Royalty-in-kind program winding down



That’s the message from the Interior Department accompanying its next-to-last annual report about the “royalty-in-kind” program tarnished by repeated scandals.

The program, dating back to 1998, allows energy companies to pay royalties to the federal government with oil and gas instead of cash. After Interior Secretary Ken Salazar announced last year that he was shutting it down, the program officially ends this Thursday, when the final contracts expire, the department said in a news release.

For fiscal 2009, the initiative generated benefits estimated at $23 million “depending on various assumptions regarding markets and administrative costs,” the newly issued report to Congress says.  But it acknowledged that, using different assumptions, the total benefits could range from a low of negative $21 million to a high of $57 million.

Beginning several years ago, the royalty-in-kind program became the target of repeated federal investigations generally revolving around allegations of improperly cozy relationships between government employees and energy industry officials. In 2008, for example, the Interior Department’s inspector general found that the program’s former director had been moonlighting for an environmental and energy consulting firm while still on the federal payroll.

The final report on the royalty-in-kind program, covering fiscal 2010, will be released next year.


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