[Code of Federal Regulations]
[Title 43, Volume 2]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 43CFR3163.2]

[Page 431-432]
 
                    TITLE 43--PUBLIC LANDS: INTERIOR
 
    CHAPTER II--BUREAU OF LAND MANAGEMENT, DEPARTMENT OF THE INTERIOR
 
PART 3160_ONSHORE OIL AND GAS OPERATIONS--Table of Contents
 
         Subpart 3163_Noncompliance, Assessments, and Penalties
 
Sec. 3163.2  Civil penalties.

    (a) Whenever an operating rights owner or operator, as appropriate, 
fails or refuses to comply with any applicable requirements of the 
Federal Oil and Gas Royalty Management Act, any mineral leasing law, any 
regulation thereunder, or the terms of any lease or permit issued 
thereunder, the authorized officer shall notify the operating rights 
owner or operator, as appropriate, in writing of the violation, unless 
the violation was discovered and reported to the authorized officer by 
the liable person or the notice was previously issued under Sec. 3163.1 
of this title. If the violation is not corrected within 20 days of such 
notice or report, or such longer time as the authorized officer may 
agree to in writing, the operating rights owner or operator, as 
appropriate, shall be liable for a civil penalty of up to $500 per 
violation for each day such violation continues, dating from the date of 
such notice or report. Any amount imposed and paid as assessments under 
the provisions of Sec. 3163.1(a)(1) of this title shall be deducted 
from penalties under this section.
    (b) If the violation specified in paragraph (a) of this section is 
not corrected within 40 days of such notice or report, or a longer 
period as the authorized officer may agree to in writing, the operating 
rights owner or operator, as appropriate, shall be liable for a civil 
penalty of up to $5,000 per violation for each day the violation 
continues, not to exceed a maximum of 60 days, dating from the date of 
such notice or report. Any amount imposed and paid as assessments under 
the provisions of Sec. 3163.1(a)(1) of this title shall be deducted 
from penalties under this section.
    (c) In the event the authorized officer agrees to an abatement 
period of more than 20 days, the date of notice shall be deemed to be 20 
days prior to the end of such longer abatement period for the purpose of 
civil penalty calculation.
    (d) Whenever a transporter fails to permit inspection for proper 
documentation by any authorized representative, as provided in Sec. 
3162.7-1(c) of this title, the transporter shall be liable for a civil 
penalty of up to $500 per day for the violation, not to exceed a maximum 
of 20 days, dating from the date of notice of the failure to permit 
inspection and continuing until the proper documentation is provided.
    (e) Any person shall be liable for a civil penalty of up to $10,000 
per violation for each day such violation continues, not to exceed a 
maximum of 20 days if he/she:
    (1) Fails or refuses to permit lawful entry or inspection authorized 
by Sec. 3162.1(b) of this title; or
    (2) Knowingly or willfully fails to notify the authorized officer by 
letter or Sundry Notice, Form 3160-5 or orally to be followed by a 
letter or Sundry Notice, not later than the 5th business day after any 
well begins production on which royalty is due, or resumes production in 
the case of a well which has been off of production for more than 90 
days, from a well located on a lease site, or allocated to a lease site, 
of the date on which such production began or resumed.
    (f) Any person shall be liable for a civil penalty of up to $25,000 
per violation for each day such violation continues, not to exceed a 
maximum of 20 days if he/she:
    (1) Knowingly or willfully prepares, maintains or submits false, 
inaccurate or misleading reports, notices, affidavits, records, data or 
other written information required by this part; or
    (2) Knowingly or willfully takes or removes, transports, uses or 
diverts any oil or gas from any Federal or Indian lease site without 
having valid legal authority to do so; or
    (3) Purchases, accepts, sells, transports or conveys to another any 
oil or gas knowing or having reason to know that such oil or gas was 
stolen or unlawfully removed or diverted from a Federal or Indian lease 
site.

[[Page 432]]

    (g) Determinations of Penalty Amounts for this section are as 
follows:
    (1) For major violations, all initial proposed penalties shall be at 
the maximum rate provided in paragraphs (a), (b), and (d) through (f) of 
this section, i.e., in paragraph (a) of this section, the initial 
proposed penalty for a major violation shall be at the rate of $500 per 
day through the 40th day of a noncompliance beginning after service of 
notice, and in paragraph (b) of this section, $5,000 per day for each 
day the violation remains uncorrected after the date of notice or report 
of the violation. Such penalties shall not exceed a rate of $1,000 per 
day, per operating rights owner or operator, per lease under paragraph 
(a) of this section or $10,000 per day, per operating rights owner or 
operator, per lease under paragraph (b) of this section. For paragraphs 
(d) through (f) of this section, the rate shall be $500, $10,000, and 
$25,000, respectively.
    (2) For minor violations, no penalty under paragraph (a) of this 
section shall be assessed unless:
    (i) The operating rights owner or operator, as appropriate, has been 
notified of the violation in writing and did not correct the violation 
within the time allowed; and
    (ii) The operating rights owner or operator, as appropriate, has 
been assessed $250 under Sec. 3163.1 of this title and a second notice 
has been issued giving an abatement period of not less than 20 days; and
    (iii) The noncompliance was not abated within the time allowed by 
the second notice. The initial proposed penalty for a minor violation 
under paragraph (a) of this section shall be at the rate of $50 per day 
beginning with the date of the second notice. Under paragraph (b) of 
this section, the penalty shall be at a daily rate of $500. Such 
penalties shall not exceed a rate of $100 per day, per operating rights 
owner or operator, per lease under paragraph (a) of this section, of 
$1,000 per day, per operating rights owner or operator, per lease under 
paragraph (b) of this section.
    (h) On a case-by-case basis, the Secretary may compromise or reduce 
civil penalties under this section. In compromising or reducing the 
amount of a civil penalty, the Secretary shall state on the record the 
reasons for such determination.
    (i) Civil penalties provided by this section shall be supplemental 
to, and not in derogation of, any other penalties or assessments for 
noncompliance in any other provision of law, except as provided in 
paragraphs (a) and (b) of this section.
    (j) If the violation continues beyond the 60-day maximum specified 
in paragraph (b) of this section or beyond the 20 day maximum specified 
in paragraphs (e) and (f) of this section, lease cancellation 
proceedings shall be initiated under either Title 43 or Title 25 of the 
Code of Federal Regulations.
    (k) If the violation continues beyond the 20-day maximum specified 
in paragraph (d) of this section, the authorized officer shall revoke 
the transporter's authority to remove crude oil or other liquid 
hydrocarbons from any Federal or Indian lease under the authority of 
that authorized officer or to remove any crude oil or liquid 
hydrocarbons allocation to such lease site. This revocation of the 
transporter's authority shall continue until compliance is achieved and 
related penalty paid.

[52 FR 5393, Feb. 20, 1987; 52 FR 10225, Mar. 31, 1987, as amended at 53 
FR 17364, May 16, 1988]