BLM TERMED LAX IN ENFORCING LIMIT ON LEASEHOLDS

Jan. 23, 1995
The General Accounting Office says the U.S. Bureau of Land Management is failing to ensure that individual oil companies do not control too many leases in any one state. The Mineral Leasing Act limits the federal acreage that one party may control in any one state to 246,080 acres (600,000 acres in Alaska) due to concerns about the potential for monopolistic control of federal oil and gas resources. BLM administers more than 51,000 producing and nonproducing oil and gas leases on about 37

The General Accounting Office says the U.S. Bureau of Land Management is failing to ensure that individual oil companies do not control too many leases in any one state.

The Mineral Leasing Act limits the federal acreage that one party may control in any one state to 246,080 acres (600,000 acres in Alaska) due to concerns about the potential for monopolistic control of federal oil and gas resources.

BLM administers more than 51,000 producing and nonproducing oil and gas leases on about 37 million acres of federal land.

CONTROLS "INADEQUATE"

GAO said BLM's internal controls are inadequate to ensure that parties do not exceed the acreage limitation.

It said BLM allows oil and gas lessees to self-certify that they have not exceeded the limit and has procedures for auditing compliance but has performed no audits since 1993 because it views this responsibility as having a low priority relative to other work and duties.

"In addition," GAO said, "when these audits were performed, BLM's strategy of selecting lessees was ineffective because it did not target parties approaching or appearing to exceed the acreage limitation. Instead, BLM used a stratified sampling methodology "Finally, in some cases, BLM has allowed companies that share the same officers, directors, or major stockholders (some of whom are also members of the same family) to be considered separate leaseholders under the acreage limitation."

WHAT GAO FOUND

GAO said by targeting parties whose lease holdings were near the acreage limit, its auditors found a lessee who had exceeded the limit by 190,000 acres in Wyoming and 27,000 acres in Nevada.

By presuming that companies are affiliated when they share the same officers, directors, or major stockholders, GAO auditors identified five companies whose total acreage exceeded the limit by more than 800,000 acres in Wyoming, 435,000 acres in New Mexico, and 86,000 acres in Nevada.

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