Mineral Revenues

Coal Lease Readjustment Problems Remedied but Not All Revenue Is Collected Gao ID: RCED-87-164 August 25, 1987

In response to a congressional request, GAO provided information on: (1) the Department of the Interior's Bureau of Land Management's (BLM) progress in readjusting federal coal leases scheduled for readjustment through September 30, 1986; (2) the adequacy of BLM collection of royalties and rent resulting from the required readjustments; and (3) the adequacy of the bonds it required from lessees to protect the federal government against the loss of revenue that accrued while lessees appealed readjustments.

GAO found that: (1) between 1976 and 1984, BLM failed to readjust 149 federal coal leases by their lease anniversary dates and, as a result, lost an estimated $187 million in royalty and rent payments; (2) BLM appears to have corrected the problem, since from 1985 through the end of fiscal year 1986, BLM readjusted all but one federal coal lease on time; (3) as of September 30, 1986, the Minerals Management Service (MMS) had not collected over $12.6 million in royalties and rent in five states because of inadequate financial management controls; and (4) BLM frequently failed to protect the government's financial interest by not requiring bond amounts that were adequate to cover the revenues that accrued while lessees appealed the readjustments.

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.

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