83 FR 3992 - Onshore Oil and Gas Operations-Annual Civil Penalties Inflation Adjustments

DEPARTMENT OF THE INTERIOR
Bureau of Land Management

Federal Register Volume 83, Issue 19 (January 29, 2018)

This final rule adjusts the level of civil monetary penalties contained in the Bureau of Land Management's (BLM) regulations governing onshore oil and gas operations as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and consistent with applicable Office of Management and Budget (OMB) guidance. The adjustments made by this final rule constitute the 2018 annual inflation adjustments, accounting for one year of inflation spanning the period from October 2016 through October 2017.

[Federal Register Volume 83, Number 19 (Monday, January 29, 2018)]
[Rules and Regulations]
[Pages 3992-3995]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-01628]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3160

[LLWO310000 L13100000 PP0000 18X]
RIN 1004-AE51


Onshore Oil and Gas Operations--Annual Civil Penalties Inflation 
Adjustments

AGENCY: Bureau of Land Management, Interior.

ACTION: Final rule.

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SUMMARY: This final rule adjusts the level of civil monetary penalties 
contained in the Bureau of Land Management's (BLM) regulations 
governing onshore oil and gas operations as required by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and 
consistent with applicable Office of Management and Budget (OMB) 
guidance. The adjustments made by this final rule constitute the 2018 
annual inflation adjustments, accounting for one year of inflation 
spanning the period from October 2016 through October 2017.

DATES: This rule is effective on January 29, 2018.

FOR FURTHER INFORMATION CONTACT: Steven Wells, Division Chief, Fluid 
Minerals Division, 202-912-7143, for information regarding the BLM's 
Fluid Minerals Program. For questions relating to regulatory process 
issues, please contact Jennifer Noe, Division of Regulatory Affairs, at 
202-912-7442. Persons who use a telecommunications

[[Page 3993]]

device for the deaf (TDD) may call the Federal Relay Service (FRS) at 
1-800-877-8339, 24 hours a day, 7 days a week to contact the above 
individuals.

SUPPLEMENTARY INFORMATION:

I. Background
II. Calculation of 2018 Adjustments
III. Procedural Requirements
    A. Administrative Procedure Act
    B. Regulatory Planning and Review (E.O. 12866, E.O. 13563, and 
E.O. 13771)
    C. Regulatory Flexibility Act
    D. Small Business Regulatory Enforcement Fairness Act
    E. Unfunded Mandates Reform Act
    F. Takings (E.O. 12630)
    G. Federalism (E.O. 13132)
    H. Civil Justice Reform (E.O. 12988)
    I. Consultation With Indian Tribes (E.O. 13175 and Departmental 
Policy)
    J. Paperwork Reduction Act
    K. National Environmental Policy Act
    L. Effects on the Energy Supply (E.O. 13211)

I. Background

    On November 2, 2015, the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015 (Sec. 701 of Pub. L. 114-74) 
(the 2015 Act) became law.
    The 2015 Act requires agencies to:
    1. Adjust the level of civil monetary penalties for inflation with 
an initial ``catch-up'' adjustment through an interim final rulemaking 
in 2016;
    2. Make subsequent annual adjustments for inflation beginning in 
2017; and
    3. Report annually in Agency Financial Reports on these inflation 
adjustments.
    The purpose of these adjustments is to further the policy goals of 
the underlying statutes.
    As required by the 2015 Act, the BLM issued an interim final rule 
that adjusted the level of civil monetary penalties in BLM regulations 
with the initial ``catch-up'' adjustment (RIN 1004-AE46, 81 FR 41,860), 
which was published on June 28, 2016, and became effective on July 28, 
2016. On January 19, 2017, the BLM published a final rule (RIN 1004-
AE49, 82 FR 6,307) updating the civil penalty amounts to the 2017 
annual adjustment levels.
    OMB issued Memorandum M-18-03 on December 15, 2017 (Implementation 
of Penalty Inflation Adjustments for 2018, Pursuant to the 2015 Act) 
explaining agency responsibilities for identifying applicable penalties 
and calculating the annual adjustment for 2018 in accordance with the 
2015 Act.

II. Calculation of 2018 Adjustment

    In accordance with the 2015 Act and OMB Memorandum M-18-03, the BLM 
has identified applicable civil monetary penalties in its regulations 
and calculated the annual adjustment. A civil monetary penalty is any 
assessment with a dollar amount that is levied for a violation of a 
Federal civil statute or regulation, and is assessed or enforceable 
through a civil action in Federal court or an administrative 
proceeding. A civil monetary penalty does not include a penalty levied 
for violation of a criminal statute, nor does it include fees for 
services, licenses, permits, or other regulatory review. The calculated 
annual inflation adjustments are based on the percentage change between 
the Consumer Price Index for all Urban Consumers (CPI-U) for the 
October preceding the date of the adjustment, and the prior year's 
October CPI-U. Consistent with guidance in OMB Memorandum M-18-03, the 
BLM divided the October 2017 CPI-U by the October 2016 CPI-U to 
calculate the multiplier. In this case, October 2017 CPI-U (246.663)/
October 2016 CPI-U (241.729) = 1.02041. OMB Memorandum M-18-03 confirms 
that this is the proper multiplier. (OMB Memorandum M-18-03 at 1 and 
n.4.)
    The 2015 Act requires the BLM to adjust the civil penalty amounts 
in 43 CFR 3163.2. To accomplish this, BLM multiplied the current 
penalty amounts in 43 CFR 3163.2 subparagraph (b)(2) and paragraphs 
(d), (e), and (f) by the multiplier set forth in OMB Memorandum M-18-03 
(1.02041) to obtain the adjusted penalty amounts. The 2015 Act requires 
that the resulting amounts be rounded to the nearest $1.00 at the end 
of the calculation process.
    Due to an error, the current penalty amount in 43 CFR 3163.2(b)(1) 
of $1,031 reflects the initial ``catch-up'' adjustment published on 
June 28, 2016, rather than the 2017 annual adjusted amount of $1,048. 
The correct adjusted penalty amount in 43 CFR 3163(b)(1) of $1,069 was 
calculated by multiplying the 2017 annual adjusted amount ($1,048) by 
the multiplier set forth in OMB Memorandum M-18-03 (1.02041).
    The adjusted penalty amounts will take effect immediately upon 
publication of this rule. Pursuant to the 2015 Act, the adjusted civil 
penalty amounts apply to civil penalties assessed after the date the 
increase takes effect, even if the associated violation predates such 
increase. This final rule adjusts the following civil penalties:

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                                                                                      Current        Adjusted
                CFR citation                      Description of the penalty          penalty         penalty
----------------------------------------------------------------------------------------------------------------
43 CFR 3163.2(b)(1)........................  Failure to comply..................          $1,031          $1,069
43 CFR 3163.2(b)(2)........................  If corrective action is not taken..          10,483          10,697
43 CFR 3163.2(d)...........................  If transporter fails to permit                1,048           1,069
                                              inspection for documentation.
43 CFR 3163.2(e)...........................  Failure to permit inspection,                20,965          21,393
                                              failure to notify.
43 CFR 3163.2(f)...........................  False or inaccurate documents;               52,414          53,484
                                              unlawful transfer or purchase.
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III. Procedural Requirements

A. Administrative Procedure Act

    In accordance with the 2015 Act, agencies must adjust civil 
monetary penalties ``notwithstanding Section 553 of the Administrative 
Procedure Act'' (2015 Act at Sec.  4(b)(2)). The BLM is promulgating 
this 2018 inflation adjustment for civil penalties as a final rule 
pursuant to the provisions of the 2015 Act and OMB guidance. A proposed 
rule is not required because the 2015 Act expressly exempts the annual 
inflation adjustments from the notice and comment requirements of the 
Administrative Procedure Act. In addition, since the 2015 Act does not 
give the BLM any discretion to vary the amount of the annual inflation 
adjustment for any given penalty to reflect any views or suggestions 
provided by commenters, it would serve no purpose to provide an 
opportunity for public comment on this rule.

B. Regulatory Planning and Review (Executive Orders 12866, 13563, and 
13771)

    Executive Order (E.O.) 12866 provides that the Office of 
Information and Regulatory Affairs (OIRA) in the OMB will review all 
significant rules. OIRA has determined that this rule is not 
significant. (See OMB Memorandum M-18-03 at 3).
    E.O. 13563 reaffirms the principles of E.O. 12866 while calling for 
improvements in the Nation's regulatory system to promote 
predictability and to

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reduce uncertainty and the use of the best, most innovative, and least 
burdensome tools for achieving regulatory ends. E.O. 13563 directs 
agencies to consider regulatory approaches that reduce burdens and 
maintain flexibility and freedom of choice for the public where these 
approaches are relevant, feasible, and consistent with regulatory 
objectives. E.O. 13563 emphasizes further that regulations must be 
based on the best available science, and that the rulemaking process 
must allow for public participation and an open exchange of ideas. We 
have developed this rule in a manner consistent with these requirements 
to the extent permitted by the 2015 Act.
    E.O. 13771 of January 30, 2017, directs federal agencies to reduce 
the regulatory burden on regulated entities and control regulatory 
costs. E.O. 13771, however, applies only to significant regulatory 
actions, as defined in Section 3(f) of E.O. 12866. OIRA has determined 
that agency regulations exclusively implementing the annual adjustment 
are not significant regulatory actions under E.O. 12866, provided they 
are consistent with OMB Memorandum M-18-03 (See OMB Memorandum M-18-03 
at 3). Therefore, E.O. 13771 does not apply to this final rule.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires an agency to prepare 
a regulatory flexibility analysis for all rules unless the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. The RFA applies only to rules 
for which an agency is required to first publish a proposed rule. See 5 
U.S.C. 603(a) and 604(a). The 2015 Act expressly exempts these annual 
inflation adjustments from the requirement to publish a proposed rule 
for notice and comment (see 2015 Act at Sec.  4 (b)(2)). Because the 
final rule in this case does not include publication of a proposed 
rule, the RFA does not apply to this final rule.

D. Small Business Regulatory Enforcement Fairness Act

    This rule is not a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act. This rule:
    (a) Will not have an annual effect on the economy of $100 million 
or more;
    (b) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions; and
    (c) Will not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises.
    This rule will potentially affect individuals and companies who 
conduct operations on oil and gas leases on Federal or Indian lands. 
The BLM believes that the vast majority of potentially affected 
entities will be small businesses as defined by the Small Business 
Administration (SBA). However, the BLM does not believe the rule will 
pose a significant economic impact on the industry, including any small 
entities, for two reasons. First, any lessee can avoid being assessed 
civil penalties by operating in compliance with BLM rules and 
regulations. Second, even though most of the entities potentially 
affected are small businesses as defined by the SBA, the adjusted 
penalties and potential increase in penalty receipts are small in 
comparison to the $16 billion value of oil, natural gas and natural gas 
liquids produced from Federal and Indian leases in FY 2016.

E. Unfunded Mandates Reform Act

    This rule does not impose an unfunded mandate on State, local, or 
tribal governments, or the private sector of more than $100 million per 
year. The rule does not have a significant or unique effect on State, 
local, or tribal governments or the private sector. Therefore, a 
statement containing the information required by the Unfunded Mandates 
Reform Act (2 U.S.C. 1531 et seq.) is not required.

F. Takings (E.O. 12630)

    This rule does not effect a taking of private property or otherwise 
have takings implications under E.O. 12630. Therefore, a takings 
implication assessment is not required.

G. Federalism (E.O. 13132)

    Under the criteria in section 1 of E.O. 13132, this rule does not 
have sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement. Therefore, a federalism summary 
impact statement is not required.

H. Civil Justice Reform (E.O. 12988)

    This rule complies with the requirements of E.O. 12988. 
Specifically, this rule:
    (a) Meets the criteria of section 3(a) requiring that all 
regulations be reviewed to eliminate errors and ambiguity and be 
written to minimize litigation; and
    (b) Meets the criteria of section 3(b)(2) requiring that all 
regulations be written in clear language and contain clear legal 
standards.

I. Consultation With Indian Tribes (E.O. 13175 and Departmental Policy)

    The Department of the Interior strives to strengthen its 
government-to-government relationship with Indian tribes through a 
commitment to consultation with Indian tribes and recognition of their 
right to self-governance and tribal sovereignty. We have evaluated this 
rule under the Department's consultation policy and under the criteria 
in E.O. 13175 and have determined that it has no substantial direct 
effects on federally recognized Indian tribes and that consultation 
under the Department's tribal consultation policy is not required.

J. Paperwork Reduction Act

    This rule does not contain information collection requirements, and 
a submission to OMB under the Paperwork Reduction Act (44 U.S.C. 3501 
et seq.) is not required. We may not conduct or sponsor, and you are 
not required to respond to, a collection of information unless it 
displays a currently valid OMB control number.

K. National Environmental Policy Act

    A detailed statement under the National Environmental Policy Act of 
1969 (NEPA) is not required because, as a regulation of an 
administrative nature, the rule is covered by a categorical exclusion 
(see 43 CFR 46.210(i)). We have also determined that the rule does not 
involve any of the extraordinary circumstances listed in 43 CFR 46.215 
that would require further analysis under NEPA.

L. Effects on the Energy Supply (E.O. 13211)

    This rule is not a significant energy action under the definition 
in E.O. 13211. Therefore, a Statement of Energy Effects is not 
required.

List of Subjects 43 CFR Part 3160

    Administrative practice and procedure; Government contracts; 
Indians--lands; Mineral royalties; Oil and gas exploration; Penalties; 
Public lands--mineral resources; Reporting and recordkeeping 
requirements.

    For the reasons given in the preamble, the BLM amends Chapter II of 
Title 43 of the Code of Federal Regulations as follows:

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PART 3160--ONSHORE OIL AND GAS OPERATIONS

0
1. The authority citation for part 3160 continues to read as follows:

    Authority:  25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, 
and 1751; 43 U.S.C. 1732(b), 1733, 1740; and Sec. 701, Pub. L. 114-
74, 129 Stat. 599, unless otherwise noted.

Subpart 3163--Noncompliance, Assessments, and Penalties


Sec.  3163.2  [Amended]

0
2. In Sec.  3163.2:
0
a. In paragraph (b)(1), remove ``$1,031'' and add in its place 
``$1,069''.
0
b. In paragraph (b)(2), remove ``$10,483'' and add in its place 
``$10,697''.
0
c. In paragraph (d), remove ``$1,048'' and add in its place ``$1,069''.
0
d. In paragraph (e) introductory text, remove ``$20,965'' and add in 
its place ``$21,393''.
0
e. In paragraph (f) introductory text, remove ``$52,414'' and add in 
its place ``$53,484''.

Joseph Balash,
Assistant Secretary--Land and Minerals Management, U.S. Department of 
the Interior.
[FR Doc. 2018-01628 Filed 1-26-18; 8:45 am]
 BILLING CODE 4310-84-P