I 114th CONGRESS 1st Session H. R. 3289 IN THE HOUSE OF REPRESENTATIVES July 29, 2015 Mr. Lowenthal (for himself, Mr. Grijalva , Ms. Norton , Mr. Gallego , Mr. Beyer , Mr. Pocan , Mr. Polis , Mr. Cartwright , Mr. Tonko , Ms. Castor of Florida , Mr. Honda , Mr. Van Hollen , and Ms. McCollum ) introduced the following bill; which was referred to the Committee on Natural Resources A BILL To prevent the waste of gas produced under oil and gas leases on Federal land and to collect royalty on all gas production.

1. Short title This Act may be cited as the Natural Gas Environmental and Economic Security Act . 2. Gas waste reduction and enhancement of gas measuring and reporting (a) In general Title I of the Federal Oil and Gas Royalty Management Act of 1982 ( 30 U.S.C. 1711 et seq. ) is amended by adding at the end the following: 118. Gas waste reduction and enhancement of gas measuring and reporting (a) Rules for preventing and reducing waste of gas via venting, flaring, and fugitive releases (1) Requirement to issue rules The Secretary shall issue rules that establish requirements for reducing and preventing the waste of gas, including by venting, flaring, and fugitive releases, from covered operations. (2) Content of rules The rules shall— (A) require that 99 percent of all gas produced that is subject to a mineral leasing law be captured annually within 5 years of enactment of the Natural Gas Environmental and Economic Security Act ; (B) require flaring of gas, rather than venting, in all instances in which gas capture is not viable; (C) require that every application for a permit to drill a production well— (i) demonstrate sufficient infrastructure is in place to capture produced gas; and (ii) be subject to public comments for a period of 30 days; (D) prohibit all new wells from flaring, within 2 years after the date of the enactment of the Natural Gas Environmental and Economic Security Act ; (E) require the operator of any covered operation that routinely flares gas before the effective date of the prohibition under subparagraph (D) to submit a gas capture plan to the Secretary no later than 6 months after such effective date that ensures the requirement in subparagraph (A) will be met; (F) require the operator of any covered operation that routinely flares gas before the effective date of the prohibition under subparagraph (D) to demonstrate a yearly decrease in the amount of gas flared, as a fraction of gas produced, to meet the requirement under subparagraph (A); (G) set performance standards based on modern equipment, to be updated every 5 years, that minimize gas loss from— (i) storage tanks; (ii) dehydrators; (iii) compressors; (iv) open-ended valves or lines; (v) pumps; and (vi) other equipment for which the Secretary considers such standards are necessary; (H) require the replacement of all high-bleed gas-actuated pneumatic devices with low-bleed or no-bleed devices; (I) set performance standards based on modern procedures and equipment, to be updated every 5 years, that minimize gas loss from— (i) downhole maintenance; (ii) liquids unloading; (iii) well completion; and (iv) other procedures for which the Secretary considers such standards are necessary; (J) require all operators to have regularly scheduled leak detection programs that assess the entire covered operation using an infrared camera or other equipment with equivalent sensitivity and the ability to survey similarly large areas; (K) require any leaks found during leak detection programs required under subparagraph (J), or otherwise, to be repaired within 2 weeks; and (L) require recordkeeping for— (i) equipment maintenance; (ii) leak detection and repair; (iii) venting events; (iv) flaring events; and (v) other operations for which the Secretary considers such requirements are necessary. (b) Gas measuring, reporting, and transparency requirements (1) In general The Secretary shall, in accordance with this subsection, establish new requirements for measuring and reporting the production and disposition of all gas subject to the mineral leasing laws to allow for more accurate accounting of all such gas that is consumed or lost by venting and flaring, and of fugitive releases of such gas. (2) Measuring and reporting requirements To account for all gas referred to in paragraph (1), the Secretary shall issue rules requiring oil or gas operators to— (A) measure all production and disposition of gas with such accuracy that fugitive gas releases can be calculated; (B) install metering devices to measure all vented and flared gas; and (C) report to the Secretary the volumes of gas measured under the requirements under subparagraph (A), including— (i) all new measured values for production and disposition, including vented and flared volumes; and (ii) fugitive releases based on guidelines for their calculation established by the Secretary in the rule. (3) Transparency The Secretary shall make all new data produced under the requirements established by the Secretary under this subsection, including calculated fugitive releases and volumes of gas lost to venting and flaring, publicly available through the Internet— (A) without a fee or other access charge; (B) in a searchable, sortable, and downloadable manner, to the extent technically possible; and (C) as soon as technically practicable after the report by the operator is filed. (c) Application Except as otherwise specified in this section, the requirements established by the Secretary under this section shall apply to— (1) the construction and operation of any covered operation initiated after the date of the issuance of rules under this section; and (2) after the end of the 1-year period beginning on the date of the issuance of such rules, any covered operation initiated before the date of the issuance of such rules. (d) Enforcement Mechanisms (1) In general The Secretary shall include in the rules issued under this section consistent enforcement mechanisms for covered operations that are not in compliance with the requirements established by the rules. (2) Requirements The enforcement mechanisms under paragraph (1) shall include— (A) civil penalties for unauthorized venting and flaring, which shall— (i) apply in lieu of the penalties under section 109; and (ii) include production restrictions and civil monetary penalties equivalent to 3 times the market value of the vented or flared gas; and (B) civil penalties that apply to noncompliance with other new or existing procedures, which shall— (i) apply in addition to or in lieu of the penalties under section 109; (ii) include production restrictions or monetary penalties, or both; and (iii) in the case of monetary penalties, be proportional to market conditions. (e) Definitions In this section: (1) Covered operations The term covered operations means all oil and gas operations that are subject to mineral leasing law or title V of the Federal Land Policy and Management Act of 1976 ( 30 U.S.C. 1761 et seq. ), regardless of size, including production, storage, gathering, processing, and handling operations. (2) Flare and flaring The term flaring means the intentional and controlled burning of gas that occurs in the course of oil and gas operations to limit release of gas to the atmosphere. (3) Fugitive release The term fugitive release means the unintentional and uncontrolled release of gas into the atmosphere in the course of oil and gas operations. (4) Gas capture plan The term gas capture plan means a plan that includes specific goals, including equipment and timelines, for capturing, gathering, and processing gas produced under an oil or gas lease. (5) Gas release The term gas release includes all gas that is discharged to the atmosphere via venting or fugitive release. (6) Vent and venting The term venting means the intentional and controlled release of gas into the atmosphere in the course of oil and gas operations. . (b) Clerical amendment The table of contents in section 1 of that Act is amended by adding at the end of the items relating to title I the following: Sec. 118. Gas waste reduction and enhancement of gas measuring and reporting. . (c) Deadline The Secretary of the Interior shall issue rules required by the amendments made by this section by not later than 1 year after the date of the enactment of this Act. (d) Assessment of venting, flaring, and fugitive releases Not later than 6 months after the end of the 1-year period beginning on the date the Secretary of the Interior first receives data submitted under the requirements established under subsection (b) of section 118 of the Federal Oil and Gas Royalty Management Act of 1982, as amended by this section, the Secretary shall— (1) submit a report to Congress describing— (A) the volume of fugitive releases, and gas consumed or lost by venting and flaring, from covered operations (as those terms are used in such section); (B) additional rules the Secretary considers necessary to further curtail venting, flaring, and fugitive releases, or the rational basis for not issuing new rules if the Secretary considers new rules are not necessary; and (C) recommendations for new statutory authority necessary to limit venting, flaring, or fugitive releases; and (2) issue rules described in the report under paragraph (1)(B) within 1 year after the date of the submission of the report. 3. Royalty collection for all gas produced on federal lands (a) Assessment on all production (1) In general Except as provided in paragraph (2), royalties otherwise authorized or required under the mineral leasing laws (as that term is defined in the Federal Oil and Gas Royalty Management Act of 1982 ( 30 U.S.C. 1701 et seq. )) to be paid for gas shall be assessed on all gas produced under the mineral leasing laws, including— (A) gas used or consumed within the area of the lease tract for the benefit of the lease (commonly referred to as beneficial use gas ); and (B) all gas that is consumed or lost by venting, flaring, or fugitive releases through any equipment during upstream operations. (2) Exception Paragraph (1) shall not apply with respect to— (A) gas vented or flared in an acute emergency situation that poses danger to human health that occurs for no longer than 48 hours; and (B) gas injected into the ground on a lease tract in order to enhance production of an oil or gas well or for some other purpose. (b) Conforming amendments (1) Mineral Leasing Act The Mineral Leasing Act is amended— (A) in section 14 ( 30 U.S.C. 223 ), by adding at the end the following: Notwithstanding any other provision of this Act (including this section), royalty shall be assessed with respect to oil and gas, other than gas described in section 3(a)(2) of the Natural Gas Environmental and Economic Security Act , without regard to whether oil or gas is removed or sold from the leased land. ; (B) in section 17 ( 30 U.S.C. 226 ), by striking removed or sold each place it appears; (C) in section 18 ( 30 U.S.C. 226 ), by striking except oil or gas used for production purposes on the claim, or unavoidably lost each place it appears; (D) in section 19 ( 30 U.S.C. 226 ), by striking except oil or gas used for production purposes on the claim, or unavoidably lost each place it appears; (E) in section 22 ( 30 U.S.C. 251 ), by striking sold or removed ; and (F) in section 31 ( 30 U.S.C. 188 ), by striking removed or sold each place it appears. (2) Outer continental shelf lands act The Outer Continental Shelf Lands Act is amended— (A) in section 6(a)(8) ( 43 U.S.C. 1335(a)(8) ), by striking saved, removed, or sold each place it appears; and (B) in section 8(a) ( 43 U.S.C. 1337(a) )— (i) in paragraph (1), by striking saved, removed, or sold each place it appears; and (ii) by adding at the end the following: (9) Notwithstanding any other provision of this Act (including this section), royalty under this Act shall be assessed with respect to oil and gas, other than gas described in section 3(a)(2) of the Natural Gas Environmental and Economic Security Act , without regard to whether oil or gas is removed or sold from the leased land. . (c) Application The amendments made by this section shall apply only with respect to leases issued on or after the date of the enactment of this Act.