Title: Bonding Reform and Taxpayer Protection Act of 2021
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 amount of bond that oil and gas developers must provide prior to conducting surface-disturbing activities and requires such amounts to adjust 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 Department of the Interior and the Department of Agriculture (USDA) to establish uniform standards for all interim and final reclamation plans. Interior and USDA 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.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1505 Introduced in House (IH)]

<DOC>






117th CONGRESS
  1st Session
                                H. R. 1505

  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. Barragan, and Mr. Huffman) 
 introduced the following bill; which was referred to the Committee on 
                           Natural Resources

_______________________________________________________________________

                                 A BILL


 
  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) Secretary concerned.--The term `Secretary 
                concerned' means--
                            ``(i) the Secretary of the Interior for 
                        public lands administered by such Secretary; 
                        and
                            ``(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 Plans of Operations 
                submitted and approved pursuant to this Act shall 
                include an Interim 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.--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, to ensure the 
                complete and timely reclamation of the lease tract, and 
                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.
                    ``(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 such determination with respect to any such 
                entity the concerned Secretary 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) Limitation on bonds.--The Secretary concerned 
                shall review the adequacy of a bond, surety, or other 
                financial instrument anytime a lease is transferred. A 
                bond, surety, or other financial arrangement described 
                in subparagraph (A) shall not be adequate if it is less 
                than--
                            ``(i) $150,000 in the case of an 
                        arrangement for an individual surface-
                        disturbing activity of each entity on an 
                        individual oil or gas lease; or
                            ``(ii) $500,000 in the case of an 
                        arrangement for all surface-disturbing 
                        activities of each entity in a State.
                    ``(E) Adjustments for inflation.--In the 
                application of subparagraph (B), the Secretaries 
                concerned shall jointly at least once every three 
                years, at the beginning of the fiscal year, adjust the 
                dollar amounts in subparagraph (B) to account for 
                inflation based on the Consumer Price Index for all 
                urban consumer published by the Department of Labor.
                    ``(F) Requiring higher bond amounts.--The Secretary 
                concerned may require a higher level of a financial 
                assurance above the applicable minimum level required 
                under paragraph (D) as the Secretary concerned 
                determines to be appropriate or necessary to ensure the 
                complete and timely reclamation of the lease tract, and 
                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.
            ``(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 applicable lessee 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.''.

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.--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.''.
    (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 (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.''.
                                 <all>