Repeal of Unneeded Outer Continental Shelf Production Rate-Setting Functions Would Cut Costs

EMD-82-97: Published: Sep 10, 1982. Publicly Released: Sep 10, 1982.

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GAO initiated this report to determine whether there are opportunities to save money or better utilize resources within the Department of the Interior by eliminating unneeded statutory and other reporting requirements involving the production of oil and gas from federal leases on the Outer Continental Shelf (OCS).

GAO found that, under authority of the OCS Lands Act of 1953 and the OCS Lands Act Amendments of 1978, Interior requires operators of OCS leases to provide various information regarding the rate at which oil and gas can and will be produced. The three different rates currently compiled by Interior's Minerals Management Service (MMS) are: (1) the maximum production rate (MPR); (2) the maximum efficient rate (MER); and (3) the maximum attainable rate (MAR). Most of Interior's rate-setting effort is not useful or necessary and could be curtailed. Although exact figures are not available, the costs on the part of both MMS and industry to collect and report on the production rates are significant. MMS is currently considering revisions to regulations which would eliminate MER for nonsensitive reservoirs. GAO believes MMS could probably eliminate MER entirely and use MPR data to monitor sensitive reservoirs. In addition, MMS officials agree that MAR is not necessary, since the information needed on OCS production capabilities can be provided through the data supporting MPR. However, since MAR is required by statute, legislative relief by Congress is required before it can be discontinued.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: In 1986, Congress and the President passed the OCS Paperwork and Reporting Act, which eliminates Interior's data gathering and reporting requirements related to MAR.

    Matter: Congress should repeal section 606 of the OCS Lands Act Amendments of 1978, 43 U.S.C. 1865, to eliminate the data-gathering and reporting requirements related to MAR.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: MMS is revising OCS Order No. 11 to make MER applicable only to reservoirs which are rated sensitive. This has been incorporated into a regulatory reform package which was published in the Federal Register on March 18, 1986.

    Recommendation: The Secretary of the Interior should require the Director, MMS, to establish necessary procedures to use MPR data for: (1) fulfillment of the OCS Lands Act Amendments requirement; and (2) continuing to fulfill Interior's responsibilities for overseeing OCS production activity after legislative relief is granted. GAO continues to believe that MMS should give further consideration to using MPR data in lieu of the MER to monitor sensitive reservoirs.

    Agency Affected: Department of the Interior


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