DENVER – The Interior Department has fined BP America $5.2 million for allegedly submitting false reports about energy production on an Indian reservation in Colorado.
The Interior Department said Wednesday that the U.S. unit of BP PLC repeatedly misreported royalty rates for natural gas on Southern Ute Indian tribal lands. Interior spokesman Patrick Etchart said BP was not taking more natural gas than reported. Instead, BP at times reported erroneous royalty rates, or listed gas coming from the wrong wells, he said.
BP America spokesman Daren Beaudo said most of the errors came when BP listed royalty payments for “natural gas” instead of “coal-bed methane gas,” a more specific designation with a different royalty schedule. The errors led BP to underpay the Southern Utes about $200,000, which has been repaid, Beaudo said. Beaudo couldn’t say how long the error went on.
Tribal leaders didn’t return calls seeking comment.
Etchart said the $5.2 million fine is in addition to the underreported royalties and would be split between the federal government and the Southern Utes.
Southern Ute auditors said they discovered incorrect reports in 2007 and reported them to BP, which blamed the misreporting on a computer glitch and promised to make changes. However, BP’s reporting errors continued after the audit pointed out the problems, leading to the fine.
“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,” said Michael R. Bromwich, head of the Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement. The ongoing errors indicated the misreporting was “knowing or willful,” Bromwich said in a written statement.
Beaudo said the problem has now been settled. “All of the errors that were identified have been corrected,” he said.
Tribal leader Chairman Matthew J. Box praised the settlement in a statement but couldn’t immediately be reached for further comment.
Bromwich took office last week. He has been tasked with making changes to the Minerals Management Service, which has been criticized for lax oversight of offshore drilling before BP’s Gulf of Mexico oil spill.
The Interior Department said the fine is unrelated to the Gulf spill. BP can appeal the Colorado fine of $5,189,800 but Beaudo said the company hasn’t decided if it would.
The fine represents $200 per day for 29,949 days BP was in violation of reporting standards. Etchart said, however, that a company could rack up multiple violation days on a single calendar day for more than one error, so he wasn’t sure what period that represented.
