US House bill introduced to raise federal onshore leasing bonds

Sept. 18, 2019
US Rep. Alan Lowenthal (D-Calif.) introduced a bill that would increase bonds that oil and gas developers must post before being allowed to drill on federal onshore public lands.

US Rep. Alan Lowenthal (D-Calif.) introduced a bill that would increase bonds that oil and gas developers must post before being allowed to drill on federal onshore public lands. HR 4346 also would require producers to develop and present a highly detailed reclamation plan to the US Bureau of Land Management before any development could occur on leased public acreage, he said.

“Much to the pleasure of the oil and gas industry, bond amounts have been ignored for decades, resulting in levels today that are woefully inadequate to cover cleaning up the oil and gas wells they are supposed to cover,” said Lowenthal, who chairs the House Natural Resources Committee’s Energy and Mineral Resources Subcommittee.

“Inadequate bonds result in unreclaimed wells, which can in turn lead to methane and other pollutants contaminating the air, soil, and water—[and] which often have to be cleaned up on the taxpayer dime,” he observed.

The amount of bond required for different public land oil and gas leases has not been adjusted since the 1950s and 1960s, he noted. HR 4346 would increase the bond amount for a single lease from $10,000 to $50,000; the amount for a set of leases in a single state from $25,000 to $250,000; and the amount for multiple leases across multiple states from $150,000 to $1 million, Lowenthal said.

The updated amounts reflect proposed new bond levels contained in a General Accounting Office report on the federal oil and gas bonding issue that is expected to be released to the public on Sept. 18, he said.

Responding to Lowenthal’s announcement, Daniel T. Naatz, senior vice-president of government relations at the Independent Petroleum Association of America, told OGJ, “Make no mistake, this proposal is not about environmental protections, but rather another attempt to shut down America’s natural gas and oil production. It’s simply another wish granted to the ‘Keep it in the Ground’ activists. Misguided policies, like this, come at a negative cost to our economy, our national security, and the tremendous progress we’ve made on cleaner air through increased natural gas use.”

Contact Nick Snow at [email protected].