GAO's Basis for Its Analysis of S. 1637

EMD-80-116: Published: Sep 25, 1980. Publicly Released: Sep 25, 1980.

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A point by point analysis is presented of the issues raised by the Secretary of the Interior concerning a recent GAO report dealing with the gas and oil leasing system.

GAO agreed with Interior that many of the aspects of the present leasing system need modification, but opposed proposed legislation dealing with the problem because the bill's adverse effects outweighed its strong points. Although the bill's objectives were not clear, its central thrust was apparently directed toward reducing noncompetitive leasing and increasing competitive leasing. Interior made forecasts of revenue and expense, but made no projections of production impact. Thus, GAO concluded that the agency viewed production as subordinate to revenue. Rather than equate acres leased to amounts of production, GAO believes that much of the high interest land may lie outside the producing geological provinces and thus not be subject to competitive leasing under the proposed legislation. GAO has advocated tighter controls through regulations without a major overhaul of the leasing system itself. It does not believe that independent producers would fare well if the proposed legislation were enacted, because they are doing well under the present competitive system.

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