1. 26th Annual Indian Land Symposium Green Bay, Wisconsin August 16, 2016
Office of Natural Resources Revenue
Thomas J. Piccirilli
Manager, State and Indian Outreach

2. The Department of the Interior

3. ONRR: Who We Are
Mission: ONRR’s mission is to collect, disburse, and verify Federal and Indian energy and other natural resource revenues on behalf of all Americans.
Vision: ONRR’s vision is to be recognized as a world-class natural resources revenue management program, setting the standard for accountability and transparency.
Dallas, TX
Denver, CO
Farmington, NM
Houston, TX
Oklahoma City, OK
Tulsa, OK
Washington, DC

4. Indian Mineral Leasing at DOI
The Department of the Interior has administered the mineral leasing program for Federal and American Indian lands for over a century.
Responsibilities are divided among four agencies:
Bureau of Indian Affairs (BIA)
Bureau of Land Management (BLM)
Office of Natural Resources Revenue (ONRR)
Office of the Special Trustee for American Indians (OST)

5. Collect Payments & Reports Audit & Ensure Compliance
Mineral Leases
(as of 3/2/2016)
Products &
% of Collections
Collect Payments & Reports
Land Categories
Oil
Natural Gas
Coal
Carbon Dioxide
Copper
Geothermal
Hot Water
Lead
Limestone
Phosphate
Potash
Renewables
Sand & Gravel
Sodium
Sulfur
Other
83%
Federal Onshore
Federal Offshore
American Indian
Royalties
Rents
Bonuses
Penalties
Other revenues
15%
54,592 Total Leases
Offshore: 4,997*
Onshore: 42,822**
Indian: 6,773***
from over 2,900 payors 2%
Disburse Funds
Note: The count for the Federal/Indian leases was added to Indian leases
33,167 Producing Leases
Offshore: 1,189*
Onshore: 25,587**
Indian: ,391***
Audit & Ensure Compliance
* Administered by BOEM
** Administered by BLM
*** Administered by BIA
1ONRR lease data is maintained for the sole purpose of collecting, verifying and disbursing mineral revenues. For official lease data, please refer to the leasing agencies.

6. Revenue Sharing Provisions
Onshore Indian Leases
100% of all revenues are disbursed to the Tribe or individual Indian mineral owners
Onshore Federal Leases
Mineral Leasing Act – provides that states receive 50% of revenues resulting from the leasing of mineral resources on federal public domain lands within their borders
Offshore Federal Leases
Outer Continental Shelf Lands Act (OCSLA) – provides that coastal states receive 27% of revenues collected from leases within the 8(g) zone, which is approximately three nautical miles seaward of the State/Federal boundary
Gulf of Mexico Energy Security Act (GOMESA) – provides that 37.5% of qualified revenues are shared among four States and their coastal political subdivisions. And, 12.5% of revenues are allocated to the Land and Water Conservation Fund 6

7. Indian Oil Negotiated Rulemaking
The rule adopted the Indian Oil Negotiated Rulemaking Committee’s (Allottees, Tribes, Industry, and Federal Government) agreement to satisfy the Indian lease major portion provision as follows:
For each designated area, the value of oil for royalty purposes would be the higher of:
1) Index-Based Major Portion (IBMP) value
NYMEX Calendar Month Average (CMA) adjusted for a designated area-specific Location and Crude Type Differential (LCTD)
2) Gross proceeds
Rule effective June 30, 2015 (30 CFR parts 1206 and 1210) and applies to July 2015 production/sales

8. Indian Oil Negotiated Rulemaking Index-Based Major Portion (IBMP)
Office of Natural Resources Revenue (ONRR) will calculate the IBMP value using the NYMEX Calendar Month Average (CMA) for each designated area - adjusted for a Location and Crude Type Differential (LCTD)
On a monthly basis, ONRR will publish on the ONRR website(onrr.gov), the IBMP value for each designated area and crude oil type
ONRR will publish the IBMP prices by the middle of the month for reporting at the end of the month
Ensures that the IBMP price closely reflects a 25th percentile (from the top) major portion value of a particular crude type within the applicable designated area

9. Cumulative Revenue Disbursement $280.7 billion
One of the Federal government’s greatest sources of non-tax revenue
$9.87 billion in FY 2015
Average of $10 billion annually

10. ONRR Program Areas Financial and Production Management
Audit and Compliance
Management
Coordination, Enforcement,
Valuation and Appeals

11. Financial and Production Management
Financial Management
Collect, verify, and distribute all rent, royalty and bonus payments
Receive, process and verify industry-submitted royalty reports
Perform Data Mining functions
Production Reporting & Verification
Receive, process and verify industry-submitted production reports
Error correction for all Federal and Indian production
Oversee meter inspections for offshore production verification

12. Audit and Compliance Management
A 3-year cycle to review and/or audit revenues was established
All audits performed according to Generally Accepted Government Auditing Standards
Compliance reviews are an analysis that determines the reasonableness of reported revenues
Properties and companies selected for review or audit using a risk assessment across the entire universe of properties and companies
Ensures that Federal and Indian mineral revenues are accurately reported and paid

13. Coordination, Enforcement, Valuation and Appeals
State and Indian Coordination
Provide customer service to States, individual Indian mineral owners, and Tribes by conducting outreach, education, and consultation
Administer delegated and cooperative audit agreements with 10 states and 6 Tribes
Provide fiduciary and "one stop" service for Indian mineral owners
Asset Valuation
Issue valuation guidance and determinations
Review and respond to transportation and processing allowance requests
Enforcement and Appeals
Coordinate or administer alternative dispute resolution, settlements, and mediation
Perform investigations of potential violations and issue civil penalties
Prepare proofs of claim to support the bankruptcy litigation process
Perform independent reviews of issues related to appeals
New Enforcement Strategy Emphasizing:
Deterrence – resolve to sanction repeat offenders
Appropriate Enforcement Actions – aggressively awarding civil penalties
Communication – provide training/information to managers and employees
Continuous improvement – balance and improve staff expertise
Partnership – collaborate on creative enforcement solutions

14. Coordination Enforcement Valuation & Appeals CEVA
Heidi Badaracco
Program Manager
State and Indian Coordination
SIC
Thomas Piccirilli
Manager
State and Indian Outreach
SIO
Kyle McCartney/Audit Manager
Bruce Rumberg/Agreement Officer Representative
State and Tribal Support
STS
Vacant
Fed. Indian Minerals Office
FIMO ,

15. State and Indian Outreach (SIO)
Our office locations:
Denver, Colorado
Oklahoma City, Oklahoma
Farmington, New Mexico

16. State and Indian Outreach (SIO)
Assist And Educate Individual Indian Mineral Interest Owners
General Lack Of Understanding Of Leasing, Royalty Collection And Distribution Processes
Manage Expectations

17. SIO-Let’s Focus on Managing Expectations
Royalties Vary Monthly
For Many Owners Royalties Are Their Sole Source Of Income
Expectations Are Often That Royalties Are Constant And Forever
Many Owners Have An Interest In Leases

18. SIO-Managing Expectations (continued)
Fractionation; 1,000’s of owners on Some leases
Problems arise; i.e., wells shut in, no payment received

19. SIO-Managing Expectations (continued)
Toll free line
133 outreach meetings in 2015
14,200 individual owner inquiries (2015)
Desk reviews
Coordinate with BIA, BLM and OST in resolving owner inquiries

20. State and Tribal Support (STS)
COOPERATIVE AUDIT AND INTERGOVERNMENTAL PERSONNEL ACT AGREEMENTS
Intergovernmental Personnel Act (IPA) of 1970, as amended (5 U.S.C )
FOGRMA, Sections 202 and 205, Authorizes Cooperative Audit Agreements with States and Tribes

21. STS-IPA Fellowship
IPA Fellowship Program can be a “stepping stone” to a successful participation in the 202 Cooperative Agreements
Develops tribal auditing skills

22. STS-IPA Fellowship (continued)
Purpose and Goals
Nine months to Two year assignments at ONRR Offices
Develops
Audit and compliance experience
Knowledge and skills for Fellowship assignees from Tribes and States
Familiarize and learn about each other’s (ONRR &Tribe) functions and processes to improve understanding, communication, and cooperation between parties

23. STS-Cooperative Audit Background

24. 26th Annual Indian Land Symposium
Thank You!
The Office of Natural Resources Revenue
Thomas J. Piccirilli