Compliance With the Department of the Interior's Cost Recovery Program Could Generate Substantial Additional Revenues

GAO reviewed the Department of the Interior's recently expanded cost recovery program as it relates to oil and gas activities on Alaska's federal onshore lands.

GAO found that the Bureau of Land Management (BLM), the Minerals Management Service (MMS), and the Fish and Wildlife Service (FWS) are not fully complying with Interior's requirement to identify and, where appropriate, seek recovery of costs for services which directly benefit firms and individuals. During fiscal year 1982, more than $1.5 million in potentially recoverable costs were incurred by Interior, but action was taken to recover only a small part of them. Similar costs are anticipated in the future. The costs are incurred in responding to requests for drilling permits and other services by specific individuals and firms involved in exploration, development, and production activities on Alaska's federal lands. With few exceptions, the beneficiaries of these services are not being required to reimburse Interior for costs incurred because of the newness of the cost recovery program, the lack of emphasis and priority being given to it, and an unawareness of the requirement to reexamine these costs for the potential for recovery. GAO found that: (1) MMS was excused from filing a cost recovery report because it was a relatively new organization; (2) the FWS report did not identify, discuss, or analyze the recovery potential of oil and gas management costs; and (3) BLM currently charges for 27 leasing-related services and has proposed regulations for increasing or imposing fees for 9 others. Although BLM identified some new areas of cost recovery, it did not identify and analyze possible cost recovery for oil and gas management costs.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Michael Gryszkowiec Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 275-5514