Geological Survey's Oil and Gas Royalty Collection System

Testimony was given on a GAO review of the U.S. Geological Survey's (USGS) oil and gas royalty collection system which has been beset by longstanding problems. USGS is responsible for collecting royalty income due from oil and gas produced on Federal and Indian lands; these collections have increased substantially with increases in oil and gas prices and could total $22 billion by fiscal year 1990. GAO reported in 1979 that USGS was having difficulty accounting for and collecting Federal royalty income, and more recent work suggests that these problems persist. GAO stated that all royalty income is not being collected and, as a result, hundreds of millions of dollars may be going uncollected each year. To improve its financial management capabilities, USGS is developing a new royalty accounting system which GAO finds encouraging. However, GAO stated that USGS has not taken timely action on the recommendations made in its 1979 report, which included enforcing timely payment of royalties and imposing interest charges on late payments. GAO emphasized that the financial management problems being experienced by USGS in its royalty income collection process can only be corrected through a sustained, high-priority effort.