The Department of Interior’s Office of the Inspector General (OIG) has revealed its intentions to create a new division to provide “more oversight of royalties” collected from mineral production on public lands, according to OIG Central Regional Audit Manager Jack Rouch, who will be responsible for the division. Mr. Rouch announced the plans at the most recent meeting of the State and Tribal Royalty Audit Committee on January 16-17 in Sacramento, California.
The new division’s priorities and workload are still being determined, but Mr. Rouch indicated that they would include a balance between additional oversight of royalty collections and auditing of the companies that owe royalties to the government. However, he stated that it’s “not [the OIG’s] intent to duplicate audits already being done” but, instead, to “establish more oversight and dedicate more resources” to the area of royalty management.
The OIG’s current plans place the new division at Mr. Rouch’s Central Region audit office in Lakewood, Colorado. The division will initially include six staff employees. Three of these employees are presently working to complete an OIG study of the Minerals Management Service’s (MMS) royalty-in-kind (RIK) oil program, and the remaining three will be added through a hiring process.
The division’s operating budget has not yet been made public, but this year’s activities will be funded from an FY 2008 congressional appropriations increase of almost $6 million over last year. The appropriations increase amounted to over $2 million more than the President’s budget request for FY 2008 (pdf).
This development comes in the wake of heightened scrutiny of MMS’s royalty management program. Much of the recent scrutiny has been in response to revelations that royalty measures were inappropriately omitted from offshore oil and gas leases. The OIG investigated the issue (pdf) last year. The OIG has also recently reported on problems with MMS’s royalty compliance review process (pdf) and on agency retaliation against whistleblowers (pdf).
Also, last month, an independent subcommittee with Interior’s Royalty Policy Committee (RPC) released an extensive report detailing recommendations for improving royalty management. On January 25, Interior Secretary Dirk Kempthorne announced that the agency will “immediately” implement the subcommittee’s administrative proposals. POGO’s statement to the RPC addressing the recommendations can be found here.
-- John Pruett
Comments