Mineral Leasing Act Reciprocity Provision--Implementation and Constraints

Pursuant to a congressional request, GAO reviewed the implementation of the reciprocity provision of the Mineral Lands Leasing Act, focusing on: (1) the Department of the Interior's procedures for making determinations on mineral reciprocity; (2) the extent of interagency cooperation; (3) investment restrictions on U.S. firms in certain foreign countries; and (4) the views of U.S. firms regarding the adequacy and usefulness of the mineral reciprocity provision.

The act allows foreign citizens to participate in developing certain minerals on federally leased lands through stock interest in U.S. firms, if the foreign country reciprocates by not denying U.S. citizens similar investment opportunities. In the 64 years that Interior has implemented the reciprocity provision, it has formally declared only Kuwait to be nonreciprocal, and it has sought to apply sanctions against Kuwait. Although a number of countries impose limitations on foreign mineral investments, past reciprocity determinations have concluded that such conditions are not unduly restrictive and do not violate the act. U.S. firms fear that the provision could have future adverse effects. GAO found that Interior revamped its procedures in 1982, and reciprocity reviews at Interior currently are completed within 4 to 7 months. Interior no longer relies heavily on the Department of State for information regarding countries under review, as it did in the past, but State did supply information to Interior through U.S. embassies for use in several recent reciprocity determinations. GAO found that Interior appears to have had sufficient data to make recent determinations and that industry representatives are not generally dissatisfied with Interior's implementation of the provision.