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Project on Government Oversight




GAO: Interior Can't Tell Whether It is Losing Taxpayer Money

January 16, 2003 


Today the General Accounting Office (GAO) is releasing its report "Mineral Revenues: A More Systematic Evaluation of the Royalty-In-Kind [RIK] Pilots is Needed." The report concludes that the Department of Interior (DOI) is unable to determine whether it is losing revenue through its RIK pilot programs, where oil companies pay the government royalties in oil rather than in cash. These pilots were promoted by the oil industry as an alternative to paying cash. In 2000, after revelations of significant underpayment of royalties by the oil industry, the DOI implemented a final oil valuation rule despite four and a half years of efforts by industry and their friends in Congress to block it. According to the GAO, in the past five years, DOI has expanded the RIK pilots to account for nearly one-third of all royalty payments collected.

"The oil industry has been tireless in coming up with new schemes to avoid paying royalties for drilling for oil on public lands. What's really shameful, is that the government is sitting back and letting it happen," said Danielle Brian, Executive Director of the Project On Government Oversight.

Representatives Nick Rahall (D-WV) and Carolyn Maloney (D-NY) today wrote to Interior Secretary Gale Norton demanding that any expansion of these pilots be halted until adequate accounting and oversight procedures are in place.

For more information:

To view the GAO report, please see

For background on Royalty in Kind.

Letter to Gale Norton, Department of Interior from Rep. Nick Rahall and Rep. Carolyn Maloney, House Committee on Resources Press Release, January 14, 2003.

Rep. Carolyn Maloney's Press Release, "GAO Questions Whether Bush Administration Oil and Gas Royalty-In-Kind Program Will Protect Taxpayers", January 16, 2003. 

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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