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H.R. 3225: Restoring Community Input and Public Protections in Oil and Gas Leasing Act of 2019

The text of the bill below is as of Jun 12, 2019 (Introduced).


I

116th CONGRESS

1st Session

H. R. 3225

IN THE HOUSE OF REPRESENTATIVES

June 12, 2019

(for himself, Mr. Grijalva, and Mr. Lowenthal) introduced the following bill; which was referred to the Committee on Natural Resources, and in addition to the Committee on Agriculture, 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 amend the Mineral Leasing Act to make certain adjustments in leasing on Federal lands for oil and gas drilling, and for other purposes.

1.

Short title

This Act may be cited as the Restoring Community Input and Public Protections in Oil and Gas Leasing Act of 2019.

2.

Leasing process

(a)

Onshore oil and gas leasing

Section 17(a) of the Mineral Leasing Act (30 U.S.C. 226(a)) is amended to read as follows:

(a)

Leasing authority

(1)

In general

All lands subject to disposition under this Act that are known or believed to contain oil or gas deposits may be leased by the Secretary.

(2)

Receipt of fair market value

Leasing activities under this Act shall be conducted to assure receipt of fair market value for the lands and resources leased and the rights conveyed by the United States.

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(b)

Competitive bidding

Section 17(b)(1)(A) of the Mineral Leasing Act (30 U.S.C. 226(b)(1)(A)) is amended to read as follows:

(A)

Competitive bidding

(i)

In general

All lands to be leased under this section shall be leased as provided in this paragraph to the highest responsible qualified bidder by competitive bidding by sealed bid.

(ii)

Geographic limitation

The Secretary shall lease lands under this paragraph in units of not more than 2,560 acres, except in Alaska, where units shall be not more than 5,760 acres. Such units shall be as nearly compact as possible.

(iii)

Frequency

Lease sales under this section shall be held for each State in which there are lands eligible for leasing no more than 3 times each year and on a rotating basis such that the lands under the responsibility of any Bureau of Land Management field office are available for leasing no more than one time each year.

(iv)

Royalty

A lease under this section shall be conditioned upon the payment of a royalty at a rate of not less than 18.5 percent in amount or value of the production removed or sold from the lease, except as otherwise provided in this Act.

(v)

Issuance of lease

The Secretary may issue a lease under this section to the responsible qualified bidder with the highest bid that is equal to or greater than the national minimum acceptable bid. The Secretary shall decide whether to accept a bid and issue a lease within 90 days following payment by the successful bidder of the remainder of the bonus bid, if any, and annual rental for the first lease year.

(vi)

Rejection of bid

The Secretary may reject a bid above the national minimum acceptable bid if, after evaluation of the value of the lands proposed for lease, the Secretary determines that the bid amount does not ensure that fair market value is obtained for the lease.

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(c)

National minimum acceptable bid

Subparagraph (B) of section 17(b)(1) of the Mineral Leasing Act (30 U.S.C. 226(b)(1)), is amended to read as follows:

(B)

National minimum acceptable bid

(i)

In general

The national minimum acceptable bid shall be $5 per acre. All bids under this section for less than the national minimum acceptable bid shall be rejected.

(ii)

Raising the national minimum acceptable bid

The Secretary may establish a higher national minimum acceptable bid—

(I)

beginning at the end of the four year period that begins on the date of enactment of the Restoring Community Input and Public Protection in Oil and Gas Leasing Act of 2019, at least once every 4 years, to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics; and

(II)

at any time if the Secretary finds that such a higher amount is necessary to enhance financial returns to the United States or to promote more efficient management of oil and gas resources on Federal lands.

(iii)

Not a major Federal action

The proposal or issuance of any regulation to establish a higher national minimum acceptable bid under clause (ii) shall not be considered a major Federal action that is subject to the requirements of section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)).

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(d)

Rentals

Section 17(d) of the Mineral Leasing Act (30 U.S.C. 226(d)) is amended to read as follows:

(d)

Annual rentals

All leases issued under this section shall be conditioned upon the payment by the lessee of a rental of—

(1)

not less than $3.00 per acre per year during the 2-year period beginning on the date the lease begins for new leases, and after the end of such two year period not less than $5 per acre per year; or

(2)

such higher rental rate as the Secretary may establish if the Secretary finds that such action is necessary to enhance financial returns to the United States and promote more efficient management of oil and gas and alternative energy resources on Federal lands.

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(e)

Elimination of noncompetitive leasing

The Mineral Leasing Act (30 U.S.C. 181 et seq.) is amended—

(1)

in section 17(b) (30 U.S.C. 226(b)), by striking paragraph (3);

(2)

by amending section 17(c) (30 U.S.C. 226(c)) to read as follows:

(c)

Lands made available for leasing under subsection (b)(1) but for which no bid is accepted may be made available by the Secretary for a new round of sealed bidding under such subsection.

;

(3)

in section 17(e) (30 U.S.C. 226(e))—

(A)

by striking Competitive and noncompetitive leases and inserting Leases, including leases for tar sand areas,; and

(B)

by striking Provided, however and all that follows through ten years.;

(4)

in section 31(d)(1) (30 U.S.C. 188(d)(1)) by striking or section 17(c);

(5)

in section 31(e) (30 U.S.C. 188(e))—

(A)

in paragraph (2) by striking , or the inclusion and all that follows and inserting a semicolon; and

(B)

in paragraph (3) by striking (A) and by striking subparagraph (B);

(6)

by striking section 31(f) (30 U.S.C. 188(f)); and

(7)

in section 31(g) (30 U.S.C. 188(g))—

(A)

in paragraph (1) by striking as a competitive and all that follows through the period and inserting in the same manner as the original lease issued pursuant to section 17.;

(B)

by striking paragraph (2) and redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively; and

(C)

in paragraph (2), as redesignated, by striking , applicable to leases issued under subsection 17(c) of this Act (30 U.S.C. 226(c)) except, and inserting , except.

(f)

Lease term

Section 17(e) of the Mineral Leasing Act (30 U.S.C. 226(e)) is amended by striking 10 years: and inserting 5 years.

(g)

Other leasing requirements

Section 17(g) of the Mineral Leasing Act (30 U.S.C. 226(g)), as amended by section 8 of this Act, is further amended by adding at the end the following:

(7)

Limitation

The Secretary shall not issue a lease or approve the assignment of any lease to any person, or to any subsidiary or affiliate of such person or any other person controlled by or under common control with such person, unless such person has the demonstrated capability to explore and produce oil and gas under the lease.

(8)

Protection of leased lands for other uses

Each lease under this section shall include such terms as are necessary to preserve the United States flexibility to control or prohibit activities that pose serious and unacceptable impacts to the value of the leased lands for uses other than production of oil and gas.

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3.

Transparency and landowner protections

(a)

Disclosure of identities filing disclosures of interest and bids

Section 17(b) of the Mineral Leasing Act (30 U.S.C. 226(b)), as amended by this Act, is further amended by adding at the end the following:

(3)

Bidder identity

The Secretary—

(A)

shall require that each expression of interest to bid for a lease under this section and each bid for a lease under this section shall include the name of the person for whom such expression of interest or bid is submitted; and

(B)

shall promptly publish each such name.

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(b)

Notice requirements

Section 17(f) of the Mineral Leasing Act (30 U.S.C. 226(f)) is amended by striking At least and all that follows through agencies. and inserting the following:

(1)

Required notice

At least 45 days before offering lands for lease under this section, and at least 30 days before approving applications for permits to drill under the provisions of a lease, modifying the terms of any lease issued under this section, or granting a waiver, exception, or modification of any stipulation of a lease issued under this section, the Secretary shall provide notice of the proposed action to—

(A)

the general public by posting such notice in the appropriate local office and on the electronic website of the leasing and land management agencies offering the lands for lease;

(B)

all surface land owners in the area of the lands being offered for lease; and

(C)

the holders of special recreation permits for commercial use, competitive events, and other organized activities on the lands being offered for lease.

(2)

Required information

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(c)

Surface owner protection

(1)

Post-lease surface use agreement

(A)

In general

Except as provided in paragraph (2), 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 subparagraph (B).

(B)

Contents

The surface use agreement shall provide for—

(i)

the use of only such portion of the surface estate as is reasonably necessary for exploration and drilling operations based on site-specific conditions;

(ii)

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;

(iii)

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

(iv)

compensation for damages as a result of exploration and drilling operations, including—

(I)

loss of income and increased costs incurred;

(II)

damage to or destruction of personal property, including crops, forage, and livestock; and

(III)

failure to reclaim the site in accordance with clause (iii).

(C)

Procedure

(i)

Notice of intent to conclude agreement

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 operator may submit the matter to third-party arbitration for resolution within a period of 90 days. The cost of such arbitration shall be the responsibility of the operator.

(ii)

List of arbitrators

The Secretary shall identify persons with experience in conducting arbitrations and shall make this information available to operators.

(iii)

Referral

Referral of a matter for arbitration by an operator to an arbitrator identified by the Secretary pursuant to clause (ii) shall be sufficient to constitute compliance with clause (i).

(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.

(2)

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 paragraph (1) in the absence of an agreement with the surface estate owner or owners, if—

(i)

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 paragraph (1)(C), but that no agreement was concluded within 90 days after the referral to arbitration;

(ii)

the operator submits a plan of operations that provides for the matters specified in paragraph (1)(B) and for compliance with all other applicable requirements of Federal and State law; and

(iii)

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—

(i)

comment on plans of operations in advance of a determination of compliance with this Act;

(ii)

participate in bond level determinations and bond release proceedings under this section;

(iii)

attend an on-site inspection during such determinations and proceedings;

(iv)

file written objections to a proposed bond release; and

(v)

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.

(3)

Surface owner notification

The Secretary shall notify surface estate owners in writing—

(A)

not less than 45 days before lease sales;

(B)

of the identity of the lessee, not more than 10 business days after a lease is issued;

(C)

concerning any subsequent request or decision regarding a lease not more than 5 business days after such request or decision, including regarding modification of a lease, waiver of a stipulation, or approval of a right of way; and

(D)

not more than 5 business days after issuance of a drilling permit under a lease.

4.

Lease stipulations

(a)

Energy policy Act of 2005

Section 363(b)(3)(C) of the Energy Policy Act of 2005 (42 U.S.C. 15922(b)(3)(C)) is amended to read as follows:

(C)

adequately protective of the resource for which the stipulations are applied;

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(b)

Revision of existing memorandum

Not later than 180 days after the date of the enactment of this Act the Secretary of the Interior and the Secretary of Agriculture shall revise the memorandum of understanding under section 363(b)(3)(C) of the Energy Policy Act of 2005 (42 U.S.C. 15922) in accordance with the amendment made by subsection (a).

5.

Master leasing plans

Section 17(a) of the Mineral Leasing Act (30 U.S.C. 226(a)), as amended by section 2, is further amended by adding at the end the following:

(3)

Master leasing plans

(A)

In general

The Secretary may adopt and implement a master leasing plan to govern the issuance of oil and gas leases under this Act for any Federal lands, in accordance with Bureau of Land Management Instruction Memorandum No. 2010–117, dated May 17, 2010, as in effect on April 24, 2017.

(B)

Factors and considerations

In deciding whether to adopt and implement a master leasing plan, the Secretary—

(i)

shall consider the criteria set forth in Bureau of Land Management Instruction Memorandum No. 2010–117, dated May 17, 2010, as in effect on April 24, 2017; and

(ii)

shall consider the benefits of avoiding conflicts between mineral leasing and other land uses, including conservation, recreation, and protection of cultural and historic resources.

(C)

State request

The Secretary shall adopt and implement a master leasing plan under subparagraph (A) applicable to leases for Federal lands in a State or county of a State, if requested by the government of such State or county, respectively.

(D)

Request by an individual

(i)

In general

Any individual who is a resident of a State or county of a State may submit a petition to the Secretary requesting that the Secretary adopt and implement a master leasing plan under subparagraph (A) applicable to the issuance of leases for Federal lands in such State or county, respectively.

(ii)

Consideration

If the Secretary receives such a petition, the Secretary shall, not later than 60 days after receiving such petition, issue a determination of whether or not the adoption and implementation of such a master leasing plan is appropriate.

.

6.

Parcel review

Section 17(a) of the Mineral Leasing Act (30 U.S.C. 226(a)), as amended by sections 2 and 5 of this Act, is further amended by adding at the end the following:

(4)

Parcel review

The Secretary shall issue oil and gas leases under this Act only in accordance with subsections C through I of section III of Bureau of Land Management Instruction Memorandum No. 2010–117, dated May 17, 2010, as in effect on April 24, 2017.

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7.

Acreage limitations

Section 27(d)(1) of the Mineral Leasing Act (30 U.S.C. 184(d)(1)) is amended by striking , and acreage under any lease any portion of which has been committed to a federally approved unit or cooperative plan or communitization agreement or for which royalty (including compensatory royalty or royalty in-kind) was paid in the preceding calendar year,.

8.

Land management

Section 17(g) of the Mineral Leasing Act (30 U.S.C. 226(g)), as amended by section 2(g) of this Act, is further amended by adding at the end the following:

(9)

Multiple-use management

The Secretary, and for National Forest lands, the Secretary of Agriculture, shall manage lands that are subject to an oil and gas lease under this Act in accordance with the principles, policies, and requirements relating to multiple use under the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701 et seq.), until the beginning of operations on such lease.

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9.

Oil shale

Section 21(a) of the Mineral Leasing Act (30 U.S.C. 241(a)) is amended—

(1)

in paragraph (1), by striking The Secretary of the Interior and inserting Subject to paragraph (6), the Secretary of the Interior; and

(2)

by adding at the end the following:

(6)

Beginning on the date of enactment of the Restoring Community Input and Public Protections in Oil and Gas Leasing Act of 2019, The Secretary may not issue any lease for oil shale under this Act before the date the Secretary issues a finding that the technical and economic feasibility of development of and production from such deposit has been demonstrated under section 369 of the Energy Policy Act of 2005 (42 U.S.C. 15927).

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10.

Transparency in management of leases

Section 17(a) of the Mineral Leasing Act (30 U.S.C. 226(a)), as amended by sections 2, 5, and 6 of this Act, is further amended by adding at the end the following:

(5)

Transparency in management of leases

For each lease under this section, the Secretary shall make available on a public website—

(A)

the identity of—

(i)

each person who is or has been a lessee under the lease; and

(ii)

each person who is or has been an operator under the lease;

(B)

notice of each transfer of the lease; and

(C)

notice of each suspension of operations, each suspension of production, and each suspension of operations and production.

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11.

Lease cancellation for improper issuance

Section 31(b) of the Mineral Leasing Act (30 U.S.C. 188(b)) is amended by inserting if the lease was improperly issued or after 30 days notice.

12.

Fees for Expressions of Interest

The Secretary of the Interior shall charge any person who submits an expression of interest, as that term is defined by the Secretary, a fee, in an amount determined by the Secretary to be appropriate in aggregate to cover the aggregate cost of processing expressions of interest.