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January 22, 2013
In Reply Refer To:
3160 (310) P
Instruction Memorandum No. 2013-056
Expires:  09/30/2014
To:                   All Field Office Officials
                        Attn: Special Investigations Group
From:               Assistant Director, Minerals and Realty Management
Subject:           Oil and Gas Theft Reporting Guidelines and Format
Program Area:  Oil and Gas Management.
Purpose:  This Instruction Memorandum (IM) replaces WO-IM-2009-115, Oil and Gas Theft Reporting Guidelines and Format, and provides field offices (FO) with guidelines and procedures when reporting suspected theft or fraud of oil and/or gas.
Policy/Action:  All FOs must use the attached form to document and process reports of theft or fraud involving oil or gas from onshore Federal or Indian Oil and Gas leases.  Complete the Oil and Gas Theft/Fraud Report (attachment 1) when any party reports oil or gas theft to the Bureau of Land Management (BLM) or when Inspection and Enforcement (I&E) personnel suspect that oil or gas theft or fraud has occurred or is occurring.  This form is available to all personnel working with fluid minerals and law enforcement personnel working on fluid minerals matters.  Use the attached fillable form as a template for this report. 
Steps to report suspected theft or fraud of oil or gas:
1.  Document the details of the alleged theft or fraud on the Oil and Gas Theft/Fraud Report form (attachment 1).  Assign a FO file number to the report and complete all appropriate parts of the report. 
2.  Send the report electronically to the BLM’s Law Enforcement Special Investigations Group (SIG) specializing in oil and gas investigations (contact information listed below) and a copy to the Washington Office Division of Fluid Minerals (WO-310) immediately.  Within 2 weeks of receiving the report, the SIG will determine whether they will take the referral.  Local BLM law enforcement activities must continue while the SIG is making its determination unless directed otherwise by the SIG. 
a)      If the SIG takes the referral, the local BLM law enforcement officer will coordinate with the SIG and will keep the FO personnel informed on the progress of the case through the Incident Management Analysis and Reporting System (IMARS).  
      • The Special Agent assigned to the case may interrupt administrative procedures (such as enforcement actions or operator notification) when s/he determines that further administrative action could jeopardize the case investigation or its prosecution.  
      • The Special Agent will consult with the appropriate fluid minerals supervisor before interrupting any administrative procedures.
b)      If the SIG does not take the referral, work with local BLM law enforcement to complete the investigation.  If the theft or fraud occurs on Indian lands, the SIG will notify the Office of Inspector General (OIG) and the appropriate Indian tribe or Indian allottee, if warranted.

3.  Before any follow-up inspection, investigation, or further operator contact, the I&E personnel will coordinate with the SIG.

4.  The FO will determine whether the theft or fraud loss is avoidable or unavoidable.  Document the FO determination on the Oil and Gas Theft/Fraud Report form.  After obtaining approval from the SIG to release the determination, the FO must notify the operator in either case (avoidable or unavoidable loss).

5.  If a loss is determined to be avoidable, and following the SIG’s approval to release the determination, notify the operator of the determination and advise the operator of the appeal rights.  If the operator appeals, further action depends on the outcome of the appeal.  If the operator does not appeal, the BLM must notify the Office of Natural Resources Revenue (ONRR) that royalty is due on the lost product.  The address for the ONRR is as follows:                
Office of Natural Resources Revenue
Program Director Audit and Compliance Management
P. O. Box 25165
Denver, Colorado 80225-0165 
6.  Detailed information found in the Oil and Gas Theft/Fraud Report form is for official use only, for possible incorporation into a criminal investigative report.  Consequently, the information contained in these forms is generally exempt from disclosure under the Freedom of Information Act.  
When BLM personnel suspect that oil or gas theft or fraud has occurred or is occurring and the operator or purchaser may be involved, step 4 is unnecessary as the lost oil or gas would be an avoidable loss and, consequently, the royalty due.
Please note these guidelines are general in nature.  Law enforcement will provide additional guidance for dealing with a specific situation or case as appropriate.  Fluid minerals personnel must keep their supervisors involved in any discussions with law enforcement and this IM does not pre-empt the responsibilities of the local FO to execute compliance for the oil and gas program.
If the suspected theft, fraud, or abuse involves a BLM employee or allegations of agency mismanagement, send the referral directly to the SIG:
            Shannon Tokos, Chief, Special Investigations Group
            Office of Law Enforcement and Security
            2815 H Road
            Grand Junction, Colorado 81506-1781
            Office:  970-244-3168
            Fax:      970-244-3169
Alternatively, report through the OIG Hotline at:
            Toll Free: 1-800-424-5081
            DC Area:  202-208-5300
            Fax:          703-487-5402
Timeframe:  Effective immediately, all offices must use the attached form to document details of known or suspected theft or fraud involving Federal or Indian onshore oil and gas leases. 
Budget Impact:  This IM has no budget impact.
Background:  Oil and gas site security regulations, found at 43 CFR 3162.7-5, provide for greater product accountability, minimize the opportunity for theft or fraud of oil or gas, and facilitate detection when a theft or fraud has occurred. Vigilance is necessary given the potential for theft across 23,000 producing leases and roughly $3 billion in royalties collected annually.
Site security regulations require that operators of oil and gas on onshore Federal and Indian lands report any thefts or fraud of oil or gas “to the authorized officers as soon as discovered but not later than the next working day.” The BLM is responsible for investigating known or suspected theft or fraud of oil or gas from onshore Federal and Indian leases, whether reported by an operator, BLM employee, or outside source.  It is important that BLM law enforcement personnel have all available information relating to the incident in order to proceed with an investigation.  As such, documentation of the details of any known or suspected theft or fraud is critical.  The BLM oil and gas personnel use this data to determine whether the loss of oil or gas was avoidable or unavoidable.
Manual/Handbook Sections Affected:  WO-310 will include these procedures in the Inspection and Enforcement Production Inspections Handbook, currently under development. 

Coordination:  WO-310 coordinated preparation of this IM with the State Offices and Law Enforcement.

Contact:  If you have any questions concerning the content of this IM, please contact Michael D. Nedd, at 202-208-4201, or your staff may contact Steven Wells, Division Chief, Division of Fluid Minerals, at 202-912-7143 or s1wells@blm.gov or Mike Wade at 303-236-1930 or mwade@blm.gov.

Signed by:                                                                   Authenticated by:
Michael Nedd                                                               Robert M. Williams
Assistant Director                                                        Division of IRM Governance,WO-560
Minerals and Realty Management
1 Attachment

Last updated: 01-29-2013