[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3698 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 3698

  To assure that development of certain Federal oil and gas resources 
   will occur in ways that protect water resources and surface owner 
                    rights, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 8, 2003

    Mr. Udall of Colorado (for himself and Mr. Udall of New Mexico) 
 introduced the following bill; which was referred to the Committee on 
   Resources, and in addition to the Committee on Transportation and 
   Infrastructure, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To assure that development of certain Federal oil and gas resources 
   will occur in ways that protect water resources and surface owner 
                    rights, 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; FINDINGS; PURPOSE.

    (a) Short Title.--This Act may be cited as the ``Western Waters and 
Surface Owners Protection Act''.
    (b) Findings.--The Congress finds the following:
            (1) Domestic oil and gas resources, including coalbed 
        methane, are an important part of the Nation's energy supply 
        portfolio and their development in appropriate locations and in 
        appropriate ways can help reduce dependence on imported energy 
        supplies.
            (2) In many areas of the Western United States, federally 
        owned minerals, including oil and gas, are in lands where the 
        surface estate belongs to non-Federal parties whose interests 
        can be adversely affected if the development of the minerals is 
        not done in an appropriate manner.
            (3) Development of oil and gas--and especially coalbed 
        methane--often involves removal of a significant volume of 
        groundwater.
            (4) Some of the water extracted in connection with this 
        development is reinjected into the ground, while some is 
        retained in surface holding ponds or released on the surface 
        and allowed to flow into streams or other waterbodies, 
        including ditches used for irrigation.
            (5) The quality of these extracted waters varies from one 
        location to another. Some of these waters are of good quality, 
        but they often contain dissolved minerals (such as sodium, 
        magnesium, arsenic, or selenium) that can contaminate other 
        waters as a result of leaks or leaching from holding ponds or 
        discharge of extracted waters. In addition, extracted waters 
        often have other characteristics, such as high acidity and 
        temperature, that can adversely affect agricultural uses of 
        land or the quality of the environment.
            (6) Clearer requirements for proper disposal of these 
        extracted waters is necessary in order to avoid adverse effects 
        on the quality of ground and surface waters as well as the 
        productivity of surrounding agricultural lands.
            (7) To reduce the chance of potential harm to water 
        supplies, agricultural production, and the environment that 
        otherwise could result from disposal of water extracted in 
        connection with coalbed methane development or the development 
        of other oil or gas resources, the Congress should act to 
        ensure that such disposal is subject to regulation under the 
        Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.) 
        and the Mineral Leasing Act (30 U.S.C. 181 et seq.).
            (8) Under the Stock-Raising Homestead Act (43 U.S.C. 291 et 
        seq.) and other laws, the Federal Government has transferred to 
        other parties the surface estate in millions of acres in 
        Western States where ownership of coal, oil, gas, and other 
        minerals has been retained by the Federal Government.
            (9) Under current Federal law, the leasing of federally 
        owned coal on lands where the surface estate is not owned by 
        the United States is subject to the consent of the surface 
        estate owners, but neither this consent requirement nor the 
        operating and bonding requirements applicable to development of 
        federally owned locatable minerals applies to the leasing or 
        development of oil or gas in similar split-estate situations.
            (10) To better balance the need for development of oil and 
        gas resources (including coalbed methane) with the rights and 
        interests of the owners of the surface estate of affected 
        lands, current law should be revised so as to increase the 
        involvement of the surface estate owners in developing and 
        implementing plans for such development and to provide clearer 
        and more adequate standards for such development.
    (c) Purpose.--The purpose of this Act is to provide for the 
protection of water resources and surface estate owners in the 
development of oil and gas resources, including coalbed methane.

                 TITLE I--PROTECTION OF WATER RESOURCES

SEC. 101. MINERAL LEASING ACT REQUIREMENTS.

    Section 17 of the Mineral Leasing Act (30 U.S.C. 226) is amended by 
adding at the end the following:
    ``(p) Water Requirements.--
            ``(1) An operator producing oil or gas (including coalbed 
        methane) under a lease issued under this Act shall--
                    ``(A) replace the water supply of a water user who 
                obtains all or part of such user's supply of water for 
                domestic, agricultural, or other purposes from an 
                underground or surface source that has been affected by 
                contamination, diminution, or interruption proximately 
                resulting from drilling operations for such production;
                    ``(B) assure that any reinjection of water produced 
                by drilling in connection with operations under the 
                lease will return the water into the same aquifer from 
                which it was extracted or an aquifer of no better water 
                quality; and
                    ``(C) comply with all applicable requirements of 
                Federal and State law for discharge of any water 
produced under the lease that is not reinjected.
            ``(2) An application for a lease under this subsection 
        shall be accompanied by a proposed water management plan 
        including provisions to--
                    ``(A) protect the quantity and quality of surface 
                and ground water systems, both on-site and off-site, 
                from adverse effects of the exploration, development, 
                and reclamation processes or to provide alternative 
                sources of water if such protection cannot be assured;
                    ``(B) protect the rights of present users of water 
                that would be affected by operations under the lease, 
                including the discharge of any water produced in 
                connection with such operations that is not reinjected; 
                and
                    ``(C) identify any agreements with other parties 
                for the beneficial use of produced waters and the steps 
                that will be taken to comply with state and Federal 
                laws related to such use.''.

SEC. 102. CLEAN WATER ACT REQUIREMENTS.

    Section 402(b) of the Federal Water Pollution Control Act (33 
U.S.C. 1342) is amended by adding at the end the following:
            ``(10) To issue permits that comply with subsection (a) and 
        any other relevant requirements of this Act, and to ensure that 
        waters extracted from a subsurface formation in connection with 
        development of oil or gas, including coalbed methane, will be 
        subject to appropriate requirements to minimize adverse effects 
        on any lands or waters that would be affected by disposal or 
        other uses of such extracted waters.''.

SEC. 103. RELATION TO STATE LAW.

    Nothing in this Act or any amendment made by this Act shall--
            (1) be construed as impairing or in any manner affecting 
        any right or jurisdiction of any State with respect to the 
        waters of such State; or
            (2) be construed as limiting, altering, modifying, or 
        amending any of the interstate compacts or equitable 
        apportionment decrees that apportion water among and between 
        States.

                   TITLE II--SURFACE OWNER PROTECTION

SEC. 201. DEFINITIONS.

    As used in this title--
            (1) the term ``Secretary'' means the Secretary of the 
        Interior;
            (2) the term ``lease'' means a lease issued by the 
        Secretary under the Mineral Leasing Act (30 U.S.C. 181 et seq.) 
        or any other law, providing for development of oil and gas 
        resources (including coalbed methane) owned by the United 
        States;
            (3) the term ``lessee'' means the holder of a lease; and
            (4) the term ``operator'' means any person that is 
        responsible under the terms and conditions of a lease for the 
        operations conducted on leased lands or any portion thereof.

SEC. 202. POST-LEASE SURFACE USE AGREEMENT.

    (a) In General.--Except as provided in section 203, the Secretary 
may not authorize any operator to conduct exploration and drilling 
operations on lands with respect to which title to oil and gas 
resources is held by the United States but title to the surface estate 
is not held by the United States, until the operator has filed with the 
Secretary a document, signed by the operator and the surface owner or 
owners, showing that the operator has secured a written surface use 
agreement between the operator and the surface owner or owners that 
meets the requirements of subsection (b).
    (b) Contents.--The surface use agreement shall provide for--
            (1) the use of only such portion of the surface estate as 
        is reasonably necessary for exploration and drilling operations 
        based on site-specific conditions;
            (2) the accommodation of the surface estate owner to the 
        maximum extent practicable, including the location, use, 
        timing, and type of exploration and drilling operations, 
        consistent with the operator's right to develop the oil and gas 
        estate;-
            (3) the reclamation of the site to a condition capable of 
        supporting the uses which such lands were capable of supporting 
        prior to exploration and drilling operations; and
            (4) compensation for damages as a result of exploration and 
        drilling operations, including but not limited to--
                    (A) loss of income and increased costs incurred;
                    (B) damage to or destruction of personal property, 
                including crops, forage, and livestock; and
                    (C) failure to reclaim the site in accordance with 
                this paragraph (3).
    (c) Procedure.--(1) An operator shall notify the surface estate 
owner or owners of the operator's desire to conclude an agreement under 
this section. If the surface estate owner and the operator do not reach 
an agreement within 90 days after the operator has provided such 
notice, the matter shall be referred to third party arbitration for 
resolution within a period of 90 days. The cost of such arbitration 
shall be the responsibility of the operator.
    (2) The Secretary shall identify persons with experience in 
conducting arbitrations and shall make this information available to 
operators.
    (3) Referral of a matter for arbitration by a person identified by 
the Secretary pursuant to paragraph (2) shall be sufficient to 
constitute compliance with paragraph (1).
    (d) Attorneys Fees.--If action is taken to enforce or interpret any 
of the terms and conditions contained in a surface use agreement, the 
prevailing party shall be reimbursed by the other party for reasonable 
attorneys fees and actual costs incurred, in addition to any other 
relief which a court or arbitration panel may grant.

SEC. 203. AUTHORIZED EXPLORATION AND DRILLING OPERATIONS.

    (a) Authorization Without Surface Use Agreement.--The Secretary may 
authorize an operator to conduct exploration and drilling operations on 
lands covered by section 202 in the absence of an agreement with the 
surface estate owner or owners, if--
            (1) the Secretary makes a determination in writing that the 
        operator made a good faith attempt to conclude such an 
        agreement, including referral of the matter to arbitration 
        pursuant to section 202(c), but that no agreement was concluded 
        within 90 days after the referral to arbitration;
            (2) the operator submits a plan of operations that provides 
        for the matters specified in section 202(b) and for compliance 
        with all other applicable requirements of Federal and State 
        law; and
            (3) the operator posts a bond or other financial assurance 
        in an amount the Secretary determines to be adequate to ensure 
        compensation to the surface estate owner for any damages to the 
        site, in the form of a surety bond, trust fund, letter of 
        credit, government security, certificate of deposit, cash, or 
        equivalent.
    (b) Surface Owner Participation.--The Secretary shall provide 
surface estate owners with an opportunity to--
            (1) comment on plans of operations in advance of a 
        determination of compliance with this title;
            (2) participate in bond level determinations and bond 
        release proceedings under this section;
            (3) attend an on-site inspection during such determinations 
        and proceedings;
            (4) file written objections to a proposed bond release; and
            (5) request and participate in an on-site inspection when 
        they have reason to believe there is a violation of the terms 
        and conditions of a plan of operations.
    (c) Payment of Financial Guarantee.--A surface estate owner with 
respect to any land subject to a lease may petition the Secretary for 
payment of all or any portion of a bond or other financial assurance 
required under this section as compensation for any damages as a result 
of exploration and drilling operations. Pursuant to such a petition, 
the Secretary may use such bond or other guarantee to provide 
compensation to the surface estate owner for such damages.
    (d) Bond Release.--Upon request and after inspection and 
opportunity for surface estate owner review, the Secretary may release 
the financial assurance required under this section if the Secretary 
determines that exploration and drilling operations are ended and all 
damages have been fully compensated.

SEC. 204. SURFACE OWNER NOTIFICATION.

    The Secretary shall--
            (1) notify surface estate owners in writing at least 45 
        days in advance of lease sales;
            (2) within ten working days after a lease is issued, notify 
        surface estate owners of regarding the identity of the lessee;
            (3) notify surface estate owners in writing concerning any 
        subsequent decisions regarding a lease, such as modifying or 
        waiving stipulations and approving rights of way; and
            (4) notify surface estate owners within five business days 
        after issuance of a drilling permit under a lease.

                   TITLE III--RECLAMATION AND BONDING

SEC. 301. RECLAMATION STANDARD AND BOND.

    Section 17 of the Mineral Leasing Act (30 U.S.C. 226) is amended by 
adding at the end the following:
    ``(p) Reclamation Requirements.--An operator producing oil or gas 
(including coalbed methane) under a lease issued pursuant to this Act 
shall--
            ``(1) at a minimum restore the land affected to a condition 
        capable of supporting the uses that it was capable of 
        supporting prior to any drilling, or higher or better uses of 
        which there is reasonable likelihood, so long as such use or 
        uses do not present any actual or probable hazard to public 
        health or safety or pose any actual or probable threat of water 
        diminution or pollution, and the permit applicants' declared 
        proposed land use following reclamation is not impractical or 
        unreasonable, inconsistent with applicable land use policies 
        and plans, or involve unreasonable delay in implementation, or 
        is violative of Federal, State, or local law;
            ``(2) ensure that all reclamation efforts proceed in an 
        environmentally sound manner and as contemporaneously as 
        practicable with the oil and gas drilling operations; and
            ``(3) submit with the plan of operations a reclamation plan 
        that describes in detail the methods and practices that will be 
        used to ensure complete and timely restoration of all lands 
        affected by oil and gas operations.
    ``(q) Reclamation Bond.--An operator producing oil or gas 
(including coalbed methane) under a lease issued under this Act shall 
post a bond that covers that area of land within the permit area upon 
which the operator will initiate and conduct oil and gas drilling and 
reclamation operations within the initial term of the permit. As 
succeeding increments of oil and gas drilling and reclamation 
operations are to be initiated and conducted within the permit area, 
the lessee shall file with the regulatory authority an additional bond 
or bonds to cover such increments in accordance with this section. The 
amount of the bond required for each bonded area shall depend upon the 
reclamation requirements of the approved permit; shall reflect the 
probable difficulty of reclamation giving consideration to such factors 
as topography, geology of the site, hydrology, and revegetation 
potential; and shall be determined by the Secretary. The amount of the 
bond shall be sufficient to assure the completion of the reclamation 
plan if the work had to be performed by the Secretary in the event of 
forfeiture.
    ``(r) Regulations.--No later than one year after the date of the 
enactment of this subsection, the Secretary shall promulgate 
regulations to implement the requirements of subsections (p) and (q).
    ``(s) Study by the General Accounting Office.--(1) The Comptroller 
General shall conduct a review to assess the adequacy of the 
regulations issued by the Secretary pursuant to subsection (r) to 
ensure that operators will meet the requirements of subsection (p).
    ``(2) A report of the results of the review required by paragraph 
(1) shall be transmitted to the Committee on Resources of the House of 
Representatives and the Committee on Energy and Natural Resources of 
the Senate no later than 180 days after the date on which the Secretary 
promulgates regulations pursuant to subsection (r).
    ``(3) The report required by paragraph (2) shall include findings 
and conclusions by the Comptroller General of the United States, and 
any recommendations the Comptroller General may make with respect to 
any legislation or administrative actions the Comptroller General 
determines would be appropriate to ensure compliance with the 
requirements of subsection (p).''.

                       TITLE IV--ABANDONED WELLS

SEC. 401. DEFINITION.

    As used in this title, the term ``abandoned well'' means any well 
drilled for the purpose of exploring for or developing oil or gas 
resources (including coalbed methane) that--
            (1) has not been in operation for a period of 12 continuous 
        months, unless the owner or operator has notified the Secretary 
        of the Interior (for wells drilled to explore for or develop 
        minerals owned by the United States) or the relevant State 
        regulatory agency (for wells drilled to explore for or develop 
        minerals not owned by the United States) that the well has been 
        temporarily shut down; or
            (2) has not been operative for more than 60 continuous 
        months after the owner or operator has notified the Secretary 
        of the Interior (for wells drilled to explore for or develop 
        minerals owned by the United States) or the relevant State 
        regulatory agency (for wells drilled to explore for or develop 
        minerals not owned by the United States) that the well has been 
        temporarily shut down.

SEC. 402. FEDERAL REMEDIATION PROGRAM.

    (a) Establishment of Program.--(1) The Secretary of the Interior, 
in cooperation with the Secretary of Agriculture, shall establish a 
program to ensure to the maximum extent feasible the remediation, 
reclamation, and closure of abandoned wells that--
            (A) are located on lands administered by an agency of the 
        Department of the Interior or the Forest Service; or
            (B) were drilled to explore for or develop minerals owned 
        by the United States located on lands with respect to which the 
        surface estate is not owned by the United States.
    (2) In implementing the program, the Secretary of the Interior--
                    (A) shall cooperate with the Secretary of 
                Agriculture and the States with respect to the Federal 
                lands covered by the program are located; and
                    (B) shall consult with the Secretary of Energy and 
                the Interstate Oil and Gas Compact Commission.
    (3) The Secretary of the Interior shall establish the program by no 
later than 3 years after the date of enactment of this section.
    (b) Program Elements.--The program established under subsection (a) 
shall--
            (1) provide for identification of abandoned wells to be 
        covered by the program;
            (2) establish a means of ranking critical sites for 
        priority in remediation based on potential environmental harm, 
        other land use priorities, and public health and safety; and
            (3) provide as far as possible for identifying any lessees 
        or other persons responsible for abandoned wells, and for 
        recovering the costs of remediation to the maximum extent 
        feasible.
    (c) Plan.--Within 6 months after the date of enactment of this 
section, the Secretary of the Interior, in cooperation with the 
Secretary of Agriculture, shall prepare a plan for implementing the 
program established under subsection (a). A copy of the plan shall be 
transmitted to the Committee on Resources of the House of 
Representatives and the Committee on Energy and Natural Resources of 
the Senate.
    (d) Review and Report.--(1) No later than 3 years after the date of 
enactment of this section, the Secretary of the Interior, in 
consultation with the Secretary of Agriculture, shall complete a review 
of the status of remediation, reclamation, and closure actions under 
the program.
    (2) Upon completion of the review required by paragraph (1), the 
Secretary of the Interior shall provide to the Committee on Resources 
of the House of Representatives and the Committee on Energy and Natural 
Resources of the Senate--
            (A) a report on the results of the review;
            (B) information regarding any wells on lands covered by the 
        program that have been abandoned since the date of enactment of 
        this section; and
            (C) any recommendations the Secretary may choose to make 
        regarding legislative or administration steps to further the 
        purposes for which the program was established.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of the Interior $5,000,000 for each of 
fiscal years 2005 through 2006 to carry out this section.

SEC. 403. ASSISTANCE TO STATES AND TRIBES.

    (a) State Program.--The Secretary of the Interior, in consultation 
with the Secretary of Energy, shall establish a program to provide 
technical assistance to facilitate State efforts to develop and 
implement practical and economical remedies for environmental problems 
caused by abandoned wells on lands that are not owned by the United 
States. The Secretary shall work with the States, through the 
Interstate Oil and Gas Compact Commission, to assist the States in 
quantifying and mitigating environmental risks of onshore abandoned 
wells on State and private lands.
    (b) Tribal Program.--The Secretary of the Interior, in consultation 
with the Secretary of Energy, shall establish a program to provide 
technical assistance to facilitate efforts by Indian Tribes to develop 
and implement practical and economical remedies for environmental 
problems caused by abandoned wells on Indian lands, including lands 
held in trust by the United States.
    (c) Program Elements.--So far as possible, the programs established 
under this section shall include--
            (1) mechanisms to facilitate identification of responsible 
        parties;
            (2) criteria for ranking critical sites based on factors 
        such as other land use priorities, potential environmental harm 
        and public visibility; and
            (3) information and training programs regarding best 
        practices for remediation of different types of sites.
    (d) Authorization of Appropriations.--There is authorized to be 
appropriated to the Secretary of the Interior for activities under this 
section $5,000,000 for each of fiscal years 2005 through 2007.
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