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February 14, 2008

In Reply Refer To:
3100 /310 P
Instruction Memorandum No. 2008-043, Change 2
Expires: 09/30/2008
To:                   All Field Officials
From:               Assistant Director, Minerals & Realty Management
Subject:            New Fee and Subactivity for Processing Applications for Permit to Drill (APD)
Program Area: Oil and gas operations.
Purpose: This memorandum provides guidance for handling the new $4,000 APD fee required by The Fiscal Year 2008 Consolidated Appropriations Act (Act).  This memorandum updates and expands guidance issued in IM No. 2008-043, Change 1.
Policy/Action: Beginning on December 26, 2007, every new APD (including those on Indian minerals) is to be accompanied by a fee in the amount of $4,000.  The Act reads, in part: “…$4,000 per new application for permit to drill that the Bureau shall collect upon submission of each new application…”  This fee applies to any APD for a new well, that is, on Form 3160-3, whether submitted individually or as part of a Master Development Plan.  The fee is not required for a Notice of Staking, but is required to be submitted with any subsequent Form 3160-3.  (See the attachment for more discussion on when the fee is and is not required.) Nothing about the fee or the processing of the fee changes Onshore Order #1 or its implementation.
If an APD for a new well is submitted without the fee, it is not to be logged in, posted or processed.  An APD submitted without the fee is to be considered as not received until the fee is paid. The operator should be contacted and given a reasonable period of time in which to submit a missing fee.  It is suggested that Field Offices send the operator a letter advising of the new requirement and providing 10 business days to send the processing fee.  The APD is to be considered filed and the processing clock starts when the operator submits the fee.  The following is suggested language to include in such a letter:
The Fiscal Year 2008 Consolidated Appropriations Act requires a new $4,000 fee for each Application for Permit to Drill (APD). This requirement became effective on December 26, 2007, when the Act was signed by the President. On (date), you submitted XXX APDs which did not include this fee.  We are holding your APDs in abeyance to provide you an opportunity to submit the fee. If we do not receive the fee, in the amount of $4,000 for each APD, within 10 business days from the date of this letter, your APDs will be returned.
Failure to submit the APD fee is not an Onshore Order #1 deficiency.  If the missing fee is not paid, the APD shall be returned to the operator.  Operators whose APDs are returned because they did not submit the fee cannot seek State Director Review and have no right of appeal to the Interior Board of Land Appeals.  Failure to submit the fee is a statutory violation, not a violation of Department regulations.
The acceptable form of payment and the processing of the payment are in accordance with the BLM Collection Reference Guide – April, 1998.
Collected funds are to be entered in Collections and Billings System (CBS), using the collection protocol as follows:
Commodity – OIL & GAS
Action – APD FILING FEE (1312)
Funds placed into a suspense account prior to this directive are to be manually transferred in CBS to subactivity 1312. Specific guidance will be provided by CBS Customer Service.
The fee is non-refundable.  The fee, to be collected “upon submission of each new application,” is for processing APDs and is required whether or not an APD is subsequently approved.
The Act appropriated a specific amount of money for processing APDs.  To properly track these expenditures, a new subactivity code has been created: 1311.  All direct costs for processing APDs are to be coded to this new subactivity.
Timeframe: This guidance is effective for the remainder of this fiscal year (FY).
Budget Impact: It is expected that collecting and processing this fee will have minimal impact on the budget.
Background: This requirement will expire at the end of FY 2008, unless Congress takes some new action to continue the fee, such as a Continuing Resolution.  As much as possible, State and Field Offices should handle the processing fee and APDs within the existing BLM procedures and guidelines.  This memorandum sets out the basic policy and actions to be taken.  The attachment is a series of questions and answers, intended to provide more detailed framework on the fee and various implementation issues.  It is not intended to be an all-inclusive catalog of every scenario that might be encountered.
Manual /Handbook Sections Affected: At this time, the processing fee is only required for APDs filed this FY. Changes to manuals or handbooks will be considered only if the fee is instituted on a more permanent basis.
Coordination: This guidance has been developed by the Division of Fluid Minerals
(WO-310), and coordinated with the Division of Budget (WO-880), the Division of Business Services (OC-600) at the National Operations Center, the Solicitor’s Office, and Field and State Office staffs in Alaska, California, Colorado, Eastern States, Montana, Utah, and Wyoming.
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 Greg Shoop (WO-310), at
Signed by:                                                                        Authenticated by:
Michael D. Nedd                                                                Robert M. Williams
Assistant Director                                                             Division of IRM Governance,WO-560
Minerals and Realty Management
1 Attachment

Last updated: 10-21-2009