Bonding Reform and Taxpayer Protection Act of 2021
Bill: H.R.1505 | Sponsor: Rep. Lowenthal, Alan S. (D-CA)
Policy area: Energy

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.

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.


 


    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be referred to as the ``Bonding Reform and Taxpayer 
Protection Act of 2021''.

SEC. 2. SURFACE DISTURBANCE AND RECLAMATION.

    Section 17(g) of the Mineral Leasing Act (30 U.S.C. 226(g)) is 
amended to read as follows:
    ``(g) Bonding Requirements.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Interim reclamation plan.--The term `Interim 
                Reclamation Plan' means an ongoing plan specifying 
                reclamation steps to be taken on all disturbed areas 
                covered by any lease issued under this Act that are not 
                needed for active operations.
                    ``(B) Final reclamation plan.--The term `Final 
                Reclamation Plan' means a plan describing all 
                reclamation activity to be conducted for all disturbed 
                areas, including locations, facilities, trenches, 
                rights-of-way, roads, and any other surface disturbance 
                covered by a lease issued under this Act prior to final 
                abandonment.
                    ``(C) Operator.--The term `operator' means, with 
                respect to an oil or gas operation, any entity, 
                including the lessee or operating rights owner, that 
                has stated in writing to a relevant authority that such 
                entity is responsible for any portion of such 
                operation.
                    ``(D) Secretary concerned.--The term `Secretary 
                concerned' means--
                            ``(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, the 
                        Secretary concerned shall, by regulation, 
                        require that an adequate bond, surety, or other 
                        financial arrangement be established prior to 
                        the commencement of surface-disturbing 
                        activities on any lease under this Act.
                            ``(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, the Secretary of the Interior and the Secretary of 
        Agriculture shall, by regulation, establish uniform standards 
        for all Interim and Final Reclamation Plans. The goal of such 
        plans shall be the restoration of the affected ecosystem to a 
        condition approximating or equal to that which existed prior to 
        the surface disturbance. Such standards shall include 
        restoration of natural vegetation and hydrology, habitat 
        restoration, salvage, storage and reuse of topsoils, erosion 
        control, control of invasive species and noxious weeds and 
        natural contouring.
            ``(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.''.

SEC. 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)) is amended by striking ``BLM Permit Processing 
Improvement Fund'' and inserting ``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.''.

SEC. 4. INSPECTION FEES.

    (a) In General.--Section 108 of the Federal Oil and Gas Royalty 
Management Act of 1982 (30 U.S.C. 1718) is amended by adding at the end 
the following:
    ``(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.

SEC. 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.) is amended--
            (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.''.
                                                 Union Calendar No. 453

117th CONGRESS

  2d Session

                               H. R. 1505

                          [Report No. 117-629]

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