**I & E Effective Compliance Procedures**

A Telecast Originating from the BLM National Training Center

January 27, 2000

This transcript is from the closed-captioning file produced during the
telecast. It may contain errors and omissions in transcription.

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Announcer: the Bureau of Land Management Satellite Network Presents Live
from the BLM National Training Center Had In Phoenix, Arizona, Oil and
Gas Effective Compliance Procedures. An Interactive Workshop for BLM
Staff Specialists and Managers Who Administer the Bureau\'s Oil And Gas
Program.

Announcer: Now, the Host of Your Program, Ron Fellows.

Fellows: Good Morning, Everyone and Welcome to BLM\'s First Telecast of
the New Millennium. It Is Our Distinct Pleasure to Be Here Today and We
Appreciate You Taking the Time to Be with Us for What We Believe Will Be
An Open and Frank Discussion of One of the Bureau\'s Most Sensitive and
Critical Programs. The Purpose of this Interactive Telecast Is Not to
Tell You What You Don\'t Know but to Describe The Existing Regulatory
Requirements and Correct Enforcement Options Available For Use by Field
Offices in Administering this Aspect of the Bureau\'s Oil and Gas
Program. Our Target Audience Is Specifically Geared Toward All BLM Oil
and Gas Personnel and Management Who Issue Violations, Assessments,
Penalties or Are Involved in Dispute Resolution Or the Appeals Process.
We Invite Other Resource Specialists to View this Program Because the I
& E Program Function Depends on Inputs from A Number of Bureau
Specialists In Order to Effectively Conduct Respective Responsibilities.
It Is Imperative That Field Office Managers Participate in This Telecast
Because Management Involvement Is Critical to Program Effectiveness.
This Point Cannot Be Stressed Enough. Before We Begin, I Would like to
Introduce Our Panel. We\'re Fortunate Today Because Our Panel Represents
53 Years of Accumulated Experiences in the I & E Arena. Joining Me Today
from Billings, Montana Is Lonny Bagley, BLM\'s Washington Office I & E
Specialist. Lonny\'s Job Today Will Be to Discuss His Findings as a
Result Of His Recent Field Office Assistance Visits, as Well as Types of
Violations, Shutdown Notices, Civil Penalties, Appeal Procedures and the
Current Proposed Rule‑making Effects to Our Current Enforcement Process.
Good Morning, Lonny.

Bagley: Pleasure to Be Here. I\'m Looking Forward to Discussing the
Enforcement Actions That Are ‑‑ We Take out In the Field and Describing
What Our Roles and Responsibilities Are.

Fellows: Great. Also with Us Is Jamie Sparger, Supervisory Petroleum
Engineering Technician. Jamie Is Here to Help Us Address The Burning
Questions. What Is a Violation and What Do You Do If a Violation Exists.
He Will Also Discuss Immediate Assessments. Welcome to the Show, Jamie.

Sparger: We\'ve He Had a Fun Week Here this Week. Hard to Believe We\'re
Getting Paid to Do This. I Would like to Say Hi to the Folks Back in
Vernal. You Guys Go Ahead and Call and Write and this Is Your Chance.
Take Your Best Shot.

Fellows: That\'s Right. Completing Our Instructional Team Is Mark Kelly,
the Team Lead for the Inspection Enforcement Team in the Farmington
Field Office. He\'s Here to Explain Procedural Steps to Correct Field
Problems Involving Written Orders and Will Join in the Presentation of
Procedures Required When an Incident of Noncompliance or Inc Is
Determined Appropriate. Good Morning, Mark. Good to See You Again.

Kelly: it Is a Pleasure to Be Here at the Phoenix Training Center. I
Appreciate the Opportunity to Come down Here and Help out with The Forum
and I Also Appreciate The Opportunity to Take a Complete Fool out of
Myself on Satellite Tv. So, Hopefully Everything Will Turn out to the
Better.

Fellows: I\'m Sure it Will. Before We Get Started with Our First
Segment, I Would like to Ask the Downlink Coordinators to Have All
Viewers Sign the Foster And Fax it to NTC During One of The Breaks. The
Roster Can Be Found in the Viewer Packet or You Can Use NTC\'s
Electronic Reporting System at the Training Center Web Site At\...

Fellows: Throughout the Workshop, We Want to Hear from You. To Be
Successful, We Need Your Active Participation Throughout The Program.
You Will Be Able to Communicate With Us by Phone or Fax. You Can Send Us
a Fax at Any Time. We Will Also Have a Formal and Answer Session During
Segment Two of Our Program. Since We Would like to Talk Directly with
You, We Will Go to Your Calls Before Answering Faxes. We Will Get to
Your Questions as Fast as We Can. A Fax Form Is Provided in the Viewer
Packet Developed for this Program for Your Use in Sending Us Your
Questions or Comments. To Help Speed up the Interactive Process, Please
Don\'t Bother With Fax Cover Pages. At the Conclusion of Today\'s
Workshop, We\'ll Be Asking You to Complete a Program Evaluation. The
Evaluation Is Also Included At the End of the Viewer Packet. Your
Feedback Is Important to Us. In Helping Us Ensure That We\'re Meeting
Your Needs. With That out of the Way, I Would like to Have Lonny Provide
Us with His Findings as a Result Of His Recent Field Office Visits.
Before Getting Started, I Think It\'s Important to Also Discuss Why We
Are Stressing the Critical Nature of Effective Enforcement Procedures.
Documentation, and Required Follow‑up Action Of. Lonny, Can You Please
Start Us Off?

Thank You, Ron. It Is a Pleasure to Be Here and Would like to Talk about
the Findings That I Found During My Field Office Visits. I Visited about
21 Offices So Far out of the 31. And One Thing I Would like to Say Is
That the Bureau Personnel Who Monitor Oil and Gas Operations Really Have
a Very Important Role to Ensure Compliance with Operations in The Field.
In Regards to Protecting the Environment, Health and Safety And Making
Sure They\'re Actively Reported. Taking Appropriate Enforcement Actions
Is One of Your Most Critical Roles When You Find Violations in the
Field. Through My Field Visits, I Discovered Several Problems in
Relationship to Enforcement Actions and Would like to Talk About Those
Here Today. And I Talk about Them in a Sense That If the Office
Inspector General or the General Accounting Office Were to Conduct
Reviews, They Would Find Similar Problems and Would Criticize BLM\'s
Work to the Point Where We Had to Be Reactive Instead of Being Proactive
in Taking Care of Our Problems. My Findings Revealed Improvement In the
Area of Inspection Enforcement as to Better Define The Roles and
Responsibility of The Inspector When They\'re Conducting Inspections.
Also, Defining the Difference Between What Is a Violation and What Is
Not. Also, Taking Proper Procedures And Correcting Problems That Are
Identified in the Field. We Show a Deficiency or Some Confusion What
Tools to Use. Also, Knowing All of the Tools That You Can Use to Gain
Compliance When Conducting Your Inspections. We Want to Talk about Those
Pretty In‑depth Today. Documenting Violations Was Also A Problem That I
Found in a Sense of What Went into the File To Support the Violation
Found And Also the Documentation into Afmss. In the Final Area I Would
like To Talk about Today Is Issuing Assessments and Civil Penalties.
There Has Been a Lot of Confusion over the Years Particularly in the
Arena of Civil Penalties and We Would Like to Discuss Those Further.
While There Are Other Areas in The Program That We Found Deficient, We
Felt That Problems Found in the Inspection Enforcement Arena Needed
Immediate Attention and That\'s Why We\'re Having the Broadcast Today.
As Ron Previously Explained, the Broadcast Is Intended to Clarify Your
Role in Taking Enforcement Actions and to Ensure You Are Aware of All
the Tools Available For You to Use.

Fellows: Lonny, I Know You Found out Many of the Things You Were Talking
about but I\'m Sure There\'s a Lot of Good Things Going on out There.
Can You Give Me Ideas What You Also Found?

Bagley: There Are a Lot of Things We Can Be Doing to Ensure Compliance
and Help the Industry Better Understand What the Requirements Are. And
to Some of Those Areas, You May Find That Taking the Proactive
Approaches Will Improve Compliance Throughout Your Area or Throughout
Inspections. These Approaches Will Vary and Maybe a Combination of
Methods That You\'ll Use in the Field. Some of Those Were Attending
Company Safety Meetings and Being Able to Discuss Specific Issues and
Mainly That\'s an Invitation Approach to Come out And Speak with the
Industry on a Particular Issue. Also Involved, One‑on‑one Meetings in
the Field with Pumpers, to Discuss Requirements As Related to Actual
Field Operations. Now, We Would like to Clarify Here That If We Are
Conducting These, It\'s Not Taken Away from Our Compliance
Responsibilities. Or Enforcement Responsibilities. But it Does Help on a
Case by Case Basis to Better Understand Individuals in the Field.
Calling an Operator on the Phone When Obviously They Don\'t Understand
What the Requirements Are. You May Notify Them They\'re in a Violation
and Notify Them That They Are but Sitting down with Them and Explaining
Thoroughly What the Requirement Is Will Help Them a Lot. Also Holding
Operator Meetings For the Field Area Has Been a Very Effective Tool to
Ensure That Industrywide in Your Particular Area, Knows What the
Requirements Are and You Also Get Feedback on What Particular Issues Are
Concerning Them and They Want Clarification. Organizing Forums Also Are
a Great Tool. It Allows Industry to Bring Formally Forward Issues for
Resolution. Also from the BLM Side, it Does Present an Ability to
Present Issues to Industry as Far as Resolution. Now, it May Be
Difficult and Those Are Only a Few of the Things That You May Be Using
out There in the Field. It May Be Difficult to Measure The Success of
Your Compliance History Here of an Operator or An Areawide. But You Will
See Differences in How Industry Deals with You and Know That You\'ll Be
More Willing To Work with Them and Ultimate Goal Will Be Compliance.
Ron, You\'ve Had Successes, Can You Elaborate on Those for Us?

Fellows: I Feel Good about What We\'ve Done in Bakersfield. In 1992, My
Goodness, Eight Years Ago Now, I Can\'t Believe How Time Is Flying. We
Started What\'s Called an Oil And Gas Work Group. Essentially, It\'s a
Forum, You Know, Where We and Industry and That Other Regulator, the
State, Can Get Together and Talk out Issues. And We Hold Quarterly
Meetings And We Discuss Technical Issues, Policy Issues, Just a Whole
Full Range of Issues. It\'s a Great Opportunity for Industry to Bring to
the Table And for Us to Bring to the Table, Too, Things That Concern Us.
Over the Years, We\'ve Discussed Items like Surface Casing Requirements,
Well Abandonments, Idle Wells and Now We\'re Starting to Talk Pretty
Diligently with Industry and the State on Electronic Commerce
Opportunities. And We Even Have a Memorandum of Understanding with the
State That California Division of Oil And Gas and Geothermal Resources
Which Really Helps Industry in That We Have Defined Our Roles And
Respective Responsibilities So We\'re Essentially Talking With One Voice
to Industry. It\'s Working Real Well for Us.

Lonny, We Found it So Important to Explain Why We Want Things Done a
Certain Way. Not Just Tell Them the Rules but Why. What\'s Important to
Have this Rule. Another Thing We\'ve Done in Vernal That\'s Been Very
Effective, We Have a Large Drilling Program and Have Had For Quite a Few
Years. You Know, We Got a Lot of Rigs From out of State. And These Rigs
Are a Long Ways From in Compliance with Federal Regulations. We Put the
Word out That We\'re Available at Any Time to Go out And Check the Rig
out Before it Ever Rigs up or Even Before it Gets to the Location and Go
over The Equipment, Their Blowout Prevention Equipment, Tell Them Where
They\'re Going to Be in Trouble If We Go out on the First Bop Test and
this Has Done An Excellent Job for Us in Cutting the Noncompliance and
Saving the Downtime and People Are a Lot Happier.

Kelly: It\'s Hard to Play the Game If You Don\'t Know the Rules. In
Farmington, We\'ve Handed out The Onshore Orders and the Regulations for
Years and a Lot Of Times They Don\'t Get down to The Level of the Field.
And We\'ve Initiated a Lot of Times and Even Had the Operators Call Us
and Ask Us to Come to Their Safety Meetings and Tell Them What Is
Expected in the Field. We Developed a List of Common Violations That We
Hand out to The Operators on a Routine Basis When We Visit with Them and
These Violations Are Basically Queried from the Old Errors Database and
They Tell Us ‑‑ the Most Common Violations That We\'ll Run up Against in
the Field and What the Abatement Period Is. This Gives the Field People
an Idea of What to Expect When We Come out There So That They Can
Preplan or Try to Come into Compliance on Their Own Before We Show Up.
We Also Have a Similar Group to What They Have in California With Ron
Called the San Juan Basin Working Committee. And this Has Been in Effect
Seven or Eight Years. Serves the Same Purpose as What Ron Mentioned.
It\'s Oil and Gas Industry and The BLM and the Department of Oil and Gas
in the State. They Come Together to Discuss Various Policy Issues,
Various Operational Issues. We Have Subcommittee Breakouts To Solve Some
of the Problems. And It\'s Been a Great Tool to Inform the General
Public, Especially the Oil and Gas Operators What\'s Going On.

Bagley: Ideas to Be Proactive In Reducing the Compliance Problems We May
Have out There. Some Offices May Be Similar Things or Additional Things,
Also. It\'s Very Good to Know That We Have this Type of Interaction With
Industry So That We Can Inform Them and Make Them Feel More Willing to
Work with Us in That Arena. Very Good.

Fellows: I Think We All Made A Good Point Here. I like the Point That
Jamie Made. This Communication, the Why We Do Things. I Have Found That
That Is Probably One of the More Important Things That We Can Get
Across. Why Are We Doing This, You Know. That\'s Critical. However, You
Know, There Are Times When We Are Going to Enforce the Rule. And
Regardless of the Proactive Measures That We Might Try to Mitigate, Some
of Our Compliance Issues, We Know That in Many Cases, We Will Have to
Take Enforcement Actions. Lonny, What Are the Different Enforcement
Tools Available for Our Use?

Bagley: Well, Ron, We Have Several Tools Available to Us to Use in
Gaining Compliance in the Field. The First One I Would like to Talk
about Is Written Orders From the Authorized Officer. This Is a Tool Used
When Don\'t You Have a Specific Requirement To Base Your Violation On.
So, It\'s a Good Tool to Notify The Operator What You\'re Really Looking
for in a Compliance Arena. We Also Have the Incidence of Noncompliance.
This Is the Tool Used to Gain Compliance When We Find a Violation in the
Field. We Also Have Oral Warnings or Verbal Warnings. Or Verbal Incs.
They All Mean the Same. This Is Where We Can Notify the Operator
Verbally on a Minor Situation That These Corrective Actions Are Needed
and it Works Quite Well. We Also Have a Tool Available to Us for
Shutting an Operations. These Are for the Most Serious Types of
Violations, We\'re Finding out There or in an Area Where We\'ve Already
Notified the Operator. We Can Take a Different Approach Instead of Going
on to Civil Penalties, for Instance and Gaining That Compliance.
Immediate Assessments, We\'re Familiar with Those. That\'s Another
Enforcement Tool We Have on More Serious Violations. We Also Have
Assessments for Failure to Comply with Minor Violations as a Tool to
Encourage the Operator to Comply With Our Requirements. We Also Have a
Tool Available to Us to Go out and Also Perform The Work Ourselves and
this Would Be Again, More Serious Types of Violations Occur. Immediate
Action Is Necessary And Obviously the Operator Is Not Taking Appropriate
Actions To Take Care of the Situation. We Then Get into Civil Penalties
In Which There\'s Been a Lot of Confusion with Civil Penalties And
Hopefully We Can Clear it up Today on How to Use Them and How Effective
They Can Be in the Compliance Arena. Then Finally, Is the Area of
Shutdowns or Excuse Me, Lease Cancellations. Canceling a Lease Is the
Last Step in Enforcement Action When The Operator Obviously Does Not
Want to Comply and We Have to Take the Steps to Take That Lease Back
Away. Now, Today, We\'ll Be Covering These Items in Quite a Bit of
Detail but First, We Need to Look at the Steps That Are Needed in Taking
Any Type of Violation. And That Is to Determine Whether Or Not We Have a
Violation Even Existing in the Field. And Jamie\'s Going to Lead Us off
On the Discussion and I\'ll Turn It over to You, Jamie.

Sparger: Thanks, Lonny. Sometimes I Wonder If it Wouldn\'t Be Easier to
Define What Is the Meaning of Life but There Really Are ‑‑ We Can Nail
It Down, I Think, a Little Bit Today. What Is a Violation. Well,
Obviously, Violation Means To Violate and Violate Means to Break or
Disregard the Rules. Now, We\'ve Been Having Fun with In this Week but I
Love the Game Of Basketball. I Imagine Some of You Do, Too. Like Any
Sport, Basketball Has a Rule Book. The Dos and Don\'ts of the Game.
Imagine, for a Second, That the Referee in the Basketball Game Is the
Authorized Officer. Now, One Very Specific Rule in Basketball Is Real
Simple. You Play the Game on the Court. If You Have the Ball, You Don\'t
Go Outside the Court. You Step Outside the Court or Even on the Line,
That\'s a Violation and the Referee Is Forced to Enforce the Rule. It\'s
Real Simple. What Are the BLM\'s Rules? The BLM Has a Rule Book, Also or
A Combination of Books That Make A Rule Book. What Are Those BLM Rules?
43 Cfr 3162.1 a States in Part The Operating Rights Owner Shall Comply
with Applicable Laws and Regulations, with the Lease Terms, Onshore Oil
and Gas Orders, Ntls and Let\'s Stop There for a Second. Let\'s Define
These Quickly. What Are the Laws Mentioned in This Regulation? Well, We
Don\'t Have to Sweat That Particular Subject Because The Laws Are
Reiterated in the Regulations Themselves. And Those Regulations Are 43
Cfr, the 316 0s, the Things We Use Almost Every Day. Lease Terms, Those
Are the Requirements in the Lease and Any Attached Lease Stipulations
That May Be There. Onshore Oil and Gas Orders, We Know What Those Are,
Don\'t We. Onshore 1 Through 7. Ntls, We\'re Dealing With, at This Point
in Time, Ntl 3 A, 4 A, and Any Locally‑issued Ntls You May Have in Your
Office. Let\'s Continue That Regulation. The Operating Rights Owner or
Operator as Appropriate, Shall Comply with Applicable Laws, Regulations,
Lease Terms, Onshore Oil and Gas Orders, Ntls And with Other Orders and
Instructions of the Authorized Officer. Other Orders and Instructions of
The Authorized Officer. Now, These Come about Primarily Through the
Approval Process. You\'ll Find These in the Apds, The Sundries, the
Agreements That Are Approved. You Know, I Would like to Make One Point.
Really, the Best Place to Find These Things, If You\'ve Done Your Work
in Your Office Is on The Afmss Approval Record. It\'s a Great Police to
Go to Get All the Information on These Other Instructions. These Other
Orders. It\'s So Much Easier than Going Back to the Well Files and
Searching All of These Files. Ok. All of These Things Put Together Make
up the BLM Rules, Oil and Gas Rules. So, Let\'s Go Back to Our Question.
What Is a Violation? A Violation Occurs When the Operator or His
Representative Fails to Comply with Any of the Specific Requirements of
the BLM\'s Oil and Gas Rules. Specific. Remember That Word. Specific
Requirements. Ok. If You\'ll Bear with Me. Back to Basketball One More
Time. In Basketball, There\'s Another Rule That Says You\'ll Play the
Game in a Sportsmanlike Manner. Now, this Is a Rule That People Take a
Little Liberty with at Times. I\'ve Seen People ‑‑ I\'ve Never Done It,
Would Never Think about Doing it ‑‑ I\'ve Seen People Kick and Spit and
Trip and Pull The Opponent\'s Shorts Down, You Know. Whatever. You
Imagine for a Second Now You\'re in a Game and Some Jerk Is All over You
with His Sweaty Body and You Want to Send a Subtle Message to Him to
Back Off. So, You Communicate That with Your Elbow to His Nose. It Works
Quite Well. The Referee ‑‑ Now the Authorized Officer Looks You in The
Eye and He Says That Is Not Sportsmanlike Conduct. The Referee Has
Clarified and Implemented That Sportsmanlike Conduct Rule. He\'s Given
You an Order. If it Was Us, We Would Call That A Written Order or an
Oral Order. He Clarified and Implemented That Requirement, That
Basketball Requirement. Written Orders Clarify and Implement a BLM Oil
and Gas Rule If That Rule Does Not Adequately Address a Specific
Situation. Ok. Enough Basketball. Let\'s Go to Real Life. Let\'s Go to
BLM Life. Imagine You Were out Inspecting A Producing Location and You
Find Two Problem Situations. The First Situation Is There\'s No Seal on
the Valve and That Particular Tank Is in the Production Phase. We Have a
Specific Regulation or Specific Rule That Says That That Seal Will Be
There. Therefore, the Fact That the Seal Isn\'t There, That\'s a
Violation. It\'s Violating a Specific Rule. Our Action Is to Issue the
Notice of Violation, Enforcing That Specific Rule. Now, the Second
Problem You May Run into ‑‑ or You Will Run into Is Trash All over
Location and All of Us Have Experienced That Too Many Times, Haven\'t
We. The 3162.51 A, under the Heading Of Environmental Obligations Is A
Very Broad and Generalized Rule. It Does Not Specifically Say You Must
Clean up Your Trash. I Don\'t Know How They Could Actually Put All of
the Specifics under That Category That You May Want to Find. So, Our
Action in That Part Is To Clarify and Implement the Rule. Issue the
Written Order or the Oral Order as Needed. Now, If the Operator Fails to
Comply with this Clarified and Implemented Rule, Then We Issue The Inc,
Then We Enforce the Rule. All Right. Last Time. If a Situation
Encountered Is Not in Compliance with a Specific Rule, That Is a
Violation. Enforce the Rule. Issue the Inc. If a Situation Does Not
Violate A Specific Rule or the Rule Is In Need of Clarification, Then Go
Ahead, Clarify and Implement That Rule. Issue the Written Order. Hey, If
You\'re in Doubt and Sometimes You Will Be, Discuss The Situation with
Your Supervisor, with Your I & E Coordinator, and Probably Best Of All,
with Your Peers. Get a Second Opinion. And You Know, If it Comes up to A
Coin Toss and It\'s 6s Either Way, Be Safe, Issue the Written Order. Ok.
Mark?

Kelly: Thanks, Jamie. I Think That Clarifies What a Violation Is. Very
Good Example Using the Basketball Scenarios. But a Lot of Times in the
Field, There Are Instances Where You Come Across a Situation and It\'s A
Problem but It\'s Not a Violation. So, in Order to Correct a Problem,
the First Step Is to Determine What a Problem Is. What Is a Problem?
Problems Are Different than Violations. Problems Are Those Things That
Something Should Be Done about But Are Not Specifically Covered By the
Regulations, Conditions Of Approvals, Ntls or Other Approved Actions. An
Example of this Would Be like In a Picture That\'s Fixing to Come up of
Old Equipment on the Lease. Now, as Fields Get Older and We Get More and
More Wells on Public Lands, We See More and More of this Kind of
Situation. That\'s Not Specifically Covered Under the Regulations That
They Can\'t Put That out There. However, under Environmental Obligations
or Even Safe and Workmanlike Operations, We Really Don\'t Want Our
Locations To Become Storage Units for Old, Unused Equipment. However, to
Get That Done, a Written Order Would Be Appropriate. Another Item That
We Find Occasionally Is Weeds Around Equipment. In this Case, Weeds
Around this Burner on an Oil Storage Tank. Now, Obviously, for Safety
Reasons, We Wouldn\'t Want That Lit with Those Weeds Around There,
Creating a Fire Hazard. And Occasionally, You Come Across Some Fairly
Bizarre Things or Unusual Things in the Field. Such as this Livestock
Watering Tank Which Is Actually Used for A Disposal Pit. Now, What
They\'ve Done in All Honesty, They Tried to Comply. They Didn\'t Want to
Put Their Oil on the Ground. However, it Really Doesn\'t Comply with Any
of Our Policies Or Approval Processes. So, in Order to Correct this Type
of Problem, We Would Issue A Written Order and Specifically Tell Them
What to Do like We Want a Line Pit That Meets These Certain Standards.
Now, to Determine Whether a Violation Exists, it Sounds Very Simple.
Obviously Anybody That\'s Been in The Field Very Long Has Found That
That Is Not the Case. That Sometimes the Violations Are Very Hard to
Differentiate Between a Problems. Now, Remember What Jamie Discussed a
Few Minutes Ago on What a Violation Actually Is. It Has to Be in Direct
Conflict With a Regulation, Rule, Condition of Approval, Ntl or Onshore
Order. It Has to Be Very Specific. Now, We Have Some Violations and
They\'re Fairly Clear‑cut. Now, this Is a Valve on an Oil Storage Tank
and it Obviously Has No Seal on It. This Would Be a Clear‑cut Violation.
We Also Have this Photo Which Is Probably Hard to Figure out What This
Is but If You\'re Facing This, this Is the Top of a Thief Hatch That\'s
Been Opened. This Is the Lid. Where the Red Arrows Are Pointing Is the
Gasket Where It\'s Been Breached. This Would Actually Be a Violation of
Onshore Order Number 4 Recording ‑‑ Requiring A Vacuum Pressure Thief
Hatch. With the Gasket Breached, It\'s No Longer Effective.
Additionally, We Find Other Violations Such as This. This Is the Same
Tank. As You Can See, It\'s Got a Nipple Welded In. This Is the Back
Side of the Tank. And It\'s Open to the Atmosphere. Now, this Is a
Clear‑cut Violation Because the Tank Cannot Become in a Pressure Vacuum
Mode. So, We Determined What Violations Are. We Determined What Problems
Are. Now, If No Violation Exists, but A Problem Needs to Be Corrected,
What Do We Do Then? What Can Be Done to Correct a Problem? In Order to
Take Corrective Action Necessary to Remedy the Problems That You\'ve
Identified, You Need to Select the Right Tool for the Job. As Previously
Discussed, There Are Several Different Tools at Your Disposal That You
Can Use. However, in the Cases That We\'re Providing Right Now, a
Written Order Would Be the Most Appropriate Tool to Take Care of The
Problems. A Written Order Is Just What it Says. It Is a Directive That
Is Written to the Operator Ordering The Company to Perform a Specific
Action. The Written Order Is Used to Specify the Requirements That Are
Not Covered by Regulation or Approval. Or to Supplement an Existing
Approval. Do Not Confuse the Written Order With a Written Inc, They\'re
Not The Same. A Written Order Is the First Step in Obtaining Compliance
With a Problem and an Inc Is a Step to Obtain Compliance with a
Violation. You Can Also Use the Written Order to Require the Operator to
Submit Additional Information. In Farmington, We Use a Written Order to
Require the Operators To Submit Production Data in Association with the
Production Inspection Such as Run Tickets, Meter Calibration Reports,
Electronic Flow Meter Reports, Seal Records or Other Items That We Deem
Necessary for That Inspection. Now, There Are Many Instances Where
Written Orders Are Appropriate. These Generally Occur after the Well Has
Been Drilled or in the Post‑approval Phase. In These Types of Cases, the
Problems Are Not Classified as Violations. They Are Instances That We
Want Corrected Before They Become Violations. Another Type of Order Is
the Verbal Order. As Such, under 43 Cfr, 3162, You\'re Allowed to Issue
a Verbal Order. However, They must Be Followed Up in Writing Within Ten
Working Days and an Example of a Written ‑‑ or of a Verbal Order Would
Be An Inspector or Surface Compliance Specialist Is in the Field,
Conducting Inspections When They Come upon a Location And There\'s
Someone There That Can Fix the Problem at the Spot. You Can Tell the
Pumpers, Switcher or Whoever Else Is out There to Pick up the Thread
Protectors on the Ground or Remove the Trash or Put the Fence Around the
Pit or Whatever It May Be. However, When You Get Back to The Office,
You\'re Obligated to Go Ahead and Follow it up in Writing Within Ten
Working Days To the Operator.

Sparger: Who Can Issue the Verbal Order?

Kelly: They Can Be Issued by Anybody That Is Delegated the Authority.
Usually the Authority Is Given To the Field Office Manager and He May
Delegate it down to the Minerals Chief or the Team Lead For That
Program. And in Some Cases, Even down to The Individual Inspectors and
Surface Compliance People in the Field. The Difference, as I Mentioned,
Before a Written Order Is Meant To Specify Requirements To, to Correct a
Problem in the Field That You\'ve Identified. An Approval or an Inc Is a
Directive to Correct a Violation In Accordance with Onshore Orders,
Regulations, or Ntls. You Can Also List Multiple Problems on the Written
Order. Although They Have to Be Documented into Afmss on a Case By Case
Basis. So, You Couldn\'t Just Write One Letter and Have One‑tracking
Item in Afmss. If You Wrote a Written Order and You Had Five Different
Problems That You Want to Correct on this Lease, You Would Have to Track
That for Each One of Those Problems in Afmss.

Fellows: Mark, I Got a Question for You. It\'s Kind of a Legal One. Do
Written Orders Carry as Much Weight Legally as an Inc?

Kelly: That\'s a Tricky Question, Ron. I Guess I Would Answer That as
Yes and No. The Written Order Is a Legal Document. It\'s Written to the
Operator Ordering Them to Perform an Action. The Action at this Point Is
Not A Violation but It\'s a Problem That We Have Detected in the Feel
That Needs to Be Taken Care Of. The Inc Is a Violation or an Inc Is
Written for a Violation in Accordance with Regs, Ntls, Onshore
Approvals. Both the Written Order and the Inc must Be Complied with in
the Time Frame Allowed or Sanctions Can Be Assessed. Whether It\'s
Assessment, Civil Penalties or Whatever. While the Written Order Is
Entered into Afmss for Tracking Purposes, it Does Not Figure Into the
Operator Compliance History. And this Is Because Again, the Written
Order Addresses Problems And Problems Are Not Violations. Only
Violations Contribute to The Operator Compliance History In Afmss. There
Are Many Components That Need to Be Addressed When Writing an Inc or
Issuing a Written Order. Beginning with the First Step, Which We\'ve
Talked about Briefly, Is Identify the Problem Or the Issue. Make Sure
That It\'s Not an Inc, Make Sure That It\'s Actually a Problem. The next
Step, When You Write The Letter Is to State the Requirements. Be Very
Clear on What You Found, When You Found it and What You Want Them to Do.
This Is the Single Biggest Issue That We\'ve Had in the past Is They Get
a Letter, They Make a Good Faith Effort to Comply but They Didn\'t
Really Understand What it Was We Wanted. Like an Inc, You Need to
Provide An Abatement Date. This Is Generally 20 Days or More Unless
It\'s a Major Violation. Now, since We\'re Talking about Written Orders,
Unless It\'s a Very Severe Case, You Will Probably Give at Least 20
Days. Now, the next Step Is to Provide A Failure to Comply Language.
This Tells the Operator That We\'re Serious. If They Fail to Comply,
Then They May Be Liable for Additional Sanctions in Accordance with 43
Cfr. They Can Also Appeal Your Written Order, If, for Some Reason, They
Disagree with What You Found and What You Want Them To Do, They Always
Have the Right to Appeal Your Decision or Your Order. Now, Additionally,
They Need to Be Sent by Certified Mail ‑‑ Oh, Let Me Back up One. You
May List Multiple Infractions as Discussed Earlier. You Can List as Many
as You Want Although I Would Suggest That They\'re Probably on the Same
Lease. However, You Have to Track Those And Enter Those Individually and
Into the Afmss for Tracking Purposes. Now, the next One Is to Send
Certified Mail. You Can Also Deliver These Personally If You Document
the Time and the Date That You Hand‑delivered That and the Person Who
You Gave That To. The next One Is We Do Not Count That Against the
Operator Compliance History as Discussed, It\'s Not a Violation at this
Point. And Only Violations Count Against the Operator Compliance
History. Now, One of Most Critical Items That You Can Do Is to Follow up
In a Timely Manner When the Inc Is ‑‑ or When the Written Order Is ‑‑
When the Time Frame Has Expired. Now, it Does No Good to Write These
Written Letters and Just Let Them Sit and Sit and Sit. There Is a
Specific Process That You Want Done and I Know We All Get Busy and
Sometimes There\'s a Lapse in When We Abate and When We Follow up on
Those. But It\'s One of the Critical Elements That You Do to Make Sure
the Compliance Is Achieved. Now, at the End of the Abatement Period, You
Need to Follow up Especially If It\'s a Serious Violation but Even a
Minor Violation, You Need to Follow up To Make Sure Abatement Has
Occurred. If it Hasn\'t, You Need to Issue An Inc Because That Now
Becomes An Incidence of Noncompliance. That Pretty Much Sums it up as
Far as Writing a Written Order, Ron.

Fellows: I\'m Going to Throw One at You. I Got a Question for You, Ron.
I Remember Back in the Farmington Days When the Coal Gas Craziness Was
Going on out There and We Were Issuing a Thousand Apds a Year. We Were
First Encountering the Person Being Produced out of There. I Remember
One of the Problems We Started with Was Was it a Violation When We Were
Concerned About the Height of a Berm Around a Tank Battery. So, That\'s
a Problem? Is it a Violation?

Kelly: it Would Depend, Ron. Again, this Is Where It\'s Critical That
You Determine What The Conditions of Approval Are. If, under the Apd
Package, If We Said That We Wanted Berms Around The Tanks for Water
Containment In Case of an Emergency, Then That Have to Be There. If You
Review the Files and You Cannot Find a Specific Condition Of Approval
That Specifies That, Then That Would Be List the as a Problem and Then
You Would Write A Written Order If You Would Want Them to Install Berms
Around the Tanks.

Fellows: Thanks, Mark. It\'s Clear It\'s Important to Know How to Handle
Field Problems That We Encounter on a Day‑to‑day Basis That Don\'t
Actually Violate Specific Regulatory Requirements. Now, Let\'s Talk a
Little Bit About How to Handle Regulatory Violations and the Proper
Procedures to Use When Encountering Them. Mark and Jamie, I Believe You
Have Some Thoughts on This.

Kelly: Yes, Ron, I Do. You Know, Life Is like a Bowl ‑‑ Actually,
Inspections Are like a Box of Chocolates. You Never Know What You\'re
Gonna Get. That Is Certainly True with the Inspections in the Oil and
Gas Field. We\'ve Determined a Few Items That Are Specific Violations
and These Are No Seal on the Valve. A Pressure Vacuum Thief Hatch ‑‑
Stated like That in the Onshore Order Number Four. Again, a Hole in the
Top of the Tank. It Is Not Appropriate. So, If a Violation Exists, We
Need to Take Care of It. And in this Case, We Issue an Incidence of
Noncompliance. Basically, There\'s Two Types of Incidence of
Noncompliance Covered under 43 Cfr 3163.1. Now, the Difference That
We\'re Going to Talk about Is One Is an Inc Form and an Inc Form Is on a
Preprinted Form Labeled a 3160‑9. We\'ve Been Using That Forever. It Was
Written Originally to Be Issued in the Field by the Pets. Now, There Are
a Lot of Violations That We Use this For. Now, However, We Can Also
Write A Letter. We Can Use the Inc Form or We Can Use a Letter. The
Letter must Contain the Exact Same Information, Not Verbatim, but it Has
to Be There In There. The Letter Is Tailored to the Individual\'s
Situation and It\'s Just in a Letter Format. However, Both, like I
Mentioned, Must Have the Same Information. Now, All Certified Pets Can
Issue Incs and Some Other Surface Compliance Specialists In Different
Offices Have Been Delegated the Authority to Use The Inc Form. However,
Most Engineers and Some Surface Compliance People Generally Write
Letters to Take Care of the Violations That They Detect in the Field or
in Compliance with Some Other Written Order. Changes Are Being Addressed
at This Time So That to Amend the Policy So That People That Are
Properly Trained in That Area Can Go Ahead and Use the Inc Form. Now, a
Notice of Violation Is Used by Many BLM Staff. Engineers and Natural
Resource Specialists Are the Primary Ones. It\'s the Current Policy That
Each Violation Be Documented on A Separate Inc Form. Now, the Reason for
This, Basically, Is When the Inc Was Originally Designed, it Was for
Issuing in the Field. And It\'s Happened Actually Prior To the Computer
Age and Also it Was a Tool for the Pets to Use In the Field So When They
Found A Violation, They Could Give That to the Person in the Field And
it Would Be Hand Delivered. There Would Be a Slow Mail Gap There. It Was
Designed Just So That You Could Speed the Process Along. Now, When Afmss
Was Created, the Program Was Usually Existing Inc Format and Just Made
the Screens In Afmss Pretty Much Verbatim on What the Inc Form Is.
However, You Still Have to Document Each Inc in Afmss Individually. One
Violation, One Inc. When Using a Notice of Violation Letter, Multiple
Notices of Incidents of Noncompliance Within Listed on One Letter.
However, Those Do Have to Be Tracked and Entered into Afmss On an
Individual Basis. Because Each Violation Is Separate. Now, There\'s Many
Components of An Inc Form That I Would like to Discuss. We\'re Talking
about Correcting The Violations That Have Been Identified. So, the First
Step Would Be to Identify the Gravity of the Violation. Now, There\'s
Two Gravities That Are Currently in Place and It\'s Major or Minor. Now,
the Minor ‑‑ the Major Violation Is Noncompliance That Causes or
Threatens Immediate, Substantial and Adverse Impacts On Public Health
and Safety, the Environment, Production Accountability or Royalty
Income. Now, for it to Be a Major Violation, it Has to Meet That
Definition, Immediate Substantial and Adverse. Those Three Items Have to
Be in Effect for That to Be a Major Violation. Also, on Major
Violations, It\'s Required That You Make a Good Faith Effort to Contact
the Operator by Phone to Notify Him Of the Violation. Remember, These
Are Major Violations. We Want Compliance as Soon as We Can Get It. And
by Using the Telephone, That Provides ‑‑ That Decreases the Mail Time.
So, Service for the Inc Is Deemed to Occur When You Notify The Operator
or Agent by Phone. However, If You Make a Good Faith Effort and You
Can\'t Reach The Operator or His Agent, You Know, Send the Inc Certified
Mail and You Will Have a Record Of When the Operator Received The Inc So
the Abatement Period Would Start the Day He Received The Inc. Minor
Violations Are the Other Gravity of Violations and Minor Violations Are
Those Violations Which Do Not Rise to the Level Of a Major Violation.
That\'s Pretty Much Everything Else. You Know, with the Exception of A
Few Items, We Write Probably 15 or 20‑1 Ratio Minor Violations to Major
Violations. Fogrma Violations Are Categorized and Count Against The
Operator Compliance History. Now, Fogrma Violations Are Those Violations
That Directly Affect Production Accountability. Seals on Tanks, Oil in
Pits, Equipment Not Working Satisfactorily. Anything That Affects the
Gas or Oil Flow. Now, Well Sounds Don\'t Affect The Gas or Oil
Accountability. That\'s Not a Fogrma Violation. A Fence Around a Pit Is
Not a Fogrma Violation. So, Remember it Doesn\'t Matter If You Have Five
Violations on Well Signs. That Doesn\'t Count Against the Operator
Compliance History as Far as Fogrma Goes. Now, Moving on to the Inc
Letter. We Can Use Many of the Same Items That We Have in an Inc Form.
On the Inc Form, it States it Is A Notice of Incidence or Noncompliance.
The Operator Has to Be Aware That He Has Received a Notice of Violation
or an Incidence of Noncompliance Letter. You must Identify the Category
And Type of Violation. The Category Being Major Minor And the Fine of
Violation Being Fogrma or Nonfogrma. Of Course, with the Letter, You
Must Cite the Specific Authority That You\'re Using to Give Them An
Instance of Noncompliance. And Be as Specific with That as Possible.
3160 Is Pretty Vague. Narrow it on down as Far as You Can Get it and
Still Be Correct. Now, Some of Them Are Not down To the Nitty‑gritty.
And Some of Them Are. Onshore Order Number 3, Part 2‑5 Dot Dot Dot Is
Probably as Good As You Need to Put. You Need to Include a Specific
Abatement Day. Now, You Can Either Put a Specific Date in There or You
Can Put 20 Days from Receipt, 30 Days from Receipt. It Really Doesn\'t
Matter, as Long as the Operator Knows When He Has to Have the Violation
Corrected By. You Also Need to Include a Failure to Comply Paragraph or
Language in Your Letter. He Needs to Be Aware That If He Fails to
Comply, That Appropriate Sanctions Will Be Applied. This Is the Same as
the Inc Form. In Fact, You Can Take the Verbiage off the Inc Form and
Put it on There Verbatim. The Same with the Appeals Language T Has to Be
Included in Your Letter. Operator Has to Be Able to Appeal Your Order or
Your Notice Of Instance of Noncompliance If He Challenges That. Again,
These Need to Be Sent Certified Mail or You Can Hand Deliver Them If
That\'s Available To You. Again, You Can List Multiple Violations in One
Letter. These Have to Be Documented Separately in Afmss and Each
Violation Would Constitute a Notice of Incidence of Noncompliance. So,
If You Have Five Letters or Five Notices in One Letter, That\'s Really
Five Incs So If He Fails to Comply with One of the Items, That One Item
Can Proceed Through the Assessment and Civil Penalty Phase If it Goes
That Far but Each One Is Separate. Now, Other Documentation That You May
Want to Include Is Logs Or Meetings or Phone Calls with The Operator.
Photographs That You\'ve Taken in The Field of the Violation. Or Samples
or Reports of Some Type to Support the Violation That You Found in the
Field. Again, as I Mentioned, During The Written Order Phase, Follow‑ups
Are Critical. On a Major Violation, Follow‑up At the Very End of the
Abatement Period, If Not the Day, the Day After. On Major Violations,
the Day After That They Do Not Comply, That\'s \$500 a Day and If
You\'re Out There ‑‑ If You Go on for Three or Four Days, I Mean,
Operator Is Really Racking up The Money Because We\'re Not Doing Our
Job. Now, Minor Violations, We Also Need to Follow Up. Now, If the
Operator Self‑certifies That and You Believe That to Be an Honorable
Effort and You Believe That You Can Trust Him to Do What He Says, Then
He Can Self‑certify That and No Further Follow‑up Would Be Required.
However, If He Fails to Send it Back and Self‑certify That, Then We must
Follow up on That. Go out There the Day of or the Day after or as Soon
as Possible That You Can and Follow up on The Minor Inc to See If
Compliance Has Been Achieved. If Not, Proceed to the Assessment Process.
And What ‑‑ I Think Jamie Wanted To Step in Here and Interject.

Sparger: Thanks, Mark. Oral Orders, Verbal Orders, Oral Warnings, Verbal
Warnings. Is Anybody Else Besides Me Confused? We Can Cut it in Half by
Saying Verbal and Oral Obviously Is the Same Thing. I Tend to Use the
Term Verbal. Oral Sounds like a Trip to the Dentist Office. Let\'s
Explain the Issues and the Regulations in the Enforcement Policy. Oral
Orders, Mark Has Already Talked about That. Did a Great Job. Those Are
in the Regulations, a Tool Available for Us as Well as In the
Enforcement Policy. Just Remember Follow Those Oral Orders up in Writing
Within Ten Business Days. Verbal Incs, Lonny Made Mention To Verbal
Incs. I Find it Interesting That the Term Verbal Inc Is Nowhere to Be
Found in the Regulations or in The Enforcement Policy but I Use It and
Everybody Else Uses it Also. But What We\'re Meaning Is the Third Thing
That We\'re Talking About, What We\'re Meaning Is Oral Warnings. Let\'s
Look at this Regulation. Excuse Me. 43 Cfr 3163.a States When an
Operator Fails to Comply with The Regulations in this Part, The Terms of
Any Lease or Permit Or the Requirements of Any Notice or Order, the
Authorized Officer Shall Notify the Operating Rights Owner or Operator
as Appropriate in Writing. In Writing. The Regulation Requires Written
Notification. However, the BLM Has Been Good To Us and They Provided
Another Tool for Us to Use the Oral Warning. Instructional Memorandum Im
94‑17 States Oral Warnings Can Only Be Used Where the Operator\'s
Efforts Demonstrate Good Faith and the Violation Is Both Minor and
Obviously Inadvertent. Ok. Look at That Real Quickly. First of All, this
Tells Us That What We\'re Dealing with Is a Violation. We\'ve Talked
about That. What Is a Violation? Everybody Should Know Except Maybe for
Me. That\'s a Clear Thing to Figure Out. It Is a Violation. Secondly, it
must Be Minor. That\'s Also Pretty Simple. It\'s Not Major. The Third,
However, and Fourth Things Are a Bit Subjective. Good Faith Efforts and
Obviously Inadvertent. You Well Know That this Requires A Judgment Call
on Your Part. Now, Let Me Explain to You What I Might Do out in the
Field to Help Me Make a Good Judgment Call. I\'m Not Saying this Is What
You Should Do and this Certainly Isn\'t Something You\'re Necessarily
Going to See in the Policy. For Good Faith Efforts, I Might Ask Myself a
Couple of Questions. One, Did the Operator Extend Any Efforts to Comply?
Second Question, I Might Ask Myself, Was That Effort a Reasonable
Effort? You Know If the Answer to Those Are No, Then I Would Say That
The Oral Warning Is out of the Question in the Scenario. How about
Obviously Inadvertent. Inadvertent Means Unintentional Or Due to an
Oversight. I Ask Myself a Couple of Questions Here, Also. Did They
Intend to Comply or Did They Think That They Were in Compliance? Now,
Before We Go Any Further, I Want to Make Sure We All Understand an
Operator Stating He Didn\'t Know What a Particular Rule Was, That Is Not
Obviously Inadvertent, Is It. He Has to Know What the Regulations
Require or the Rules Require. Again, These Are My Thoughts. Let\'s Go to
a Real Life Example. Let\'s Say That You Go out on a Tank Battery and
this Tank Battery, the Facility Used to Be On Lease but Recently Was
Unitized. We All Know That Because it Was Unitized, the Operator Has to
Put the Unit Number on the Facility Site. Now, this Actually Happened to
Me Not Too Long Ago. It Was Kind of Fun. I like Fun Stuff in the Field.
The Operator Made a Stencil, Sent the Crew out with a Can of Spray Paint
to Put the Number on The Signs. Unfortunately the Roust a Abouts Turned
the Sten till Backwards. Only about 50 Facility Signs, They Put the
Number Backwards. Let Me Ask Myself the Questions. Was That a Minor
Violation? Yeah, It\'s a Minor Violation. Did the Operator Make a Good
Faith Effort? Yeah, I Think He Did. Was it Inadvertent? Yeah, it Was
Dumb but it Was Inadvertent. But it Was Worth it Just to See Their Faces
When You Brought it To Their Attention. That I Would Feel Very
Comfortable Issuing an Oral Warning. How about the Same Tank Battery But
a Different Scenario. How about There Is No Facility Sign. Minor
Violation? Yes, Still a Minor Violation. Good Faith Effort? No Effort.
Inadvertent? Sorry, Ignorance of the Rules Does Not Cut It. In That
Case, I Would Have to Issue the Written Inc. Let\'s Take it to Drilling
for a Second. You Go out on the Drilling Rig Inspection One Day after
the Bop Test. You Walk up Beside the Choke Manifold and There\'s No
Gauge Like the Regulations Specifically Require. But You See That Mud
Gauge Laying Beside the Manifold and It\'s Ready to Be Put In. Just
Hadn\'t Been Installed. Minor Violation? Yeah, That\'s a Minor
Violation. Good Faith Effort? Probably. Probably Every Rough Neck out
There Was Told to Put That Gauge In and You Know What That\'s Worth.
Inadvertent? Probably Inadvertent. I Would Feel Comfortable Issuing The
Oral Warning and Giving the Operator until I Finished My Sandwich to Get
the Thing Screwed In. How about the Same Rig, Same Scenario but No Mud
Gauge. As a Matter of Fact, the Operator Has to Cull to Town to Have a
Mud Gauge Sent Out. Minor Violation? Still Minor. Good Faith Effort? No,
Nope Effort. Inadvertent? No, Sorry. I\'ll Go to Go Back to the Written
Inc in That Case. If in Doubt, Issue the Written Inc. You\'ll Always Be
Safe. Furthermore, this Policy Goes on To State in the Usage of Oral
Warnings or Verbal Warnings Basically I\'m Not Going to Read It to You
but it Says If it Works, Work It. If it Doesn\'t, Stop, Go to the
Written Inc. If Your Verbal Warning Gets the Operator to Start Complying
and Maybe Fixing Things Ahead of You, and Other Similar Problems, Your
Verbal Warning Is Working. However, If He\'s Using That Verbal Warning
as Nothing More Than a Work Order Which Happens Occasionally, Then It\'s
Not Working. You Need to Go Ahead and Go to The Written Inc. Ok. A Few
More Points. An Oral Warning Needs an Abatement Period Just like an Inc,
Just like These Other Tools We\'ve Talked About. Secondly, the Oral
Warning Does Not Require Written Confirmation Like the Oral Order Does.
You Don\'t Have to Send it in Writing to the Operator. Third, the Oral
Warning Should Be Documented in the Afmss Database. You Document That on
the Inc Shutdown Window in the Inc Action Type Field, Select Verbal
Warning, Click on it and You\'ve Got the Documentation. Lastly, Remember
Do Not Issue Assessments for Failure to Comply with an Oral Warning.
Issue Instead of That, You Would Start the Enforcement Process. If They
Fail to Comply Within Your Abatement Date, Start the Enforcement
Process, Issue the Written Inc and You\'re off to The Races. Ron?

Fellows: Gentlemen, We Covered a Lot of Material Here. I Think We\'re
Going to Need a Break. So, at this Point, We Are Going To Take a 15
Minute Break. When We Come Back, We\'re Going To Hear from Lonny and
We\'re Going to Ratchet this up a Little Bit and Talk about Shutdown
Notices Then Mark and Jamie Will Be Back and We\'ll Cover Assessments.
So, See You All in a Few Minutes.

Fellows: Welcome Back to Our Enforcement Workshop. Before We Get Things
Started Again, We\'re Starting to Get Some Faxes Coming In. They\'re
Started to Roll in Now. However, There\'s One Small Problem. Some of
Them Are Very Difficult To Read. So, When You Send Those Faxes, Please
Write a Little Bit Clearer. To Give Us Half a Chance Here to Read Them
All. So, Now as I Promised, Things Are Going to Get Interesting. We\'re
Going to Go to Lonny and He\'s Going to Discuss Shutdown Notices and the
Proper Procedures for Handling Them. Lonny, When Can I Use a Shutdown
Notice?

Bagley: Shutting down an Operation Can Be an Effective Tool to Gain
Compliance. There Will Be Situations Where You Will Want to Shut down
the Operations for an Immediate Situation and Also in Cases Where
You\'ve Already Notified The Operator in Writing. When Operations Are
Shut down For Immediate Situations Such as When Drilling Without a
Permit Or Causing Services Disturbance Without Approval, You Would Use
The Shutdown Notice Immediately. Those Are ‑‑ These Are When Things Are
Done Prior to Approval. Where Continued Operations Could Result in
Immediate Substantial And Adverse Impacts on the Public Health and
Safety, the Environment and Production Accountability or Royalty Income,
Shutdown Notices Are Also Very Effective. Shutting down for Other
Reasons ‑‑ Shutting down for Other Reasons Could Be Given When Notices
Are in Writing N Situations Where this Could Occur If the Operator Fails
to Comply Your Initial Notice or The Violation Is One in Which You Would
like to Get Their Attention. Also in this Particular Area, Assessments
Will Continue Throughout the Shutdown Period. Also, Violations When
First Discovered with a Minor Situation in Nature, They Have Also Risen
to a Major Violation Shutdown Operations May Be Necessary. When Issuing
a Shutdown Notice, You must First Issue an Incident Of Noncompliance to
Notify the Operator That this Is in Violation. Along with a Shutdown
Notice Which Fails ‑‑ Builds the Criteria for Stopping the Operation.

Kelly: in Farmington, We Have A Lot of Indian Lands. How Would You Go
about Issuing a Shut‑in Notice on Indian Lands? Is That Different than
on Federal Lands?

Bagley: an Additional Step Is Necessary, Mark. First of All, We must
Notify the Bia of Our Actions and Also Inform the Tribe of Our Actions
Because One of the Major Things About Indian Leases Is That They\'ll
Expire If There\'s Production That Hasn\'t Occurred For 30 Days,
They\'ll Expire on Their Own.

Sparger: Occasionally in Vernal, We Get Requests from the Minerals
Management Service or The Bureau of Indian Affairs to Perform a Shutdown
Action. What Do We Do in That Situation?

Bagley: in That Situation, When Mms Has Notified Us, We Would Honor the
Request but We Would Want it to Be in Writing To Us. And Then There\'s
Another Situation Where We Would like to Talk about Today and Uses a
Very Effective Tool and That Is Where We Would Shut down the ‑‑ Excuse
Me, Where We Would Go and Enter The Lease and Do the Work Ourselves. In
These Situations, this Is Where the Operator Has Refused To Comply and
the Nature of the Violation Is So Serious That Immediate Corrective
Action Is Necessary. One of the Criteria Involved Is That Operator must
Pay for the Operations plus 25% for Overhead Costs. Now I Would like to
Toss it over To Jamie Who\'s Going to Talk About Immediate Assessments.

Sparger: Thanks, Lonny. You Know, the Bureau Has Given Us in Our
Enforcement Toolbox, Has Given Us a Big Hammer and The Big Hammer Is
Immediate Assessments. Let\'s Go Right to the Regulation. 43 Cfr 3163.1
B States in Part Certain Instances of Noncompliance Are Violations of
Such a Serious Nature as to Warrant the Imposition of Immediate
Assessments upon Discovery. Now, Let\'s Stop There for a Second. Number
One, the Problem Has to Be a Violation. And Number Two, That Violation
Has to Be of a Serious Nature. Upon Discovering, the Following
Violations Should Result in Immediate Assessments Which May Be
Retroactive in the Following Specified Amounts per Violation. What Does
this Tell Us? It Tells Us That the Word There Is Shall Result in
Immediate Assessments. That Means If We Find It, We\'re Supposed to
Issue the Immediate Assessment. Also Tells Us That Those Assessments May
Well Be Retroactive. At Least of Two the Situations That You May
Encounter, You\'re Going to Have to Go Back and Find out When the
Problem Started and Then Begin the Assessment Calculation at That Point.
What Are These Particular Bad Things That You May Run Into? Number One,
Failure to Control ‑‑ or Excuse Me, Failure to Install a Blowout
Preventer or Other Well Control Equipment as Required by the Approved
Drilling Plan. \$500 per Day for Each Day That The Violation Existed.
Including Days the Violation Existed Prior to Discovery Not To Exceed
\$5,000. Now, We Know What Blowout Preventers Are but What Is Meant By
the Term Equivalent Well Control Equipment? Well, Again, We Don\'t Have
a Definition in the Policy. But That Could Be a Major Piece Of
Equipment. I Emphasize the Word Major. A Major Piece of Equipment
That\'s a Part of That Blowout Prevention System Such as Maybe The
Accumulator or the Choke Manifold. Something That If It\'s Not There,
You Have No Well Control Or You\'ve Seriously Hampered Any Well Control
Possibilities. If That\'s the Case, Then Issue The Immediate Assessment.
What\'s Our Second Problem? This Drilling Without Approval Or for
Causing Surface Disturbance on Federal or Indian Surface Preliminary to
Drilling Without Approval. \$500 per Day, Again for Each Day That the
Violation Existed Including Days the Violation Existed Prior to
Discovery Not To Exceed \$5,000. Please, Keep in Mind this Immediate
Assessment Does Not Apply in a Split Estate Scenario Where Your Surface
Ownership Is Fee or State, Ok. All Right. Let\'s Go to Our Third
Immediate Assessment. Failure to Obtain Approval of a Plan for Well
Abandonment Prior To Commencement of Such Operations, \$500. Now, this
Is a One‑time Assessment. You Do Not Go Back to the Day it Began. It
Might Be Months Ago. Or a Year Ago. This Is a One‑time Assessment of
\$500. Now, Sometimes We Forget about The Fact That We Have Another One
More Immediate Assessment That Is an Enforcement Tool at Our Disposal.
And That Is Breaking a Federal Seal. Onshore Order 3, Iv States in Part
a Card Is Attached to Each Federal Seal Installed, Identifying the
Federal Seal as Such and Advising That Removal Or Violation of the Seal
Without Approval by the Authorized Officer Shall Result in an Immediate
Assessment of \$250. That\'s Exactly What it Says. Shall Result in an
Immediate Assessment. If Somebody Breaks the Federal Seal That We
Install, That\'s a \$250 Assessment. Please Keep in Mind That the
Authorized Officer ‑‑ Excuse Me, The State Director Has the Authority to
Reduce or Compromise Any Assessment That\'s Been Issued. He\'ll State
the Reasons Why in The Record. Mark, Back to You.

Kelly: Thanks, Jamie. Those Sound Pretty Potent Penalties There. I Would
like to Talk a Few Minutes about Monetary Assessments. These Assessments
Are Another Tool That Have Been Given to Us To Try to Bring the
Operators Into Compliance. Assessments Are Not Punitive in Nature. The
Assessments Cover the Administrative Costs for Recouping Some of the
Costs Associated with this Inspection. Civil Penalties on the Other Hand
Are a Punitive Action Taken Against Operators for Failure to Comply with
Notices or Instances Of Noncompliance of the Authorized Officer. Now,
When I Talked to You Earlier, We Barely Got into this Of When
Assessments Are Appropriate. Now, Assessments Are Appropriate When the
Operator Fails to Comply with Any Written Order or Incident of
Noncompliance of the Authorized Officer. Now, Don\'t Get Confused with
If You Issue a Written Order and They Don\'t Comply, No, You Don\'t Go
to Assessments, You Go to the Inc Process but They Can Initiate from a
Written Order. When They Fail to Come into Compliance with a Written
Order Or Notice, of the Authorized Officer, at the End of the Abatement
Period, If They\'re Not In Compliance, the next Step Is To Issue an
Assessment. Assessments Are Covered under 3163.1. They\'re Broke down
into Two Separate Parts. 3163.1a1 and 3163.1a2. Outlines the Procedures
for Assessments Issued with Continued Noncompliance for Major and Minor
Violations. Now, Major Violations, If You Will Remember, Are Those
Violations That Are Immediate, Substantial and Adverse to Public Health
and Safety and the Environment, Production Accountability or Royalty
Income. Make Sure it Meets the Three Requirements and it Falls into One
of Those Categories. Now, Major Violations Are Assessed at \$500 a Day.
Now, There Is a Cap on the Number of Violations That You Can Have or a
Number of Violations That You Can Assess Per Lease per Day. Now, There
Is a \$1,000 per Day Per Operator per Lease Cap. So, If You Had Five
Major Violations on One Lease, it Would Still Be Capped at \$1,000 Per
Day. Now, That Continues for 20 Days. So, I Mean It\'s Basically from
The Date That They\'re Notified Till the Date That They Come Into
Compliance. This If They Don\'t Come into Compliance at the End of the
Abatement Period, Then ‑‑ and The Abatement Period Is 20 Days From
Receipt or 20 Days from Notice, it Goes into Civil Penalties. And We\'re
Not Going to Discuss Civil Penalties in Detail Right Now. Lonny Will Get
to That Shortly. So, for Again, Major Violations Are Assessed under
3163.1a1, You Have to Notify the Operator of Potential Civil Penalties
If Not Corrected. They Have to Be Aware That That Is the next Step for
Them to Go Through. Minor Violations, on the Other Hand, Are a Little
Bit Different. If You Go out to the Lease on Your Follow‑up and You
Determine That the Operator Did Not Comply With the Inc, You Assess Him
\$250 and Issue Another Inc. You Can Also Issue a Letter Stating the
Same Thing or You Can Use the Inc Form. The Process Is Exactly the Same.
You Assess \$250 and Give Them Another Reasonable Abatement Period
That\'s Not less than 20 Days. Again, this Has a Cap on It. The Cap Is
\$250 per Operator per Day per Lease, Capped at \$500. So, If You Had
Five Minor Violations That Were Not Corrected, it Would Still Be Capped
at \$500 per Day. And That\'s Not a Continuing Assessment. That\'s a One
Time Only Assessment. So, You Would Give Them an Inc. They Don\'t
Comply, You Assess Them \$250, You Give Them Another 20 Days to Comply.
At the End of the 20 Days If They\'re Not in Compliance, it Goes to
Civil Penalties at That Point. In Your Letter or Your Incidence Of
Noncompliance, the Second Notice Which Is the Assessment, Notify Them If
You Write a Letter That Civil Penalties May Occur If Noncompliance Is
Not ‑‑ If Compliance Is Not Achieved Within the Abatement Period. Now,
That Pretty Much Covers in A Brief Way, What the Monetary Assessments
Are for Major and Minor Violations. Back to You, Ron.

Fellows: Thanks, Mark and Jamie. Want to Remind Us All That Compliance
Is Still the Primary Objective Here and the Appropriateness of the Tools
That We\'ve Been Talking about Is Very Important. However, There Are
Circumstances Where We Even Have to Move this Thing a Little Bit
Further. So, Let\'s Do That. And Lonny, We\'re Going to Dive Right into
That Swamp. And Called Civil Penalties. So, Let\'s Move on and If You
Can Give Us Some Ideas on Sometimes Confusing Issue and We\'ll See Where
We\'re Going to Go with It.

Bagley: Thank You, Ron. It Is Sometimes Confusing When To Use Civil
Penalties and We\'ll Try to Clarify That Here Today. And When ‑‑ One of
the Cases Is When Would We Use Civil Penalties. And this Would Be in the
Case Where You Have a Failure to Comply with a Notice and Also Where You
Have Other Situations That Are in the Regulations That Require Civil
Penalties. The Last Thing Is We Have Knowing and Willful Type
Violations. Mark Had Discussed When to Fall Into Civil Penalties after a
Compliance Period Has Lapsed and They Fail to Comply and You\'ve Issued
a Second Notice That After That Time They Can Go into Civil Penalties.
We\'ll Talk about That More. I Would like to Stress Other Tools Prior to
Getting the Civil Penalties and That Would Be the Shutdown Notice. There
Are Going to Be Times When It\'s a Lot Easier or a Better Way to Get
Compliance If You Go To the Shutdown of Operations. You\'ll Get the
Operator\'s Attention More Quickly and Most Likely Would Result in
Compliance More Immediately. However, You\'re Going to Run Into
Situations Where the Lease May Already Be Shut in and You Wouldn\'t Be
Able to Go to That Route. The Process Then Would Fall on To Either
Performing the Work Ourselves or Going on to Civil Penalties. So, Let\'s
Discuss Civil Penalties a Little Bit Here. And the next Item Is What
Actions Do I Take When Using Civil Penalties. First of All, You must
Have Already Notified the Operate They\'re a Violation Does Exist And
You\'ve Given an Appropriate Abatement Date to Correct It. Or it Was
Found by a Liable Person and Was Failed to Correct. Now, for Situations
Where You Have a Major Violation, the Civil Penalty Cannot Be Assessed
Until 20 Days Have Lapsed since The First Notice. And We\'ll Talk about
That in a Little Bit, Too. For Minor Violations, You Cannot Assess Civil
Penalties until 20 Days after the Date of Second Notice. And We\'ll
Discuss That a Little Bit Further. So, the Question Is How Do I
Calculate My Civil Penalties. And Hopefully I Can Clear up How We Can
Determine and Calculate Civil Penalties in the Little Bit of Time We
Have Left this Morning. On a Situation of a Major Violation Is Not
Corrected Within 20 Days, the Lessee Shall Be Liable for a Civil Penalty
up To \$500 per Day, per Violation From the Date of Notice. Not to
Exceed \$1,000 per Day. Well, the Question Is Then What Is the Date of
Notice. If We Take into Consideration That We Have Found a Violation, A
Major One, on January 1st, We Identified It, the Inc Then Was Sent to
the Operator on January 2nd. The Operator Received it or Deemed Received
Through Our Call To the Operator or Various Methods When They Received
the Inc Themselves on January 3rd. Well, the Date of First Notice In
this Case Would Be January 3rd. Well Then What Would Be the 20th Day
When I Could Assess Civil Penalties? The 20th Day Then Would Be January
23rd. That\'s When Civil Penalties Could Start. But, Again, We Need to
Talk a Little Bit about If Civil Penalties Are Taken into Consideration,
There\'s Going to Be Some Time Lag Maybe That We\'ll Have to Consider
Here a Little Bit Later. If the Violation Does Continue, Is Not
Corrected Within 40 Days, You must Issue a Noncompliance Back to the
Operator of a Major Violation and Give Them 40 Days To Correct the
Violation. Then If It\'s Not Corrected, and That\'s 40 Days from the
Date of First Notice, If the Violation Is Not Corrected Within That 40th
Day, the Operator\'s Then Liable for a Civil Penalty of \$5,000 per Day,
per Violation Not to Exceed \$10,000. Up and Through the 60th Day. Well
Then What Would Be the 60th Day, Would Then Be, in this Case, March 3rd.
Because the Operator Received The Inc on January 3rd. So, the 60th Day
Would Then Be March 3rd Again So You Can\'t Assess Anymore than That.
Now, Any Civil Penalties or Excuse Me, Any Assessments Paid Or Assessed
During this Period Of Time Are Going to Be Deducted From the Amount of
Civil Penalties. Also, If the Operator Does Agree To a Longer Abatement
Period, Beyond the 20 Days, You Cannot Assess Civil Penalties for More
Than 20 Days So You Start Backwards from When That Abatement Date
Started and Assess 20 Days Back. Now, for Minor Violations, in The
Process Here, the Operator Was Notified in Writing of the Violation and
Did Not Correct It. And Then You Also Assess Them Under the \$250
Assessment. Under 3163.1. Then Through the Process, the Operator Has
Issued the Second Notice upon Assessment of the \$250 and Given Not less
than 20 Days to Abate That. As Mark Explained Earlier. Then the Operator
Has Failed to Comply with That Particular Request for ‑‑ to Come into
Compliance or Order, You Might Say. Well Then in a Civil Penalties
Situation, If the Operator Has Failed to Comply after That 20th Day from
the Date of Second Notice, the Operator Shall Be Liable for a Civil
Penalty up to \$50 per Day per Violation Not to Exceed \$100 per Day.
Well, a Question Then Comes What Is the 20th Day in this Situation?
Let\'s Take into Consideration That the Abatement Date of the First Inc
Was February 9th. In this Case Then, on the 10th Of February, a Second
Notice With an Assessment Was Issued to The Operator. They Received That
Inc on February 17th. Well, Your Date of Second Notice Then Becomes
February 17th. And That\'s When Civil Permits Could Be Started. The 20th
Day from That Date Then Would Be March 7th. It Would Be the 20th Day.
Now, If the Violation Was Not Corrected Within the 20 Days, You must
Give the Operator Another 40 Days to Comply. Or Excuse Me, Another 20
Days. And That Would Be Then March 27th Would Be the 40th Day for
Calculating Civil Penalties with The Date of Second Notice Being
February 17th. And in this Case, the Operator Is Liable for Civil
Penalties of Up to \$500 per Day per Violation, Not to Exceed \$1,000
Per Day. Up and Through the 60th Day. Now, the 60th Day in this Case
With the Second Notice Being on February 17th, Is Going to Be April 17th
Is When the Second Notice or the 60 Day Period Will End. Any Assessments
Assessed During This Time and Paid by the Operator Would Be Deducted
from The Civil Penalty Amount. Also, Again, If the Operator Does Agree
to an Abatement Period Longer than 20 Days, He Cannot Calculate Civil
Penalties On the 20th Day from the Notice. It Has to Be from the End of
the Abatement Period of the Longer Period Agreed To. Now, We\'ve Gone
Through the Civil Penalty Process up until The 60th Day. What Would
Happen If at the End Of the 60th Day, the Operator Was Not in
Compliance? At the End of 60 Days, the Operator Would Be Notified of The
Proposed Civil Penalties and Also That Lease Cancellation Proceedings
Would Be Initiated. We No Longer Want the Operator In Business If
They\'re Going to Continue to Fail to Comply. Now, for Determining the
Civil Penalty Amounts, Let\'s Talk About That a Little Bit More. Must
the Civil Penalty Amount Be Assessed at the Full Amount? Well, Yes for
Major Violations, They must Be Assessed as per Our Policy at the Full
Amount. Now, Any Proposed Civil Penalties for Minor Violations, However,
Can Be Assessed up to The Amount Specified. The Field Manager Has the
Discretion to Assess up to That Amount. Now, Again, Any Amount of
Imposed or Paid Assessments During this Time Will Be Deducted from the
Civil Penalty Amount. Another Question Comes Up. Who Can Reduce Civil
Penalties? On a Case by Case Basis, the State Director Can Compromise or
Reduce the Civil Penalty Amounts. But as Jamie Explained, Through The
Assessment Amounts, He must State on the Record as Far as What the
Reasons Were for Reducing Those Amounts. Now, Let\'s Talk a Little Bit
About Some of the Other Civil Penalty Cases out There. That Are a Little
More Explanatory in the Regulations. The First One Is If a Transporter
Fails or Refuses to Permit ‑‑ or Excuse Me, Fails to Permit Inspection
of His Documents, He Could Be Liable For Civil Penalties of up to \$500
per Day with a Maximum of 20 Days. Another Civil Penalty in Our
Regulations and in Fogrma Is That Any Person Who Refuses to Permit
Lawful Entry for Inspection Is Liable up to \$10,000 per Day Not to
Exceed 20 Days. For That Violation. Now, this Brings Us into the Next
Category. Jamie, Do You Have a Question?

Sparger: Yeah, If the Transporter Says Go Away and Refuses to Let Us
Inspect What We Need to Do, Does That Civil Penalty Go to the
Transporter or Back to the Operator?

Bagley: That\'s Against the Transporter Themselves. Fogrma and Congress
Has Intended If We Have Some Transporters out There That Are Not
Complying and Allow Us to Look at the Documentation, We\'re Going to Go
After the Transporter, Not the Operator.

Sparger: Thanks.

Bagley: Now, Let\'s Look at Some Knowing and Willful Type Situations.
Well, the First Thing Is You Know, What Is up with the Knowing and
Willful Type Civil Penalties out There and How Do I Really Prove a
Knowing and Willful Type Situation. Well, the Short Answer Is Sometimes
I Really Don\'t Know. But Let\'s Take a Look at What Congress Did and
What They Intended for Us to Have as a Tool to Look at Knowing and
Willful. They Provided Us an Avenue to ‑‑ As a Big Stick, You Might Say,
For Operators or in Some Cases, Transporters, That Are Not Complying. We
Had a Big Stick to Go after Them With. Also, as Intended to Send a
Strong Message to Anyone, Operate on Federal or Indian Lands That We Do
Mean Business And We Would Go after Them If We Knew Full Well That They
Were Not in Compliance. And this Would Be Any Entity Committing Those
Acts That Knew Full Bull They Were in Noncompliance. We Could Go after
Them for Knowing and Willful. Myself, I\'m Kind of Relieved We Have the
Big Sticks Also. It Does Give Us an Avenue If We Can Prove the Case, We
Can Go After That Particular Entity and Get Compliance and Also Assess
Punitive Type Situations.

Although It\'s Going to Be Difficult at Times If We Know to Prove
Knowing and Willful Type Situations. A Lot of the Cases You\'re Going To
Be Involved With, You\'re Going to Involve Law Enforcement Also. Let\'s
Look at the Categories for Knowing and Willful Situations. Some of the
Knowing and Willful Type Situations Are, If You Fail To Report Your
Startup Notice, You Can Be Assessed up to \$10,000 per Day for Each Day
the Violation Exists. Up until 20 Days. Also, Any Person Could Be Liable
For Civil Penalties up to \$25,000 per Day If They Knowingly, Willfully
Prepare, Maintain or Submit False Reports Or Other Data. Also, If the
Person Knowingly And Willfully Takes or Removes Transports, Uses or
Diverts Any Oil or Gas from a Federal or Indian Lease Without Legal
Authority, Can Be Assessed \$25,000 for Each Day Not to Exceed 20 Days.
Also, If a Person Purchases, Accepts, Sells or Transports or Conveys to
Another Any Oil or Gas Knowing or Having Reason to Know That the Oil or
Gas Was Stolen from a Federal or Indian Lease. That Is \$25,000 per Day.
Now, We\'ve Talked about the Amounts per Day and These Knowing and
Willful Type Situations and Also, Each One of Them Has a Category Not to
Exceed 20 Days. Well, What Happens at the End of The 20 Days If There\'s
Still in Noncompliance? In Those Situations, If the Violation Continues
past the 20 Day Maximum Time Frame, They Will Be Subject to Lease
Cancellations and Those Particular Cases Will Be Initiated. Now,
Hopefully I\'ve Cleared up The Criteria Involving Civil Penalties and
Knowingly and Willful Situations. And Mark, Did You Have a Question
There?

Kelly: to Back up a Little Bit, I Was Wondering Who Can Stop
Transporters and Do They Have to Be on the Lease, off the Lease?

Bagley: Very Good Point, Mark. That Does Create Somewhat of a Problem in
an Enforcement Arena For Us but Stopping Anyone on Lease, We Can Do
That. If They\'re There Filling up the Truck, We Can Ask for Their
Documentation. And They Have to Provide It. If We Know That That
Particular Truck Came and Got a Load of Oil From a Federal Lease but
They Were off the Lease, We Would Then Use the Assistance of Law
Enforcement or the Sheriff\'s Department to Assist Us in Stopping the
Trucks and Asking Them to Look at Their Documentation. But We Have to
Know That They Did Come from a Federal or Indian Lease. Thanks, Mark.

Fellows: I Have One for You, Lonny. This Procedure Is Very, Very
Difficult to Get Through Once You Start It. So, My Question Is Once You
Do Start This, Do You Have to Conclude it or Can You Stop Somewhere in
the Middle of this And Take Another Route or Are You Locked In?

Bagley: the Process Can Be Stopped. In Ways of Let\'s Say You See the
Operator\'s Making a Diligent Effort. You Can Extend the Abatement
Period for Some Violations in Agreement with the Operator. Or Actually
They\'re Going to Come to You and Ask You for That Extension. Well, at
That Point, You\'re Basically Stopping the Process. And Civil Penalties
May Not Be Occurring at That Point. You May\'s Gree To. But You Still
Have the Ability Then When it Resumes into ‑‑ You\'re Going to Give Them
a Good Period of Time or an Agreed upon Time. After the Time If They
Fail to Comply, Civil Permits Will Continue On. So, Yes, Do You Have
Flexibility There in Working with Civil Penalties.

Sparger: Where Does a Specialist Go to Make Sure What Goes in the Civil
Penalties Letters and Who Signs the Letters?

Bagley: They\'re Basically Covered in the Regulations. We Do Have Policy
on What Is Contained in the Civil Penalty Situation and They Pretty Much
Follow What Is in the Regulations as Far as Providing Them the
Opportunity for Appeal, Setting out the Criteria on What Sole Penalties
Are and What Amounts Are Being Charged at or Proposed to Be. And as Far
as Signing Those Civil Penalties, That Would Probably Come down to the
Authorized Officer. In Which the Inspector\'s Going To Be Involved in
That Process. But Most Likely, the Manager\'s Going to Sign That or His
Designated Person for Doing It.

Sparger: Ok, Great.

Bagley: Any Other Questions, Guys?

Fellows: I\'ve Noticed When I Was in Farmington and Also in Bakersfield,
Sometimes the Threat of Using Civil Penalties Gets the Job Done, Too.
So, There\'s Where the Judgment Comes in on Part of the Inspector.
Difficult Road to Go Down. But Sometimes the Threat of Using Civil
Penalties Does Work Just as Well as Using Them Themselves.

Bagley: Yes, it Does, Ron. That Goes Right into Our Inc Form and Notice
of Violation That Does Tell the Operator If You Fail to Comply, We\'re
Going To Take Other Actions to Increase the Penalty You Might Say for
Failure to Comply like Going into Assessments for Failure to Comply and
Then on Into Civil Penalties. So, They Are Notified Right Up‑front and
We Don\'t Get into a Lot of Civil Penalty Cases but When We Do Have To,
the Operator\'s Well Aware That They\'re in the Wrong.

Fellows: Anybody Else Have Questions on That or Anything Else We Talked
about Before We Take the Break for Lunch?

Bagley: I Do Have One Other Item I Would like to Talk about And That\'s
Law Enforcement, When Do We Involve Those Folks in the Process. There\'s
Going to Be Times When We Want to Involve Law Enforcement When We
Suspect There\'s Any Possibility of Theft Occurring or If There Are
Areas We Suspect Fraud. We Need to Involve Law Enforcement in Those
Cases. They\'re Going to Be Able to Assist Us in Taking the Criminal
Road Then and Getting the Situation Taken Care Of. We Are Working on
Some New Policy Regarding Involvement of Law Enforcement. And That
Should Be Hitting the Street Pretty Soon but It\'s Just Setting out the
Criteria, Who We Notify, When We Do and What Procedures to Be Followed
So It\'s Very Important to Involve Those Folks.

Sparger: Lonny, I\'m Going to Put Myself on the Line Here. In Vernal, We
Have a Lot Federal And Tribal Leases. Now When We Notify Law Enforcement
on a Lease, We Go to Our Field Office Ranger and He Takes Care of It. Or
We Work with Him and He Takes Care of It. But on the Tribal Leases,
We\'ve Been Going to the Fbi or the Bureau of Indian Affairs Police.
Tell Me Yes If That\'s the Right Way to Do That. If Not, Educate Us.

Bagley: it Is the Right Procedures to Take. When You\'re Dealing with
Indian Leases, it Becomes a Little More Of a Special Case, You Might Say
Because of Our Trust Responsibilities. And Bia Is Responsible for a Lot
Of Actions That Occur on Indian Lands. We\'re Responsible but If
There\'s A Situation Where We Do Suspect Theft or Fraud, You Involve Bia
And Also Notify the Fbi in Those Cases.

Sparger: Great.

Bagley: it Brings out on Federal Leases, You May in Some Situations,
Through Your Law Enforcement, Be Involving Fbi, Too, If it Is Happening
Across State Lines for Instance or Other BLM Agencies.

Sparger: Ok.

Fellows: Anyone Else Have Any Questions on this or Any Other Subject
Before We Break? Well, You Know, Thanks, Lonny. That Was a Difficult
Subject to Get Through. One Message, Too, Is That We Shouldn\'t Be
Afraid of Using This Tool. That\'s Exactly What it Is. It\'s Another
Tool.

Bagley: I Hope I Cleared it Up for Folks, If Not, I\'m Sure We\'ll Get
Questions.

Fellows: That Concludes the First Segment of Today\'s Enforcement
Workshop. We\'re Going to Go off the Air Now for an Hour to Give You a
Chance to Eat Lunch. When We Come Back, We\'ll Look at How State Offices
Handle State Director Reviews, We\'ll Have an Update on Oil and Gas Rule
Making Efforts That Could Affect Our Enforcement Procedures and We\'ll
Have a Special Message From BLM\'s Top Management. We Also Set Aside
Some Time to Hear from You in an Open Question and Answer Session.
Remember, When We Come Back, Once Again, We\'ll Be on Satellite Galaxy 6
Transponder 5. So, Keep Those Receivers Right Where They Are. We\'ll
Give You a Short Test Signal Before We Pick up Things Again. Stay with
Us. There\'s a Lot More Coming Up. We\'ll See You Soon.
\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*

Fellows: Welcome Back to Our Oil and Gas Effective Compliance Procedures
Workshop. Again I\'m Joined by Washington Office I & E Specialist Lonny
Bagley and from Vernal, Utah, Supervisory Petroleum Engineering
Technician, Jamie Sparger Is Back with Us and Also From Farmington Field
Office, I & E Team Leader, Mark Kelly Has Returned. In this Afternoon
Session, We\'ll Review What We Covered Before The Break. And as We
Mentioned, We\'ll Look At the State Director\'s Review Procedures as
Well as Getting an Update on the Ongoing Proposed Oil and Gas Rule
Making Effort. But Before We Pick Things up Again, We Have BLM\'s Deputy
Director Nina Hatfield and Assistant Director Pete Culp on The Phone.
They Wanted to Call in to Participate in Our Program Today To Discuss
Topics Regarding BLM\'s Oil and Gas Program and Some of the Challenges
We Face. So, Let\'s Go to the Phones Now.

Hello. We\'re Here.

Fellows: Pete, Are You There?

I Sure Am.

Fellows: How Is Everything in Santa Fe?

We Were Surprised by the Snow But Not Nearly as Much as in D.c.

Fellows: You Have to Go Back Tomorrow, Right?

That\'s Right.

Fellows: I Hope That Tip Has The Sidewalk Shoveled for You. Nina, What
Could You Offer Us Today? We\'ve Been Looking Forward to Your Call.

I Appreciate the Opportunity To Participate. I\'m Sorry That I Can\'t Be
with You in Person. You All Know We\'ve Just Finished An Executive
Leadership Team Meeting Here in Santa Fe. And of Course One of the
Topics, The Main Topics That We Had on The Agenda Was Talking about the
Oil and Gas Enforcement Program. Inspection and Enforcement Program. And
it Has Been a Concern of All Of Our\'s and I\'m Glad to Hear That We
Have this Training Session Ongoing So We Can Continue to Try to Make
Progress In this Program. As We\'ve Looked at the Strategic Plan over
the Last Couple of Years and as We\'re Doing Revisions Now, One of the
Things That We\'re Trying to Do Is to Make Sure That as a Bureau, We
Look at Trying to Take Care of Existing Commitments. And I Think the
Hard Work That You All Do in Terms of Your Inspection Efforts Are
Absolutely Critical to Making Sure That the Bureau Achieves Its Mission
of Ensuring That the Environment and the Public Are Protected and That
the Production from Indian and Federal Lands Is Accounted For. And We
Think That There\'s Been Some Uncertainty in the Program Over the Last
Few Years. I\'m Sure That That Derives in Large Part out of the Struggle
That All of Us Have Had in Terms Of Trying to Make Our Limited Resources
Stretch Across a Number of Programs. But as We\'ve Looked at the
Inspection and Enforcement Program Through Some Recent Visits to the
Field, We\'ve Certainly Recognized There Were Short Comings and as the
Elt Decided in its Last Meeting and Others of You Have Done in the
Interim Between That Meeting and This Meeting, We\'re Certainly Wanting
to Take Aggressive Steps To Make Improvements in the Program. As a
Result of That, We\'ve Just Approved a Plan That Was Developed to
Revitalize the I & E Program. It Covers Three Key Areas That Are
Required, We Think, to Make Sure That There Is Improvement In the
Program and That the Program Is Successful. And Pete Led a Little
Discussion With the Elt While We Were Here To Talk about this Plan for
Improvement of the I & E Program. We Also Had the Benefit of Listening
to California State Office Talking about Some of the Efforts That
They\'ve Made and One of the Areas That Is in the Plan and That
California Had Paid Particular Attention to Was That of Oversight in
Management Involvement. Through Our Field Visits, We\'ve Seen That
Supervision Is a Program Needs to Be Realigned Closer to the Activities.
Due to the Complexity of the Program, It\'s Critical for the Supervisor
to Have Sufficient Knowledge of the Program to Monitor the Completion of
the Work and Certainly to Be Able to Recognize Problems and Take
Immediate Action to Resolve Them. And as We Had Eliminated Some of The
Supervisory Positions in the Program, We Think It\'s Resulted In a
Suffering in the Quality of The Work That\'s Been Performed. So, We
Certainly Intend to Increase Oversight in the Program. We Need
Consistency and How Inspections Are Conducted and in Maintaining
Complete Documentations of the Inspections That We\'ve Done. Presently,
We\'ve Found Through Our Evaluations and Inspection Procedures Are Not
Being Followed. That Enforcement Actions Are Not Appropriately Taken.
And That the Knowledge Level of The Inspection Staff Has Suffered and
Has Not Been Maintained. And While We\'ve Seen Recent Improvements in
this Area, It\'s Not Yet at the Level to Provide Assurance That Our
Inspections Are of a Quality to Ensure Compliance. I Might Note That Law
Enforcement Also must Play a Role in the I & E Program. Where You, as
Inspectors, Suspect Any Theft or Fraud, the Procedures Need to Be in
Place So That You Can Notify a Law Enforcement Personnel. Now, in
Addition to the Oversight and Management Involvement of the Program That
We\'re Seeking to Improve Through This Newly‑developed Plan, We\'re Also
Looking at the Training and Certification Issues. As a Bureau, We
Certainly must Assure That You Have Maintained The Necessary Skills to
Perform Your Duties. We Found That We Have Not Kept Up with the New
Technology in The Maintenance of Basic Skills For the Job. So, We\'ll Be
Taking a Look at Our Current Certification Process to Build in Criteria
to Ensure That Critical Skills Are Maintained and to Assist Field
Offices in Receiving Necessary Training When New Technologies Are
Developed. We\'ll Be Offering Training Courses So That We Can Define
Their Roles and Responsibilities As Well. Now, as a Result of Our Field
Office Visits, and the Fact That The I & E Function Remains a High‑risk
Area for the Department, I\'ve Made this Program a Very High Priority
for Each State with Oil and Gas Responsibility. And One of the First
Ways That We\'ve Done That Has Been by Instituting Some Items for Each
State Director Specifically Related to the I & E Program. They Cover Two
Areas. One Ensuring That Inspection Goals Are Met and Secondly, Ensuring
the Quality Inspections Are Conducted. And That Brings Me to the Issue
Of the Quality Inspections. It\'s a Point I Really Want to Hone in On.
Your Inspection Efforts Are Critical to Ensure the Protection of the
Environment And the Public and Production Accountability. And It\'s
Crucial That Your Inspections Are of a Quality That Fully Meets this
Objective. During Our Field Visits, You Express Concerns That the
Washington Office Was Only Interested in Achieving the Number of
Inspections with No Regard to Quality. And I Want to Assure You That The
Opposite Is Absolutely True. Our Efforts Are Meaningless If We Do Not
Spend the Time Necessary to Ensure That Our Objectives Are Met. Now, I
Know That Today You Are Discussing Effective Compliance Procedures and
That Plays a Big Role in Achieving Our Goals. I Know from Personal
Experience, Having Been Involved in Another Life with an Inspection
Program, How Difficult it Is to Deal with Regulatory Infractions by
Multinational, Multibillion Dollar Corporations and Entities That You
All Deal with Every Day. But it Is a Part of Our Job and Protecting the
Public Lands and It Is Something That We Have to Make Sure We Do, That
We Do a Full‑scale Inspection, a Quality Inspection and If We Find There
Are Noncompliances, That We Take Appropriate Enforcement Actions. When
We Looked at the Data That Had Been Compiled from the Review of the
Program, the Decline of the Number of Incidents of Noncompliance Issued
since Fiscal Year \'93 and The Review of the Enforcement Actions
Indicated That We Needed To Do this Broadcast in a Timely Manner. Now, I
Understand That the Presentation Has Gone Very Well Up to this Point and
Encourage You to Participate During the Question and Answer Period
Coming up in a Few Minutes but Let Me Make Sure That Everybody
Understands That We Want to Make Sure We Have Quality Inspections And If
You Do Find Noncompliances, That We Make Sure We Take Appropriate
Enforcement Actions. So, Thank You All for Letting Me Speak on Your
Program Today. Now I\'ll Turn it over to Pete.

Thanks, Nina. I Particularly Wanted to Address The Issue of Devolution
of Responsibility for I & E to the States That Was with Us for a Number
of Years and Really Complicated Our Life and the Administration of this
Program For a Considerable Period. As Many of You Know, There Were
Several Members of the Iogcc Who Were Pushing Very Hard for a Period of
Time to Take over Basically All of Our Post Lease Functions on Federal
Lands. Their Proposals Went Well Beyond The Proposals We Had Made Some
Years Back and They Were Never Ideas We Supported. Moreover, There Was
Never Anonymity among the Member States on a Plan or a Legislative
Proposal to Achieve These Objectives. What Has Happened Here in the Last
Couple of Years Is That There\'s Been Considerable Turnover in the
Representation On the Iogcc and Turnover in the Chairmanship. Governor
of Alaska Is Now the The Chairman and We Had Representatives at Their
Last Meeting and the Agenda of the Iogcc Is Really No Longer Includes a
Plan to ‑‑ or an Objective to Take over the I & E Function on Federal
Lands and I Want to Say, Too, That I Think One of the Reasons That\'s
That\'s Happened Is Not Just the Turnover in Leadership, but Also The
Efforts We\'ve Made in the States to Work More Closely with The State
Oil and Gas Commissions. So, Really the Bottom Line Is That the Issue of
Devolution Is No Longer a Concern That We Have. I Do Know That this ‑‑
It\'s Had Quite an Impact on Our Program. Even in One Case, I\'m Aware
of a State Oil and Gas Commissioner That Was Telling Some of Our Pets
That since They Would Probably Soon Be Coming to Work For the State or
Need to Go to The State If They Needed a Continuing Job, That If They
Were Too Rigorous in Enforcing Or Had a Reputation for Being Too
Rigorous in Enforcing Our Rules or Regulations, They Wouldn\'t Get a Job
Offer. From the State and You Know, Unfortunately, Things like That Were
Part of this Whole Difficult Period. That We Went Through. But I Do
Think That That Is Very Definitely Behind Us and Not an Issue Anymore
and We Need to Get On with Reinvigorating the I & E Program and That
Includes Vigorous Enforcement Where That\'s Appropriate. I\'m Happy to
Have this Opportunity to Join the Broadcast for a Few Minutes and I Wish
You Well for the Rest of The Program.

Fellows: I Appreciate That, Pete. And Speaking for a Number of
Inspectors That I Know out There In the Field, the Comments You Made
about the Let\'s Put this Chapter Behind Us and Move on Is A Welcome
Comment. Let Me Tell You That. Nina, Can\'t Let You Get Away Without One
Question.

Pete Will Be Glad to Answer It. \[ Laughter \]

Sparger: Nina, Jamie Sparger, The Approval of the Revitalization Plan Is
Good News For the I & E Program. Do You Have an Idea When the Directives
and the Structure of Putting this Together Will Be Sent to the Field
Level So We Can Start on That?

I Will Let Pete Answer That Because His Group Is Working on It and He
Can Better Tell You The Schedule.

We Do Have Some Assignments And We Do Have a Schedule and Some Due Dates
for the Different Parts of the Revitalization Program. I Regret to Say
That I Don\'t Have it with Me Although Lonny, Maybe You Have a Copy?

Bagley: I Do Have a Copy with Me, Not Here in the Studio. But We Have
Sent Back Draft for Your Consideration. It\'s Probably in the Washington
Office 310 at the Moment.

We Can Certainly Get it out To Everybody Very Quickly.

as a Matter of Fact, I Think That All of Your Seat Directors Have a Copy
of the Plan and I Think the Plan Has Those Development Dates in It. And
So All of Your State Directors Should Be Leaving this Meeting Today with
That Plan and The Proposed Development Dates For All Those Documents
That Need to Be Done.

Sparger: That\'s Super.

Fellows: We Did Receive One Fax, Nina. Money and Personnel. Probably
Heard this Before. Are We Going to Put Money and Personnel Behind this
Initiative?

I Think It\'s a Great Question. Through the Strategic Plan Objective,
What We\'re Trying Do Do Is to Say to Everyone We Have Limited Resources
in the Bureau And We\'ve Worked Hard in the Last Few Months in Terms of
Working with the Department and Omb in Terms of the Fact That Bureau Is
Really Stressed at a Breaking Point, Almost, in Terms Of Overall
Resources to Deal With Our Infrastructure Needs And Clearly Part of the
Infrastructure Needs Are Taking Care of These Ongoing Commitments
Through Inspection And Enforcement Actions. So What We\'re Trying to Do
Is to Make Sure as We Look at the Distribution of the 2000 Money That
We\'re Gearing That Money Toward Doing Things like Inspection
Enforcement That Are Part of Taking Care of Our Ongoing Responsibility
Rather Than Continuing to Obligate Ourselves into New Responsibilities.
And So I\'m Going to Be Working With Pete and the State Directors to
Make Sure We\'ve Tried to Realign the 2000 Budget To Do That. Now, in
Addition to That, We Have I Hope, a Really Good Chance at Some Increased
Money In 2001. So, We\'re Continuing to Work With What ‑‑ I Think the
President\'s Budget Will Be Going Up to Congress Early in February And
Then March We\'ll Be Having a Hearing with the Appropriations Committee
and We\'ll Be Talking To Them Then about Our Needs for Some Additional
Funding in this Area. In Terms of Staffing, I Think We\'ll Look at That
Through a Work Force Plan That We\'re All Going to Be Looking at in
Terms Of How We Can Make Sure That We Have Inspectors in Place to Take
Care of What Really Is a Vital Federal Responsibility. I Think It\'s
Something We Can Only Improve Incrementally. I Can\'t Tell You You\'ll
Have a Big Block of Money Coming to You. I Think it Will Be Sort of
Trying to Readjust Our Workload Saying We\'ll Focus on Inspection
Enforcement as a Key Component Of Taking Care of the Responsibilities We
Already Have. I Can Tell You That Last Year I Had the Pleasure of
Testifying Before Our Congressional Committee and of Course What They
Were Wanting to Do at That Point in Time Was Commit to Give More
Resources to Doing Apds and We Told Them at That Time It\'s Not Just the
Resources to Do Apds but You Have to Recognize Every Time We Enter into
One of These Commitments it Is a Long‑term Commitment for the Bureau and
We Have to Do Money To Do the Inspection and Enforcement That Flows out
of That Kind of Commitment and So We\'re Continuing to Try to Take That
Line with Congress That We Need Money to Take Care of Basic
Infrastructure Needs and for Us, That Means Inspection Enforcement. I
Think That\'s Where We Are. We\'re Trying to See If We Can\'t Redevote
Resources in 2000 and We\'re Trying Very Hard to Get Some Additional
Resources in 2001.

Fellows: Nina and Pete, I Appreciate You Taking Time from Your Busy
Schedule to Share Those Thoughts with Us. And Again, Thank You Very
Much.

Anything to Add to Resources?

Thank You All. You\'re Very Welcome. We Hope You Have a Very Successful
Program.

Fellows: Ok. Thank You.

Thank You, All. Bye.

Fellows: That Was Some Pretty Good News. I\'m Glad to See That Once We
Discovered What We Needed to Do That We Can Put the Resources Behind it
to Do it and I\'m Looking Forward to That Happening. While We Covered an
Awful Lot of Material Before Lunch So Let\'s Do a Little Bit of Review.
So, I Would like to Take You Through Some of the Enforcement Steps That
Can Be Taken to Ensure Field Compliance. So, Lonny, Why Don\'t We Get
Started and Help Us Out.

Bagley: I\'m Going to Discuss The Initial Point of When You Do Find a
Problem in the Field and You Have to Make a Decision Whether or Not it
Is a Violation Or Whether or Not to Go with a Written Order Aspect. When
Problems Are Identified That Are Not Violations, We Need To Issue an
Order of the Authorized Officer, a Written Order to Them. Identifying
What the Problem Is And Give Them an Abatement Date To Correct That
Problem. And Then upon the Completion of That Abatement Date, We Perform
A Follow‑up Inspection to Ensure That Those Activities Were Completed.
If the Follow‑up Revealed That The Corrective Action Was Not Taken, Then
We Would Forward on Over into the Inc Process and That Will Determine
Then Whether The Inc Was Major or Minor. I Would like to Turn it over to
Jamie. He\'s Going to Talk about Major Violations and Give You a Recap,
There.

Sparger: Thanks, Lonny. A Major Violation Is Uncovered Or Discovered. In
the Field and the First Step Of Course Is Documentation and Sending the
First Notice of Noncompliance or Inc to the Operator. Keep in Mind
That\'s the First Notice. We\'ll Refer Back to That. With That First
Notice, You Need To Also Establish an Abatement Date and Normally
That\'s a Pretty Short Abatement Date. The next Step Would Be Follow‑up
Just as Soon as Possible after The Abatement Date Is Completed To See If
They\'ve Complied. If the Operator Hasn\'t Complied, At That Point You
Will Send Your Second Notice for Failure to Comply. And with That
Notice, an Assessment of \$500 per Day Beginning with the Date of the
First Notice. Now, with This, Will You Attach A 20‑day Abatement Period.
This Will Be Your Second Abatement Period. At this Point, it Would Be
Good To Talk about the Fact That You Probably Ought to Be Considering A
Shut‑in Notice or a Shutdown Notice or Perhaps Performing the Work and
Billing the Operator The Cost‑plus 25%. At the End of this Second
Abatement Period Which Is the First 20 Day Abatement Period, You Conduct
Your Follow‑up Inspection. If the Operator Has Still Not Complied, Then
the Operator Will Get the Third Notice from the BLM. This Notice Will Be
Entitled Proposed Civil Penalties. The Proposed Civil Penalties Began at
\$500 per Day. And Again, Go Back to That First Notice Date. An
Additional 20 Days Abatement Period Is Given. Again, Think about Whether
or Not a Shut‑in or Performing the Work Would Be the Right Enforcement
Tool to Use at this Time. Ok. Now at the End of this Third Abatement
Period Which Is the Second 20‑day Abatement Period, Again, You\'re Going
to Need to Follow up and See If the Operator Has Complied. If He
Hasn\'t, Which I Would Almost Have to Say He\'s Either Brain Dead or
Something. A Responsible Operator Doesn\'t Let this Go That Far or in
this Case, We Have One in Jail That We Don\'t Have Much of a Choice On.
But Now You\'re into Your Fourth Notice. If He\'s Failed to Comply. The
Penalties Increase and You Have to Notify in this Fourth Notice the
Operator That Penalties Are Now Have Gone from \$500 per Day to \$5,000
per Day Beginning the Date of That Again First Notice. Then You Give
Your Last 20‑day Abatement Period. One More Time Consider the Shut‑in
Option or Performing the Work. Now at the End of the Last 20 Day
Abatement Period, You Conduct Your Follow‑up Inspection. If the Operator
Has Still Not Complied, this Is the Worst‑case Scenario. Now after 60
plus Days, of Abatement Days, You Send Your Fifth and Final Notice,
Tabulating the Total Penalties Owed, with Appeal Rights, Send That
Notice to the Operator and Commence Lease Cancellation.

Bagley: Now I Would like to Turn it over to Mark.

Kelly: Thanks, Lonny. Let\'s Recap on What a Minor Violation Is to Start
With. A Minor Violation Is Everything That Doesn\'t Rise to the Level Of
a Major. Basically, as I Said Earlier, Everything Else. So, after You
Identify the Violation, You Issue the Inc With a Reasonable Abatement
Period. Usually for a Minor Inc, That\'s 20 or 30 Days or More Time If
The Authorized Officer Agrees to It. That Means If You\'re Writing an
Inc, You Can Write it for More Than 30 Days. At this Point, Consider
Whether Shutdown Orders Are Appropriate Or If the Violation Needs to Be
Corrected Immediately That We Should Correct it Ourselves. Usually
That\'s Not the Case with A Minor Violation but That\'s Something to
Keep in Your Mind All the Time. At the End of the Abatement Period That
You\'ve Prescribed, Follow up on Inc. If the Violation Has Not Been
Abated, Issue an Assessment. Remember for a Minor Violation, That\'s
\$250. Issue the Assessment along with An Additional Abatement Period.
Now, the Additional Abatement Period Cannot Be less than 20 Days.
Generally, in Our Office, We Use 20 Days. That Brings Them up to 40
Days. So, If the Violation Is Not Corrected at the End of the Second
20‑day or 30‑day Abatement Period, 6 You Go into Civil Penalties. Now,
Civil Penalties for Minor Violations Are Assessed at \$50 a Day. Again,
Follow up on a Violation. That\'s Critical. At the End of the Abatement
Period from the Assessment Letter, the Date That ‑‑ When You\'re Going
to Go into Civil Penalties, Make Sure They Haven\'t Abated That. Go Back
to the Field, Follow Up. Get Back to the Office, Write The Letter,
Notice of Proposed Civil Penalties for a Minor Violation Starting at
\$50 per Day and Continuing until the Violation Is Corrected or until
The 40th Day from the Second Notice. The Second Notice Is the Date of
The Assessment Letter. Now, at the End of the Abatement Period, That
Will Be 40 Days From the Date of the Second Notice. So, at this Time,
They\'re into Civil Penalties for about \$2,000. If They Didn\'t Abate,
it Jumps Up Fairly Substantially and It\'s Also Goes Back to the Date of
The Second Notice. \$400 or \$500 a Day on the 41st Day Through the 60th
Day. Again, They Can Abate this Anytime and the Penalties Will Stop. So,
It\'s Imperative That You Try To Keep in Contact with the Operator or
Continuously Go out There Every Several Days to See If They\'ve Abated
the Violation. At the End of the 60‑day Period, If They Haven\'t
Corrected the Violation, They\'re Now Liable For \$30,000 in Civil
Penalties. At this Point, You Would Also Notify Them of Proposed Civil
Penalties in the Amount of \$30,000 with the Notice of Appeal Rights and
Begin Lease Cancellation Proceedings. That\'s Fairly Substantial. It
Happens Occasionally. You Need to Be Prepared to Take It All the Way.
Also, Remember That Shut‑in Notices or Having to Work Are Appropriate.
At Any Time During the Process. Back to You, Lonny.

Bagley: Thanks, Mark and Jamie. Let\'s Turn it Back to You, Ron.

Fellows: Ok. Let\'s Shift Our Focus a Little Bit Here and Let\'s Get the
State Office Involved. Let\'s Discuss State Director Review Procedures.
I Know Field Offices Often Wonder What Happens When the State Director
Receives an Appeal from an Operator. Lonny, Perhaps You Could Describe
the Procedures to Handle These Requests and What May Be Expected from
Field Offices During this Process.

Bagley: in the Appeals Process, like Jamie and Mark Are All Talking, You
Can, as an Operator, Any Adverse Party Can File a State Director Review
If They\'re Adversely Affected by The Decision or the Incident of
Noncompliance Action That You Took. And to Do That, They Have to File
That Particular Request, State Directory Request Within 20 Days of the
Violation Notice Or 20 Days of When the Decision Was Made by the
Authorized Officer. At That Point, the State Director Has Ten Days to
Makes a Decision on the Case. Also During this Period of Time, When the
Operator Does Submit or Any Adversely Affected Party, Could Request That
an Oral Presentation Be Presented to Present Their Case. You May Ask
Then at That Point What Role Would I Play as the Inspector in That
Particular Instance. Well, for the Most Part, You Would Be Responsible
for Finding The Information to the State Office for Review. Saul of the
Documents Surrounding the Issue like Your Photographs, Any Logs or
Worksheets or Reports, That You Created or Got from the Operator That
Supports Your Finding. You Would Transmit That to the State Office for
Review and Then They Would Take an Action on That. Another Question
Comes in to What Extent must I Document My Violation or My Actions. This
Was Covered Throughout the Presentation by Jamie and Mark As Very
Important That We Have Adequate Documentation in the File to Support
Your Findings. This Comes into the Point That Nina Also Made on Her
Remarks. We Need to Have the Quality in Our Work and That Means the
Documentation to Support Our Actions. If We Don\'t, Your Subject to
Losing Your Case Even Though You May Have Been Right If You Don\'t
Document it Properly. So, I Can\'t Stress That Enough. So, in the Extent
of State Director Review, You Might Ask Well, What Are Some of the
Decisions That the State Director Would Make in Conjunction with the
State Director Review. Well, They Could Affirm Your Request or Affirm
the State Directory Review Meaning They Upheld Your Decision in the
Field for Taking the Appropriate Enforcement Actions or the Decision
Made by the Authorized Officer. They Could Also Affirm it as Modified
and this Comes into Effect When Part of the Decisions You Made, They
Want to Modify it Such as Reducing Civil Penalty or an Assessment
Amount. Or There Might Have Been Part of It That They May Have Given the
Operator Longer Abatement Period To Correct the Violation Even Though
Upholding Your Decision. They Could Also Reverse Your Decision. And this
Gets Back to the Issue We Talked about Before. If You Were Completely
Wrong in Your Actions or That You Didn\'t Provide the Amount of
Documentation Necessary to Support Your Actions, That Decision Will Be
Reversed. Also, They Could Vacate a Decision. Vacating Is Not Used That
Often In BLM. Ibla Does Use it but this Is When a Decision Is Not Made
on Your Actions. And Is Usually Remanded Back to The Office for Further
Review or Analysis. But Again, No Decision Is Made Based on the
Information in the Facts on the Case. They Could Also Set Aside a
Decision Meaning That They Don\'t Want to Make a Decision Yet Because
They Feel There May Be Some Other Work That Needs to Be Done So They May
Set it Aside But at Any Time, Could Decide The Decision Based on Your
Actions in the Field. They Could Also Remand it Back To You for Further
Work. And Remanding Is Usually Used With Vacated. It Could Also Be Used
with Affirmed. They Could Remand it Back for Additional Work. It Is Also
Used with a Set Aside. Remanded Is Where They\'re Going To Stipulate to
the Field Office That Additional Work Is Necessary to Support Your Case.
And Also There Could Be a Combination of All of Those. As We Talked
about Before. Now, You Might Ask Well, What Will the State Director
Review Address? Well, They\'re Going to Address First Thing, Whether the
State Director Review Request Was Filed Timely. They\'re Also Going to
Give the Case Background in Involved That Includes the Times, Dates,
Names, et Cetera. They\'re Also to Give an Explanation to the Subject
Matter and Procedures of the History of the Case. Also, They\'re Going
to Discuss The Authorities, the Laws, the Regulations Surrounding the
Decision That You Made. Did You Use Appropriate References? Did You Use
Appropriate Regulation Citation for Your Particular Violation. They\'ll
Look at That and Consider It. Then They\'ll Do a Thorough Analysis on
the Complaint You Might Say Waged by the Person as To Whether or Not
They\'re Standing Against the Regulations Would Either Weigh in Their
Part Or in Your Part. As Far as the Decision. They\'ll Summarize and
Make a Conclusion and That\'s When They\'ll Make a Decision on That
Case. Also, They\'ll Include an Appeals Paragraph to Where They Can
Appeal to the Internal Board of Land Appeals If They Are Not Satisfied
with That Decision. And Again, Any Person Can Appeal To Ibla from the
State Director Decision. And Then You Might Ask Then in That Case, If it
Does Get Appealed to Ibla, What Steps Would We Be Involved? Well, the
Main Thing That We Would Be Doing Is Supplying Ibla With a Complete Case
History. Providing Them with All the Information That Supported the
Decision Made by the State Director. And Then May Come Back to the State
Director Also and Ask for Additional Information If They Feel There\'s
Some out There to Be Gained. That Pretty Much Covers the Appeals
Process, Ron. I\'ll Turn it Back over to You.

Fellows: as You Know, It\'s at The Appeals Stage That the Importance of
Documentation Becomes Critical. Without Your Careful Attention To
Documentation, the Success of Any Appeal Action Becomes Doubtful.
Remember, the State Director and His Staff Do Not Know the Specifics of
a Given Case Without Your Case File Information. The Success of Your
Actions in The Field to Achieve Compliance May Depend on Your Attention
to Detail and the Documentation of Those Details If an Appeal Is Filed.
As a Reminder, I Would like to Mention to Our Viewer Nas Few Minutes
We\'ll Be Opening up the Phones to Hear from You. If You Have a Question
or a Comment for Our Panel or Anything We\'ve Covered, Please Give Us a
Call or Send Us a Fax. We Will Get to as Many Questions As We Can in the
Time Remaining. What We Have Been Discussing to This Point Are Those
Existing Procedures Now in Place That Govern the I & E Program. And in
Particular, Enforcement Actions. As You Are Aware, the Bureau Is
Proposing Modifications to the Rules Governing the Oil and Gas Program
and Embedded in Those Proposed Rules Are Changes That Will Affect
Existing Enforcement Procedures. Lonny, Will You Give Us Some Idea How
These Proposed Changes Will Impact Our Current Program?

Bagley: Yes, I Can Do That, Ron. Thank You, Again. One of the Things I
Would like To Mention in the Processes We Have Talked Today Will Not
Change How You Take Enforcement Actions. They\'ll Be Done the Same Way.
If You Find a Problem That Is Not Specifically Required in the
Regulations, You\'re Going to Use An Orderly Authorized Officer. If You
Do Find a Violation, You\'ll Follow the Same Inc Process Throughout the
Entire Compliance Procedure. There Are Some Changes Though to
Enforcement That I Would like to Talk about but Again, the Procedures
We\'ve Talked about Today Will Not Change. First Let Me Talk about Some
of The Major Changes. Now, One of the Things We Did Is Went to
Performance‑based Regulations. This Gives the Opportunity for An
Operator to Provide Their Best Analysis of How to Approach Something. Or
to Take an Action in the Field. Particularly an Example Is, for
Instance, a Permit to Drill. This Has Become More of a Performance‑based
Application Where the Operator Is to Consider Several Things and Then
Submit Their Particular Approach To Handling That for this Particular
Well. BLM Then Reviews That Application and Then Submits Any Conditions
of Approval Back to The Operator Based on Our Findings or Our Analysis
of That Particular Action. And Again, It\'s Getting Back to Using in
this Particular Case, Best Sciences and So Forth in That Development.
We\'ve Also Taken a Step to Cite Industry Standards Rather than
Reiterating Them in the Regulations. This Is One of the Issues That
Industry Is Really Concerned With and One of the Areas We\'ll Be
Addressing in the Comments But in this Case, Rather than Citing the
Regulation on Your Inc, You Would Be Citing a Specific Industry Standard
Api Standard That They\'re in Violation Of. In Regards to Enforcement
Actions, We No Longer Will Have Major Minor Classifications. Fogrma Did
Not Dictate to Us That We\'ve Split Those out as Major and Minor. It
Simply Addresses a Violation. How You\'re Going to Take Care of That in
the Severity of the Violation Will Be Based on How Much Time You Give to
Correct It. That Will Not Change. Such as the Sales Valve, for Instance.
You\'re Still Going to Want it Sealed Within 24 Hours So it Is Still a
Very Serious Type of Violation So You\'re Going to Give Them That
Particular Short Time to Correct It. Also, Assessments for Failure to
Comply Are Now up to \$250 per Day Violation. Immediate Assessments,
Structure\'s Changed, We\'ve Add The about Four of Them into the
Structure. We\'ve Also Eliminated the per Day Assessments Instead of
Having a One Time Assessment or Going to a One Time Assessment On the
Meeting Assessments. Eliminated the Cap for a Number Of Instances per
Lease per Operator per Inspection That They Can Be in Violation of and
Be in Noncompliance and So You Could Have as Many, We Said Today, up to
Not to Exceed \$1,000. That No Longer Exists. Civil Penalty Process Was
Changed. One of the Major Changes in Civil Penalties Is That Any
Assessments Will Continue Through the Civil Penalty Process Also Instead
of Deducting Those. We\'ve Also Eliminated the Cap on Civil Penalties.
The Effects on the I & E Program Are Very Few. Like I Said, the Same
Process Will Be There in Enforcement and You\'ll Go Right Through the
Same Criteria for Taking Enforcement Actions. It Will Require More
Judgment on Your Part. Probably Will Require More Inspections Because of
Performance‑based and More of a Thought Process for Folks. That Pretty
Much Covers It, Ron. And the Major Items Anyway, Involved in the New
Regulation Package.

Fellows: Appreciate It, Lonny. Well, Thanks. As You Are All Aware from
Our Discussions to this Point, There Are a Number of Options to Employ
in Order to Achieve Compliance. Many of the Tools Available Range from
Verbal Warnings to Shutdown Notices from Immediate Assessments to Civil
Penalties. All of These Tools Require Judgment on the Part of the
Inspector and must Involve Management and Appropriate Technical
Oversight. We must Not Forget That We Operate in a Highly‑regulated
Environment and the Tools We Apply to Meet These Statutory Requirements
must Necessarily Be Procedurally Connect. It Has Been My Experience That
Successful Appeals of Inspector Orders and Remanded Decisions Are
Primarily Based on Inappropriate Application of a Corrective Measure.
Procedures and Documentation of Those Procedures Go Hand in Hand.
Judgment and the Appropriateness Of the Enforcement Action Taken By the
Field Inspector Cannot Be Overemphasized. It Is a Cornerstone of
Effective Compliance. We Finally Reached That Point. It\'s Your Turn.
We\'ve Reserved the Rest of Today\'s Show to Hear from You. So, Get
Those Fingers Dialing And Send in Those Faxes. I Think I\'m Going to
Start with A Fax Now and Lonny, Let Me Read This to You. This One\'s to
You. Hearing Nina and Pete\'s Comments Was Very Encouraging. We Know
about Educating Our Supervisor. Question, What Is the Plan for
Oversight?

Bagley: One of the Areas in Oversight We Felt Was Very Key Is That We
Did Lose the Oversight Functions on the State Office Level. It Was
De‑emphasized and We Needed to Bring That Oversight Function Back to the
Field and Ensure We Had the Quality Inspection. So, We Propose to Go out
to All The State Offices and Ask Them To Submit Plans as to How They\'re
Going to Handle Oversight Functions. Once They Submit the Plans to The
Washington Office and Where I Will Be the Main Reviewer, We\'re Going to
Look at That for Consistency of Review and Their Process and Give
Feedback to the States on Suggestions or Accepting Their Proposals as
Far As Oversight Functions. We Want That to Increase Though.

Fellows: We Have a Second Part of That Question and You Probably Heard
this One Before. I Think We All Have. We Have Heard the Quality Versus
The Number Issue for a Long Time. Will We Address Quality in the
Strategy Now Based on Nina\'s Comments or Will We Still Panic At the End
of the Year for Numbers?

Bagley: Very Good Question And Concern. I Believe That the I & E
Strategy Currently Covers Quality. It Sets out a Process and Gives
Criteria and Gives Some Objectives to the Inspector That You Are
Responsible to Ensure That You Have Production Accountability, You\'re
Protecting the Environment and We Have Public Health and Safety. Now, We
Will Be Addressing Quality to a Large Degree in Making More Clearer That
We Do Want Quality Inspections But, as You Know, We\'ve Gone from a
Process of a Cooks Book Situation to Relying More on the Judgment of the
Inspector. And Here the Inspector\'s Responsible for That Quality. You
must Ask Yourself the Question Do I Have Production Accountability? Is
the Environment Protected? Is Public Health and Safety Considerations
Being Taken So I Think It\'s All in There but We Need to Make Sure That
Everybody Understands We\'re out for Quality and Not Numbers.

Fellows: Would like to Give Credit for That Fax but There\'s No Name on
this One. Ok. Jamie, I Got One for You. And this One\'s from Max.

Sparger: You Never Mentioned Attachment of the Bond. Is That an Option?

Sparger: Is this the Same Max That I Know Of? Yeah, It\'s an Option, You
Bet, Ron. We Have a Policy out on That. The Bureau Has a Policy out on
When to Attach the Bond. You Bet That\'s an Option. For Unpaid
Penalties, Unpaid Assessments. Or Even for Perhaps Performing The Work
and If the Operator Won\'t Pay for That Work Being Performed. Of Course,
Once That Bond Is Depleted or Reduced, Then You\'ve Opened up Another
Can of Worms To Deal with but Sure. You Bet. Just One More of the Tools.

Fellows: One More of the Tools Is Absolutely Right. Thanks, Max. Good
One. From the Bakersfield Field Office, I Have a Fax from Sheila
Gutierrez. Question and this One Is to You, Lonny. Can BLM Issue an
Incident of Noncompliance to Operators That Have Failed to Report Their
Monthly Report of Operation Production Reports to Mms? Example, Xyz
Company Has Not Submitted Mro Production Reports To the Mms since August
of 1998. Can We Issue an Inc to Xyz Company?

Bagley: the Short Answer Is No, We Can\'t. That Responsibility Was
Transferred to Mms Through Regulatory Change in 1988. When They Took
over the Reporting Process, the Responsibility for Getting Reports from
Operators, They Then Took on a Responsibility to Deal with the Operator,
to Get The Report Submitted. Now, What We Can Do Is Work with The
Operator to Encourage Him to Send the Reports to Mms but it Is Not and I
Repeat, Not a Violation for BLM to Consider. Like I Said, All We Can Do
Is Work with the Operator to Do That.

Fellows: Ok. Good, Thank You. Thanks, Sheila. Ok. We Have One Here from
Lee in Rock Springs and this One\'s Either for Mark or Lonny. This
Question Relates to the Vapor Tight Tank Issue. We Lost an Inc on
Failure to Maintain Vapor Tight Tanks. That Is Failure to Install Vent
Line Valve When it Went to an Sdr. The Ruling Was That an Order Could Be
Issued but Not an Inc. Thief Hatch Was Installed but The Vent Was Open
to the Atmosphere, Similar but Not Exactly like the Open Connection
Collar in the Example. Can You Comment?

Bagley: There Were Several States That Ran up to this Issue Because of
Regulations State That a Vacuum Thief Hatch, Vacuum Pressure Thief Hatch
must Be Installed and or a Vent Line Valve. Now, We Know That the
Intention Of Those Regulations of That Statement Meant If There Was a
Vent Line Valve Installed, That You Should Install It. But That Is Not
the Ruling If You Look at the Literal Intent Or Literal Reading of the
Requirement. It Says and or Vent Line Valve. So, States Have Said in
Some Cases That Before We Can Handle These Cases, You must Issue it As
an Order of the Authorized Officer, First. Rather than Going Through an
Incident of Noncompliance Because of the Way the Regulation Is Written.
In the Proposed Regs, We\'ve Changed That to Take Care of That Issue.

Fellows: Very Good. Thank You, Lee. I Hope That Answers Your Question.
Mark or Jamie, I\'m Going to Direct this One to Either Or. This One Is
Kind of a Scenario Question. And this One\'s from Carlsbad, New Mexico.
Scenario, You Wrote Ten Minor Violations on an Inspection. They Did Not
Comply. Assessed with a \$500 Cap. The Question Is\... Do They Still
Have to Correct All Ten or Just the Two in Which You Assessed? Can All
Ten Minor Violations Be Assessed on the Same Assessment? Should it Be
Outstanding until All Ten Are Corrected? Want Me to Read it Again?

Kelly: I\'ll Take a Stab at That for What It\'s Worth. If You Wrote Ten
Incs on a Lease, Had You Ten Violations, They Did Not Abate Any One of
Those Ten, You Would Give Them The Assessment for \$500. Give Them
Another Reasonable Abatement Period, 20 Days. And Continue Through the
Process. If They\'re Not Abated in Afmss, You Would Not Put an Abatement
Date in There. They Would Continue to Be Unabated until Such Time They
Would Be Corrected. However, If it Continues on to Civil Penalties or
Wherever, They Would Stay Open until All Ten of Those Individually Were
Corrected.

Bagley: and Then You Would Be At the Maximum Amount per Day, So You
Would Be at \$1,000 per Day but Allen it Would Remain Open.

Fellows: Thank You, Carlsbad. We Have a Phone Call Here. It\'s from
Farmington. And It\'s Mike in Farmington. We Have a Question on Numbers
Versus Quality. Ok, Mike. What Is Your Question?

Can You Hear Me Ok?

Fellows: Turn Your Tv down a Little Bit, Mike.

Caller: How Are We Doing? We Hate to Beat a Dead Horse Here but We\'ve
Got a Catch 22 in The Bureau and I\'m Sure It\'s Bureauwide with Quality
Versus Numbers. Our Numbers Are Generated by Fogrma. As Everyone Well
Knows. My Question Is, I Guess, Through The Bureau and Those Powers That
Be Is Fte Is a Big Problem for Our Office and I\'m Sure Bureauwide. Is
There Really Anything They\'re Going to Do for Us as Far as You Know
about That?

Bagley: One of the Things We\'re Looking at Is to Have States Look at
the Program and Really Determine from a Quality Aspect of How Many
Resources They Need. And Then Set Forward Plans to Put the Resources in
Place. One of the Very Effective Tools That We Have for Us Today Is That
Inspection Plan Matrix. If You Are Documenting Your Time Properly and
Have a Good Documentation or Know What That Time Is on Average and You
Equate That to the Goals We Have Set out on the Washington Level,
National Goals, Then You Can Present That in a Way That Ok, These Are
Required Inspections But Here\'s Our Resources Available. And We Can
Only Accomplish Those We Have Because We Don\'t Have The Resources to
Meet the Required. Now, If You Don\'t Have Those Necessary Resources,
You Can Then Start Breaking down Where Our High Priority Inspections
Are. Of Course, You\'ll Do High Priority Drilling, High Priority
Plugging. And You\'re Going to Do All of Your Fogrmas Then You\'re Going
To Start Reducing from There on The Other Inspections on a Three‑year
Cycle.

Caller: That\'s Where We Break Down Is Because Once We Put the Numbers
on Paper, We Show That We Can\'t Get to the Fogrmas out Of Our Office.
Every Year. We Could Plan on 150 Drilling But We Never Actually Know
What Those Numbers Will Be. I Guess What I\'m Trying to Get To Is Where
Do We Draw the Line On the Fogrma Inspections? Do We Start Doing
Percentages? Do We Start Rotating Them? How Can We Do this Effectively?

Bagley: If You Can\'t Get to Your Required Number of Fogrma Inspections,
You\'re in a Pretty Difficult Boat There. You\'re Going to Have to Make
a Decision Then Breaking down the Fogrmas Which Ones Are More Important
to Get To. And Then Take it from There. It\'s Going to Be a Management
Call on Your Part to Say Ok, I Am Going to Have to Make Some Cuts
Somewhere. And Just Proceed On. And Your Matrix Then Will Have To Help
You Gain the Resources Necessary to Get All of Your Fogrmas and Then on
up to the National Goals, Also.

Caller: Ok. I Appreciate It.

Bagley: Thanks, Mike.

Caller: Herman Want Me to Tell Ron Fellows That His Face Has Gotten
Longer.

Fellows: I Don\'t Know If That\'s Good or Bad, Mike but Thanks. We Have
a Fax Here from Washington D.c. And It\'s from Paul Brown and Here\'s
the Question. Can an Affected Operator By‑pass The State Director Review
and Appeal Directly to Ibla?

Bagley: in the Process of This Review, Yes, He Can Appeal Directly to
Ibla. If He Feels He\'s Not Going to Get the Decision He Wants Then Yes,
He Can.

Fellows: Ok.

Bagley: Short Answer.

Fellows: Thanks, Paul. Here\'s One from Noelle and this One Is Addressed
to You, Mark. Order Letters Written by Operation Staff Such as Demand
Plug or 60 Day Letters, Should They Be Entered into Afmss since No
Compliance History Is Maintained for Orders.

Kelly: the Answer on That Is Yes, They Should Be Tracked in Afmss. Afmss
Was Designed to Track Those Types of Actions and That Way We Have a Good
Idea of What Types of Actions or Orders That We\'re Generating and We
Can Track Those. So, Yes, You Do.

Bagley: Also Is an Effective Way to Track Your Abatement Dates. I Think
Part of the Question Was On Effectiveness of Compliance And When to Take
Certain Action On ‑‑ and We Can Use That and Put That Effective
Abatement Date in There and Make Sure We Do a Follow‑up at That Point,
Too.

Fellows: Ok, Well, Thanks, Guys. I Hope That Answered Your Question. We
Have a Lot of Faxes Here So I\'m Going to Move on Real Quick But I Do
Encourage You to Call In. Here\'s One from California. Would it Be
Possible to Get a Copy of All Questions and Answers Asked During the
Broadcast? Whatever Response Was Given, We Would like to See and Hear
Responses from Lonny, Mark and Jamie.

Bagley: Certainly We Can Give Them a Copy of the Video Being Produced
for this Particular Section and Also in the Past, We\'ve Posted All of
the Faxes With Answers up on the Internet Site. So That They Can Get it
from That Point There.

Fellows: So, It\'s on the Home Page. We\'ll Make Sure They Get a Copy.
Here\'s One Here for You, Lonny. Why Was the Plug Back ‑‑ I Can\'t Read
this ‑‑ on Afmss Discontinued and What Is the Proper Way to Choke a Plug
Back? To Code a Plug Back. Pardon Me.

Bagley: in the Event ‑‑ Through Afmss, to Try to Eliminate as Many Codes
as Possible and Make Them More Concise or Make Some Codes Even Cover a
Variety of Things. And in the Plugback Situation, It Was Felt That That
Would Be Better Put under C Rather than Plug Back.

Fellows: I Appreciate That. Sorry If I Butchered That Too Much, Lonny
out of Whiteriver Field Office. Hope That Answered Your Question. We
Have Another One Here from California. Kent Has a Fax Here. Let Me Read
It. This One\'s to You, Lonny. Heads Up. In Situations of Environmental
Emergency Such as Oil Spills and Well Blowouts, How Can the I & E
Program Best Manage to Clean up And Comply with the Regulatory
Requirements of Hazardous Materials Threatened Endangered Species and
Nepa Compliance?

Bagley: Well, this Is Answered in Probably Three Words That ‑‑ and I\'ll
Expand but it Would Be Coordination, Coordination, Coordination. And
That ‑‑ You\'re Going to Have To Get Involved with the Entities That
Have Responsibility in the Cleanup. Hazmat People, You Have the
Inspection Staff Is Going to Look at Production Accountability along
with the Engineering Staff and Environmental Scientists on Board.
Wildlife on Board. It Is Just a Coordination Effort And Setting out the
Requirements For the Operator to Comply Is Basically the Answer to That
Question There.

Fellows: We Have Another One Here from California. I\'m Not Playing Any
Favorites Here. That\'s the Way They Came In. Ok. The Way I Was Handed
Them.

Bagley: Did You Make a Deal With the People out Back?

Fellows: Mark or Jamie, Please Clarify the Difference Between a Verbal
Order and an Oral Warning. Mark Said Verbal Warning Should Be Followed
up but Then Jamie Said Verbal and Oral Is the Same Thing and the Oral
Warning Does Not Need to Be Confirmed in Writing.

Kelly: I\'ll Take That, Ron. As We Discussed Earlier, Written Orders Are
for Problems Before They Become Violations. So, You Can Issue a Verbal
Order In the Field and Follow it up Within Ten Days with a Letter to The
Operator. Now, Any Incident of Noncompliance Has to Be Documented
Whether It\'s Verbal Or Written, it Has to Be Tracked In Afmss So There
Is a Difference There. The Written Order or Actually The Verbal Order
and the Verbal Inc Are Two Different Things. If it Says Instance of
Noncompliance, it Has to Be Tracked in Afmss and it Has to Be Followed
Up.

Fellows: Ok. Here\'s Another One Either for You or Jamie. We Send out
Production Accountability Letters Which State You Are Ordered to Submit
Et Cetera. They Also Contain Verbiage as to Failure to Comply and the
Appeal Rights. Question, Is this an Order? Does it Have to Be Entered
into Afmss?

Sparger: I\'m Glad You\'re Sending Those Out. Good Luck with Your
Audits. Yeah, That\'s an Order. It Is a Written Order of the Authorized
Officer and it Needs To Be Tracked in Afmss. If the Operator Fails to
Comply, Then You Would Commence the Enforcement Process, Issue the
Incident of Noncompliance. Absolutely. It\'s a Written Order.

Fellows: Very Good. Another Part of That Question, What Is the Proper
Procedure When a Lease Is Terminated and The Operator Continues to
Submit 3160s to Mms?

Sparger: I Think, Ron, That\'s Primarily an Mms Issue. The Mms Should Be
Notifying the Operator the Lease No Longer Exists. It\'s Not Really
Something We Have to Become Overly Concerned About. The Mms ‑‑ I Suppose
If Anything, We Ought to Be Notifying Mms. I Guess We Do Notify Mms That
The Lease Was Terminated. They Should Notify the Operator. They\'re the
One with the Jurisdiction. They Should Notify the Operator To Stop
Sending in the 3160s.

Fellows: Ok. Very Good. That One Was from Andy in Cortez.

Sparger: Thanks, Andy.

Fellows: Lonny, this One Is To Lonny Something Ollie Bagley. It\'s from
John. Here\'s the Question. Doing a Rig Inspection, I Found A Minor
Violation. A Company Rep or Pusher Is Not Around. Can I Send a Warning
over E‑mail Or over a Fax?

Bagley: No. Well, Let\'s Back Up. You\'re Talking about a Warning. And
If You Send Anything to the Operator in Writing, You\'re Basically
Giving Them a Written Notification That They Have a Violation and it
Would Be Considered a Written Inc. Now, Using an E‑mail System or Fax,
Really Doesn\'t Quite Cut it As Far as I\'m Concerned When Notifying the
Operator. Either Have to Send it Certified Mail or Hand Deliver It. And
If You Wanted to Take Steps To First Fax or E‑mail the Operator That
They Do Have a Violation and Then Subsequently Send it to Them in the
Written Format in the Mail. That Should Be the Proper Procedure You
Should Be Following.

Fellows: Thanks, John. Good Question. Good Response. Got One for You,
Mark. This Is from Pb. You Can Take Your Shot at Who Pb Is.
Environmental Concerns on Nonfederal Surface. Using Nonfederal Surface
Area on A BLM Lease to Store Old Equipment and it Becomes a Problem. Is
a Written Order to Be Issued Or Should One Be Issued?

Kelly: Ok. As I Understand It, You Have a Federal Lease with a Split
Estate with Fee Surface and That Instance, the BLM Does Not Get Involved
with the Negotiations Between the Oil and Gas Company And the Landowner.
So, in this Case, BLM Would Actually Have No Jurisdiction So, No Written
Order Would Be Required.

Bagley: Particularly If It\'s Offsite, off the Well Pad We\'re Currently
On. Even it Is on the Well Pad, If They Have an Agreement Between a Land
Owner to Store it There, There\'s Not Too Much We Can Do About It.

Fellows: Ok. Hope That Answers That Question For Pb. Here\'s One from
Bakersfield. Can Written Orders Be Entered Into Afmss as a Major or Are
They All to Be Considered Minor? Mark?

Kelly: Well, Ron, Actually, Written Orders Are Not Violations at All.
So, it Would Be Hard to Classify Them as Either Major or Minor. Although
I Guess in My Mind, All Of Them Would Be a Minor and Actually Afmss Will
Default to Minor. During the Entry Process, I Think this Is Being
Addressed by The Afmss Users Group. And until Such Time as We Receive
Further Instructions on How to Code That, I Would Let it Default to
Minor and Not Worry About It.

Fellows: this One Is for Lonny from Bo. If You must Have an Abatement
Date on an Inc, What Would That Date Be? For Failure to Notify, Spud,
Bop, Test Casing, et Cetera, Can You Write Immediate in on Drilling?

Bagley: If I Understand it Right, I Think Bo Is Asking the Question
Whether or Not He Should Put in an Abatement Date When Dealing with
Situations When They Should Have Already Notified Them of Those Action
Being Taken. And You Need to Have an Abatement Date. What I Would
Suggest Using Is The Date You Used for the Noncompliance Because this
Way There Is an Abatement Date In, There the Operator Was Notified. They
Should Have Reported. And That Would Be in My Mind the Appropriate Date
to Be Entered.

Fellows: Ok. Very Good. Hope That Answers That. We Have One Here from
Bakersfield. This Is to Lonny or Mark Kelly. In a Case Where a Written
Order Is Issued with Five Different Items, Can the Order Have an Inc
Number and the Subsequent Violations Noted in the Letter Be Tracked by
Using Letter A, B, C, but All under the Unique Inc Number or Written
Order Number.

Kelly: Don\'t Want to Touch That.

Bagley: I Think What They\'re Getting at Is When You Have Multiple
Violations Being Listed, They\'ll Give it One Inc Number like 1 Lb 00
for the Year 2000, 001 and Then Breaking That Out as A, B, C, and D in
Afmss. Well, That Actually Is a Unique Number for Each One of the
Violations So, You Really Have a Unique Number When You\'ve Changed One
from Another. So, Yes, I Would Enter it That Way in the System If That
Pretty Much Clarifies Your Concern There. Any Other Feedback?

Sparger: Lonny, We Found It\'s Helpful to Go Ahead and Issue Unique
Numbers for Each One of These Orders. And If That Order Goes to ‑‑ for
Failure to Comply Goes to an Inc, Then We Can Put a Suffix on It, an I.
If it Goes to Assessment, We Can Put an A. If it Goes to Civil
Penalties, We Can Put a C. And They\'ll Be Unique Numbers But We Can
Actually Track the Process of That Violation and it Helps Sometimes to
Communicate With the Operator. If He Doesn\'t Have to Look at Four or
Five Different Numbers But the Same Number with Different Prefixes ‑‑ or
Suffixes Which for Us Make it a Unique Number.

Bagley: I Think That Would Work Very Well.

Fellows: Here\'s One Again for You Lonny from Frank Moore. Lonny, Last
Week I Was at a Dry Gas Well. No Gas Is Used on the Lease. They Have
Been Reporting Gas Venting. I Do Not See How Any Gas Has Been Vented.
The Gas Flows Directly into the Meter Ten Feet Away. Is this a Case of
Knowing and Willful, Falsely Reporting of Gas Production, If They Cannot
Explain the Gas Venting?

Bagley: I\'m Not Sure What Type of a Point You\'re Trying to Make Here,
Frank or What the Question Is but from What You\'ve Put down Here Is
You\'ve Actually Discovered There Is No Venting Occurring at the Lease.
But the Operator Is Reporting That They\'re Venting. One of the Things
That Does Occur on Gas Wells That You Cannot Vent Gas from a Gas Well.
That\'s by Regulation. So, There Is a Problem There and If They\'re
Actually Not Venting, The Operator Needs to Explain What Reasons
They\'re Accounting For Venting. Some of the Situations I Have Run into
Is That Operators Will, For Some Operations I Should Say And ‑‑ in a
Gathering System and You\'re Going to a Compressor Plant, the Plant Will
Go down And it Will Vent at the Compressor. So, There May Be a Situation
Where They\'ve Had to Vent Some For Emergency Purposes and That Is
Allowed for Emergencies but Normally You Don\'t Vent Any Gas From a Gas
Well. Let Me Tell You What, I\'ll Give You a Call When I Get Back next
Week and We Can Get More Details On What Your Situation Is There And Try
to Take Care of It. Jamie, Had You Input?

Sparger: Yeah, Lonny. Just by What the Question Says And I Might Be up
in the Dark And Maybe this Is a Little to The Side but If They\'re
Reporting Venting and Reporting The Venting Every Month, I Would Almost
Bet That They Are Utilizing the Wrong Measurement Point and They Are
Reporting Their Volumes Produced and Volumes Sold from the Plant and
Reporting Their Vented Volumes From the Plant When They Should Be
Reporting Probably Back on That Well Head Meter.

Bagley: That\'s a Good Point.

Sparger: It\'s Time for an Audit.

Bagley: Thanks, Frank. We\'ll Get Back to You.

Fellows: Frank, If That Doesn\'t Help, Just Give Us a Call Here While We
Still Have a Few More Minutes Then We Can Talk it Out. Got a Couple More
Faxes Here. I Have One Here from Sheryl from Mms this One Is Directed at
You, Lonny. Lease Cancellation, Leases Capable of Production. Has Any
BLM Office Successfully Cancelled a Lease in Federal Court?

Bagley: Not That I Know Of, They Have Not. When You\'re Looking at
Situations When Leases Capable Of Production, She\'s Right. You Have to
Go to Court to Cancel the Leases. It Has to Be Based on the Operator
Compliance. And That Would Be at the End of Civil Penalties. We\'re
Going to Cancel the Lease And Get Somebody Else in There That Can
Operate It. To My Knowledge, and If Anybody\'s out There That Knows Of
Any Cases, Please Let Us Know But I Don\'t Know of Any.

Fellows: Ok. I Have a Second Part of That From Sheryl. This One\'s about
Problem Operator. Is There Any Way to Prevent an Operator from Operating
on Other Properties ‑‑ from Operating Other Properties?

Bagley: If the Question Is Related to If the Operator Is a Habitual
Offender Maybe or If We\'ve Already Cancelled the Lease and We\'ve
Foreclosed on Their Bond, They\'re Put on a List and Anyone Including
the Operator, Any Officers Named Cannot Show up on Any Leases That Are
out There If They Want To Release Something. So, Yes, There Is a
Prohibitive Measure We Can Take but it Has To Go Through Due Process
Also And That Operator Has to Be Pretty Much Put on What We Call A
Blacklist Before We Can Do That.

Fellows: Ok. Interesting. Ok. I Have a Question for You, Mark. If During
an Inspection, the Inspector Determines That There Is a Violation, Inc
Required and There Is Also a Situation Problem That Requires a Written
Order, Is it Proper to Mail Them Both in the Same Certified Envelope to
the Operator?

Kelly: Yes, You Can Do That. However, Be Aware That under Some
Conditions, Some Operators May Claim That They Didn\'t Get One or the
Other Documents That Were Contained in That Envelope Just to Be
Obstinate. If You\'ve Got a Good Rapport With the Operator and You
Don\'t Feel That Will Happen, Sending Them Both Together in the Same
Envelope Is Perfectly Acceptable.

Bagley: Have You Had Experiences That Way?

Kelly: We Had a Few Where They Claim They Didn\'t Get the Information.
In Those Cases with the Operators, We Send Them One at a Time.

Fellows: We\'re Getting to the End of the Faxes. No More Coming In. I
Don\'t See Any Lines So I\'ll Finish with One Last Fax Here And this One
Is Directed at Jamie. Guess Where It\'s From? Bakersfield! How about
That! Since the Authorized Officer Issues the Written Order, Should It
Be Accredited to the Pet or The Authorized Officer at Afmss Since the
Authorized Officer Signs It.

Sparger: Good Question. Who Did the Work? The Authorized Officer or You?
I Bet You Did All of the Work. And It\'s Going to Be Credited to You. It
Should Go up to Your Inspection and It\'s Your Baby.

Fellows: Ok. That Looks like the End of the Faxes. No More from
Bakersfield, Please. End of the Phone Calls. I\'d like to Thank Everyone
for Their Questions and Comments. If You Need Any Additional
Information, Please Feel Free to Contact Any of Us for Details. How Many
Times Have You Heard The Terms Quality Inspection and Effective
Compliance Used. Conversely, How Many Different Definitions Have You
Heard of These Same Terms? Our Objective of Course Is Compliance. Our
Job Is to Ensure That Oil And Gas Operations Are Conducted In an
Environmentally Responsible Manner and That Product Accountability Is a
Matter of Fact, Not Speculation. Our Job Is Also to Ensure That Record
Keeping Is Appropriate to The Action Taken. Nothing More or less Is
Expected. The Mechanics Involved Here Have Been Well Discussed Today and
Are Well Known and Have Been a Matter of Statute and Policy for A Number
of Years. Yes, Changes Will Occur and Some Of Those Changes Will Make
Your Job More Effective While Others May Require Adjustments in Your
Procedural Routine. One Thing That Will Never Change Is the Ability of
Our Field Inspectors to Continuously Make Adjustments Regarding the
Appropriateness of Their Actions In a Changing Regulatory Environment.
The Ability and Willingness to Communicate Bureau Requirements, That Is
to Complain the Why of Our Actions to Both Industry Field Hands and
Company Executives, Also the Ability to Lay out a Strategy Governing Our
Inspection Responsibilities Will In My Opinion, Help Define the Quality
Inspection Effective Compliance Question. Management Has a Role Which Is
To Get Involved. Not Only in the Development of I & E Strategies but
Enforcement Activities. It Is Important for Managers to Understand the
Issues That Field Inspectors Face on a Day‑to‑day Basis. It Is Important
for Managers to Understand the Range of Enforcement Tools Being Employed
By Field Inspectors and the Appropriateness of Those Actions. A
Partnership Between Field Inspector and Managers Needs to Be Forged If
Not Now in Place. Before We Close Things Out, I Would like to Ask Our
Panelists If They Have Any Last Words of Wisdom. Mark?

Kelly: I\'ve Got a Couple of Things. First I Would like to Say That The
Time That We\'ve Put Together During this Forum Has Been a Lot Of Fun.
It\'s Been a Lot of Work. It\'s a Serious Subject and It\'s Also a Dry
Subject. You Know, It\'s Hard to Sit There And Listen to All of this but
It\'s Important That You Know it And You Learn It. You Have to Apply It.
I Would Also like to Say We Know It\'s Complicated Stuff Sometimes And
If You\'ve Got Any Questions, Feel Free to Contact Me in Farmington.
I\'ll Be Glad to Spend Some Time And Tell You War Stories or Try To
Calculate Your Civil Penalties for You or Help You Out or Whatever. I
Appreciate the Opportunity to Be Here and I Had a Good Time, Ron.

Fellows: I Had a Good Time, Too. Jamie, What Would You like to Add?

Sparger: Ron, I Agree with You. If You Have Any Problems That You Need
Help With, Call Mark. He\'s Ready. No, You Can Call Any of Us. You Know,
Compliance Really Is ‑‑ We Have a Simple Goal in the I & E Program and
That\'s Just to Ensure Compliance. And We\'ve Talked about a Lot of The
Tools We Have in Our Toolbox To Get the Compliance. One Thing I\'ve
Noticed Though With New Inspectors and New Service Protection
Specialists, I\'ve Watched Them Come Through The Training Program. I\'ve
Watched Them Come Through The Office after 20 Years, You See a Few
Things. One Thing I\'ve Noticed That Most New Inspectors Lack Is
Confidence. Confidence Is Really a Beautiful, Wonderful Thing When
You\'ve Got it and It\'s Miserable When You Don\'t. I Just Encourage You
Guys Who Are Starting out Just to Hold On, Do Your Job Every Day and it
Will Click and I Don\'t Know to Explain it Any Better. It Will Click and
You\'ll Feel Comfortable Doing this Job. Second Thing I Would like to
Mention, Ron, Is this Might Seem To Be a Difficult Job Putting on This
Presentation but I Want the People at Home to Understand Without
Question Who\'s Really Doing the Work Around Here and It\'s this Legion
of People Back Here Running this Program and Bringing this the Satellite
Program to You. They\'ve Done an Excellent Job And If We Can Be Made to
Look Good, They\'ve Done That. Particularly Patti. She\'s Done an
Excellent Job. I Hope People Appreciate. She Is at Work Long Before We
Get up and after We\'ve Gone to Bed, She\'s Still at it Making This
Thing Work.

Fellows: I Certainly Second That One. I\'m Sure We All Do. Well, Lonny
or Ollie, I Don\'t Know Which One to Call You. Gotta Be Something to
This. So, What Do You Have from the National Perspective?

Bagley: Well, First of All, Doing the Explaining the Ollie Part Would
Take a Little Bit More Time than We\'ve Got Here Today. What I Would
like to Do Is Thank Both Mark and Jamie for Participating Here and
Helping Us Present this Course Today. And Also Ron, Thank You from a
Management Perspective of Being Here and Providing That Perspective Is
Very Important in Hosting Our Show. One of the Things I Do Have to
Clarify on a Statement I Made Earlier, I Was Whispered to in My Ear That
When I Made the Statement about Ibla and Whether Or Not an Operator Can
Go Directly to Ibla, We May Be Mistaken There. We\'ve Had Phone Calls in
Disagreement for That. So, We\'ll Have to Clarify That Issue and Get it
Back to the Field as to How That Can Take Place. We Apologize If We Had
Misstated That and We\'ll Get That Clarified Through Our Policy Going
Back out to the Field. We Discussed a Number of Items Here Today and a
Number of These Items Have Changed Our Current Policy. Our Washington
Office Im 94‑17 Which Is the Latest Enforcement Policy That We Have.
We\'ve Made Slight Changes to It. I Want Everybody to Be Assured That We
Are Going to Be Getting That out to the Field. We Hoped to Have Had Done
Already but with Other Things Coming Up, We Weren\'t Able to Get to That
Point. But the Main Thing I Would like To Point out Is We Do Have
Flexibility in Enforcement Actions We Take in the Field. You Don\'t
Necessarily Have to Go Right Directly to Civil Penalties. You Can Do
Shutdown Notices and Shut down the Operation. Get Their Attention
Immediately. Get the Problem Corrected and You\'re Back on Your Way. You
Can Also Perform the Work And Then Bill Them for it plus 25% over and
Those We Should Look at Exploring Before We Go To the Civil Penalty
Process Because We Know That Once We Get Into That Mode It\'s
Complicated. It Is Hard to Follow. And It\'s Difficult to Prove or It\'s
Difficult to Get the Money At the End Anyway. And Almost Impossible. I
Would like to Reiterate What Jamie Said about Building Confidence. Doing
Your Job. Any Time You Have Questions, Give Me a Call or Your State
Coordinators a Call. If They Can\'t Explain It, We Need to Have it More
and Better Defined. And Through Our Action Plan, We\'re Planning to Do
That. With Your Help in the Field and Some Will Be Called upon to Help
Us out in Developing the Policies and Guidance in the Field. So, I
Encourage You to Participate Also in Regards to That, We Know That
We\'re Probably Not Going to Get as Many Inspections Done this Year As
Last Year Due to Budget, Also Due to the Implementation of the Action
Plan. So, We Do Want to Stress on Quality of Inspections. Make Sure
We\'re Doing the Right Thing. Looking at the Right Stuff. And Just Doing
Our Job and Having Fun at It. Thanks to You All.

Fellows: Great Closing Comments from You All. Well, this about Wraps it
up for Our Effective Compliance Procedures Workshop. We Would like Again
to Thank All Of Who You Called In, Faxed Us Questions. We Appreciate
Your Participation. That\'s What Makes Satellite Events like this Work.
I Would like to Ask All of Our Viewers to Complete Their Program
Evaluation for this Telecast on NTC\'s Web Site Which Can Be Found at
www.ntc.blm.gov. Or Use the Evaluation Form Provided in Your Viewer
Packet. It Contains Instructions on Where to Send It. We Would like to
Remind All Satellite Downlink Coordinators To Complete the Standard
Broadcast Viewer Roster and Fax It to NTC Immediately or You Can Use
NTC\'s Automated Viewer Reporting System on the NTC Home Page. Thanks
for Watching and So Long From Phoenix.

to Help Your Office Participate in Future Telecasts, See the BLM
Satellite Downlink Guide and Visit the NTC Home Page on the World Wide
Web. NTC\'s Internet Address Is www.ntc.blm.gov. Transcripts of this
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More Information on Upcoming Distance Learning Events, as Well as
Traditional Courses, Call the Training Center at 602‑906‑5500 or Visit
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Announcer: this Broadcast Has Been a Production of the BLM National
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