Overview of the Office of Natural Resources Revenue

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					   U.S. Department of the Interior

  Office of Natural Resources Revenue (ONRR)



           ONRR Overview and Updates
                                     Presented by:
                    Deborah Gibbs Tschudy, Deputy Director


          National Oil & Gas Royalty Conference
                    October 17 , 2012




Industry Compliance         Accurate Revenues and Data   Professionalism & Integrity
                      Outline of Presentation



 • Background and Program Highlights

 • New Initiatives 

 • New and Upcoming Regulations




                                                                              2

Industry Compliance    Accurate Revenues and Data   Professionalism & Integrity
           Office of Natural Resources Revenue




         Background and
        Program Highlights


                                                                             3

Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
                       ONRR: Who We Are

Ø Office under the Assistant Secretary for Policy, Management and Budget 
  within the Department of the Interior

Ø Responsible for the management of revenues associated with federal 
  offshore and federal and American Indian onshore mineral leases, as well 
  as revenues received as a result of offshore renewable energy efforts  



      Dallas                                                       Houston
     Denver                                                    Oklahoma City
   Farmington                                                       Tulsa
   Ft. Berthold                                               Washington D.C.

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Industry Compliance     Accurate Revenues and Data     Professionalism & Integrity
             ONRR’s Strategic Outcome Goals

    Companies timely comply with 
1   laws, regulations and lease terms 
    and pay every dollar due


                          States, Tribes, Indian mineral owners, 
                      2   US Treasury and other entities receive 
                          timely and accurate revenues and data



                                                    The public trusts ONRR’s 
                                             3      professionalism, integrity, 
                                                    efficiency and quality

                                                                                  5

Industry Compliance    Accurate Revenues and Data       Professionalism & Integrity
   ONRR Voted Top Work Places 2012 – Denver




                                                                             6

Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
                      Department of the Interior




                                                                                7

Industry Compliance      Accurate Revenues and Data   Professionalism & Integrity
           Office of Natural Resources Revenue




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Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
                       FY 2011 Disbursements

 FY 2011 Disbursements: $11.16 Billion
 •   $6.05 billion to the U.S. Treasury
 •   $892 million to the Land & Water Conservation Fund
 •   $150 million to the Historic Preservation Fund
 •   $1.53 billion to the Reclamation Fund
 •   $2.0 billion to 35 States
 •   $538 million to the Department’s Office of the Special Trustee 
     on behalf of 34 Indian tribes and approximately 30,000 
     individual Indians

 Note:  FY 2012 Disbursement Information will be available on ONRR’s website on 
 November 19, 2012
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Industry Compliance        Accurate Revenues and Data       Professionalism & Integrity
          FY 2011 Cumulative Mineral Lease
         Revenue Disbursement ~ $230.7 Billion

                                                   •   Since 1982, ONRR has 
                                                       distributed $230.7 billion in 
                                                       revenues from onshore and 
                                                       offshore lands to the Nation, 
                                                       States, and American 
                                                       Indians

                                                   •   The ONRR distribution to 
                                                       the U.S. Treasury is one of 
                                                       the Federal government’s 
                                                       greatest sources of non-tax 
                                                       income



                                                                                      10

Industry Compliance   Accurate Revenues and Data        Professionalism & Integrity
                 Financial Management Highlights


  FY 2012 Reports Received:
                                                                          FY 2012 Lines
   1,970 payors (Form 2014)                                                Processed:
                 
  1,900 operators (Oil and Gas 
      Operations Report)
                                                                     4,875,150           6.1 million 
                                                                   million royalty     production lines 
  The PeopleSoft accounting                                             lines             @ 97.5% 
  system was one of the first                                       @ 98.94  %          accuracy rate
  in DOI to satisfy OMB and                                        accuracy rate
  Federal Managers Financial 
     Integrity Act financial                                              Financial operations and 
      system requirements                                                     internal controls 
                                                                             contributed to DOI 
                                                                           achieving unqualified 
                                                                            opinions* during the 
                                                                             annual CFO audits 
  *Unqualified opinion (Clean Audit) -  In conformity with U.S. 
  generally accepted accounting principles  (GAO-09-946SP)
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Industry Compliance               Accurate Revenues and Data                Professionalism & Integrity
              Audit and Compliance Highlights

            Since 1982, audit and                    For every dollar spent on 
            compliance activities               compliance activities between FY 
             have collected $3.9                2009-2011, ONRR returned $3.89 
                   billion                             back to taxpayers



   In FY 2012 completed                                      Completed compliance 
     325 audits and 891                                       work on 92% of the 
    compliance reviews                                         companies with a 
                                                           high/significant risk rating


                                 In FY 2012 ensured 
                             compliance for about $3.1 
                             billion in royalty revenues

                                                                                          12

Industry Compliance        Accurate Revenues and Data       Professionalism & Integrity
                  Coordination and Enforcement
                  State and Indian Coordination

 • Cooperative agreement support and                  Alaska          North Dakota

   coordination with ten States and six Tribes        California      Oklahoma

 • Serves as an advocate for the fulfillment of       Colorado        Texas
   ONRR trust responsibility and to resolve           Montana         Utah
   Indian mineral-related issues                      New Mexico      Wyoming



      Blackfeet            Southern Ute        •   In FY 2012, ONRR held 97 
      Navajo Nation        Ute                     outreach sessions and resolved 
      Shoshone/Arapaho     Ute Mountain Ute        over 35,000 royalty-related 
                                                   inquiries




                                                                                         13

Industry Compliance      Accurate Revenues and Data            Professionalism & Integrity
                           Enforcement Highlights

Civil Penalties
•     $28.8 Million in penalties collected since FY 2000 
•     1,112 cases opened since FY 2000 and 964 cases closed



                             Alternative Dispute Resolution
                             •     $280 million received in settlement cases from FY 2009–
                                   FY 2011


Litigation Support
•     849 debts referred to Treasury between FY 2009 - FY 2012 involving over 
      $2.1 million in delinquent debts
•     26 Bankruptcy Proofs of Claim filed since FY 2009 involving over $3.8 
      million
                                                                                             14

    Industry Compliance          Accurate Revenues and Data       Professionalism & Integrity
           Office of Natural Resources Revenue




                New Initiatives



                                                                             15

Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
       Upgrade to Minerals Revenue Management
                   Support System
Operations Management Tool                               Interest Modernization
 • Tracks compliance activity, reporter                • Ability for easier, on-line review and 
   interactions, and collections from compliance         reconciliation of interest calculations
   activity                                            • Allows for rule-based interest calculations 
 • Allows ONRR to determine payor risk and               based on lease type and program; e.g., royalty 
   schedule assignments based on risk                    relief programs that have different interest 
 • Tracks and maintains all compliance                   rules
   documents via Electronic Work Papers

   Flexible Disbursements                                 eCommerce Phase II
 • Provides flexibility to distribute and disburse 
   money without manual intervention in response to    • Online rental allows payors to upload data and 
   legislative changes                                   make annual lease rental payments through 
 • Flexibility to disburse at the unique lease           pay.gov
   level/program (geothermal, GOMESA, etc.)            • Implements industry-recommended 
                                                         enhancements to eCommerce
Business Intelligence Software
                                                           PeopleSoft Upgrade
 • Capability to perform data analysis of payor 
   and operator reported royalty and production        • PeopleSoft Upgrade from Version 8.9 to 9.1
   information                                         • PeopleTools Upgrade from Version 8.4.9.18 
 • Tools for Volume Comparison, Price                    to 8.5.1
   Monitoring, Adjustment Monitoring, Trending,        • Database Upgrade from Oracle 10.4 to 11           16 
   and more
2014S ONRR DATA ACCURACY EFFORTS OGORS
                                                                                                                        Timeline

                                        Up-Front System Edits
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                                   Missing Reports, Volume Comparisons, LVS/GVS, 




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             on




                                  High Level Analyses of Sales Values, Royalty Values, 
              s




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                                                                                     ach
                                                    Adjustments, etc.
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                                                   Reviews




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                                                                                                                   2-3 Years


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                                                                                                                       7 Years        
                                                                                                              (Fed. oil & gas)
                                                                                                                                         17
              eCommerce and Data Mining
                Improving Data
                Quality
      Problems Addressed by New Edits in eCommerce

      - Indian Net Negatives
      - Exceeding Allowance limits
      - Incorrect Pricing
      - Incorrect Royalty Rates
      - OGOR/2014 Coding Errors
      - Invalid Agreements


                                                Problems Addressed by Data Mining

                                                - Volume Variances
                                                - Net Negatives
                                                - Improper Adjustments
                                                - Reporting Anomalies
                                                - Agreement Misreporting
                                                - Chronic Misreporting

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Industry Compliance        Accurate Revenues and Data      Professionalism & Integrity
                     Improving Data Accuracy

  New Royalty and Production Reporting Edits:

      • 14 edits in December 2011, 
      • 32 new or modified edits in October 2012, and
      • 9 edits requiring additional study for future releases

  Updated list of edits available at http://www.onrr.gov/FM/ReptInfo.htm

      Total Data Mining Collections to Date = $20,979,005.94*
                                            Exceptions    Collections to Date
                                             Resolved

                   Volume Comparison          61,932       $16,941,333.34

                   RSFA – 6 Year 
                   Limitation on                 763        $3,750,540.54
                   Adjustments

                   Net Negative Reporting        988          $287,132.06
*As of August 2012                                                                               19

  Industry Compliance          Accurate Revenues and Data              Professionalism & Integrity
     Enhancements to ONRR’s Statistics Website

 • ONRR is improving the www.onrr.gov statistical website to 
   provide transparency, clarity, ease of use, and ability to search 
   and query data  
 • November 19, 2012, roll-out to include FY 2012 
   Disbursements and FY 2012 Reported Revenues by  
   Accounting Year




                        http://www.onrr.gov/ONRRWebStats

                                                                             20

Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
                 How Important is Data Accuracy?

 “Leasing, production revenue on public lands soared in 2011”
        Phil Taylor, Energy and Environment (E&E) reporter
        Published: Thursday, January 5, 2012 

 “Revenue reported from natural gas production on public lands nearly doubled in 2011, and the 
 number of new oil and gas leases issued increased by two-thirds, according to statistics released 
 today by the Interior Department.  The Bureau of Land Management data show natural gas 
 production at its highest level since at least 1984.”

 Question from Senator Barasso’s (Wyoming) Staff:
 “BLM reports that natural gas production on Federal lands in Wyoming went from approximately 
 1.63 Tcf  in FY 2010 to approximately 3.94 Tcf in FY 2011, or an increase of 140%.  In other 
 words, BLM is reporting that natural gas on Federal lands in Wyoming exceeded the total amount 
 of natural gas production in all of Wyoming for FY 2011, which obviously does not make sense.  
 Can you help me understand this?”

  Did onshore natural gas production actually double from 2010 to 2011?
                                                                                                      21

Industry Compliance              Accurate Revenues and Data              Professionalism & Integrity
                            How Important is Data Accuracy?

                  FY 2011 Accounting Year Reported Sales Volume, Sales Value, and RVLA
                                   Data Initially Reported to ONRR                        What Should Have Been Reported to ONRR
                          Sales Volume         Sales Value         RVLA               Sales Volume       Sales Value         RVLA 
    Wyoming Federal 
    Onshore - 
    Unprocessed Gas     3,293,788,183.86     3,958,152,845.56      418,295,472.35      898,504,428.79     3,958,152,845.56      418,295,472.81 
                                                                                                                             
    All Reported 
    Royalty Revenues    7,051,616,561.06    19,846,186,758.47   2,380,152,200.65   4,656,332,805.99    19,846,186,758.47   2,380,152,201.11 
                                                                                                                           
    All Reported 
    Royalty Revenue 
    by Category 
    Federal Onshore                                            1,360,212,189.72                                           1,360,212,190.18 
                                                                                                                          
    Federal Onshore 
    Reported Royalty 
    Revenue            5,370,199,795.57    12,555,793,825.24   1,360,212,189.72   2,974,916,040.50    12,555,793,825.24   1,360,212,190.18 




•     In August 2011, a Federal oil and gas payor misreported sales volumes on their Form MMS-2014 report so 
      significantly that it distorted the FY 2011 sales volume published on ONRR’s statistics website by 2.4
      Trillion cubic feet giving the appearance that Federal onshore gas production doubled from FY 2010

•     The payor correctly reported the royalty rate and royalty value (subject to audit)
                                                                                                                                                  22

    Industry Compliance                           Accurate Revenues and Data                                Professionalism & Integrity
             How Important is Data Accuracy?

 ONRR Actions

 • ONRR’s Office of Enforcement assessed the company a $1.9 
   million civil penalty for knowing or willful maintenance of false, 
   inaccurate, or misleading information on ONRR’s database

 • ONRR updated the Federal gas price up-front edit to “Fatal” on 
   January 26, 2012.  The Federal oil and Indian oil and gas up-front 
   price edits were already “Fatal” 

 • ONRR is monitoring reported Sales Volumes on a real time basis



                                                                              23

Industry Compliance    Accurate Revenues and Data   Professionalism & Integrity
               Well Data Reconciliation Project

 • Consistent well information between ONRR and BLM/BSEE 
   is vital to effectively account for production and collect every 
   dollar due. 

 • ONRR is working with BLM and BSEE to reconcile well data 
   information and
         ü   Ensure validation of OGORs against the most recent well data
        ü Streamline OGOR reporting and processing
        ü Provide earlier notification to Operators if OGORs do not match well
                    information

 • Successful implementation will:
        ü Further automate data exchange between
                Operators and Federal Agencies
        ü Assure well and OGOR data integrity

                                                                                            24

Industry Compliance         Accurate Revenues and Data            Professionalism & Integrity
                 Recent Dear Reporter Letters

 • Recent Dear Reporter Letters Involving Indian Leases (both 
   dated August 27, 2012) 
        - Dual Accounting for Indian Leases and Arm’s-length Sales of Indian Gas 
          Beyond the First Index Pricing Point 

        - Gas Sold From Indian Leases in an Index Zone Under Arms’-Length 
          Dedicated Contracts and Paying Indian Royalties on Oil and Gas Produced 
          From Indian Leases on Behalf of Others

 • Both letters sent certified mail; return receipt requested

 • Failure to comply may subject lessee to enforcement actions, 
   including civil penalties


                                                                                      25

Industry Compliance       Accurate Revenues and Data        Professionalism & Integrity
                       GAO High Risk Report

 GAO High Risk Report
          Three "shortcomings" in Interior's revenue collection policies:

          1) The Federal Government receives a fair return on its oil and gas resources 
             (so called "government take")
          2) Interior completes its production verification inspections
          3) Interior's data on production and royalties are consistent and reliable 




Responsibility shared with BLM, BOEM and BSEE

                                           ONRR’s responsibility to accurately collect 
                                           royalty and production data from industry
                                                                                                26

 Industry Compliance          Accurate Revenues and Data              Professionalism & Integrity
                      GAO High Risk Report

Four ONRR-related GAO Reports Cited on the GAO High Risk Report
GAO-08-0893R – Mineral Revenues: Data Management Problems and Reliance on
Self-Reported Data for Compliance Efforts Put MMS Royalty Collections at Risk
         Status:  All 4 implemented 

GAO-09-549 – Mineral Revenues: MMS Could Do More to Improve the Accuracy
of Key Data Used to Collect and Verify Oil and Gas Royalties
         Status: All 5 implemented

GAO-10-313 – Oil and Gas Management: Interior’s Oil and Gas Production
Verification Efforts Do Not Provide Reasonable Assurance of Accurate
Measurement of Production Volumes
          Status:  1 implemented

GAO-11-34 – Federal Oil and Gas Leases: Opportunities Exist to Capture Vented
and Flared Natural Gas, Which Would Increase Royalty Payments and Reduce
Greenhouse Gases
         Status:  1 targeted for full implementation in 2013

                                                                                    27

Industry Compliance       Accurate Revenues and Data      Professionalism & Integrity
             Unbundling of Transportation and
                    Processing Costs

 •   Because fees charged by pipeline companies often include deductible and 
     non-deductible costs, calculation of allowable gas transportation and gas 
     processing costs can be difficult and complicates ONRR’s compliance 
     reviews and audits

 •   ONRR and the State of New Mexico have unbundled 12 systems to date. 
     Rates may be found at http://www.onrr.gov/unbundling/default.htm 

 •   ONRR has hired 8 new FTE and will be hiring 3 additional FTE to 
     implement a strategy to unbundle rates for Federal and Indian 
     transportation and processing systems

 •   ONRR is implementing the unbundling strategy in coordination with State 
     and Tribal audit programs

                                                                                    28

Industry Compliance       Accurate Revenues and Data      Professionalism & Integrity
           Draft ONRR Unbundling Strategy
LEADERSHIP & 


                                                                Unbundling Team (AV)
  DIRECTION

                                              •   Inventory & prioritize transportation and processing systems
                                              •   Develop and oversee a 3 - 5 year project plan
                                              •   Develop the Statement of Work and oversee contractor
                                              •   Provide technical support to ACM, STRAC, & contractor




                                                                                                                              COLLABORATION
                                              •   Develop performance measures and monitor progress
                                              •   Publish unbundled rates on website



                                                                        Data
REPOSITORY




                                                                      Contractor
                                                 •  Determine allowable equipment based on guidance 
   DATA 




                                                    provided by the Unbundling Team
                                                 •  Sort equipment costs by allowed and non-allowed 
                                                    costs
                                                 •  Use the data to determine allowable and
                                ta




                                                    non-allowable percentages




                                                                                                                 Data
                             Da




                                                                                                                  ata
                                                 •  Store & maintain collected data
AUDIT & DATA 
COLLECTION




                    Unbundling Audit Team (ACM)                                                  States & Tribes  
                •  Incorporate the high risk transportation                      •  Issue data requests to system operators
                   systems into annual work plans                                •  Tour facilities of selected systems
                •  Tour facilities of selected systems                           •  Analyze & submit data to Contractor
                •  Issue data requests to system operators                       •  Draft orders to pay and perform
                •  Analyze & submit data to Contractor
                •  Issue orders to pay and perform                                                                                  29
        ONRR Unbundling Information Website

 • Published Annual Factors for Gas Plants and Transportation 
   Systems (http://www.onrr.gov/Unbundling/default.htm)




Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
     Inventory & Prioritization of Bundled Systems


 •   ONRR has identified 189 gas plants that process Federal & Indian natural 
     gas production (based on FY 2011 data)

 •   ONRR established 22 criteria for each plant and selected 7 high risk factors 
     to prioritize which gas plants to unbundle

 •   29 high-priority gas plants cover more than 80% of total volume reported 
     for all gas plants in FY 2011
 • Timeline for unbundling the 29 high-priority plants:
         -   FY 2013 – 6 Gas Plants
         -   FY 2014 – 7 Gas Plants
         -   FY 2015 – 16 Gas Plants

 • ONRR will evaluate associated transportation systems when we evaluate 
   each gas plant


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Industry Compliance          Accurate Revenues and Data   Professionalism & Integrity
      Next Steps in ONRR’s Unbundling Efforts

 • Previous unbundling efforts have taken an average of 3 years to complete, 
   yielded results that are only valid for one year, and must be repeated for 
   each year where factors are needed
 • ONRR is evaluating an engineering solution that uses:
     üIndustry accepted engineering practices and data;
     üSophisticated, industry standard modeling tools; and
     üReplacement costs, adjusted for location and updated annually
 • An engineering solution would be based on minimal data needs:
       - Process Flow Diagrams
       - Gas Throughput
       - Gas Composition
       - Inlet and outlet conditions for major process components


                                                                                   32

Industry Compliance      Accurate Revenues and Data      Professionalism & Integrity
           Office of Natural Resources Revenue




         New and Upcoming
            Regulations


                                                                             33

Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
     Federal Oil & Gas Valuation Proposed Rule

 • ONRR published an Advanced Notice of Proposed Rulemaking for 
   Federal Oil and Gas Valuation on May 27, 2011; comment period 
   closed on July 26, 2011
 •   Purpose is to make changes to existing Federal Oil & Gas regulations at 30 
     CFR Part 1206, subparts C and D to:
      ü  Offer greater simplicity, certainty, clarity, and consistency in
           production valuation for mineral lessees and mineral revenue
           recipients; 
      ü  Be easy to understand; 
      ü  Decrease industry’s cost of compliance and government’s cost of
           enforcement; and
      ü  Provide early certainty to industry and ONRR that companies
           have paid every dollar due
                                                                                      ‹#›
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Industry Compliance        Accurate Revenues and Data       Professionalism & Integrity
     Federal Oil & Gas Valuation Proposed Rule

 • ONRR received responses from 19 commenters representing 
   states, industry, industry trade associations and the general 
   public. Comments viewable at: 

          http://www.onrr.gov/Laws_R_D/PubComm/AA01rmpc.htm  

 • ONRR has drafted proposed regulations for Federal Oil and 
   Gas Valuation.  

 • The proposed rule is currently with the Office of the Solicitor 
   for review


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Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
             Indian Oil Negotiated Rulemaking

 Purpose: Advise the Secretary on a rulemaking to address 
 Indian Oil Valuation as it relates to the major portion 
 requirement in Indian oil leases
 • Charter signed by the Secretary on Dec 1, 2011, establishing the 
   Indian Oil Valuation Negotiated Rulemaking (IONR) Committee 
   under the authority of the Federal Advisory Committee Act
 • Balanced membership from industry, Indian tribes and allottees, and 
   the Federal government
 • Held meetings throughout the Spring/Summer 2012; next meeting 
   late October 2012
 • Committee is considering a traditional ONRR-calculated major 
   portion and an index-based methodology.  

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Industry Compliance    Accurate Revenues and Data   Professionalism & Integrity
                                 Regulations

  ØDebt Collection, 30 CFR 1218 – Final rule
   • Published May 2, 2012
   • Clarified and codified provisions of Debt Collection Act of 1982 and      
     Debt Collection Improvement Act of 1996 
   • Established procedures governing collection of delinquent royalties, 
     rentals, bonuses, and other amounts due   
   • Included provisions for administrative offset

Ø Amendments to ONRR’s Website, Mailing Addresses, and
  Payment Definitions – Direct Final Rule
    • Published May 2, 2012
    • Codified eCommerce as ONRR’s reporting website for royalties and 
      production
    • Added a definition for pay.gov


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Industry Compliance      Accurate Revenues and Data      Professionalism & Integrity
                                Regulations


Ø Amending OMB Control Numbers and Certain Forms -
  Direct Final Rule
    § Published December 8, 2011

    § Amended OMB control numbers for information collection 
      requirements, certain form numbers, and corresponding technical 
      corrections to position titles, agency names, and acronyms listed in 
      chapter XII of 30 CFR

    § ONRR is in the process of finalizing a second Direct Final Rule to 
      update the remaining forms




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Industry Compliance      Accurate Revenues and Data      Professionalism & Integrity
                            Regulations


 Ø Proposed Rule for Civil Penalties
 • Applies civil penalty regulations to solid mineral and 
   geothermal leases

 • Adjusts FOGRMA civil penalty amounts for inflation as 
   required by the Federal Civil Penalty Inflation Adjustment 
   Act

 • Provides notice that ONRR will post a matrix for civil penalty 
   assessments on the ONRR website

 • The proposed rule is currently in internal review
                                                                             39

Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
                             Regulations


Ø Proposed Rule for GOMESA (Phase II)
• Moves GOMESA Phase I regulations from 30 CFR Part 519 to 30 
  CFR Part 1219
• Establishes formula and methodology for calculating and 
  allocating GOMESA Phase II revenue to the Gulf Coast States, 
  their eligible coastal political subdivisions, and the Land and 
  Water Conservation Fund
• GOMESA Phase-II revenue sharing starts after October 1, 2017

• The proposed rule is currently in internal review

                                                                             40

Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
                            Regulations


 Ø Takes vs. Entitlements – Proposed rule

 • Implements section 6(d) of RSFA and prescribes when a 
   Federal lessee must report and pay royalties on the volume of 
   oil and gas it takes from a lease, or on the volume to which it 
   is entitled based on its ownership interest in the unit or lease

 • The proposed rule is currently with OMB for review




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Industry Compliance   Accurate Revenues and Data   Professionalism & Integrity
      FY 2013 President’s Budget Items of Interest

Ø Sharing of Civil Penalties

  •   The Department is proposing new language amending Section 206 of the 
      FOGRMA that requires ONRR to share with States and Tribes 50% of any 
      civil penalties resulting from activities conducted by a State or Tribe under 
      a cooperative audit agreement.

  •   The law also requires to ONRR deduct the 50% civil penalty share from 
      the funding it provides to the State or Tribe for its audit program costs.  

  •   Proposed language would require ONRR to reduce the State or Tribe’s 
      share of the 50% civil penalty by the funding ONRR provides through 
      audit cooperative agreements


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Industry Compliance       Accurate Revenues and Data        Professionalism & Integrity
    FY 2013 President’s Budget Items of Interest

Ø FY 2013 Onshore Oil & Gas Inspection Fees:
     •   BLM will collect a non-refundable inspection fee from the designated 
         operator of each Federal and Indian lease or agreement subject to 
         inspection under 30 U.S.C. 1718(b) 
     •   FY 2013 fees range from $700 to $6,800 for each lease or agreement - 
         billed at the beginning of the fiscal year

Ø FY 2013 Offshore Oil and Gas Inspection Fees:
   • For facilities above the waterline, excluding drilling rigs, the annual fee 
      ranges from $10,500 –  $31,500 - billed at the beginning of the fiscal year
   • FY 2013 drilling rig inspection fees are
     ü $16,700 for rigs operating in water depths < 500 feet 
     ü $30,500 for rigs operating in water depths ≥ 500 feet
   • These fees billed within 30 days of the month in which the inspection 
      occurs
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Industry Compliance      Accurate Revenues and Data     Professionalism & Integrity
                      Questions & Comments



                               Please Contact

                            Deborah Gibbs Tschudy
               Deputy Director, Office of Natural Resources Revenue
                                  PO Box 25165
                                   MS-61000B
                         Denver Federal Center, Bldg 85
                                Denver, CO 80225
                      Deborah.Gibbs.Tschudy@ONRR.Gov


                            http://www.onrr.gov 
                                                                                     44

Industry Compliance       Accurate Revenues and Data       Professionalism & Integrity

				
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