The Office of Natural Resources Revenue (“ONRR”), a unit within the United States Department of the Interior, is responsible for collecting and disbursing revenues from energy production on federal and Indian lands and offshore on the Outer Continental Shelf.
The agency verifies reporting, conducts audits, and enforces laws, regulations, lease terms, and orders. The agency also issues civil penalties for noncompliance.
For example, if ONRR sends you a Notice of Noncompliance and you do not correct all of the violations identified within 20 days (or longer, if so specified), you become subject to civil penalties of up to $500 per day per violation. What is more, ONRR believes each incorrect line on a Form ONRR-2014 or Oil and Gas Operations Report (“OGOR”) is a separate violation.
In 2015, ONRR assessed lessors, operators, and other reporters and royalty payors more than $11.5 million in civil penalties. These penalties ranged from individual assessments of less than $3,000 to over $6.9 million. In fact, this past year saw the largest amount of civil penalties issued to date. By comparison, in 2014 ONRR assessed just over $8 million in civil penalties, in 2013 just over $9 million, and in 2012 just over $11.3 million.
In 2015, ONRR focused its enforcement and collection efforts primarily on federal and Indian leases in Wyoming and New Mexico, as well as in Colorado, North Dakota, South Dakota, Utah, Oklahoma, Ohio, and offshore in the Gulf of Mexico. In 2014, ONRR also focused its efforts on Wyoming and New Mexico, in addition to Utah, Colorado, Oklahoma, and offshore.
In 2015, civil penalties were most often issued for a company’s failure to submit production reports and second most often for the failure to submit royalty reports. By comparison, in 2014 ONRR assessed civil penalties almost exclusively for the failure to submit production reports.
The chart below summarizes each civil penalty ONRR issued and publicized in 2015. As you can see, companies often received Notices of Noncompliance before civil penalties were assessed. These Notices are typically issued after an audit or Data Request, and they almost always come with a 20-day deadline. We have found that regular and consistent communication with the agency during audits often prevents the issuance of such Notices. Auditors are also often able to extend compliance deadlines and are more willing to do so when companies and their legal counsel are actively involved in the process.
Click here to view the table.