Mineral Trespass to Federal and Indian Minerals
UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
WASHINGTON, D.C. 20240
http://www.blm.gov
June 10, 2020
In Reply Refer To:
3160 (310) P
EMS TRANSMISSION 06/11/2020
Instruction Memorandum No. 2020-028
Expires: 09/30/2023
To: All Field Office Officials
From: Assistant Director, Energy, Minerals, and Realty Management
Subject: Mineral Trespass to Federal and Indian Minerals
Program Areas: Oil and Gas Exploration and Operations.
Purpose: This Instruction Memorandum (IM), along with its four attachments, establishes the Bureau of Land Management’s (BLM) policy and procedures for detecting and deterring Federal and Indian[1] mineral estate trespass (mineral trespass), and the steps to take when a BLM office discovers a mineral trespass.
This IM also defines Federal and Indian mineral estate traversing wells and acknowledges that a strategy to address this issue may be developed after the Washington Office’s Division of Fluid Minerals collects more information about this topic from the BLM State Offices (SOs).
Administrative/ Mission Related: Mission.
Policy/Action:
Mineral Trespass
The BLM’s 43 CFR 9239.0-7 regulations provide that the:
“extraction, severance, injury, or removal of … mineral materials from public lands under the jurisdiction of the Department of the Interior, except when authorized by law and the regulations of the Department, is an act of trespass. Trespassers will be liable to the United States, and will be subject to prosecution for such unlawful acts.”
In the context of Part 9230 as a whole, it is evident that the words “mineral materials” in section 9239.0-7 are not limited to their meaning under the Materials Act, but instead refer to all minerals, including oil and gas.[2]
A mineral trespass occurs when an operator, either intentionally or unintentionally, completes and produces oil or gas (including drill stem testing) or removes drill cores from a well in leased mineral estate where the operator has no legally recognizable interest, or from a Federal or Indian mineral estate that is unleased.
Conducting drill stem testing and/or collecting drill cores entails entering and removing the Federal mineral estate and requires prior approval by the authorized officer.[3] Thus, conducting these activities without first obtaining authorization under an approved Application for Permit to Drill (APD) is a violation of the BLM’s regulations.[4]
This IM addresses only trespasses on oil and gas resources in BLM-managed and Indian lands; it does not address other trespass situations. Please see Attachments 1 through 4 for additional guidance on detecting, processing, and deterring mineral trespass.[5]
The BLM does not adjudicate operating rights on a lease when reviewing or approving an APD.[6] Once the BLM leases a parcel, the lease conveys to the lessee the right to produce the oil and gas from the parcel. When an operator obtains an approved APD for a lease in which it does not hold operating rights and is not the contractor for the lessee, the operator has trespassed on the lessee’s leasehold and the trespasser will be liable to the United States and subject to prosecution for such unlawful acts.[7] If the trespassing operator fails to pay royalties, then the Office of Natural Resources Revenue (ONRR) has a royalty claim against the lessee, who could then have a claim against the trespasser in addition to the trespass case that the BLM would pursue.
Data Request on Traversing Wells
A traversing well is a well that passes through Federal or Indian minerals without BLM approval or knowledge, but does not produce from those lands, whether those lands are leased or unleased.[8] There have been reported cases of traversing wells; however, the scale of the occurrence is unknown. In order to ascertain the magnitude of the issue and to develop management policies for traversing wells, the BLM SOs must provide a strategy to work with their State oil and gas conservation commission(s) to collect data for the following:
- The number of traversing wells, by Field Office, and by Federal and Indian mineral estate;
- Average length of wellbore through Federal/Indian minerals for each well, including whether it is horizontal versus vertical length, and the depth and distance to target zone; and
- Recommendations for the best way to track these traversing wells and ensure that BLM staff reviews the drilling plans and current, as well as any future, completion reports. This supports determining whether a well is potentially in trespass, or if the drilling plan will adequately protect the traversed mineral estate.
The SOs must provide their strategies by November 13, 2020. Until then, when a BLM office identifies a traversing well situation, it should notify the Headquarters Office Division of Fluid Minerals.
Drilling Without Approval (DWOA)
This IM does not address DWOA cases; a separate permanent IM (BLM PIM 2016-001 signed on September 30, 2016) addresses DWOA. The BLM’s personnel should use the definition of mineral trespass from this IM, which updates the definition provided in the DWOA IM.
Surface Trespass
This policy also does not discuss surface trespass on Federal lands, which is addressed through the BLM’s Lands, Realty and Cadastral Survey program.
Tracking
The BLM’s offices will enter trespass wells into the Automated Fluid Minerals Support System (AFMSS) and traversing wells into a SharePoint spreadsheet located at: https://partnerteamspace.blm.doi.net/sites-wo/mrmt/frac/Trespass%20IM/Forms/AllItems.aspx.
Collaboration with State Agencies
The BLM offices should also collaborate with State regulatory agencies to seek to develop and formalize data sharing strategies that would provide the BLM with opportunities to review both the drilling plans and completion reports for potential trespass and traversing wellbores. The BLM offices should seek to negotiate a Memorandum of Understanding (MOU), or modify an existing MOU to address trespass and traversing wells with their respective State(s) as conditions allow.
As specified in BLM Manual Sections 3160-2 (Drainage Protection) and 3160-9 (Communitization), BLM SO engineers should regularly review the hearing dockets from the State oil and gas commissions to determine if a forced-pooling request would impact Federal or Indian minerals. As appropriate, BLM will work with operators to establish a Federal unit or Communitization Agreement (CA) to protect the Federal interests in forced-pooling situations. In forced-pooling cases where there are unleased Federal lands, an escrow account will be set up to deposit allocated production revenues related to the unleased tract until such lands are leased. The SO staff should coordinate with the Washington Office and Department of the Interior’s (DOI) Office of the Solicitor (SOL) to ensure that operators are aware of DOI’s official position on State forced-pooling statutes. The BLM will continue to implement its policy of encouraging the SOs to work with operators to establish Federal oil and gas units or CAs, as applicable, to prevent trespass of unleased Federal or Indian minerals.
Indian Mineral Estate
During the development of this IM, the BLM considered the occupation and use of the Federal and Indian mineral estate when determining if and when a mineral trespass might occur. When the BLM detects a trespass in Indian mineral estate (Tribal or allotted), the BLM offices will work cooperatively with the Bureau of Indian Affairs (BIA).
Budget Impact: There is an increased workload associated with implementing this trespass policy, but it is possible to accomplish the workload with existing personnel and budgets at the Field, District, and State Office levels when combined with the requirements for the BLM’s drainage and Indian diligence programs. The detection of trespass may result in additional revenue to the Federal government from the collection of royalties (with disbursement to the States) or damages.
Background: Consistent with the March 28, 2017, Executive Order entitled Promoting Energy Independence and Economic Growth and Secretarial Order 3349 (American Energy Independence), the DOI was directed to reexamine guidance to ensure that there is a better balancing of conservation strategies and policies with the equally legitimate need of creating jobs and working cooperatively at the local level with State agencies, as they earn a share of any future disbursements from the collection of royalties from Federal mineral leases.
This IM is in response to a 2014 Office of Inspector General audit (Report No. CR-IS-BLM-0004-2014) of the BLM’s onshore oil and gas management program, which found that the BLM lacked nationwide policies to detect, deter, or process mineral trespass cases. In addition, this IM also responds to the Office of Inspector General’s Management Advisory entitled The Bureau of Land Management’s Procedures for Addressing Forced-Pooling Requests and Mineral Trespass (Case Nos. OI-OG-14-0290-I and OI-OG-17-1004-I) issued on December 9, 2019. This IM will ensure that the BLM is properly protecting the Federal and Indian mineral estate. In light of technological advancements in horizontal drilling/completions and increases in activity during boom times, particularly in areas with highly fragmented mineral ownership, mineral trespass scenarios are more likely to occur.
Pages of Manual/Handbook Sections Affected: The BLM will append the procedures for detecting mineral trespass cases to the BLM Manual Sections 3160-2, Drainage Protection and 3160-9, Communitization.
Instruction Memorandums Affected: None.
Coordination: This IM was coordinated with the DOI’s SOL, BIA and ONRR; BLM’s SOs, Law Enforcement Special Agent in-Charge, and Washington Office Divisions of Fluid Minerals and Lands, Realty and Cadastral Survey.
Contact: If you have any questions concerning the content of this IM, please contact Nicholas Douglas at 202-208-4201. Your staff may contact Kent L. Hoffman, Acting Chief, Fluid Division (WO-310) at 202-912-7143 or khoffman@blm.gov; or Greg Noble, Petroleum Engineer (WO-310) at 307-231-5198 or gnoble@blm.gov; Rebecca Good, Geologist (WO-310) at 307-261-7633 or rgood@blm.gov.
Signed by: Authenticated by:
Nicholas E. Douglas Robert M. Williams
Assistant Director Division of Regulatory Affairs,WO-630
Energy, Minerals, and Realty Management
4 Attachments
1 – Methods to Detect Mineral Trespass (1 p)
2 – Steps to Take When BLM Becomes Aware of a Mineral Trespass (2 pp)
3 – Enforcement Tools for Mineral Trespass (2 pp)
4 – Deterring Mineral Trespass (1 p)
[1] Indian minerals and/or Indian mineral estate refers to mineral interests, title to which is held in trust by the United States for an individual Indian or a tribe, or title to which is held by an individual Indian or tribe and can only be alienated or encumbered by the owner with the approval of the Secretary.
[2] See, e.g., 43 CFR 9239.5-2. Trespass is distinguished from drainage, which is lawful. See, e.g., 43 CFR 3100.2-1, 3162.2-2 through .2-15. Note that the legal authorities do not agree on whether a well lawfully drilled into one tract commits a trespass when its hydraulic fracturing fluids invade an adjacent unleased tract causing oil and gas to flow into the well. See Barber v. Magnum Land Services, LLC, 2013 WL 2097397, *5 (N.D. W.Va.). If you suspect that such a situation is causing loss of Federal oil or gas, please contact the Solicitor’s Office.
[3] 30 U.S.C. 181 et seq., 25 U.S.C. 396; 43 CFR 3160 and as stated in Onshore Oil and Gas Order #1 III.D.3(g): “The testing, logging, and coring procedures proposed, including drill stem testing procedures, equipment, and safety measures.”
[4] See, e.g., Onshore Oil and Gas Order #1 IV.
[5] The statute of limitations period for mineral trespass on Federal lands and minerals is six years. 28 U.S.C. 2415(b). The limitations period for actions brought by the United States for mineral trespass on Indian lands is six years and 90 days. If you suspect that such a situation is causing loss of Federal oil or gas, please contact the Solicitor’s Office. For similar situations on Indian land cases, BLM offices should work cooperatively with the Bureau of Indian Affairs (BIA) office.
[6] 43 CFR 3162.3-1(i). See also BLM Form 3160-3: “Application approval does not warrant or certify that the applicant holds legal or equitable title to those rights in the subject lease which would entitle the applicant to conduct operations thereon.”
[7] Of course, if the BLM has reason to believe an operator does not have operating or contractual rights to produce oil and gas from the lease, it should share the basis for that belief with the lessee.
[8] Note that at common law, a traversing well bore is a trespass, just not a mineral trespass. E.g., Union Oil Co. v. Domengeaux, 86 P.2d 896 (1939).