The Interior Department will phase out its controversial royalty-in-kind program, Interior Secretary Ken Salazar announced at a hearing this morning.
Interior’s Minerals Management Service is responsible for collecting revenue from oil and natural gas projects on federal lands.Â The RIK program collects those royalties as oil or gas instead of cash; the government then sells the minerals and sends the revenue to the Treasury.
But the program has been plagued for years by ethical problems and accounting difficulties. The program puts MMS managers — federal employees — in the odd position of acting like oil or gas salesman. Managers often don’t know whether they’re collecting the correct amount of oil or gas, or selling it at the appropriate price. The non-profit Project on Government Oversight exhaustively documented the problems with the RIK program in a report last year. And a GAO report released this week (pdf) found serious auditing problems with MMS’ natural gas RIK program.
Salazar said today that a replacement program will be phased in. We’ll have more details this afternoon.