Big Oil Shortchanges Taxpayers, Better Data Needed to Strengthen Enforcement, Says New Gov Watchdog Report
WASHINGTON – Today, the U.S. Government Accountability Office (GAO) released a new report entitled, FEDERAL OIL AND GAS ROYALTIES: Opportunities Exist to Improve Interior’s Compliance Program, which was requested by U.S. House Natural Resources Committee Ranking Member Raúl M. Grijalva (D-Ariz.). The report found that the U.S. Department of the Interior’s Office of Natural Resources Revenue (ONRR) — the agency responsible for collecting royalties from oil and gas extracted on public lands and waters — collected $600 million in unpaid royalties from oil companies through audits and compliance reviews from 2012-2022. Oil companies likely owe even more to American taxpayers, but incomplete data and inadequate staffing limit ONRR’s ability to know the full extent. Ranking Member Grijalva issued the following statement on release of the report:
“Between Big Oil’s well-documented practices of polluting communities, denying climate change, and colluding with OPEC, we can hardly trust them to make good on their responsibility to fully compensate American taxpayers for drilling on our public lands and waters,” said Ranking Member Grijalva. “That’s why it’s imperative that Interior has the staffing it needs to design robust data collection and risk monitoring systems that keep oil companies in compliance with royalty requirements. And that’s why it’s doubly imperative that Republicans finally abandon Trump’s Project 2025 agenda to dismantle the very agencies that protect us from this kind of corporate greed. I urge Interior to act on GAO’s recommendations to help ensure oil companies are paying their fair share to the American people.”
REPORT FINDINGS & RECOMMENDATIONS
From 2012-2022, oil companies generated $600 billion in sales from oil and gas produced on public lands and waters, from which ONRR collected $74 billion in royalties. Over that same time period, ONRR generated an additional $600 million in royalties through its compliance activities.
There is room for improvement in ONRR’s compliance activities, but incomplete data, inadequate staff, and other resource challenges limit the agency’s ability to conduct modeling that would help identify cases that are high-risk for noncompliance. For this report, GAO attempted to estimate the “royalty gap” between royalties collected and royalties actually owed, but ONRR did not have sufficient data for their model.
To ensure a fairer return for American taxpayers, ONRR must have accurate data collection, modeling, and compliance systems. Improving royalty collections by even 1% would generate tens of millions in additional federal revenue per year. GAO issued 14 recommendations to improve ONRR’s data systems, improve compliance oversight, develop an updated royalty gap model, and collect additional data for that model.
READ the full GAO report here.
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