Ensuring the Accurate Collection of Royalties

Interior's Minerals Management Service (MMS) is responsible for the collection of royalties paid on the production of oil and natural gas on federal lands and waters. In fiscal year 2007, MMS collected more than $9 billion in royalties, which includes royalties paid in-value (payments made in cash) and royalties paid in-kind (payments made in oil or gas).

• In recent years, GAO has issued several products that raised significant concerns about the reliability of royalty data and MMS's internal controls, both of which place the accurate collection of royalties at risk, and has provided a number of recommendations. MMS has recognized many of the identified weaknesses and has action plans to implement many of GAO’s recommendations over the next several years, including fundamental changes to financial management computer systems and other tools. Many key aspects of MMS’s operations are in flux, and the risk of lost revenues and further weakened oversight exists.

  Full Report of GAO-00-893R (PDF, 18 pages), Highlights of GAO-08-691 (PDF), Full Report of GAO-08-792R (PDF, 17 pages), Highlights of GAO-08-560T (PDF), Full Report of GAO-07-676R (PDF, 15 pages), Full Report of GAO-07-590R (PDF, 16 pages), Highlights of GAO-07-682T (PDF), Highlights of GAO-07-369T (PDF), Full Report of GAO-06-786R (PDF, 15 pages), Highlights of GAO-05-124 (PDF), Highlights of GAO-04-448 (PDF), Highlights of GAO-03-296 (PDF)

^ Back to topWhat Needs to Be Done

To help provide greater assurance that federal oil and gas is being measured accurately, the Secretary of the Interior needs to

• report to Congress any year in which BLM and MMS’s Offshore Energy and Minerals Management have not met their legal and agency requirements for completing production inspections, along with the cause and a plan for achieving compliance, and evaluate both the accuracy and completeness of production inspection data in their databases.

  Full Report of GAO-08-893R (PDF, 18 pages)

To improve Interior’s compliance program, the Secretary of the Interior needs to

• direct MMS to require that the onshore compliance review process include the review of a sample of third-party documentation in instances when BLM has not already collected this information to provide additional assurance that self-reported data are correct.

  Full Report of GAO-08-893R (PDF, 18 pages)

^ Back to topKey Reports

Oil and Gas Royalties: Royalty Relief Will Cost the Government Billions of Dollars but Uncertainty Over Future Energy Prices and Production Levels Make Precise Estimates Impossible at this Time

GAO-07-590R, April 12, 2007

Summary (HTML)   Full Report (PDF, 14 pages)   Accessible Text   Recommendations (HTML)

Oil and Gas Royalties: Litigation over Royalty Relief Could Cost the Federal Government Billions of Dollars

GAO-08-792R, June 5, 2008

Summary (HTML)   Full Report (PDF, 17 pages)   Accessible Text

Oil and Gas Royalties: A Comparison of the Share of Revenue Received from Oil and Gas Production by the Federal Government and Other Resource Owners

GAO-07-676R, May 1, 2007

Summary (HTML)   Full Report (PDF, 15 pages)   Accessible Text

Mineral Revenues: Data Management Problems and Reliance on Self-Reported Data for Compliance Efforts Put MMS Royalty Collections at Risk

GAO-08-893R, September 12, 2008

Summary (HTML)   Full Report (PDF, 18 pages)   Accessible Text   Recommendations (HTML)

Oil and Gas Royalties: The Federal System for Collecting Oil and Gas Revenues Needs Comprehensive Reassessment

GAO-08-691, September 3, 2008

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 39 pages)   Accessible Text

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