Wednesday, September 16, 2009
Yet again the Minerals Management Service (MMS) has been criticized for improperly collecting what is owed to the federal government by oil and gas companies that drill on federal lands. The Government Accountability Office investigated the MMS’ Royalty-In-Kind (RIK) program which allows companies to pay royalties in the form of crude oil or natural gas instead of cash, and the GAO report found that agency officials did not know for certain how much it was owed. All they knew was the amount was at least $21 million.
The investigation also discovered that the MMS doesn’t audit RIK gas operators’ records, so there’s no way to tell if the government is actually getting the correct volumes of in-kind deliveries. Nor have officials bothered to establish adequate policies and procedures to resolve imbalances between agency and company records. The MMS could also use more staff to do its job properly, the GAO concluded.
-Noel Brinkerhoff
GAO: The Royalty-In-Kind Program Is Forgoing Taxpayer Revenue (Project on Government Oversight)
Royalty-In-Kind Program: MMS Does Not Provide Reasonable Assurance It Receives Its Share of Gas, Resulting in Millions in Forgone Revenue (Government Accountability Office) (PDF)
Can a Failed Agency be Trusted to Oversee Oil Industry? (by Noel Brinkerhoff and David Wallechinsky, AllGov)
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