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Editorial: Interior's long history of accounting failures
Tuesday, December 12, 2006

"The American treasury is already short more than a billion dollars because of the Interior Department’s failure over the last decade to collect all the royalties owed from oil and gas producers in the Gulf of Mexico. The new Congress needs to fix the problem, or persuade a sluggish Bush administration to do so.

The problems are twofold. The first is a loophole in leases signed by the Clinton administration in 1998 and 1999 to encourage deep-water exploration at a time when oil and gas prices were relatively low.

The more serious problem involves royalty enforcement and collection, which is the responsibility of the department’s Minerals Management Service. Whistleblowers have testified to the service’s shortcomings, and last week, the Interior Department’s inspector general said that the service relied too heavily on statements by oil companies, instead of independent audits that would give a more accurate account of production and royalties owed.

Officials say they are trying hard to renegotiate the flawed leases. As for the broader management failures, they have hired new people and begun an internal review. This is all to the good, but the Interior Department has a long history of accounting failures and a more recent history of giving the oil and gas industry much of what it wants on public lands. When Congress summons Secretary Dirk Kempthorne to testify, it will want more than promises."

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Editorial: Royalty Rip-Off (The New York Times 12/12)
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Inspector General Report:
Minerals Management Service's Compliance Review Process (December 2006)

GAO Letter:
Suggested Areas for Oversight for the 110th Congress (November 17, 2006)

Inspector General Testimony:
Devaney Interior Department: A Culture of Managerial Irresponsibility and Lack of Accountability? (September 2006)

Inspector General Report:
Allegations Concerning Senior Officials of the Office of Special Trustee for American Indians (May 2005)

Relevant Links:
Government Accountability Office:
Office of Special Trustee - http://www.ost.doi.gov

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