Monitoring and Review of Lease Suspensions
UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
WASHINGTON, D.C. 20240
http://www.blm.gov
June 14, 2019
In Reply Refer To:
3100 (310) P
EMS TRANSMISSION 06/17/2019
Permanent Instruction Memorandum No. 2019-007
To: State Directors
From: Assistant Director, Energy, Minerals, and Realty Management
Subject: Monitoring and Review of Lease Suspensions DD: End of First Quarter of Every Calendar Year (March 31st)
Program Area: Oil and Gas Leasing.
Purpose: This Instruction Memorandum (IM) supplements existing policy and guidance for conducting lease suspension reviews for Federal oil and gas leases. This policy requires the Bureau of Land Management (BLM) State Offices (SOs) to regularly review suspended leases and provide procedures for monitoring lease suspensions to ensure that lease suspensions in effect are warranted.[1]
Policy/Action: The SOs will report to the Washington Office Division of Fluid Minerals (WO-310) a statement of the efforts made to monitor lease suspensions as directed in this IM by the end of the first quarter of every Calendar Year (CY), starting March 31, 2020.
Recording the Reasons for Lease Suspensions
As outlined in IM 2015-028, Oil and Gas Lease Adjudication - LR2000 Desk Reference Guide - Updated Data Entry Standards for Oil and Gas Leasing, all SOs should follow the oil and gas data standards for all existing oil and gas leases. When using the action codes 676 - Suspension of Operations and Production/No Payment, or 677 - Suspension of Operations or Production/Payment Required, the SO must enter the reason for the suspension in BLM’s Legacy Rehost System (LR2000).
Monitoring Lease Suspensions
The BLM National Operations Center developed a new canned report for showing leases in a suspended status based on the date order of action codes. The new report called “CR Oil and Gas Lease Suspensions” is available to users in LR2000. The SOs should review this report at the beginning of every CY to verify that LR2000 accurately reflects the leases in a suspended status.
In addition, to promote more consistent monitoring of suspended leases, SOs will use action code 247 – Future Action Suspense, and an estimated date to review the case. Specifically, the BLM Field Office should note when to lift the suspension (date) when issuing the lease suspension memo. When the specific date to lift the suspension is unknown and it is difficult to predict the period of delay, the estimated date used in LR2000 should be no more than one year from the date of the SO’s review. This should prompt a yearly review of the current conditions to ensure the suspension is still warranted. If review of the file shows the suspension should continue, update action code 247 – Future Action Suspense to the next year and update remarks as appropriate. When lifting the suspension, the office should remove action code 247 – Future Action Suspension from the case file in LR2000.
The LR2000 Desk Reference guide, located on the adjudicator SharePoint site at http://teamspace/sites-wo/wo300/adjudicators/Shared%20Documents/Forms/AllItems.aspx, will be updated based on this IM. The SOs can periodically run the existing canned report, “CR Case Action Information,” using this action code. Because action code 247 – Future Action Suspense is not exclusive to lease suspensions, it will aid in monitoring other cases.
Budget Impact: Minimal, as it does require some staff effort to review lease suspensions.
Background: In June 2018, the U.S. Government Accountability Office (GAO) released Report 18-411, entitled, “BLM Could Improve Oversight of Lease Suspensions with Better Data and Monitoring Procedures” (https://www.gao.gov/products/GAO-18-411). Oil and gas leases on Federal lands generate billions of dollars in rents and royalty payments each year, but these revenues decline if leases are suspended (i.e., the lease term is placed on hold). To ensure that Federal lands are developed appropriately, the GAO made several recommendations, including that the BLM should record the reasons for lease suspensions in its database (currently LR2000) and develop procedures for monitoring suspensions.
Over the last five years, the WO-310 completed a series of reviews of its oil and gas lease information, in LR2000 using the Data Flux tool, in an attempt to improve the data quality by increasing accuracy, completeness, consistency, and validity. Each spring, the Division generates a report for each SO that highlights the errors found in LR2000. Each SO is responsible for taking action to address the errors identified for their respective state. Failure to note the reason for a lease suspension in the action remarks will generate an error on the Data Flux report. These corrections are a high priority and require a physical inspection of the case file.
Pages of Manual/ Handbook Sections Affected: The BLM Handbook H-3103-1, Fees, Rentals and Royalties (also known as the BLM Oil and Gas Adjudication Handbook) will incorporate the policy contained in this IM in its next revision.
Instruction Memorandums Affected: None.
Coordination: The preparation of this policy was coordinated with BLM SO Specialists, the Washington Office of Energy, Minerals, and Realty Management Directorate (WO-300), and in consultation with the Department of the Interior Office of the Solicitor.
Contact: If there are any questions concerning the content of this IM, please contact me 202-208-4201, or your staff may contact Suzanne Mehlhoff, Acting Division Chief (WO-310) at 202-912-7143 or smehlhoff@blm.gov, or Robin Naeve, Acting Senior Mineral Leasing Specialist (WO-310) at 801-539-4254 or rnaeve@blm.gov.
Signed by: Authenticated by:
Mitchell Leverette Robert M. Williams
Acting, Assistant Director Division of Business Resources,WO-850
Energy, Minerals, and Realty Management
[1] The Mineral Leasing Act of 1920, as amended, defines the types of suspensions and the criteria that need to be met for each. Under Section 17, the BLM can suspend either operations or production, while suspensions under Section 39 suspend both operations and production. Section 17 suspensions halt the term of the lease, but rental, and, if applicable, royalty payments continue. Section 39 suspensions of operation and production halt the term of the lease as well as any rental and royalty payments during the duration of the suspension. This is not applicable to Indian leases on trust or restricted Indian lands, which fall under the auspices of the Bureau of Indian Affairs and its existing policies and procedures.