GAO Report Released: Oil and Gas Management: Continued Attention to Interior's Revenue Collection and Human Capital Challenges Is Needed

Recently, the Government Accountability Office (GAO) released a report, titled Oil and Gas Management: Continued Attention to Interior's Revenue Collection and Human Capital Challenges Is Needed GAO-13-647T (May 16, 2013). The details of the 12-page report, available here, are discussed below:

Why GAO Did This Study

Interior issues permits for the development of new oil and gas wells on federal lands and waters; inspects wells to ensure compliance with environmental, safety, and other regulations; and collects royalties from companies that sell the oil and gas produced from those wells. In recent years, onshore and offshore federal leases produced a substantial portion of the oil and gas produced in the United States. In fiscal year 2012, Interior collected almost $12 billion in mineral revenues including those from oil and gas development, making it one of the largest nontax sources of federal government funds. Previous GAO work has raised concerns about Interior's management and oversight of federal oil and gas resources.

This testimony focuses on (1) Interior's oversight of offshore oil and gas resources, (2) Interior's collection of oil and gas revenues, and (3) Interior's progress to address concerns that resulted in its inclusion on GAO's High Risk List in 2011. This statement is based on prior GAO reports issued from September 2008 through February 2013.

GAO is making no new recommendations. Interior continues to act on the recommendations that GAO has made to improve the management of oil and gas resources. GAO continues to monitor Interior's implementation of these recommendations. 

GAO Report Released: Mineral Resources: Mineral Volume, Value, and Revenue

Recently, the Government Accountability Office (GAO) released a report, titled Mineral Resources: Mineral Volume, Value, and Revenue GAO-13-45R (Nov. 15, 2012). The details of the 50-page report, available here, are discussed below:

Why GAO Did This Study

The Department of the Interior (Interior) administers minerals found in over 700 million acres of federal lands, 57 million acres on Indian lands, and 1.8 billion acres below offshore waters. Operators who lease these lands and extract these minerals pay billions of dollars annually that are shared among federal, state, and Indian tribal governments and are one of the largest nontax sources of revenue to the federal government. Some of these minerals, such as oil, gas, and coal, are available through leases requiring payments in the form of rents and bonuses, which are required to secure and maintain a lease, and royalties, which are based on the value of the minerals that are extracted. These minerals are generally known as leasable minerals. The Department of the Interior's Office of Natural Resources Revenue (ONRR) is responsible for compiling data on the volume and value of leasable minerals produced from all federal and Indian lands where there is a trust responsibility, and collecting the appropriate payments. In contrast, other minerals, such as gold, silver, and copper, are governed by the General Mining Act of 1872, which makes these minerals available to operators through a federal claim-patent system that provides the right to explore, extract, and develop the federal mineral deposit without having to pay a royalty. These minerals are generally known as hardrock minerals.

Congress asked us to review minerals extracted from federal lands. Our objectives were to provide information on the (1) volume and dollar value of leasable minerals extracted from federal lands and waters in fiscal years 2010 and 2011; (2) amount the federal government collected for leasable minerals in royalties, rents, bonuses, and other revenue and how this amount was calculated; and (3) availability of data on the volume and dollar value of hardrock minerals extracted from federal lands in fiscal years 2010 and 2011.

Bureau of Land Reclamation Colorado River Basin Water Supply and Demand Study Released

 Recently, the U.S. Dept of Interior Bureau of Land Reclamation released a study, titled Colorado River Basin Water Supply and Demand Study (Dec. 2012). The details of the report, available here, are discussed is the executive summary excerpted below:

Funded by the Reclamation through the Basin Study Program under the Department of the Interior’s WaterSMART (Sustain and Manage America's Resources for Tomorrow) Program and the agencies The Study Area is shown in figure 1 and is defined as the hydrologic boundaries of the Basin within the United States, plus the adjacent areas of the Basin States that receive Colorado River water. In many adjacent areas, the Colorado River supply is in addition to other water supply sources used to meet water demands representing the Basin States, the Study was conducted by Reclamation’s Upper Colorado and Lower Colorado Regions and the representatives of the Basin States’ agencies. The purpose of the Study was to define current and future imbalances in water supply and demand in the Basin and the adjacent areas of the Basin States that receive Colorado River water over the next 50 years (through 2060), and to develop and analyze adaptation and mitigation strategies to resolve those imbalances.  

The Study did not result in a decision as to how future imbalances should or will be addressed. Rather, the Study provides a common technical foundation that frames the range of potential imbalances that may be faced in the future and the range of solutions that may be considered to resolve those imbalances.

Congressional Research Service Report Released: Controlling Air Emissions from Outer Continental Shelf Sources: A Comparison of Two Programs—EPA and DOI

The Congressional Research Service (CRS), the public policy research arm of Congress, just issued the report Controlling Air Emissions from Outer Continental Shelf Sources: A Comparisonof Two Programs—EPA and DOI (Nov. 26, 2012). The 33-page report authored by Jonathan L. Ramseur discusses the following: 

Summary

Air emissions from outer continental shelf (OCS) operations are subject to different regulatory programs, depending on the location of the operation. The Department of the Interior (DOI) has jurisdiction over OCS sources in federal waters in the western Gulf of Mexico and most of the central Gulf. In addition, the Consolidated Appropriations Act, 2012 (P.L. 112-74), transferred air emission authority in the OCS off Alaska’s north coast from the Environmental Protection Agency (EPA) to DOI. EPA has jurisdiction over sources in all other federal waters.

The primary difference between the EPA and DOI programs is rooted in the different statutory authorities: the 1990 Clean Air Act (CAA) and the 1978 Outer Continental Shelf Lands Act (OCSLA). The primary objectives of these statutes are different—air quality versus offshore energy development. The two regulatory programs reflect these underlying differences. For much of the past 30 years, these differences received little attention, primarily because most of the federal oil and gas resources in EPA’s jurisdiction have been subject to moratoria. In 2008, moratoria provisions expired, potentially opening many of the areas in EPA’s jurisdiction to oil and gas leasing activity. If more OCS areas in EPA’s jurisdiction are open for oil and gas leasing, policymakers interest in these differences will likely increase.

For OCS sources in EPA’s jurisdiction, requirements depend on whether the source is located within 25 miles of a state’s seaward boundary (“inner OCS sources”) or beyond (“outer OCS sources”). Inner OCS sources are subject to the same requirements as comparable onshore emission sources, which vary by state and depend on the area’s air quality status; outer sources are subject to various CAA provisions, including the Prevention of Significant Deterioration (PSD) program. In contrast, OCS sources in DOI’s jurisdiction are subject to air emission requirements only if emissions would “significantly affect” onshore air quality.

A key difference between the EPA and DOI programs is the federal emission threshold that would subject a source to substantive requirements. For sources in EPA’s jurisdiction, this is the PSD threshold of 250 tons per year (tpy) of regulated emissions. Sources that exceed this level would likely be subject to Best Achievable Control Technology (BACT) and other provisions. States’ analogous thresholds that apply to inner OCS sources may be more stringent. By comparison, a DOI OCS source applies an exemption formula, based on distance from shore (e.g., a source 30 miles from shore would have an emission threshold of 990 tpy). If a source remains subject after this step, it must conduct air modeling to assess whether its emissions would have a significant effect on onshore air quality. In effect, this two-step process constitutes a much less stringent threshold than EPA’s 250 tpy threshold.

Another substantial difference is the time frame allotted to the agencies for reviewing a potential source’s permit (EPA) or activity-specific plan (DOI). In addition, the EPA permit process allows greater opportunity for input from the public. In particular, EPA’s Environmental Appeals Board offers parties a powerful tool to compel agency review.

Therefore, two identical operations, located in separate jurisdictions, could face considerably different requirements and procedural time frames. Some stakeholders would likely argue that the additional opportunities for public involvement in EPA’s permit process help create a balance between resource development and environmental concerns. Others would likely contend these steps present unnecessary burdens and timing uncertainty in the process.

Reclamation: Managing Water in the West -- DOI

The report, produced by the U.S. Department of the Interior Policy and Administration, Denver, Colorado office, (dated April 2011) responds to requirements under the SECURE Water Act of 2009, and shows several increased risks to western United States water resources during the 21st century due to climate change.

"Specific projections include:
• a temperature increase of 5-7 degrees Fahrenheit;
• a precipitation increase over the northwestern and north-central portions of the western United States and a decrease over the southwestern and south-central areas;
• a decrease for almost all of the April 1st snowpack, a standard benchmark measurement used to project river basin runoff; and
• an 8 to 20 percent decrease in average annual stream flow in several river basins, including the Colorado, the Rio Grande, and the San Joaquin."