Mineral Revenues

In response to a congressional request, GAO reviewed the Bureau of Land Management's (BLM) implementation of the Federal Onshore Oil and Gas Leasing Reform Act, focusing on: (1) BLM development of implementing regulations; (2) how BLM conducted oil and gas lease test sales, and the sales' results; and (3) the effect of royalty rate changes for competitively issued oil and gas leases.

GAO found that: (1) BLM issued final regulations to implement the act within the required 180 days; (2) the eight test sales showed that the new system increased competitively leased acreage from 3 percent to 46 percent of all acreage, resulting in increased federal and state revenues; (3) although states received 50 percent of bonuses and rents and did not receive a share of the fees BLM charged, they received a larger share of leasing revenues under the act; (4) under the test sales, bonus and rent revenues for leases that would have sold noncompetitively under the prior system comprised 97 percent of revenues; (5) BLM regulations did not require bidder registration, larger deposits by winning bidders, or enforcement of full payment within 10 business days after auctions; (6) BLM changed royalty rates for competitive leases to a flat rate to simplify administration and encourage competitive leasing and exploration; (7) although the act resulted in increased revenues, less than half of the land leased through the test sales was leased competitively; and (8) although some officials believed that sealed bidding would generate higher revenues, there was no evidence to prove that.

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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