned The term Secretary concerned (i) the Secretary of the Interior for public lands administered by such Secretary; (ii) the Secretary of Agriculture for forest service lands. (2) In general The Secretary concerned shall regulate all surface-disturbing activities conducted pursuant to any lease issued under this Act, and shall determine reclamation and other actions as required in the interest of conservation of surface resources. (3) Reclamation plans required (A) Analysis and approval required No permit to drill on an oil and gas lease issued under this Act may be granted without the analysis and approval by the Secretary concerned of both an interim reclamation plan and a final reclamation plan covering proposed surface-disturbing activities within the lease area. (B) Plans of operations All Federal plans or permits submitted pursuant to this Act with the potential to create surface disturbance shall include an Interim and Final Reclamation Plan. (C) Secretarial Review The Secretary concerned shall review each Interim Reclamation Plan at regular intervals and shall require such plans to be amended as warranted, subject to the approval of such Secretary. (4) Bonding (A) In general (i) Regulation Not later than 180 days after the date of enactment of the Bonding Reform and Taxpayer Protection Act of 2021 (ii) Amount of bond In determining the adequacy of a bond, surety, or other financial instrument required by regulation under clause (i), the Secretary shall find that such arrangement is adequate if it is not less than the greater of— (I) the amount necessary for— (aa) the complete and timely reclamation of the lease tract; (bb) the restoration of any lands or surface waters adversely affected by lease operations after the abandonment or cessation of oil and gas operations on the lease; or (cc) in the case of an idled well, the total plugging and reclamation costs for each idled well controlled by the same operator; (II) $150,000 in the case of an arrangement for an individual surface-disturbing activity of each entity on an oil or gas lease; or (III) $500,000 in the case of an arrangement for all surface-disturbing activities of each entity in a State. (iii) Adjustment for inflation (I) In general In the application of clause (ii), the Secretaries concerned shall jointly at least once every three years, at the beginning of the fiscal year, adjust the dollar amounts in clause (ii) to account for inflation based on the Consumer Price Index for all urban consumer published by the Department of Labor. (II) Rounding If any amount as adjusted under subclause (I) is not a multiple of $1,000, such amount shall be rounded to the next higher multiple of $1000. (B) Prohibition The Secretary concerned shall not issue or approve the assignment of any lease under the terms of this section to any person, association, corporation, or any subsidiary, affiliate, or person controlled by or under common control with such person, association, or corporation, during any period in which, as determined by the relevant Secretary, such entity has failed or refused to comply in any material respect with the reclamation requirements and other standards established under this section for any prior lease to which such requirements and standards applied. (C) Notice and opportunity for compliance Prior to making a determination not to issue or approve the assignment of a lease under subparagraph (B) with respect to an entity the Secretary concerned shall provide such entity with adequate notification and an opportunity to comply with such reclamation requirements and other standards and shall consider whether any administrative or judicial appeal is pending. Once the entity has complied with the reclamation requirement or other standard concerned each oil or gas lease may be issued to such entity under this Act. (D) Review upon transfer The Secretary concerned shall review the adequacy of a bond, surety, or other financial instrument anytime a lease or well under this Act is transferred. The Secretary shall find such bond, surety, or other financial instrument adequate if such arrangement— (i) meets the requirement described in subparagraph (A)(ii); and (ii) is not for a lesser amount than the amount maintained by the current operator. (E) Requiring higher bond amounts The Secretary concerned shall, at any time that such Secretary determines that a bond, surety, or other financial instrument required by a regulation issued pursuant to subparagraph (A) no longer meets the requirements of clause (ii) of such subparagraph, increase the required amount of such financial arrangement to the level required by subparagraph (A). (F) Phasing-in bond increases With respect to a bond increased under subparagraph (E), the Secretary concerned shall require the operator to meet the following deadlines in posting the amount of the increase that results from the operation of such paragraph: (i) 25 percent of the increase by not later than 1 year after the date on which the determination was made under subparagraph (D). (ii) 75 percent of the increase by not later than 2 years after such date. (iii) 100 percent of the increase by not later than 3 years after such date. (5) Standards Not later than 180 days after the date of enactment of the Bonding Reform and Taxpayer Protection Act of 2021 (6) Monitoring The Secretary concerned shall not approve final abandonment and shall not release any bond required by this Act until the standards and requirement for final reclamation established pursuant to this Act have been met. (7) Financial assurances The Secretary concerned shall not release the financial assurance established for a lease until the operator has paid the inspection fees required under section 4 for the lease covered by the financial assurance instrument. (8) Bond Adequacy Review The Secretary shall conduct bond adequacy reviews as required under paragraph (4)(D) in accordance with Bureau of Land Management Instruction Memorandum No. 2019-014, dated November 15, 2018. (9) Orphaned well fee The Secretary of the Interior shall collect a per barrel of oil equivalent fee of not less than $0.10 on oil and gas produced from Federal lands for the use of plugging and reclamation of orphaned wells. . 3. Changes to the BLM Permit Processing Improvement Fund (a) Name of fund Section 35(c)(2)(B) of the Mineral Leasing Act ( 30 U.S.C. 191(c)(2)(B) BLM Permit Processing Improvement Fund BLM Administration and Accountability Fund (b) Additional uses Section 35(c)(3)(A) of such Act (30 191(c)(3)(A)) is amended by adding at the end the following: Such coordination and processing shall include— (i) the coordination and review process for financial assurances for oil and gas leases and bond releases for oil and gas leases; (ii) the inventory of orphaned wells and coordinate the processing of requests for delays in the permanent closure of inactive wells; and (iii) coordination and processing related to environmental and cultural resources reviews applicable to oil and gas activities. . 4. Inspection fees (a) In general Section 108 of the Federal Oil and Gas Royalty Management Act of 1982 ( 30 U.S.C. 1718 (d) Inspection fees (1) In general Except as provided in paragraph (5), the designated operator under each oil and gas lease on Federal or Indian lands, or each unit and communitization agreement that includes one or more such Federal or Indian leases, that is subject to inspection under subsection (b) and that is in force at the start of the fiscal year 2021, shall pay a nonrefundable annual inspection fee in an amount that, except as provided in paragraph (2), is established by the Secretary by regulation and is sufficient to recover the full costs incurred by the United States for inspection and enforcement with respect to such leases. (2) Amount Until the effective date of regulations under paragraph (1), the amount of the fee shall be— (A) $700 for each lease or unit or communitization agreement with no active or inactive wells, but with surface use, disturbance or reclamation; (B) $1,225 for each lease or unit or communitization agreement with 1 to 10 wells, with any combination of active or inactive wells; (C) $4,900 for each lease or unit or communitization agreement with 11 to 50 wells, with any combination of active or inactive wells; and (D) $9,800 for each lease or unit or communitization agreement with more than 50 wells, with any combination of active or inactive wells. (3) Due date Payment of the fee under this section shall be due, annually, not later than 30 days after the Secretary provides notice of the assessment of the fee. (4) Penalty If the designated operator fails to pay the full amount of the fee as prescribed in this section, the Secretary may, in addition to utilizing any other applicable enforcement authority, assess civil penalties against the operator under section 109 in the same manner as if this section were a mineral leasing law. (5) Exemption for Tribal operators An operator that is a Tribe or is controlled by a Tribe is not subject to paragraph (1) with respect to a lease, unit, or communitization agreement that is located entirely on the lands of such Tribe. (6) Adjustment for inflation In the application of paragraph (2), the Secretaries shall at least once every three years, at the beginning of the fiscal year, adjust the dollar amounts in paragraph (2) to account for inflation based on the Consumer Price Index for all urban consumer published by the Department of Labor. . (b) Assessment for fiscal year 2022 The Secretary of the Interior shall assess the fee under the amendment made by subsection (a) for fiscal year 2022, and provide notice of such assessment to each designated operator who is liable for such fee, by not later than 60 days after the date of enactment of this Act. 5. Bonding Equity for National Wildlife Refuge System Lands Section 4 of the National Wildlife Refuge System Administration Act of 1966 ( 16 U.S.C. 668dd et seq. (1) by redesignating subsections (h) through (o), as subsections (i) through (p), respectively; and (2) by inserting after subsection (g) the following new subsection: (h) Reclamation, Damages, and Financial Assurance for oil and gas operations on Refuge Lands (1) The Secretary, acting through the Director, shall obtain adequate financial assurances from non-Federal entities to repair potential damages to refuge resources, prior to the commencement of surface-disturbing activities as part of the development of non-Federal minerals below refuge surface estate, including— (A) to ensure the complete and timely reclamation of the land, and the restoration of any lands or surface waters adversely affected by operations after the abandonment or cessation of oil and gas operations on the land; and (B) to meet potential response and assessment costs and other damages to refuge resources as a result of oil and gas operations. (2) Financial assurances forfeited by a non-Federal entity under this subsection shall be retained and available to the Secretary, without further appropriation, and shall remain available until expended, for— (A) plugging and abandoning wells; (B) removing structures, equipment, materials, and other infrastructure; (C) response costs and damage assessments conducted; (D) restoration, replacement, or acquisition of the equivalent refuge resources; and (E) monitoring and studying affected refuge resources. . 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

Summary: Bonding Reform and Taxpayer Protection Act of 2021 This bill revises bonding requirements for oil and gas development on public land leased from the federal government. Such bonds are required to ensure oil and gas developers have adequate financial resources for implementing reclamation plans to restore public land after oil and gas development (e.g., drilling operations) ceases. Specifically, the bill increases the bond amounts that oil and gas developers must provide prior to conducting surface-disturbing activities and requires such amounts to adjust at least once every three years for inflation. In addition, the bill sets fees to cover the cost for inspection and enforcement with respect to such leases. The bill also requires the Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) to establish uniform standards for all interim and final reclamation plans. BLM and USFS may not release any bond amounts until the standards have been met by oil and gas developers and the inspection fees have been paid. Finally, the bill gives the U.S. Fish and Wildlife Service the authority to obtain and retain adequate financial assurances (e.g., bonds) from nonfederal entities to repair potential damages to resources of the National Wildlife Refuge System prior to the commencement of activities related to mineral development, such as oil and gas operations.