Department of the
Published on 30 June 2010
DENVER June 30, 2010 – The Department of the Interior's
Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM)
announced today that BP America Inc. has been assessed a civil
penalty of $5.2 million for submitting "false, inaccurate, or
misleading" reports for energy production that occurred on
Southern Ute Indian Tribal lands in southwestern Colorado. The
civil penalty announced today is not related to the BP oil spill
in the Gulf of Mexico.
"It is simply unacceptable for companies to repeatedly
misreport production, particularly when it interferes with the
auditing process," said BOEM Director Michael R. Bromwich. "We
are committed to collecting every dollar due from energy
production that occurs on Federal and American Indian lands, and
accurate reporting is crucial to that effort."
Bromwich praised the work of Southern Ute Tribal auditors who
initially discovered the errors during an audit and which the
Tribe first brought to BP's attention August 2, 2007. The
Tribe's audit was conducted as part of a cooperative agreement
with BOEM's Minerals Revenue Management program (MRM). The Tribe
was instrumental in documenting the ongoing errors.
Bromwich's sentiments were shared by Southern Ute Tribal
Chairman Matthew J. Box. "The Southern Ute Indian Tribe and the
MRM have had a highly successful 25-year-long audit
relationship," Box said. "Over the years, this relationship has
yielded significant benefits for the Tribal membership. One of
the more important aspects of the audit program is to encourage
oil and gas companies to accurately report the Tribe's royalties
to the MRM." Box added, "I appreciate the MRM's recognition of
its trust responsibility to the Tribe by assessing civil
penalties when other means have failed to attain correct and
The Southern Ute Tribal auditors and MRM found that BP
reported incorrect royalty rates and prices for royalty
purposes, and reported well production on leases other than
those to which the production is attributable.
After receiving audit issue letters and an order, the company
agreed with the auditors' concerns and repeatedly promised to
correct the problems, which they attributed to errors in their
As part of its investigation, MRM and Tribal auditors
examined later production reports to determine if BP had
resolved the issues, as it had agreed. Bromwich said the same
reporting errors were found in the later reviews, "leading us to
conclude that BP's continued submission of erroneous reports was
knowing or willful."
Bromwich said the total civil penalty is $5,189,800 through
May 15, 2010. The company may challenge the civil penalty
assessment through a Department of Interior hearing procedure.