UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
WASHINGTON, D.C. 20240
 
May 13, 2008
 
In Reply Refer To:
3100 (310) P
 
EMS TRANSMISSION 05/16/2008
Instruction Memorandum No. 2008-124
Expires: 09/30/2009
 
To:                   All Field Officials
 
From:               Assistant Director, Minerals and Realty Management
 
Subject:            Implementing the Recommendations of the Royalty Policy Committee Report “Mineral Revenue Collection from Federal and Indian Lands and the Outer Continental Shelf”
 
Program Area: Fluids and Solid minerals operations.
 
Purpose: This Instruction Memorandum (IM) outlines how the Bureau of Land Management (BLM) will review and implement the recommendations of the Royalty Policy Committee (RPC) Report “Mineral Revenue Collection from Federal and Indian Lands and the Outer Continental Shelf.”
 
Policy/Action: The BLM is forming four teams with the Minerals Management Service (MMS) to review and implement the recommendations found in the RPC Report.  The four teams are:
 
Fluid Minerals – The majority of recommendations made address oil and gas issues.  This includes a Gas Measurement sub-team.
 
Solid Minerals – Some recommendations are specific to solid minerals.
 
Production Accountability – Oil and gas were the commodities needing the most improvement, which includes components of under and over reporting, and oil and gas quality influences such as gas BTU analysis and oil gravity.
 
Architecture – Many recommendations address processes, data standards, coordination, information sharing, and information technology issues.
 
Teams and leaders have been identified and each team lead has been asked to recommend additional members for its team, if necessary (see Attachment 1). States are asked to make these selected employees available. Most of the work will be done during this fiscal year (FY); however some tasks may be longer term efforts. 
 
Production accountability is identified as needing improvement in the above referenced report and is identified as a weakness in an upcoming GAO report.  The BLM is taking some immediate actions to address this issue and they are described below. One finding in the RPC Report was that some oil and gas production accountability technicians (PATs) are not being used for production accountability tasks and are being assigned unrelated duties. The PATs are to be used for production accountability duties and not be routinely assigned non-production accountability-related duties. 
 
Another recommendation in the report directed the BLM to use additional funding for production accountability. To implement this recommendation, the FY 2008 Annual Work Plan (AWP) and FY 2009 Planning Target Allocation (PTA) distributes adequate funds to the National Operations Center (NOC) to form a multi-disciplinary team of PATs, and a senior compliance specialist to focus on nationwide production accountability efforts. The team is expected to consist of 10 full time employees in permanent/term positions. This team serves as a pilot to validate the long term concept. A meeting was held on April 21-22, 2008, at the Colorado State Office with Inspection and Enforcement (I&E) coordinators and others, to further discuss how this team would be structured.  The Washington Office (WO) will coordinate with the NOC to implement the proposals developed from the meeting.
 
The FY 2009 I&E Strategy (Strategy) will include a new production accountability review. To simplify case identification of these reviews each year, the Strategy will have field offices (FO) identify the planned case reviews for production accountability purposes. The Strategy will also identify the target percentage of case reviews each year for production accountability purposes. Further details on changes to the Strategy will come under separate IM. In addition, the WO has developed a monthly I&E report similar to the present bi-weekly Application for Permit to Drill (APD) Status Report. Management (WO and State Offices) will use this report to track the progress of FOs completing the I&E Strategy. The report will be generated from the Automated Fluid Minerals Support System (AFMSS) and initially will only cover Federal inspections. When Indian AFMSS comes back on line, the Indian portion of the report will be implemented. The WO notes that delays continue in entering data into AFMSS. Several IMs have directed data entry standards for AFMSS (with the most recent being IM 2005-046). The new I&E report and the present APD Status Report is dependent on accurate and timely data entry into AFMSS. Therefore, new APD data will be entered within 5 working days of receipt or APD status change (including when the APD becomes complete). Inspection data will be entered into AFMSS no later than 5 working days of inspection completion. Incidents of non-compliance, assessments, and proposed civil penalties will be entered into AFMSS within 5 days of being sent to the operator.  These requirements will be included in the I&E Manual/Handbook which is planned for completion this FY.
 
The focus of the RPC Report was oil and gas and coal, simply because of the magnitude of the money involved in royalty payments. There are a number of recommendations pertaining to production accountability in the RPC Report and we stress the same diligence and awareness for production accountability in all of the solids programs, including the Minerals Materials Program. Accordingly, until we are fully able to address the specific solid minerals recommendations each FO will ensure that production has been verified for each lease, contract or permit according to the frequency required by existing policy (monthly, quarterly or annually) and be timely entered into LR2000.  In preparation for addressing another recommendation in the report all FOs are directed to ensure they accurately document all the labor costs of conducting I&E/Production Verification reviews for solid minerals in the Management Information System using program elements NF, NG, and OB, as appropriate.
 
Timeframe: This guidance is effective immediately.
 
Budget Impact: The FY 2008 AWP already addresses the issue of the new centralized PAT team at the NOC and funds have been retained in WO to cover the required travel of the new RPC teams. The FY 2009 AWP will address fully funding the NOC for the PAT team.  The solid minerals production accountability tracking should not add significant costs.
 
Background: On December 17, 2007, the RPC released the “Mineral Revenue Collection from Federal and Indian Lands and the Outer Continental Shelf Report.” This report made numerous recommendations on production accountability both onshore and offshore to the Secretary of the Interior. Several of these recommendations were directed to the BLM.
 
A Production Coordination Committee (PCC) has been created to ensure coordination and collaboration of mineral production and royalty issues. The PCC will be a permanent committee to address issues and opportunities even after the recommendations of the RPC have been implemented. The Assistant Director, Minerals and Realty Management will represent the BLM, with other members from the MMS and the Assistant Secretary for Indian Affairs. There is also an Implementation Steering Committee (ISC) comprised of BLM and MMS employees at the WO and the MMS offices in Denver and the Gulf of Mexico. The ISC will coordinate with the PCC and are meeting bi-weekly to account for accomplishments and to discuss issues that may arise from implementing recommendations from the RPC Report. 
 
Manual /Handbook Sections Affected: The forthcoming National Oil and Gas I&E Manual/Handbook will include the requirements outlined in this IM.  The solid minerals manuals/handbooks will be modified as needed as part of the RPC action plan.
 
Coordination: This guidance was coordinated between the WO Division of Fluid Minerals, (WO-310), and the WO Division of Solid Minerals (WO-320).
 
Contact: If you have questions or concerns, please contact me at 202-208-4201, or your staff may contact Tim Spisak (WO-310) at 202-452-5061, or Mitchell Leverette (WO-320) at
202-452-5088.
 
 
Signed by:                                                                    Authenticated by:
Michael D. Nedd                                                          Robert M. Williams
Assistant Director                                                         Division of IRM Governance,WO-560
Minerals and Realty Management
 
 
1 Attachment