GAO Report Reveals Persistent Oversight Gaps in Federal Oil and Gas Program
The Government Accountability Office’s April 2025 report, GAO-25-108130, titled Federal Oil and Gas: Challenges for Providing Effective Oversight, underscores long-standing and unresolved challenges in the Department of the Interior’s management of oil and gas resources on federal lands and waters. Over the past decade, the GAO has made 121 recommendations across 29 reports addressing weaknesses in five key areas: revenue collection, permitting guidance, IT systems, financial assurance, and workforce readiness. Although Interior has implemented roughly two-thirds of the recommendations, one-third remain open as of March 2025, raising concerns about continued inefficiencies and financial risks to the federal government.
The report opens by framing the economic significance of federal oil and gas production, which accounted for 26% of U.S. oil and 14% of natural gas output in 2024, generating nearly $14 billion in revenue. Despite this substantial contribution, the Office of Natural Resources Revenue (ONRR) has not estimated the royalty gap—the difference between royalties owed and collected—since 2011. In 2010 and 2011, the estimated gap was around $100 million. GAO recommends that ONRR implement a new model to estimate the gap periodically, aiding strategic planning and improving compliance.
The Bureau of Land Management (BLM), which oversees onshore drilling, also suffers from inefficiencies tied to outdated guidance and misaligned permit processing. For instance, BLM has failed to prioritize drilling permits likely to result in near-term activity, leading to staffing inefficiencies. It also continues to rely on antiquated leasing guidance, which creates unnecessary delays. GAO urges BLM to document a new process for prioritizing permits and to modernize its leasing policies.
Information technology management has emerged as a major obstacle to oversight. BLM’s $40 million attempt to modernize its oil and gas data system failed by 2021, forcing a regression to paper-based processes. ONRR also lacks critical data that could enhance its audit targeting. The GAO stresses the need for stronger leadership and internal controls when developing IT systems and recommends evaluating new data collection methods to improve royalty enforcement.
Financial assurance to cover site cleanup costs is another point of vulnerability. BLM reported 89 newly orphaned wells from 2017 to 2019 due to insufficient bonding by companies. Offshore, the Bureau of Ocean Energy Management (BOEM) held only $3.5 billion in supplemental bonds to cover an estimated $40 to $70 billion in decommissioning liabilities as of June 2023. GAO recommends that Congress provide BLM with the authority to require sufficient financial assurances and that BOEM accelerate regulatory updates to address these systemic risks.
A capable and stable workforce is critical to reform, yet staffing issues remain pervasive. ONRR has not prioritized hiring staff with data analysis skills, undermining efforts to verify royalty payments. BLM, meanwhile, has not recovered from the disruption caused by the relocation of its headquarters in 2019, which led to a 169% increase in staff vacancies. GAO recommends that both agencies engage in workforce planning, including long-term strategies to attract and retain qualified personnel.
The GAO concludes that although Interior has made progress, significant gaps remain that could compromise the government's ability to obtain fair value from its resources, manage environmental risks, and maintain efficient operations. Effective oversight of federal oil and gas operations is not just a matter of bureaucratic efficiency; it directly affects taxpayers, energy security, and the stewardship of public lands.
This summary is provided for informational purposes only and is not guaranteed to be accurate. It does not constitute legal advice.
