Federal Offshore Regulatory Agencies Announce Increased Civil Monetary Penalties for 2018
Like death and taxes, the specter of civil penalties remains ever-present. In the federal offshore energy regulatory environment, monetary penalties have increased once again in 2018. Spurred on by increases in the Consumer Price Index, each of the federal Bureau of Safety and Environmental Enforcement (“BSEE”), the federal Bureau of Ocean Energy Management (“BOEM”), and the U.S. Coast Guard (“Coast Guard”), have adjusted their civil penalty amount during 2018 to account for inflation. Consequently, offshore facility lessees or permittees or vessel operators incurring violations in 2018 after the effective date that such monetary penalty increases became effective will be subject to the bolstered penalty amounts.
BSEE Civil Monetary Penalty Increase.
BSEE announced in early January 2018 that the maximum civil penalty rate for federal Outer Continental Shelf Lands Act (“OCSLA”)1 violations increases to $43,576 a day for each violation, effective January 18, 2018.2 BSEE had most recently adjusted its civil penalty amounts in February 2017.
BSEE seeks to promote safety and protection of the environment in the course of energy exploration, development and production in federal offshore waters through regulatory oversight and enforcement. The assessment of civil monetary penalties serves to deter perilous activities as well as promote compliance with applicable environmental and safety-related standards imposed by BSEE with respect to offshore energy activities.
Authority for BSEE to adjust its civil monetary penalty arises under the OCSLA, which directs the Secretary of the Interior to adjust the OCSLA maximum civil penalty amount at least once every three years to reflect any increase in the Consumer Price Index to account for inflation.3 Additionally, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “FCPIA 2015”) requires federal agencies to adjust the level of civil monetary penalties through rulemaking.4 Together, these legislative acts provide the legal impetus for BSEE to review and increase civil monetary penalties, as necessary.
BOEM Civil Monetary Penalty Increase.
BOEM announced increases in its maximum civil penalty rate in early March 2018.5 BOEM promotes the safe and responsible exploration and development of energy resources in federal offshore waters through regulations adopted and implemented under the OCSLA and the Oil Pollution Act of 1990 (“OPA”).6 Regulatory oversight under the OPA generally pertains to offshore operators’ demonstration of oil spill financial responsibility for covered offshore facilities, including wells, platforms and pipelines.7
On and after March 2, 2018, covered parties failing to comply with applicable OCSLA requirements will be subject to maximum civil penalties of $43,576 a day for each violation.8 On and after March 2, 2018, OPA violations will be subject to maximum civil penalties of $46,192 a day for each violation.9 BSEE last adjusted its civil penalty amounts for OCSLA and OPA violations in February 2017.
Similar to BSEE, BOEM’s authority to adjust its civil monetary penalty arises under the federal OCSLA as well as the FCPIA 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.10 The Federal Civil Penalties Inflation Adjustment Act of 199011 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.
Coast Guard Civil Monetary Increase.
The U.S. Department of Homeland Security announced in early April 2018 the increase in Coast Guard civil monetary penalties.12 Unlike the BSEE and the BOEM, which have only one or a couple of penalty schemes under their respective programs, the Coast Guard is authorized to assess close to 150 different penalties under varying legislative and regulatory initiatives that encompass the agency’s oversight and safeguarding of maritime safety and security as well as environmental stewardship.13 Coast Guard penalties are authorized under Titles 14, 16, 19, 33, 42, 46 and 49 of the United States Code, with Titles 33 and 46 authorizing most of these penalties, with respect to navigation, navigable waters and shipping.14
New maximum civil monetary penalty amounts, as adjusted by the most recent April 2018 rulemaking, range from less than $1,000 to more than $323,000, effective April 2, 2018.15 To review the complete list of increases in Coast Guard civil monetary penalties, refer to Table 4 of the final rulemaking publication on the increases in penalties.
1 43 U.S.C. § 1331 et seq.
2 83 Fed. Reg. 2,538 (Jan. 18, 2018).
3 43 U.S.C. § 1350(b)(1).
4 Pub. L. 104-410.
5 See 83 Fed. Reg. 8,930 (Mar. 2, 2018).
6 33 U.S.C. § 2701 et seq.
7 30 C.F.R. § 553.1.
8 83 Fed. Reg. 8,930, 8,932 (Mar. 2, 2018).
10 33 U.S.C. §2716a.
11 Pub. L. 104-410.
12 83 Fed. Reg. 13,826 (Apr. 2, 2018).
13 Id. at 13,829.
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.