Inspection and Enforcement
The Bureau of Land Management (BLM) Oil and Gas program is responsible for ensuring safe and responsible development. The BLM has performed over 20,000 inspections annually since fiscal year 2006, and over 30,000 annually since fiscal year 2010 on oil and gas lease and well cases. These inspections ensure adherence to Federal and Indian laws, regulations, policies, and permit conditions of approval.
Enforcement Actions
The regulations for enforcement actions can be found in 43 CFR 3163 – Noncompliance, Assessments, and Penalties.
43 CFR 3163.1 outlines the BLM’s response to regulatory noncompliance:
Whenever an operating rights owner or operator fails or refuses to comply with the regulations in this part, the terms of any lease or permit, or the requirements of any notice or order, the Authorized Officer shall notify the operating rights owner or operator as appropriate, in writing, of the violation or default by issuing an Incident of Noncompliance (INC). This course of action pertains to any violation of a specific regulatory requirement, Onshore Order, Notice to Lessee, lease term, approved permit, Conditions of Approval, or Orders of the Authorized Officer. If the problem is outside of these authorities, or does not have definitive standards of measurement, the BLM issues an Order of the Authorized Officer (also known as a Written Order).
Read the regulatory enforcement guidelines below for terms and legal implications:
- Definitions
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The definitions outlined in 43 CFR 3160.0-5 include both major and minor violations:
“Major Violation means noncompliance that causes or threatens immediate, substantial, and adverse impacts on public health and safety, the environment, production accountability, or royalty income.”
“Minor Violation means noncompliance that does not rise to the level of a major violation.” Why does the gravity of the violation matter? Depending upon severity of the violation, the BLM may apply different enforcement tools and/or assessments, and there may be additional requirements. An immediate phone call and follow-up inspections should take place for all Major violations, etc.
- Noncompliance
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43 CFR 3163.1 stipulates the penalties for committing major and minor violations:
Major Violations - If the violation or default is not corrected within the time allowed, the authorized officer may subject the operating rights owner, operator purchaser, transporter as appropriate, to an assessment of $1,000 per violation;
Minor Violations - If the violation or default is not corrected within the time allowed, the authorized officer may subject the operating rights owner, operator purchaser, transporter as appropriate, to an assessment of $250 per violation;
- Monetary Assessments - Civil to Criminal Penalties
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Beside the Written Order and Incident of Noncompliance, there are many other enforcement tools. A company may have their operations shut-in such that operations on the well or lease must cease. There may also be immediate monetary assessments of $1,000 in accordance with 43 CFR (3163.1(b), 3173.29, 3174.15, and 3175.150(b).
Civil penalties pursuant to 43 CFR 3163.2 range from $1,000+ a day to $52,000+ per day, depending on the violation. The monetary amount adjusts annually based on the inflation rate. The BLM may pursue a Civil Action in a District Court (43 CFR 3163.4).
For Criminal Penalties per 43 CFR 3163.3, Any person who commits an act for which a civil penalty is provided in §3163.2(f) shall, upon conviction, be punished by a fine of not more than $50,000, or by imprisonment for not more than 2 years, or both.
In rare circumstances, the BLM may “attach the bond”, which means the BLM uses the bond money to fix the enforcement infraction at the well or pipeline location.
- Delegation of Authority / Cooperation Agreements / Contracts
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43 CFR 3190 provides procedures for approval, implementation and administration of delegations of authority, cooperative agreements and contracts for inspection, enforcement and investigative activities related to oil and gas production operations on Federal and Indian lands under the provisions of the Federal Oil and Gas Royalty Management Act of 1982 (30 U.S.C. 1701 et seq.).
Types of Inspections
The BLM’s inspections ensure compliance with environmental, operational, and record-keeping guidelines with some minimal variations. In each section is a brief description of the different types of inspections that the BLM conducts.
- Production
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The BLM conducts production inspections on facilities to ensure that equipment, practices, and procedures are in accordance with the regulations, orders and any applicable approval documents.
- Drilling
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During the drilling process, the BLM inspects operations to ensure that equipment, practices, and procedures are in accordance with regulations, orders and the approval document.
- Abandonment
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The BLM conducts abandonment inspections during the plugging of an oil and gas well to ensure that equipment, practices, and procedures are in accordance with regulations, orders and the approval document. These could be depleted producing wells or newly drilled dry holes.
- Workover
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The BLM conducts workover inspections on existing producing wells, depleted producing wells, or service wells during workover operations, to ensure that equipment, practices, and procedures are in accordance with the approval document.
- Environmental
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Natural Resource Specialists (NRS), Environmental Scientists (ES), or other resource program specialists (wildlife biologists, archaeologist, etc.) typically perform the BLM’s environmental inspections. Environmental inspections include inspection of reclamation, erosion concerns, topsoil stock piling, location, road, and pit construction and use, spills, water disposal methods, tank battery dikes, and surface hazards. Inspections of abandoned locations ensure proper reclamation in accordance with the approval document. These inspections specifically look at and address surface environmental impacts.
- Records Verification
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The BLM reviews production records and compares them to production reports sent to the Office of Natural Resources Revenue. This type of inspection does not require an onsite visit.
- Undesirable Event
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The BLM conducts undesirable event inspections when spills or accidents occurs on an oil and gas lease.
- Alleged Theft
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When an operator or the public reports an alleged theft of production to a BLM Field Office, the BLM carries out an alleged theft inspection.