Chair Grijalva, Rep. Lowenthal Release GAO Report on Industry’s Compliance With Fossil Fuel Royalties, Look Ahead to Taxpayer Protection Bill

Washington, D.C. – Chair Raúl M. Grijalva (D-Ariz.) and Rep. Alan Lowenthal (D-Calif.), Chair of the Subcommittee on Energy and Mineral Resources, today released a Government Accountability Office (GAO) report finding that the Department of the Interior’s (DOI) Office of Natural Resources Revenue (ONRR) should do more to ensure industry pays the royalties it owes the public from the extraction of public oil and gas resources.

The GAO report, Federal Oil and Gas Royalties: Additional Actions Could Improve ONRR’s Ability to Assess Its Royalty Collection Efforts,available at https://www.gao.gov/products/GAO-19-410, assesses ONRR’s ability to ensure royalty compliance. GAO finds that the agency failed to meet its compliance goals in fiscal years 2014 and 2015 – “because of a shift in the agency’s goals that created a short-term misalignment of planned work and available resources” – and makes seven recommendations for improvement. 

DOI concurred with all seven recommendations.

In 1982, Congress enacted the Federal Oil and Gas Royalty Management Act to expand the Interior secretary’s authority to audit and enforce royalty payment obligations on federal and Indian oil and gas leases. The law was established following a series of investigations by GAO and DOI’s Office of Inspector General that found Interior was potentially missing hundreds of millions of dollars in royalties due from federal oil and gas leases. The 1982 law was enforced by the Minerals Management Service until 2010, when ONRR was created in the aftermath of theDeepwater Horizon explosion and oil spill.  

In November 2017, Chair Grijalva, Rep. Lowenthal, and 15 other Democrats introduced the Sustainable Energy Development Reform Act, a comprehensive bill that would have increased taxpayer benefits, promoted conservation, and reformed outdated oil and gas management laws. Among other provisions, the bill would have strengthened ONRR’s oversight of royalty compliance and eliminate loopholes that could be used by the oil and gas industry to reduce revenue payments.

Grijalva said today that the new GAO report demonstrates the need for legislation similar to his 2017 bill, especially considering the Trump administration’s push to extract and sell every last ounce of oil and gas from federal land regardless of environmental, financial or public health consequences.

“Whether it’s in the Arctic National Wildlife Refuge or near historical treasures like Chaco Canyon, this administration cries ‘energy dominance’ and issues permits regardless of the consequences,” Grijalva said today. “We need to rethink that strategy, and where drilling does occur, we need to make sure industry stops taking advantage of loopholes that take money out of taxpayers’ pockets. Government agencies need to make sure taxpayers get a full return when oil and gas companies enjoy the privilege of drilling on public lands, and this report suggests that’s not always happening.”

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