The Interior Department's reorganization of its oil and gas agencies may jeopardize the agency's ability to effectively manage revenue collection and meet its oil and gas oversight and government responsibility, according to Congress's watchdog.
The Government Accountability Office (GAO) testified for the House Oversight and Government Reform Committee's hearing on the Deepwater Horizon oil spill cleanup this morning that even before the spill, Interior collected lower levels of oil and gas revenue in the U.S. Gulf of Mexico than "all but 11 of 104 oil and gas resource owners" (during higher gas prices, no less). And although it's a worthwhile effort, the post-spill reorganization--which appropriately separates the auditing and leasing functions out of the agency formerly known as the Minerals Management Service (MMS)--only increases the risk of taxpayers losing out on their fair share because of the administrative burden it represents. The GAO also raised concerns that problems with recruitment and turnover for oversight positions made it more difficult to ensure royalty payment accuracy.
Program risk in this area can be costly. Not only do oil and gas royalty revenues--$9 billion in total for fiscal year 2009--make up one of the largest sources of revenue for the federal government after taxes, but many states count on these royalties to be able to provide state-level services.
As of December 2010 the Interior department failed to implement many GAO recommendations to improve oil and gas management. The agency's failure to improve in this area landed it on the GAO's "high risk list" this year.
Mandy Smithberger is POGO Investigator.
Image: Vince O'Sullivan