Indian Energy Development:

Interior Could Do More to Improve Its Process for Approving Revenue-Sharing Agreements

GAO-16-553: Published: Jun 13, 2016. Publicly Released: Jun 14, 2016.

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What GAO Found

The Department of the Interior (Interior) recently issued guidance intended to streamline the review process and reduce the approval times of oil and gas revenue-sharing agreements—called a communitization agreement (CA)—that include Indian resources. Under the revised guidance, for example, oil and gas operators are to provide simplified, less detailed information in their CA applications. In addition, the revised guidance eliminates some duplication in the Bureau of Indian Affairs' (BIA) and the Bureau of Land Management's (BLM) review processes.

Potential Time-Saving Steps of the Revised Communitization Agreement Process

Potential Time-Saving Steps of the Revised Communitization Agreement Process

It is too early to determine the effect the revised guidance will have on the CA process, but Interior will be limited in its ability to assess the results of its actions for three reasons:

Interior has established few time frames for the BIA and BLM offices that perform key tasks during the review and approval process. None of these time frames apply to BIA, which is ultimately responsible for approving an Indian CA. Standards for Internal Control in the Federal Government states that management should define objectives to include, among other things, time frames for achievement. Without time frames, BIA will be limited in its ability to hold offices accountable to ensure a more timely review process.

BIA has no systematic way to track an Indian CA through the review process. A 2014 interagency plan to improve the federal permitting review process stated that the ability to track review times is a best practice to improve the federal review process. Without a systematic tracking mechanism, BIA will be unable to fulfill its monitoring role to ensure that documents move through the review process expeditiously.

Interior's revised guidance does not include a plan to evaluate whether its efforts to streamline the process result in the more timely review of Indian CAs, and BIA officials told GAO that they have no plans for such an assessment. Standards for Internal Control in the Federal Government states that management should compare actual performance to expected results and analyze significant differences. Without conducting such an assessment, Interior will not know if the revised guidance has resulted in the more timely payments of royalties to Indian mineral owners.

Why GAO Did This Study

The development of Indian-owned oil and gas resources is one of the largest revenue generators in Indian country, and individual Indian mineral owners may rely on royalty payments from such development to pay for living expenses. Various offices within Interior are responsible for management and oversight of oil and gas development on Indian lands. In some cases, Indian-owned resources cannot be developed independently. In those cases, BLM reviews a revenue-sharing agreement known as a CA, and BIA approves it. Prior GAO reports identified an extensive backlog of Indian CAs awaiting review and approval, leading to significant delays in the payments of royalties to Indian mineral owners.

GAO was asked to review Interior's review and approval process for Indian CAs. This report examines Interior's recent guidance intended to streamline the review and approval process for Indian CAs and the effect this guidance may have on the timeliness of the process. GAO analyzed agency procedures and guidance and interviewed Interior officials responsible for managing the CA review and approval process.

What GAO Recommends

GAO recommends that Interior establish required time frames for the review and approval of Indian CAs, develop a systematic mechanism to track these CAs through the review process, and assess its actions to improve the timeliness of the process. Interior concurred with GAO's recommendations and described the actions it plans to take in response.

For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In a meeting on February 25, 2019, BIA officials told us the agency has drafted suggested time frames for the review and approval for the Indian communitization agreements (CAs) for both BIA and BLM. BIA is revising the Onshore Energy and Mineral Lease Management Interagency Standard Operating Procedures to include these timeframes. The officials said that the Indian Energy and Minerals Steering Committee (IEMSC) will meet in May 2019 and discuss the proposed timeframes. IEMSC is a committee within Interior that includes senior managers from BIA, BLM, and other agencies with a focus on Indian trust energy and mineral policies and issues.

    Recommendation: The Secretary of the Interior should direct the Director of the Bureau of Indian Affairs and, as appropriate, the Director of the Bureau of Land Management to establish required time frames for the review and approval of Indian CAs to ensure a more timely CA process.

    Agency Affected: Department of the Interior

  2. Status: Open

    Comments: As of September 30, 2018, the Department of the Interior added a tracking module for Indian communitization agreements (CA), as well as other mineral lease agreements, to its Trust Asset and Accounting Management System (TAAMS). The tracking module captures key dates along the review and approval process for a CA package, including, but not limited to, the initial receipt, confirmation of a complete package, technical review request, and recommendation whether to approve. However, the new module does not require a specific time frame for the review and approval of Indian CAs as noted in our first recommendation nor does it generate a report to management to notify them when there are delays in the review and approval process or if such a time frame is missed.

    Recommendation: The Secretary of the Interior should direct the Director of the Bureau of Indian Affairs and, as appropriate, the Director of the Bureau of Land Management to develop a systematic mechanism for tracking Indian CAs through the review and approval process to determine, among other things, whether the revised CA process meets newly established time frames.

    Agency Affected: Department of the Interior

  3. Status: Open

    Comments: In a meeting on February 25, 2019, the BIA Acting Director and other officials said that they have collected data since April 2017 on the timeframes of the review and approval of CAs and have been assessing efforts to streamline the process. In addition, the officials said that the Indian Energy and Minerals Steering Committee will meet in May 2019 and this topic will be discussed.

    Recommendation: The Secretary of the Interior should direct the Director of the Bureau of Indian Affairs and, as appropriate, the Director of the Bureau of Land Management to assess whether the revised CA process is achieving its objective to improve the timeliness of the review and approval of Indian CAs, and if not, make changes as appropriate.

    Agency Affected: Department of the Interior

 

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