Federal Oil and Gas revenue: Actions Needed to Improve BLM’s Royalty relief Policy

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Why GAO Did This Study

BLM manages the federal government’s onshore oil and gas program with the goals of facilitating safe and responsible energy development while providing a fair return for the American taxpayer.

In April 2020, oil and gas producers faced financial challenges from a drop in demand for oil during the COVID-19 pandemic. If oil and gas prices decline, it places financial stress on oil and gas companies, thereby increasing bankruptcies and the risk of wells being shut down.

BLM developed a temporary policy to provide oil and gas companies relief from royalties that they owe to the federal government when they sell oil and gas produced on federal lands.

This testimony discusses (1) BLM’s development of the temporary policy for royalty relief and what is known about the policy’s effects, and (2) BLM’s implementation of this policy
across relevant states. To do this work, GAO reviewed BLM documents; analyzed royalty data; and interviewed BLM officials from headquarters and the five BLM state offices with
jurisdiction over states that account for 94 percent of royalties from oil and gas production on federal lands.

What GAO Recommends

GAO is making two recommendations. BLM should (1) evaluate the effects of its temporary royalty relief policy and use the results to inform its ongoing royalty relief program, and (2) update its guidance to provide consistent policies for royalty relief.

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