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S. 2177: Oil and Gas Bonding Reform and Orphaned Well Remediation Act


The text of the bill below is as of Jun 22, 2021 (Introduced).


II

117th CONGRESS

1st Session

S. 2177

IN THE SENATE OF THE UNITED STATES

June 22, 2021

introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources

A BILL

To amend the Mineral Leasing Act to ensure sufficient bonding and complete and timely reclamation of land and water disturbed by Federal and Indian oil and gas production, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Oil and Gas Bonding Reform and Orphaned Well Remediation Act.

(b)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

TITLE I—Orphaned well remediation

Sec. 101. Orphaned well remediation program.

TITLE II—Federal onshore oil and gas reclamation bonding program

Sec. 201. Declaration of policy.

Sec. 202. Regulation of surface-disturbing activities.

TITLE III—Miscellaneous

Sec. 301. Cost recovery.

Sec. 302. Regulations.

2.

Findings

Congress finds that—

(1)

according to the Interstate Oil and Gas Compact Commission, there are in existence not fewer than 56,600 orphaned well sites, and as many as 746,000 undocumented orphaned well sites, across the United States on Federal, State, Tribal, and private land;

(2)

as of April 2021, there are at least 14,400 orphaned wells on Federal land, according to the Department of the Interior;

(3)
(A)

orphaned well sites—

(i)

pose significant public health, safety, and environmental risks; and

(ii)

should be remediated; but

(B)

there are no identified responsible parties to provide for the remediation of those sites;

(4)

it is reasonable for the Federal Government—

(A)

to provide financial resources to States and Indian Tribes to rectify the long-term public health, safety, and environmental risks described in paragraph (3)(A)(i);

(B)

to support the creation of jobs relating to the remediation and reclamation of orphaned well sites; and

(C)

to update policies to ensure that wells are not orphaned in the future;

(5)

under the Mineral Leasing Act (30 U.S.C. 181 et seq.), the Secretary of the Interior (referred to in this Act as the Secretary) is required—

(A)

to ensure the complete and timely reclamation of all Federal onshore oil and gas leases; and

(B)

to secure financial assurances in the form of bonds, sureties, or other approved financial arrangements for remediation, reclamation, and well closure;

(6)

with respect to the Federal onshore oil and gas leasing program, the Secretary—

(A)

is required—

(i)

regularly to review existing onshore oil and gas financial assurances; and

(ii)

to increase the amount of those assurances, as necessary; but

(B)

in practice, often fails to carry out the activities described in subparagraph (A);

(7)

the Secretary—

(A)

implements well and financial assurance adequacy review policies inconsistently across field offices of the Department of the Interior;

(B)

has failed to track systematically data relating to potential liabilities and the adequacy of financial assurances; and

(C)

does not maintain information relating to actual reclamation costs incurred for inactive, orphaned, or inadequately reclaimed wells and leases;

(8)

due to the shortcomings in the required minimum financial assurance amounts and the ineffectiveness of the Secretary in tracking and reviewing those financial assurances, the cost of reclaiming existing Federal onshore oil and gas wells and leases far exceeds the amounts posted as financial assurance; and

(9)

the inadequacy of the Secretary in the administration of financial assurances for Federal onshore oil and gas activities—

(A)

poses a threat to land, water, and other resources; and

(B)

is a major financial liability to the taxpayers of the United States, who are often responsible for the costs of reclaiming onshore oil and gas wells and leases that are inactive, orphaned, or inadequately reclaimed by lessees.

I

Orphaned well remediation

101.

Orphaned well remediation program

(a)

In general

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

(q)

Orphaned well remediation program

(1)

Definitions

In this subsection:

(A)

Abandon

The term abandon, with respect to a well under an oil or gas lease issued under this Act, means—

(i)

to plug the well;

(ii)

to remove all installations associated with the well; and

(iii)

to terminate operations for production from the well.

(B)

Inactive

The term inactive, with respect to a well or facility under an oil or gas lease issued under this Act, means that the well or facility does not—

(i)

produce oil or gas, as applicable, in paying quantities; or

(ii)

actively aid in the production of oil or gas, as applicable, in paying quantities.

(C)

Operator

The term operator, with respect to an oil or gas operation, means any individual or entity (including a lessee or operating rights owner) that has provided to a relevant authority a written statement that the individual or entity is responsible for the operation (or any portion of the operation).

(D)

Orphaned

The term orphaned, with respect to a well or well site under an oil or gas lease issued under this Act, means that the responsible party of the well or well site—

(i)

cannot be located; or

(ii)

cannot provide adequate financial assurance to permanently plug and reclaim the well or well site.

(E)

Responsible party

(i)

In general

The term responsible party, with respect to a well or well site under an oil or gas lease issued under this Act, means an individual or entity (including a lessee or operator) that is or will be responsible for—

(I)

the remediation, reclamation, and permanent plugging of the well or well site; or

(II)

the payment of financial assurance for the well or well site in accordance with subsection (g)(4).

(ii)

Inclusions

The term responsible party includes—

(I)

an association, corporation, subsidiary, or affiliate of an individual or entity described in clause (i); and

(II)

any person controlled by, or under common control with, an individual or entity described in clause (i).

(F)

Secretary

The term Secretary means the Secretary of the Interior.

(2)

Establishment

Not later than 180 days after the date of enactment of this subsection, the Secretary shall establish, in accordance with this subsection—

(A)

in cooperation with the Secretary of Agriculture, a program to remediate, reclaim, and permanently plug orphaned oil and gas wells and well sites located on land administered by the land management agencies of the Department of the Interior and the Department of Agriculture, respectively; and

(B)

a program under which the Secretary shall distribute 75 percent of the amounts made available under paragraph (9) to States and Indian tribes that have submitted to the Secretary an application to remediate, reclaim, and close orphaned oil and gas wells and well sites on land under the jurisdiction of the States and Indian tribes.

(3)

Activities

The programs established under paragraph (2) shall—

(A)

use existing and updated inventories of orphaned well sites to establish priority for the distribution of funds under the programs for activities, including—

(i)

remediating, reclaiming, and permanently plugging orphaned wells and well sites;

(ii)

remediating and reclaiming related well pads;

(iii)

reclaiming related access roads; and

(iv)

restoring land, water, and habitat impacted by orphaned wells and the prior operation of the wells;

(B)

provide a public accounting of the costs of remediation, reclamation, and permanent plugging for each applicable orphaned oil or gas well and well site;

(C)

seek to determine the identity, if unknown, of any potential responsible party associated with the orphaned well or well site, or a surety or guarantor of such a responsible party, to the extent such information can be ascertained; and

(D)

seek to obtain from responsible parties reimbursement for applicable expenditures, to the maximum extent practicable.

(4)

Cooperation and consultation

In carrying out the programs established under paragraph (2), the Secretary shall—

(A)

work cooperatively with—

(i)

the Secretary of Agriculture; and

(ii)

each State, local government, and Indian tribe within the jurisdiction of which an orphaned well site on Federal land is located; and

(B)

consult with—

(i)

affected States, local governments, and Indian tribes;

(ii)

the Secretary of Energy; and

(iii)

the Interstate Oil and Gas Compact Commission.

(5)

Report to Congress

Not later than 1 year after the date of enactment of this subsection, and not less frequently than once every 2 years thereafter, the Secretary, in cooperation with the Secretary of Agriculture and in consultation with affected States and Indian tribes, shall submit to Congress a report describing the expenditures under, and the progress and achievements of, the programs established under paragraph (2).

(6)

Use of funds

(A)

Initial period

For the first 2 fiscal years beginning after the date of enactment of this subsection, the funds made available to remediate, reclaim, and permanently plug orphaned wells and well sites under the program established under paragraph (2)(B) shall be allocated based on a demonstration of—

(i)

identified orphaned wells and well sites in need of remediation, reclamation, or permanent plugging, with a priority for sites posing the greatest adverse impacts to—

(I)

public health and safety; and

(II)

land, water, and other resources; and

(ii)

adequate programmatic and administrative capacity to expend the funds in a timely and effective manner.

(B)

Subsequent fiscal years

For the third fiscal year beginning after the date of enactment of this subsection, and each fiscal year thereafter, the Secretary shall make funds available under the program established under paragraph (2)(B) based on—

(i)

the factors described in subparagraph (A); and

(ii)

a determination by the Secretary that an affected State or Indian tribe is—

(I)

using bonds or other financial assurances that will fully cover costs associated with remediating and reclaiming orphaned oil and gas wells under the jurisdiction of the State or Indian tribe; or

(II)

adopting and using—

(aa)

bonds described in subclause (I); or

(bb)

other financial assurances.

(C)

Unused funds

In any case in which the Secretary determines that, for any fiscal year, a State or Indian tribe cannot effectively use any portion of the funds that otherwise would be made available to the State or Indian tribe under subparagraph (A) or (B), the Secretary shall use those funds—

(i)

to remediate, reclaim, and close orphaned wells and well sites on land administered by the Secretary or the Secretary of Agriculture;

(ii)

to review and update any inventory of orphaned or inactive wells, including wells previously identified as idle or abandoned, on land described in clause (i);

(iii)

to carry out subsection (g)(6)(E);

(iv)

to carry out paragraph (8); or

(v)
(I)

to determine the identity of any potential responsible party associated with an inactive well or well site, or a surety or guarantor of such a responsible party, to the extent such information can be ascertained; and

(II)

to obtain from such a responsible party reimbursement for applicable expenditures, to the maximum extent practicable.

(7)

Limitation on re-leasing

Before conducting any oil and gas leasing of Federal land that contains a well or well site that was remediated, reclaimed, or permanently plugged pursuant to this Act, the Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall—

(A)

determine that—

(i)

re-leasing and development of the land will not degrade the restored conditions accomplished pursuant to the remediation, reclamation, or closure; and

(ii)

the land achieves compliance with all applicable standards adopted pursuant to subsection (g)(5) prior to being re-leased; and

(B)

on making a positive determination pursuant to clauses (i) and (ii) of subparagraph (A), require the operator to provide to the applicable Secretary a bond or other financial assurance that will fully cover the costs associated with the plugging and reclamation.

(8)

Data collection

(A)

In general

Not later than 2 years after the date of enactment of this subsection, the Secretary and the Secretary of Agriculture shall jointly develop, and make publicly available, a computer database to provide centralized data relating to operations, reclamation activities, and financial assurances for each oil and gas lease in effect under this Act.

(B)

Inclusions

The database under subparagraph (A) shall include, with respect to each lease described in that subparagraph, information relating to—

(i)

the number, location, and status of each well subject to the lease;

(ii)

the number, location, and status of each inactive and orphaned well subject to the lease, and the length of time that each such well has not been producing;

(iii)

the names of all responsible parties for each well, including lessees and operators;

(iv)

whether the lease is part of a unit;

(v)

the amount of the financial assurance that has been established for the lease;

(vi)

the history of financial assurance amounts for the lease, including dates of review and requested increases;

(vii)

inspection, violations, and enforcement actions taken with respect to the lease, including resolution of each violation, if any;

(viii)

whether the period of liability of the financial assurance on the lease has been terminated;

(ix)

payment status for royalties, rents, and fees; and

(x)

any additional information required to be collected pursuant to subsection (g)(6).

(C)

Notification

The Secretary shall—

(i)

ensure that the database under subparagraph (A) is made available to each field office of the Bureau of Land Management and the Forest Service, as applicable; and

(ii)

provide automatic and timely notification, on a lease-by-lease basis, of applicable requirements and deadlines to review financial assurances and inactive well status, in accordance with subsection (g).

(D)

Provision of data at expense of lessee

(i)

In general

Except as provided in clause (ii), the Secretary may require that data for the database under subparagraph (A) shall be provided and entered into the database—

(I)

by the applicable lessee; and

(II)

at the expense of the lessee.

(ii)

Inspection and enforcement actions

Any relevant data relating to a Federal inspection or enforcement action shall be provided and entered into the database under subparagraph (A) by the applicable Federal enforcement official.

(iii)

Data quality

The Secretary shall carry out such activities as the Secretary determines to be necessary to ensure the quality of the data included in the database under subparagraph (A).

(9)

Funding

(A)

In general

Notwithstanding any other provision of law, from the Federal share of royalty revenues deposited into the Treasury pursuant to section 35, the Secretary of the Treasury shall transfer to the Secretary to carry out the programs established under paragraph (2), to remain available until expended—

(i)

on October 1, 2021, $1,500,000,000;

(ii)

on October 1, 2022, $1,500,000,000; and

(iii)

on October 1, 2023, and on each October 1 thereafter through October 1, 2030, $625,000,000.

(B)

Receipt and acceptance

The Secretary shall be entitled to receive, shall accept, and shall use to carry out this subsection the funds transferred under subparagraph (A), without further appropriation.

.

(b)

Conforming amendments

(1)

Section 349 of the Energy Policy Act of 2005 (42 U.S.C. 15907) is amended by striking the section designation and heading and all that follows through Out of any in subsection (i) and inserting the following:

349.

Wells drilled into federally managed mineral estate

Out of any

.

(2)

The table of contents for the Energy Policy Act of 2005 (Public Law 109–58; 119 Stat. 596) is amended by striking the item relating to section 349 and inserting the following:

Sec. 349. Wells drilled into federally managed mineral estate.

.

II

Federal onshore oil and gas reclamation bonding program

201.

Declaration of policy

Congress declares that it is the policy of the United States that—

(1)

pursuant to this title and the amendments made by this title, the Secretary, and the Secretary of Agriculture with respect to National Forest System land, should—

(A)

require the posting by holders of oil or gas leases under the Mineral Leasing Act (30 U.S.C. 181 et seq.) or the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.) of financial assurances that are sufficient to pay for the actual costs of remediating, reclaiming, and permanently plugging onshore oil and gas wells, well sites, and lease tracts; and

(B)

implement a system of tracking and reviewing the financial assurances described in subparagraph (A) that ensures ongoing adequacy and public transparency;

(2)

in ensuring robust onshore oil and gas financial assurances under paragraph (1), the Secretary and the Secretary of Agriculture will—

(A)

better protect the land, water, and other resources of the United States; and

(B)

reduce the financial risks to taxpayers of paying for inadequately reclaimed onshore oil and gas wells and leases; and

(3)

in administering this title and the amendments made by this title, the Secretary, and the Secretary of Agriculture with respect to National Forest System land, should ensure that the actions of the applicable Secretary—

(A)

are in accordance with the goals of multiple-use management; and

(B)

will benefit the fiscal interests of the United States.

202.

Regulation of surface-disturbing activities

Section 17(g) of the Mineral Leasing Act (30 U.S.C. 226(g)) is amended—

(1)

in the sixth sentence—

(A)

by striking such entity and inserting the responsible party, or to the operator or other entity on behalf of which the responsible party acted; and

(B)

by striking Once the entity has complied with the and inserting the following:

(C)

Issuance of lease after compliance

On compliance by a responsible party under this paragraph with each

;

(2)

in the fifth sentence, by striking Prior to making such determination with respect to any such entity the concerned Secretary shall provide such entity with and inserting the following:

(B)

Requirement for notice and opportunity to comply

Before making a determination under subparagraph (A) with respect to any operator or other entity or responsible party, the Secretary shall provide to the operator, entity, or responsible party

;

(3)

by striking the fourth sentence and inserting the following:

(7)

Failure or refusal to comply

(A)

In general

The Secretary shall not issue, or approve the assignment of, any lease under this section to any operator, other entity, or responsible party during any period in which, as determined by the Secretary, the operator, entity, or responsible party has failed or refused to comply in any material respect with a reclamation requirement or other standard established under this section that is applicable to any other lease of the operator, entity, or responsible party.

; and

(4)

by striking the subsection designation and all that follows through operations on the lease. and inserting the following:

(g)

Regulation of surface-Disturbing activities

(1)

Definitions

In this subsection:

(A)

Abandon

The term abandon, with respect to a well under an oil or gas lease issued under this Act, means—

(i)

to plug the well;

(ii)

to remove all installations associated with the well; and

(iii)

to terminate operations for production from the well.

(B)

Inactive

The term inactive, with respect to a well or facility under an oil or gas lease issued under this Act, means that the well or facility does not—

(i)

produce oil or gas, as applicable, in paying quantities; or

(ii)

actively aid in the production of oil or gas, as applicable, in paying quantities.

(C)

Operator

The term operator, with respect to an oil or gas operation, means any individual or entity (including a lessee or operating rights owner) that has provided to a relevant authority a written statement that the individual or entity is responsible for the operation (or any portion of the operation).

(D)

Orphaned

The term orphaned, with respect to a well or well site under an oil or gas lease issued under this Act, means that the responsible party of the well or well site—

(i)

cannot be located; or

(ii)

cannot provide adequate financial assurance to permanently plug and reclaim the well or well site.

(E)

Responsible party

(i)

In general

The term responsible party, with respect to a well or well site under an oil or gas lease issued under this Act, means an individual or entity (including a lessee or operator) that is or will be responsible for—

(I)

the remediation, reclamation, and permanent plugging of the well or well site; or

(II)

the payment of financial assurance for the well or well site in accordance with paragraph (4).

(ii)

Inclusions

The term responsible party includes—

(I)

an association, corporation, subsidiary, or affiliate of an individual or entity described in clause (i); and

(II)

any person controlled by, or under common control with, an individual or entity described in clause (i).

(F)

Secretary

The term Secretary means the Secretary of the Interior.

(2)

Regulation of use and activities

The Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall—

(A)

regulate all use and activities conducted pursuant to any lease for oil or gas issued under this Act; and

(B)

determine the remediation, reclamation, permanent plugging, and other activities that the responsible party shall be required to carry out in the interest of conservation of land, water, and surface resources, including resources with recreation, range, timber, mineral, watershed, fish or wildlife, natural scenic, scientific, or historical value.

(3)

Reclamation and operations plan required

(A)

In general

Each application for a permit to drill submitted for a lease issued under this Act shall include a plan of operations for surface use, disturbance, and reclamation that covers all proposed activities and operations within the lease area.

(B)

Inclusions

Each plan of operations under subparagraph (A) shall—

(i)

specify—

(I)

the location of all relevant facilities, roads, drill pads, trenches, and pipeline or utility corridors;

(II)

details regarding drill pad construction, methods for containment, and disposal of waste material;

(III)

the identification, location, and condition of any inactive or orphaned well sites on land covered by the lease; and

(IV)

such other information as the Secretary, or the Secretary of Agriculture with respect to National Forest System land, may require; and

(ii)

include the interim reclamation plan and final reclamation plan developed under subparagraph (C).

(C)

Interim and final reclamation plans

(i)

Interim reclamation plan

(I)

In general

Each applicant for a permit to drill under subparagraph (A) shall develop for submission with the plan of operations of the applicant under that subparagraph an interim reclamation plan that specifies the reclamation activities that the applicant will carry out to address the land, water, and resources (including resources with recreation, range, timber, mineral, watershed, fish or wildlife, natural scenic, scientific, or historical value) impacted by activities carried out pursuant to the permit to drill that are not needed for active operations.

(II)

Requirement

The Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall—

(aa)

review each interim reclamation plan submitted under subclause (I) at regular intervals; and

(bb)

as the applicable Secretary determines to be necessary, require the amendment and reapproval by the applicable Secretary of the interim reclamation plan.

(ii)

Final reclamation plan

(I)

In general

Each applicant for a permit to drill under subparagraph (A) shall develop for submission with the plan of operations of the applicant under that subparagraph a final reclamation plan that includes a detailed description of the reclamation activities the applicant will carry out prior to final abandonment or cessation of oil and gas operations with respect to all land, water, and resources (including resources with recreation, range, timber, mineral, watershed, fish or wildlife, natural scenic, scientific, or historical value) impacted by activities carried out pursuant to the permit to drill.

(II)

Review and approval

The Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall review and approve a final reclamation plan under subclause (I) only after determining that the final reclamation plan is consistent with the standards promulgated pursuant to paragraph (5).

(D)

Analysis and approval required

The Secretary shall not grant a permit to drill under this Act unless the Secretary has—

(i)

analyzed and approved the plan of operations submitted with the application for the permit under subparagraph (A), including the interim reclamation plan and the final reclamation plan under subparagraph (C); and

(ii)

made the interim and final reclamation plans under subparagraph (C) publicly available before that approval.

(4)

Financial assurances

(A)

Requirement

(i)

In general

The Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall promulgate regulations to require that a financial assurance shall be provided by the lessee prior to the commencement of activities on any lease issued under this Act to ensure the complete and timely remediation and reclamation of any land, water, or other resources (including resources with recreation, range, timber, mineral, watershed, fish or wildlife, natural scenic, scientific, or historical value) adversely affected by lease activities and operations after the abandonment or cessation of oil and gas operations on the lease.

(ii)

Elimination of nationwide financial assurances

(I)

In general

A lessee may not provide a financial assurance under clause (i) on a nationwide basis for all leases of the lessee in the United States.

(II)

Requirement

With respect to any nationwide financial assurance in effect on the date of enactment of the Oil and Gas Bonding Reform and Orphaned Well Remediation Act, the Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall require that, not later than 1 year after that date of enactment, the lessee shall post financial assurances in accordance with this paragraph.

(iii)

Addition of new operators

Notwithstanding any other provision of law (including regulations), in any case in which a lease issued under this Act is assigned or transferred to a new operator, the previous operator of the lease shall include the new operator on the existing financial assurance provided under this subparagraph until the date on which the new operator has provided a financial assurance on behalf of that new operator in accordance with this paragraph.

(B)

Form

(i)

In general

The financial assurance under subparagraph (A) shall be provided in the form of a surety, bond, 1 or more letters of credit, 1 or more certificates of deposit, or cashier’s or certified check, subject to the approval of the Secretary, or the Secretary of Agriculture with respect to National Forest System land.

(ii)

Limitation

Self-bonding shall not be an acceptable form of financial assurance under subparagraph (A).

(C)

Amount

(i)

In general

Subject to clause (ii), the amount of a financial assurance required under this paragraph shall be the amount determined by the Secretary, or the Secretary of Agriculture with respect to National Forest System land, to be sufficient to ensure the complete and timely remediation and reclamation required under subparagraph (A)(i) if the work were to be performed by the applicable Secretary in the event of forfeiture by the lessee.

(ii)

Minimum amounts

(I)

In general

Subject to subclause (II), the minimum amount of a financial assurance required under this paragraph shall be not less than, as applicable—

(aa)

$150,000, in the case of a financial assurance for surface-disturbing activities of a responsible party on an individual oil or gas lease; or

(bb)

$500,000, in the case of a financial assurance for all oil and gas leases of a responsible party in a State.

(II)

Adjustments for inflation

Not later than 3 years after the date of enactment of the Oil and Gas Bonding Reform and Orphaned Well Remediation Act, and not less frequently than once every 3 years thereafter, the Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall adjust for inflation the minimum amounts under items (aa) and (bb) of subclause (I).

(iii)

Additional factors

The Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall establish the level of a financial assurance required under this paragraph above the applicable minimum level required under clause (ii) as the applicable Secretary determines to be appropriate or necessary to ensure the complete and timely remediation and reclamation required under subparagraph (A)(i), after taking into consideration the following factors:

(I)

The depth of each relevant proposed wellbore.

(II)

The presence of other resources (including resources with recreation, range, timber, mineral, watershed, fish or wildlife, natural scenic, scientific, or historical value).

(III)

The number of wells to be drilled on the lease.

(IV)

The number and percentage of low-producing and inactive wells on—

(aa)

the applicable lease; and

(bb)

any other leases held by each applicable lessee, operator, and responsible party.

(V)

Any current or past violations by each responsible party.

(VI)

The anticipated condition of the applicable well site and the extent of the remediation and reclamation to be required.

(VII)

The ability of each responsible party to fully carry out that remediation and reclamation.

(VIII)

Such other factors as the applicable Secretary determines to be relevant.

(D)

Review

(i)

Prospective

(I)

In general

With respect to any financial assurance provided after the date of enactment of the Oil and Gas Bonding Reform and Orphaned Well Remediation Act, not less frequently than once every 5 years, and at any time at which the applicable lease is assigned or transferred, the Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall review the financial assurance to determine, after taking into consideration the factors described in subparagraph (C)(iii), whether the amount of the financial assurance is adequate to ensure the complete and timely remediation and reclamation required under subparagraph (A)(i).

(II)

Authority to increase

If the Secretary, or the Secretary of Agriculture with respect to National Forest System land, determines under subclause (I) that the amount of a financial assurance is not adequate, the applicable Secretary shall increase the amount of the financial assurance in accordance with subparagraph (C), including making an adjustment for inflation, as appropriate.

(ii)

Retrospective

(I)

In general

Not later than 1 year after the date of enactment of the Oil and Gas Bonding Reform and Orphaned Well Remediation Act, and not less frequently than once every 5 years thereafter, the Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall—

(aa)

review the sufficiency of each financial assurance provided before that date of enactment;

(bb)

determine, after taking into consideration the factors described in subparagraph (C)(iii), whether the amount of the financial assurance is adequate to ensure the complete and timely remediation and reclamation required under subparagraph (A)(i); and

(cc)

provide to each responsible party a written notice, including any relevant findings, relating to the determination under item (bb).

(II)

Authority to increase

If the Secretary, or the Secretary of Agriculture with respect to National Forest System land, determines under subclause (I) that the amount of a financial assurance is not adequate, the applicable Secretary shall increase the amount of the financial assurance in accordance with subparagraph (C), including making an adjustment for inflation, as appropriate.

(E)

Release

On request, and after inspection by the Secretary, or the Secretary of Agriculture with respect to National Forest System land, the applicable Secretary may release, in whole or in part, the financial assurance required for a lease under this paragraph if the Secretary determines that—

(i)

the remediation, reclamation, or permanent plugging covered by the financial assurance has been completed in accordance with—

(I)

subparagraph (A)(i); and

(II)

the standards established under paragraph (5); and

(ii)

all other applicable Federal requirements have been met.

(5)

Standards

(A)

In general

The Secretary and the Secretary of Agriculture shall jointly promulgate regulations to establish uniform standards for the complete and timely reclamation of land, water, and other resources (including resources with recreation, range, timber, mineral, watershed, fish or wildlife, natural scenic, scientific, or historical value) adversely impacted, directly or indirectly, by oil and gas activities and operations (including any prior remediation or reclamation efforts that fail to achieve compliance with the standards described in subparagraph (B)) to the condition that existed prior to the adverse impact, including—

(i)

standards for the interim reclamation plans and final reclamation plans required under paragraph (3)(C); and

(ii)

timelines for—

(I)

commencing and completing the permanent plugging of wells and related remediation and reclamation activities; and

(II)

achieving compliance with the standards described in subparagraph (B).

(B)

Requirements

The standards under subparagraph (A) shall include standards for—

(i)

the remediation and reclamation of natural vegetation and hydrology;

(ii)

habitat restoration;

(iii)

salvage, storage, and reuse of topsoils;

(iv)

erosion control;

(v)

reclamation of access roads;

(vi)

control of invasive species and noxious weeds; and

(vii)

natural contouring.

(6)

Inactive wells

(A)

In general

Any lessee the lease of which includes an inactive well (except for a well with an approved suspension of operations pursuant to section 39) shall, as soon as practicable after determining that the well has been inactive—

(i)

for a period of more than 30 consecutive days, submit to the Secretary a notice of that inactivity; and

(ii)

for a period of more than 60 consecutive days—

(I)

bring the inactive well into—

(aa)

production in paying quantities; or

(bb)

the active aid of production in paying quantities;

(II)

submit to the Secretary an application for a delay in the remediation, reclamation, and permanent closure of the well in accordance with this paragraph; or

(III)

permanently plug the well and complete the timely remediation and reclamation required under paragraphs (4)(A)(i) and (5).

(B)

Period of delay

(i)

In general

Subject to clause (ii), the Secretary may approve an application under subparagraph (A)(ii)(II) for a delay in the remediation, reclamation, and permanent plugging of an inactive well under subparagraph (A)(ii)(III) for a period of not more than 1 year.

(ii)

Extensions

(I)

In general

Subject to subclause (II) and subparagraph (D), on receipt of application by a lessee under subparagraph (A)(ii)(II), the Secretary may approve 1 or more additional delays in the remediation, reclamation, and permanent closure of an inactive well, each of which additional delays shall be for a period of not more than 1 year.

(II)

Requirements

Before approving an application for an additional delay under subclause (I), the Secretary shall—

(aa)

take into consideration whether the operator is making all required royalty, rental, and fee payments on time;

(bb)

review the amount of the financial assurance for the applicable lease; and

(cc)

increase the amount to ensure the complete and timely remediation, reclamation, and permanent closure required under paragraph (4)(A)(i) if the work were to be performed by the Secretary in the event of forfeiture by the lessee.

(C)

Application requirements

(i)

In general

Each application of a lessee to delay permanent abandonment and reclamation of a well under subparagraph (A)(ii)(II) or (B)(ii) shall include a description of—

(I)

the period of time during which the well has been inactive;

(II)

the justification for delaying permanent abandonment and reclamation of the well;

(III)

the probable duration of the delay;

(IV)

the means by which the wellbore is to be protected during the delay; and

(V)

the contemplated eventual disposition of the well.

(ii)

Special requirements for applications for extension

Each application for a delay under subparagraph (A)(ii) or (B)(ii) shall demonstrate, through test results, that the applicable well is—

(I)

mechanically sound; and

(II)

capable of—

(aa)

production in paying quantities; or

(bb)

actively aiding in production in paying quantities.

(D)

Prohibition

(i)

In general

No well may be inactive for a period of more than 2 years.

(ii)

Requirement

With respect to a well under a lease issued under this Act that has been inactive for a period of more than 2 years, the applicable lessee shall—

(I)
(aa)

bring the inactive well into—

(AA)

production in paying quantities; or

(BB)

the active aid of production in paying quantities; and

(bb)

pay any related royalties, rentals, or other fees due; or

(II)
(aa)

permanently plug the well; and

(bb)

complete the timely remediation and reclamation required under paragraph (4)(A)(i).

(iii)

Action by Secretary

In any case in which a lessee has not carried out any required action under clause (ii) with respect to a well described in that clause, the Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall execute forfeiture of the financial assurance associated with the well.

(E)

Inventory

(i)

In general

Not later than 180 days after the date of enactment of the Oil and Gas Bonding Reform and Orphaned Well Remediation Act, and not less frequently than annually thereafter, the Secretary, or the Secretary of Agriculture with respect to National Forest System land, shall complete an inventory of all wells that, as of the date of publication of the inventory—

(I)

are inactive, orphaned, or abandoned; or

(II)

have previously been identified as idled, orphaned, or abandoned.

(ii)

Inclusions

Each inventory under clause (i) shall identify, with respect to each inactive or orphaned well—

(I)

the location of the well;

(II)

the length of time during which the well has been inactive or orphaned;

(III)

the responsible parties associated with the well; and

(IV)

any financial assurance provided to remediate and reclaim the well, including the most recent date on which the Secretary reviewed that financial assurance.

.

III

Miscellaneous

301.

Cost recovery

(a)

In general

Section 17 of the Mineral Leasing Act (30 U.S.C. 226) (as amended by section 101(a)) is amended by adding at the end the following:

(r)

Cost recovery requirements

(1)

In general

Before approving an application for a permit to drill pursuant to a lease issued under this Act, the Secretary of the Interior, or the Secretary of Agriculture with respect to National Forest System land, shall determine the cost to the Federal Government of carrying out Federal inspection and enforcement actions for the lease.

(2)

Financial assurances

The Secretary of the Interior, or the Secretary of Agriculture with respect to National Forest System land, shall not release the financial assurance established for a lease under subsection (g)(4)(E) until the applicable lessee has reimbursed the applicable Secretary for the total cost of Federal inspection and enforcement actions on the lease.

.

(b)

Use of BLM Permit Processing Improvement Fund

Section 35(c)(3) of the Mineral Leasing Act (30 U.S.C. 191(c)(3)) is amended by striking subparagraph (A) and inserting the following:

(A)

In general

Of the amounts in the Fund, the Secretary of the Interior, in consultation with the Secretary of Agriculture, shall use, without further appropriation or fiscal year limitation—

(i)

50 percent—

(I)

to carry out the coordination and review process for—

(aa)

financial assurances for oil and gas leases under this Act; and

(bb)

bond releases for oil and gas leases under this Act;

(II)

to coordinate—

(aa)

the inventory of wells that are orphaned or inactive (as those terms are defined in subsection (q)(1)); and

(bb)

the processing of requests for delays in the permanent closure of wells that are inactive (as so defined); and

(III)

to coordinate and process environmental and cultural resource reviews applicable to oil and gas activities under this Act; and

(ii)

the remaining amounts for the coordination and processing of oil and gas use authorizations on onshore Federal and Indian trust mineral estate land.

.

302.

Regulations

(a)

In general

Not later than 1 year after the date of enactment of this Act, the Secretary and the Secretary of Agriculture, acting in coordination, shall concurrently promulgate regulations to implement this Act and the amendments made by this Act.

(b)

Effect on funding

The funds made available pursuant to subsection (q)(9) of section 17 of the Mineral Leasing Act (30 U.S.C. 226) (as added by section 101(a)) shall be disbursed and expended in accordance with applicable interim guidance pending completion of the rulemaking required under subsection (a).