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WASHINGTON, Dec. 6 — An eight-month investigation by the Interior Department’s chief watchdog has found pervasive problems in the government’s program for ensuring that companies pay the royalties they owe on billions of dollars of oil and gas pumped on federal land and in coastal waters.
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These are among the inspector general’s findings:
¶ Since 2000, the number of audits has declined by 22 percent and the number of auditors has been reduced by 15 percent, even though soaring energy prices have doubled the total amount of money at stake, to about $10 billion a year.
¶ Though the Interior Department says it has “reviewed” about 72 percent of all revenues from federal leases, it actually examined only 9 percent of all properties and 20 percent of all companies.
¶ The department’s “compliance review” system, a computerized form of fact-checking that has increasingly replaced audits, essentially relies on the word of the oil companies being monitored. Officials conducting such reviews do not ask companies for their actual records.
¶ Government data are incomplete and often inaccurate, making it almost impossible for enforcement officials to develop strategies for selecting companies for special scrutiny.
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It also said the agency’s statistics about recovering money were incomplete, inaccurate and sometimes misleading. The investigators said they could not even determine how many audits the government completed each year or whether the government recovered as much it had identified in underpayments.
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The new panel will be led by a man with close ties to the oil industry, David T. Deal, a former assistant general counsel for the American Petroleum Institute.
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http://www.nytimes.com/2006/12/07/washington/07royalty.html