Summary: What GAO Found
In summary, there were nearly 70 different types of leasable minerals extracted from federal lands and waters in fiscal years 2010 and 2011, but their volume cannot be aggregated because they use different units of measure. For example, the volumes of the four most valuable of these minerals--oil, gas, natural gas liquids, and coal--are measured in barrels, million cubic feet (mcf), gallons, and tons, respectively. According to ONRR data, the total value of all leasable minerals extracted from federal and Indian land and sold in fiscal years 2010 and 2011 was $92.3 billion and $98.6 billion, respectively.
The resulting revenue to the federal government from mineral leasing activity on federal and Indian land in fiscal years 2010 and 2011 was $11.3 billion and $11.4 billion, respectively. Of this amount, oil, gas, and natural gas liquids accounted for the majority of the revenue--$10.1 billion in each fiscal year. The bulk of this revenue comes from royalties, which accounted for 92.8 percent of total revenue in 2011.
The mechanisms used to calculate the three types of leasable mineral revenue--bonus bids, rents, and royalties--vary widely. For example, for oil and gas leases, bonus bids--up-front payments to obtain a lease--are determined by a competitive bidding process, with leases going to the highest bidder. Prior to the competitive bidding, Interior sets a minimum acceptable bonus bid for each offshore parcel and a minimum per acre bid amount for each onshore parcel offered for lease. Rent is charged annually for a lease until production begins or the lease is terminated or relinquished. Royalty rates depend on the mineral and are generally calculated based on a proportion of sales value, less allowable deductions, such as transportation and processing allowances.
Regarding the availability of data on hardrock minerals, we found that federal agencies generally do not collect data from hardrock mine operators on the amount and value of hardrock minerals extracted from federal lands because there is no federal royalty that would necessitate doing so. Furthermore, while many western states collect data on the hardrock minerals produced in their state for purposes of assessing a state royalty, they generally do not collect data on the volume of those minerals extracted from federal land within those states. The Department of the Interior is now working to implement an international initiative to promote openness and accountability in the oil, gas, and mining sectors called the Extractive Industries Transparency Initiative. This initiative is currently in the beginning stages of implementation--consequently it is unclear what affect, if any, it will have on reporting requirements for operators of hardrock mines on federal lands. Interior officials told us that they expect to finish implementing this initiative in about 4 years.
Why GAO Did This StudyThe Department of the Interior (Interior) administers minerals found in over 700 million acres of federal lands, 57 million acres on Indian lands, and 1.8 billion acres below offshore waters. Operators who lease these lands and extract these minerals pay billions of dollars annually that are shared among federal, state, and Indian tribal governments and are one of the largest nontax sources of revenue to the federal government. Some of these minerals, such as oil, gas, and coal, are available through leases requiring payments in the form of rents and bonuses, which are required to secure and maintain a lease, and royalties, which are based on the value of the minerals that are extracted. These minerals are generally known as leasable minerals. The Department of the Interior's Office of Natural Resources Revenue (ONRR) is responsible for compiling data on the volume and value of leasable minerals produced from all federal and Indian lands where there is a trust responsibility, and collecting the appropriate payments. In contrast, other minerals, such as gold, silver, and copper, are governed by the General Mining Act of 1872, which makes these minerals available to operators through a federal claim-patent system that provides the right to explore, extract, and develop the federal mineral deposit without having to pay a royalty. These minerals are generally known as hardrock minerals.
Congress asked us to review minerals extracted from federal lands. Our objectives were to provide information on the (1) volume and dollar value of leasable minerals extracted from federal lands and waters in fiscal years 2010 and 2011; (2) amount the federal government collected for leasable minerals in royalties, rents, bonuses, and other revenue and how this amount was calculated; and (3) availability of data on the volume and dollar value of hardrock minerals extracted from federal lands in fiscal years 2010 and 2011.
For more information, please contact Anne-Marie Fennell at (202) 512-3841 or fennella@gao.gov.
