Compliance With the Department of the Interior's Cost Recovery Program Could Generate Substantial Additional Revenues

RCED-83-94: Published: Sep 6, 1983. Publicly Released: Sep 6, 1983.

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GAO reviewed the Department of the Interior's recently expanded cost recovery program as it relates to oil and gas activities on Alaska's federal onshore lands.

GAO found that the Bureau of Land Management (BLM), the Minerals Management Service (MMS), and the Fish and Wildlife Service (FWS) are not fully complying with Interior's requirement to identify and, where appropriate, seek recovery of costs for services which directly benefit firms and individuals. During fiscal year 1982, more than $1.5 million in potentially recoverable costs were incurred by Interior, but action was taken to recover only a small part of them. Similar costs are anticipated in the future. The costs are incurred in responding to requests for drilling permits and other services by specific individuals and firms involved in exploration, development, and production activities on Alaska's federal lands. With few exceptions, the beneficiaries of these services are not being required to reimburse Interior for costs incurred because of the newness of the cost recovery program, the lack of emphasis and priority being given to it, and an unawareness of the requirement to reexamine these costs for the potential for recovery. GAO found that: (1) MMS was excused from filing a cost recovery report because it was a relatively new organization; (2) the FWS report did not identify, discuss, or analyze the recovery potential of oil and gas management costs; and (3) BLM currently charges for 27 leasing-related services and has proposed regulations for increasing or imposing fees for 9 others. Although BLM identified some new areas of cost recovery, it did not identify and analyze possible cost recovery for oil and gas management costs.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Office of Financial Management is awaiting clarification and updated information from the bureaus. In a memo dated January 24, 1985, which endorsed the Cost Recovery Report, Interior identified general actions BLM has taken to track and monitor cost recovery items. However, BLM contends that it is not yet practical to fully implement the GAO recommendation.

    Recommendation: The Secretary of the Interior should instruct the Director of the Office of Financial Management to ensure that bureaus and offices comply with the expanded program to recover appropriate costs for services provided to the nonfederal sector. Specifically, bureaus and services in Alaska should identify unrecovered oil- and gas-related costs, evaluate the appropriateness of recovery possibilities, and institute collection procedures, where appropriate.

    Agency Affected: Department of the Interior


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