Policy Letter

POGO Supports Reform of MMS and the RIK Program (S. 3543 ) - Hopes to Restore Ethical Conduct and Accountability to the Resource Management

The Honorable Robert Menendez

317 Senate Hart Office Building

Washington, D.C. 20510

Fax: 202.228.2197

The Honor Bill Nelson

716 Senate Hart Office Building

Washington, DC 20510

Fax: 202.228.2183

Dear Senators Menendez and Nelson,

The Project On Government Oversight (POGO) strongly supports every effort to promote ethical conduct and accountability in the management of the taxpayers' natural resources, which is why we wish to express our gratitude to for your hard work on S. 3543.

Oil and gas royalty collections from drilling on federal lands and waters are the second largest source of revenue for the federal government.1 Investigations conducted by the Department of the Interior’s (DOI) Inspector General (IG) and POGO revealed gross misconduct in DOI’s Royalty-In-Kind (RIK) program. Instances of misconduct included reports of RIK personnel receiving inappropriate gifts from industry and performing outside work that clearly conflicted with the ethical performance of their duties for the RIK program. POGO is pleased that S. 3543 addresses these problems by establishing clear provisions that prohibit the acceptance of these gifts, and that more clearly defines what outside work presents a conflict of interest. Most importantly, by making violations of the gifts provision a felony, this bill clearly establishes the accountability desperately needed in the RIK program.

.In POGO’s most recent report, Drilling the Taxpayer: Department of Interior’s Royalty-In-Kind Program, POGO tracked the history of the program to demonstrate how it was industry-created, industry-supported, and industry corrupted. In the report, POGO points to how the Government Accountability Office (GAO) has repeatedly found that the RIK program cannot prove that it benefits taxpayers. Additionally, DOI IG Devaney recently told the House Natural Resources committee that he also could not verify the profitability of the program, since RIK contracts were “unauditable” by the IG’s forensic accountants. Given these significant failures to verify the most basic effectiveness of this program, POGO applauds S. 3543 for suspending the RIK program until DOI conducts a comprehensive review that certifies to Congress that the program is accurately measuring the royalty amounts owed to taxpayers.

Finally, auditing is one of the most basic tools for financial accountability. POGO and others have frequently criticized the RIK program for being overly reliant on superficial oversight through “compliance reviews” in lieu of audits. POGO believes that by clearly prohibiting DOI from using compliance reviews instead of audits, S. 3543 takes a significant step toward restoring fiscal responsibility to the RIK Program.

There are too many concerns and too much money at stake to allow DOI to expand RIK as a method for collecting billions of dollars owed to taxpayers. POGO urges the House and Senate to support S. 3543 to restore accountability and ethics to the collection of the taxpayers’ royalties.


Danielle Brian

Executive Director