Oil and Gas Theft Reporting Guidelines and Format

UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
WASHINGTON, D.C. 20240
http://www.blm.gov

April 27, 2009

In Reply Refer To:
3160 (310) P

EMS TRANSMISSION 05/07/2009
Instruction Memorandum No. 2009-115
Expires: 09/30/2010

To:                       All Field Officials

From:                   Assistant Director, Minerals and Realty Management

Subject:               Oil and Gas Theft Reporting Guidelines and Format                                                                                                                                                   

Program Area:  Oil and Gas Management.

Purpose:  To provide field offices (FO) with guidelines and procedures to follow when oil and/ or gas theft or fraud is suspected.

Policy/Action:  The attached form is to be used to document and process reports of theft or fraud involving oil or gas from onshore Federal or Indian Oil and Gas leases.  “The Oil and Gas Theft/Fraud Report” (attachment 1), is to be completed when oil or gas theft is reported 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 will be available to all personnel who work with fluid minerals and law enforcement personnel working on fluid minerals matters.  The attached form has been created as a fillable form that can be used as a template for this report. 

When oil or gas theft is reported to the BLM, the following steps are to be followed:

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 and a copy to the Fluid Materials Division, Washington Office (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 are to continue while the SIG is making its determination unless justified otherwise by SIG. 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 Lawnet.  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 Special Agent assigned to the case may interrupt administrative procedures (such as enforcement actions or operator notification) when he/she 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.
5. Detailed information found in the Oil and Gas Theft/Fraud Report form is for official use only, as the information may be subsequently incorporated into a criminal investigative report.  Consequently, the information contained in these forms is generally exempt from disclosure under the Freedom of Information Act.
6. The FO will determine whether the theft or fraud loss is avoidable or unavoidable.  Document the FO’s determination on the Oil and Gas Theft/Fraud Report form.  In either case (avoidable or unavoidable loss), the operator will be notified after the SIG approval to release the determination.
7. If a loss is determined to be avoidable, and following the SIG’s approval to release the determination, the operator will be notified of the determination and advised of the operator’s right to appeal.  If the operator appeals, further action depends on the outcome of the appeal.  If the operator does not appeal, the BLM must notify the Minerals Management Service (MMS) that royalty is due on the lost product.  The address for the MMS is as follows:

Minerals Management Service
Deputy Associate Director for Audit, MS 3600
P. O. Box 25165
Denver, CO  80225-0165

When I&E personnel suspect that oil or gas theft or fraud has occurred or is occurring and the operator or purchaser may be involved, the steps for oil or gas theft are to be followed with the exception of steps 6 and 7 above.  Steps 6 and 7 are unnecessary as the lost oil or gas would be an avoidable loss and, consequently, the royalty due.

Please note these are guidelines are general in nature.  Guidance for dealing with a specific situation or case may be requested from law enforcement personnel at any time.  Law enforcement investigations are normally initiated when actual loss is suspected or there are other circumstances that require investigation.  Fluid minerals personnel are reminded to keep their supervisors involved in any discussions with law enforcement.

Timeframe:  Effective immediately, details of known or suspected theft or fraud involving Federal or Indian onshore oil and gas leases are to be documented on the attached form. 

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.

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 from their leases 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 it is 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.  These data are also used by BLM oil and gas personnel to determine whether the loss of oil or gas was avoidable or unavoidable.

Manual/Handbook Sections Affected:  Procedures will be included in the Inspection and Enforcement Production Inspections Handbook when it is developed.

Coordination:  This IM was coordinated with the State Offices and Law Enforcement.

Contact:  If you have any questions concerning the content of this IM, please contact me at 202-208-4201, or your staff may contact William Gewecke at 202-452-0337 or william_gewecke @blm.gov. 

Signed by:                                                                   Authenticated by:
Tim Spisak                                                                  Robert M. Williams
Acting, Assistant Director                                          Division of IRM Governance,WO-560
Minerals and Realty Management

1 Attachment
      1 - Oil and Gas Theft/Fraud Report Form (4 pp)