118 HR 4301 IH: Bonding Reform and Taxpayer Protection Act of 2023
U.S. House of Representatives
2023-06-22
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I
118th CONGRESS
1st Session
H. R. 4301
IN THE HOUSE OF REPRESENTATIVES
June 22, 2023
Ms. Porter (for herself, Mr. Grijalva, Ms. Barragán, Mr. Huffman, and Mr. Levin) 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.
1.

Short title
This Act may be referred to as the “Bonding Reform and Taxpayer Protection Act of 2023”.
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; 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 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 2023, 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 2023, 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.”.
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.”.
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 2023, 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 2024
The Secretary of the Interior shall assess the fee under the amendment made by subsection (a) for fiscal year 2024, 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.) 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.”.