Mineral Resources

BLM Needs to Improve Controls Over Oil and Gas Lease Acreage Limitation Gao ID: RCED-95-56 December 29, 1994

The Bureau of Land Management's (BLM) internal controls cannot guarantee that federal oil and gas leases are not issued to parties who have exceeded the Mineral Leasing Act's acreage limitation. BLM allows oil and gas lessees to self-certify that they have not exceeded the acreage limitation, and although the agency has procedures for auditing compliance with the requirement, BLM has not done a compliance audit since 1993 because it considers it a low priority. Even when audits were done, BLM's strategy for selecting lessees was ineffective because it did not target parties for approaching or appearing to exceed the acreage limitation. Finally, BLM has allowed companies that share the same officers, directors, or major stockholders to be considered separate leaseholders under the acreage limitation. GAO discovered one lessee who had exceeded the limitation by more than 190,000 acres in Wyoming and by nearly 27,000 acres in Nevada. Similarly, by presuming that companies are affiliated when they share the same officers, directors, or major stockholders, GAO identified five firms whose aggregate acreage exceeded the limit by more than 800,000 acres in Wyoming, 435,000 acres in New Mexico, and 86,000 acres in Nevada.

GAO found that: (1) BLM does not have adequate controls to ensure that oil and gas leases are not issued to parties who have exceeded the acreage limitation; (2) BLM allows lessees to self-certify that they have not exceeded the acreage limitation; (3) although it has audit procedures in place, BLM has not performed compliance audits on gas and oil leases since 1993 because it gives these audits a low priority; (4) BLM did not focus its earlier audits on those lessees who were approaching the acreage limitation; (5) BLM considers affiliated companies having the same officers, directors, and stockholders to be separate leaseholders; and (6) five companies that shared the same officers, directors, and shareholders significantly exceeded the acreage limitation in three states.

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: Team: Phone:


The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.