Mineral Revenues:

Delays in Processing and Disbursing Onshore Oil and Gas Bid Revenues

RCED-86-69: Published: Mar 24, 1986. Publicly Released: Apr 28, 1986.

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GAO reviewed the Department of the Interior's procedures for: (1) depositing and processing bid revenues from offshore and onshore competitive oil and gas lease sales; and (2) disbursing onshore bid revenues to the states.

GAO found that Interior's procedures and guidelines for depositing and processing offshore bid revenues were adequate, but the procedures for depositing, processing, and disbursing onshore bid revenues could be more timely. More timely receipt and deposit of onshore bid revenues, in compliance with Department of the Treasury and Interior instructions, would make these funds available to the federal government sooner, thereby decreasing the need for the Treasury to borrow money and incur interest. Interior could also save the Treasury interest costs by streamlining its procedures for notifying winning bidders of bid acceptance and for requiring final bid payment from onshore bidders. GAO estimated that timely deposits of these funds and streamlined procedures could have saved the Treasury about $152,000 for the 55 parcels it reviewed. GAO also found that Interior's procedures for disbursing states' shares of onshore bid revenues could be more timely. Timely deposit and payment of onshore bid revenues to the states could become more important because Congress is considering actions to increase acreage offered for competitive leasing.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: BLM directed its regional offices to deposit these monies on the day of the sale. It will follow up during its administrative procedures audits to verify that the offices complied with the daily deposit requirement.

    Recommendation: The Secretary of the Interior should direct the Director, Bureau of Land Management (BLM), to ensure that high-bid checks are deposited on a daily basis after receipt by adopting alternative methods for deposit, such as using local commercial banks to wire transfer bid revenues to Treasury and by not holding the checks.

    Agency Affected: Department of the Interior

  2. Status: Closed - Implemented

    Comments: BLM directed its regional offices to accept high bids that meet or exceed the parcels' estimated values within 1 working day following the lease sale date.

    Recommendation: The Secretary of the Interior should direct the Director, BLM, to establish time frames for the evaluation staff to accept high bids that meet or exceed the parcels' estimated values so that winning bidders can be notified more promptly.

    Agency Affected: Department of the Interior

  3. Status: Closed - Implemented

    Comments: BLM directed its regional offices to notify successful high bidders within 3 working days from the time the bid acceptance is indicated.

    Recommendation: The Secretary of the Interior should direct the Director, BLM, to establish time frames for staff to perform the necessarily administrative tasks to notify winning bidders of bid acceptance.

    Agency Affected: Department of the Interior

  4. Status: Closed - Implemented

    Comments: BLM directed its regional offices to use DHL Worldwide Courier Service to notify winning bidders of bid acceptance when monies due are over $10,000.

    Recommendation: The Secretary of the Interior should direct the Director, BLM, to establish procedures for notifying winning bidders by overnight delivery service when it is cost-effective for the government.

    Agency Affected: Department of the Interior

  5. Status: Closed - Implemented

    Comments: In December 1987, the Learhy Reform Act became law. Interior's implementing regulations, finalized in June 1988, do require winning bidders to submit bonuses within 10 days.

    Recommendation: The Secretary of the Interior should direct the Director, BLM, to establish a shorter time frame for winning bidders to submit their four-fifths balances.

    Agency Affected: Department of the Interior

  6. Status: Closed - Implemented

    Comments: MMS and BLM signed a Memorandum of Understanding, dated October 27, 1986, specifying that BLM would transfer bonus bids collected and deposited by BLM to MMS within 30 days of lease issuance.

    Recommendation: The Secretary of the Interior should direct the Directors of the Mineral Management Service (MMS) and BLM to take steps to expedite payments to the states, including developing new procedures, such as quicker delivery service, and weekly or biweekly time frames for notifying the MMS accounting center when the final four-fifths bid balances are deposited by BLM state offices.

    Agency Affected: Department of the Interior

  7. Status: Closed - Not Implemented

    Comments: Interior disagreed with this recommendation and does not plan to take corrective action.

    Recommendation: The Secretary of the Interior should direct the Directors, MMS and BLM, to take steps to expedite payments to the states including adjusting the automated system at the accounting center to notify Treasury to pay the states' shares more quickly.

    Agency Affected: Department of the Interior

 

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