U.S. tweaks monetary penalties for oil & gas players
The Department of the Interior’s Bureau of Ocean Energy Management (BOEM) has made adjustments to monetary penalties for oil and gas companies, implementing the 2023 inflation adjustments for the maximum daily civil monetary penalties contained in BOEM regulations in accordance with Federal law.
The Bureau of Ocean Energy Management made the final rule announcement on Tuesday, 14 February 2023, explaining that the Federal Civil Penalties Inflation Adjustment Act Improvements Act (FCPIAA Improvements Act) of 2015 requires Federal agencies to adjust the level of civil monetary penalties for inflation annually. These adjustments are intended to maintain the deterrent effect of civil penalties and further the underlying statutes’ policy goals.
Back in March 2022, BOEM implemented the 2022 inflation adjustments for its civil monetary penalties through a final rule entitled ‘2022 Civil Penalties Inflation Adjustments for Oil, Gas, and Sulfur Operations in the Outer Continental Shelf,’ which was published in the Federal Register. That rule accounted for inflation for the 12-month period between October 2020 and October 2021.
In accordance with the Improvements Act, BOEM determined that Outer Continental Shelf Lands Act (OCSLA) and Oil Pollution Act (OPA) maximum daily civil monetary penalties require annual inflation adjustments and issued the final rule adjusting those penalty amounts for inflation through October 2022. The annual inflation adjustment is based on the per cent 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.
For 2023, BOEM multiplied the current OCSLA maximum daily civil monetary penalty of $48,862 by the multiplier 1.07745 to equal $52,646.36. In addition, BOEM multiplied the current OPA maximum daily civil penalty amount of $51,796 by the multiplier 1.07745 to equal $55,807.60.
As the Improvements Act requires that the resulting amount be rounded to the nearest dollar, the final rule adjusts the maximum civil monetary penalties per day per violation to $52,646 for violations under the Outer Continental Shelf Lands Act and to $55,808 for violations under the Oil Pollution Act of 1990.
“The Final Rule is available via the Federal Register. The adjusted penalty levels will take effect immediately upon publication of this rule,” concluded BOEM.
Regarding the Bureau of Ocean Energy Management’s recent activities, it is worth noting that BOEM announced it had prepared a Final Supplemental Environmental Impact Statement (EIS) for two Gulf of Mexico oil and gas lease sales – 259 and 261 – in January 2023 to comply with the Inflation Reduction Act of 2022.
The Final Supplemental EIS includes an expanded greenhouse gas (GHG) analysis and provides an analysis of monetized impacts from these estimated GHG emissions. The Inflation Reduction Act mandates lease sales 259 and 261 to be held no later than 31 March 2023 and 30 September 2023, respectively.