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The U.S. Government Accountability Office (GAO) recently released its bi-annual “High-Risk” report detailing federal programs and activities that have a high probability of waste, fraud, and abuse. One activity which remained on the list since its first inclusion in 2011 was the management of oil and gas production on public lands and water.

The Department of Interior (DOI) is responsible for the oversight and management of approximately 700 million acres of public lands and waters of which DOI has leased nearly 30 million acres for oil and gas development over the past decade. DOI collects a percentage of industry earnings for oil and gas resources extracted from public lands and waters. As the resource owners, taxpayers have a right to a fair return for minerals extracted from public lands and waters. Similarly states and private landowners charge royalties for production on their lands.

According to the GAO, the Department of Interior does not provide “reasonable assurance” that taxpayers are receiving their fair share of royalties from the production of oil and gas on public lands. DOI is failing to meet its requirements to conduct production level verifications which have resulted in “missing data, errors in company-reported data…, sales data that did not reflect prevailing market prices…, and a lack of controls over changes to the data that companies reported.” As a result, DOI compromises its “responsibilities to oversee oil and gas development federal leases, potentially placing both the environment and royalties at risk.”

Royalties from public lands are a valuable source of federal revenue. Yet, without reliable and accurate data collection, taxpayers lose billions each year in under-reporting, under-collection, and mismanagement. In these tight budget times, these problems must be fixed.

For more information, please contact Autumn Hanna at (202) 546-8500 x112 or autumn [at] taxpayer.net.