Interior Has Not Solved Indian Oil and Gas Royalty Payment Problems

In response to a congressional request, GAO examined the Department of the Interior's initiatives to ensure the timely and accurate collection and distribution of Indian oil and gas royalties, specifically Interior's efforts to: (1) provide useful royalty payment explanations to individual Indians; (2) resolve royalty overpayments; and (3) ensure that Indian leases are included in its exception processing system. GAO also evaluated the possibility of using the Mineral Management Service's (MMS) new computer to help solve royalty payment problems.

The Oil and Gas Royalty Management Act requires Interior to provide Indian royalty owners with explanations of their royalty payments. The Bureau of Indian Affairs (BIA) developed an automated system to provide this information. However, GAO found that BIA was not complying with the act, because: (1) 18,000 of 27,000 Indian royalty owners were not receiving royalty payment explanations; (2) the payment statements did not include the royalty rate; (3) 40 percent of those who received royalty explanation statements found them difficult to understand because of their small print and technical language; and (4) BIA has not taken action to resolve about $450,000 in overpayments made prior to installation of the automated system. GAO also found that MMS: (1) has made progress in ensuring that Indian leases are included in its exception processing system; (2) identification of late payments could result in an additional $375,000 in annual revenue to Indians; (3) has not implemented procedures for identifying other payment exceptions and for collecting an estimated $2.3 million in backlogged Indian royalty revenues; (4) has proposed a new computer system for its royalty management program, but the system will not resolve Interior's problems in information dissemination, royalty overpayments, and exception processing; and (5) will modify its system to generate royalty rate information and to reduce the number of adjustments and overpayments.

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: Howard G. Rhile Jr Team: General Accounting Office: Information Management and Technology Division Phone: (202) 512-6418