BOEM Announces Increased Civil Monetary Penalties for 2019
As has been reported on in the past, federal agencies with oversight over offshore regulated activities, including oil and gas exploration and production operations, continue to increase the maximum civil penalty amounts they may assess for violations of applicable law, with the federal Bureau of Ocean Energy Management (“BOEM”) being the latest agency to do so. Spurred on by increases in the Consumer Price Index, on March 26, 2019, BOEM adjusted its civil penalty amount to account for inflation. Consequently, offshore oil and gas facility lessees or permittees regulated by BOEM that incur violations after March 26, 2019, will be subject to the bolstered penalty amounts.
BOEM made its announcement on increased maximum civil penalty amounts in the March 26, 2019 issue of the Federal Register. BOEM promotes the safe and responsible exploration and development of energy resources in federal offshore waters through regulations adopted and implemented under the federal Outer Continental Shelf Lands Act (“OCSLA”) and the Oil Pollution Act of 1990 (“OPA”). Regulatory oversight by BOEM under the OCSLA encompasses a number of operational and safety requirements generally applicable to oil and gas leasing operations on the Outer Continental Shelf, including the granting of leases, rights-of-way and rights-of-use and easements, approval of certain exploratory and developmental plans, and imposition of bonding requirements for offshore lease interests, including decommissioning obligations. BOEM’s authority under OPA generally pertains to offshore operators’ demonstration of oil spill financial responsibility for covered offshore facilities, including wells, platforms and pipelines.
On and after March 26, 2019, covered parties failing to comply with applicable OCSLA requirements will be subject to maximum civil penalties of $44,675 a day for each violation, an increase of $1,099 over the 2018 penalty cap of $43,576 a day for each violation. By comparison, on and after March 26, 2019, covered parties failing to comply with applicable OPA requirements will be subject to maximum civil penalties of $47,357 a day for each violation, an increase of $1,165 over the 2018 penalty cap of $46,192 a day for each violation. BOEM last adjusted its civil penalty amounts for OCSLA and OPA violations on March 2, 2018.
BOEM’s authority to adjust its civil monetary penalty arises under OCSLA as well as the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. Additionally, the OPA authorizes the Secretary of the Interior to impose civil penalties for failure to comply with financial responsibility regulations that implement OPA. Also, the Federal Civil Penalties Inflation Adjustment Act of 1990 requires that all civil monetary penalties, including OPA maximum civil penalty amounts, be adjusted for inflation at least once every four years. On the basis of these collective legislative acts, BOEM reviews and increases civil monetary penalties, as necessary.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.