[Biennial Report on the Federal Royalty Management System for Fiscal Years 1996 and 1997]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 98-I-708

Title: Biennial Report on the Federal Royalty Management System
       for Fiscal Years 1996 and 1997

Date:  September 30, 1998





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U.S. Department of the Interior
Office of Inspector General






SPECIAL REPORT


BIENNIAL REPORT ON THE FEDERAL ROYALTY
MANAGEMENT SYSTEM FOR FISCAL
YEARS 1996 AND 1997

REPORT NO. 98-I-708
SEPTEMBER 1998








Memorandum                                    C-IN-MOA-001-96


        To:  The Secretary

      From:  Richard N. Reback
             Acting Inspector General

   Subject:  Biennial Report on the Federal Royalty
             Management System for
             Fiscal Years 1996 and 1997 (No. 98-I-708)


This is the seventh biennial report  issued by the Office of
Inspector General.  This report was prepared  in accordance
with  Section  302(b)  of  the  Federal  Oil and Gas
Royalty Management  Act  of  1982,  which  requires  the
Office  of Inspector General to conduct a biennial audit of the
Federal Royalty  Management  System  and report the results
to  the Congress and the Secretary of  the  Interior.   We
prepared this report based on the results of eight audit
reports, one evaluation   report,   and   one   investigative
initiative completed by the Office of Inspector  General  and
one audit report issued by the General Accounting Office.
Based  on  our reviews of the Royalty Management
System,  we concluded that  the  Minerals  Management  Service
and  the Bureau   of   Land   Management  had  made
improvements  in collecting  mineral  lease   revenues.
Specifically,   the adequacy  of  minimum  bonus bids and annual
rental fees was evaluated before each lease  sale to ensure that
the Federal Government received fair value  for  offshore  oil
and  gas leases.   We  estimated that this improvement will
result in increased lease  revenues during  1998 through 2001
of about $194 million.

However, to adequately protect mineral resources and
further enhance  royalty collections,  the  Service  needs
to  make improvements in cost sharing deductions from states'
mineral leasing receipts and in operating, testing,
supporting, and controlling  automated information systems.

In  terms  of  revenues,  the  Department  of  the Interior
collected royalties,  rents,  and bonuses of $4.7
billion in fiscal year 1996 and $6.2 billion in fiscal year
1997.  Some of these revenues were generated  from  Service,
state, and tribal  audits  of  royalty  payors.   Specifically,
Service audits  of  royalty  payors  resulted in the
collection  of royalties and the denial of refund  requests
totaling $39.7 million  ($38.7 million in audit collections
and  $1 million in denials  of  refund  requests)  in  fiscal
year 1996 and $40.1 million in audit collections (there were no
denials of refund  requests)  in  fiscal  year 1997.  State
and tribal audits of royalty payors resulted  in  the collection
of an additional $9.5 million in fiscal year 1996 and $9.5
million in fiscal year 1997.

This  report  does not make any new recommendations because
each  of  the 10  audit  and  evaluation  reports contained
recommendations to the appropriate Departmental officials at
the time each  report  was issued.  The Department generally
has been responsive to the  audit  recommendations and  has
made  the improvements to the Royalty Management System that
were  suggested.    In  addition,  the  Service provided  a
synopsis  (Appendix 4)  that  it  prepared  of  its Royalty
Management  Program  accomplishments  during  this biennial
period.   The  Service and the Bureau, through the Assistant
Secretary for Land  and  Minerals  Management, also provided
comments on the report in August 17  and September 14, 1998,
memoranda,  which we considered and incorporated into  this
report as appropriate.

cc: Assistant Secretary for Land and Minerals Management
    Assistant Secretary for Indian Affairs


                            CONTENTS


                                                   Page

INTRODUCTION......................................... 1

BACKGROUND........................................... 1

OBJECTIVE AND SCOPE.................................. 1

RESULTS OF BIENNIAL REVIEW FOR
    FISCAL YEARS 1996 AND
    1997............................................. 3

A.  IMPROVEMENTS MADE IN THE ROYALTY
      MANAGEMENT
      SYSTEM......................................... 3

B.  IMPROVEMENTS NEEDED IN THE ROYALTY
      MANAGEMENT
      SYSTEM......................................... 5

C.  ADDITIONAL ROYALTY MANAGEMENT SYSTEM
      ISSUES......................................... 6

APPENDICES


1. AUDIT AND EVALUATION REPORTS
      ISSUED..........................................8

2. ESTIMATED DOLLAR IMPACT OF REPORTS INCLUDED IN
      THE BIENNIAL REPORT FOR FISCAL YEARS 1996 AND
      1997........................................... 9

3. STATUS OF PRIOR REPORT
RECOMMENDATIONS..................................... 10

4. SYNOPSIS OF ACCOMPLISHMENTS OF THE MINERALS
      MANAGEMENT SERVICE'S  ROYALTY MANAGEMENT
      PROGRAM FOR FISCAL YEARS 1996 AND
      1997.......................................... 11

INTRODUCTION

BACKGROUND

The Federal  Oil  and  Gas  Royalty Management Act of
1982  requires  the  Secretary  of  the  Interior  to
establish   comprehensive  inspection,   fiscal   and
production  accounting,   collection,   and  auditing
systems.   These systems are required to provide  the
capability  to   accurately  determine  oil  and  gas
royalties,   interest,    fines,   penalties,   fees,
deposits, and other payments  owed and to collect and
distribute such amounts in a timely manner.

To   accomplish  this  requirement,   the   Secretary
established   the   Royalty   Management  System  and
assigned specific responsibilities  to  the  Minerals
Management  Service,  the  Bureau of Land Management,
and  the  Bureau  of  Indian Affairs.   The  Minerals
Management Service is responsible  for monitoring oil
and gas production from Federal leases  on  the Outer
Continental  Shelf, the Bureau of Land Management  is
responsible for  monitoring  oil  and  gas production
from  onshore  Federal  and  Indian leases,  and  the
Bureau of Indian Affairs distributes mineral revenues
to  individual  Indians  and  tribes.   Most  of  the
royalty  management functions were  assigned  to  the
Service's  Royalty  Management  Program.  The overall
mission   of   the   Program  is  to  ensure   proper
determination,  collection,   and   distribution   of
bonuses, rents, and royalties from Federal and Indian
lands  in  a  manner that maximizes incentives to the
efficient management,  production,  and  use  of oil,
gas,  coal,  and  other  mineral resources consistent
with  public  health and safety,  environmental,  and
public land use requirements.

The  policies  and   procedures   for   the   Royalty
Management  System are delineated in public laws  and
Departmental   regulations,  including  the  Allotted
Indian Land Leasing  Act  of  1909,  as  amended; the
Mineral  Leasing Act of 1920, as amended; the  Indian
Mineral Leasing Act of 1938; the Minerals Leasing Act
for Acquired  Lands  of  1947,  as amended; the Outer
Continental Shelf Lands Act of 1953,  as amended; the
Geothermal   Steam   Act   of   1970;   the  Combined
Hydrocarbon  Leasing Act of 1981; the Indian  Mineral
Development Act  of  1982;  the  Federal  Oil and Gas
Royalty Management Act of 1982; the Federal  Oil  and
Gas  Leasing  Reform Act of 1987; and the Federal Oil
and Gas Royalty  Simplification  and  Fairness Act of
1996.

OBJECTIVE AND SCOPE

The  Federal  Oil and Gas Royalty Management  Act  of
1982,  Section  302(b),   requires   the   Office  of
Inspector General to perform a biennial audit  of the
Federal  Royalty Management System and to submit  the
results  of  such  audit  to  the  Congress  and  the
Secretary.   This  biennial  report  of  the  Royalty
Management System is the seventh of such reports  and
covers  the  biennial  period  of  October  1,  1995,
through  September  30,  1997  (fiscal years 1996 and
1997).

The overall objective of this biennial  review was to
determine   the  Department's  compliance  with   the
Federal Oil and  Gas  Royalty Management Act of 1982.
This  was accomplished by  the  Office  of  Inspector
General  through  its  conduct  of one evaluation and
eight  audits,  seven  on  the  Minerals   Management
Service and two on the Bureau of Land Management, and
through  a  joint  investigative initiative involving
both the Service and  the  Bureau.  Since the Royalty
Management System consists of various components such
as  leasing,  inspection,  production   and   royalty
accounting, royalty collection and distribution,  and
auditing,   we  selectively  reviewed  activities  of
these components.   We  considered  factors  such  as
materiality,  degree  of  risk, prior audit coverage,
and  current information regarding  the  activity  in
selecting  the  specific activities to be reviewed in
this biennial period.  We also considered the results
of a General Accounting  Office  audit  of  costs for
onshore   minerals  leasing  programs.   The  reports
included  in  this  biennial  report  are  listed  in
Appendix 1.

RESULTS OF BIENNIAL REVIEW

FOR FISCAL YEARS 1996 AND 1997

Based on a review of eight Federal Royalty Management
System audits,  one evaluation, and one investigative
initiative conducted  during  the biennial period, we
concluded  that the Minerals Management  Service  and
the Bureau of  Land  Management had made improvements
in the System since the  last  biennial  report  that
should increase mineral lease collections and enhance
payor/producer  compliance with existing regulations.
However,   additional   improvements  are  needed  to
adequately  protect  mineral  resources  and  further
enhance    royalty    collections.      Specifically,
improvements  are  needed  in  the  following  areas:
(1) computation  of  cost  sharing  deductions   from
states'  mineral  leasing  receipts, (2) operation of
automated   information  systems,   (3)   application
software  testing   and   support,  and  (4)  general
controls over automated information systems.

Office  of  Inspector General  audit  and  evaluation
reports  issued  on  the  Royalty  Management  System
during this period identified a total monetary impact
of about $217.9  million,  which  was  classified  as
potential  additional  revenues  ($214.7 million) and
funds  to  be put to better use ($3.2  million)  (see
Appendix 2).

Regarding the  nine  reports  issued by the Office of
Inspector  General during this biennial  period,  one
audit report  and  one  evaluation  report identified
improvements  made in the Royalty Management  System,
four audit reports  presented  opinions on the annual
financial statements of the Service  and  the Bureau,
and  three  audit  reports  identified  areas needing
improvement in the Royalty Management System.   These
reports contained 33 recommendations for improvement,
of  which  3   remain  unresolved  (see  Appendix 3).
These  reports  are synopsized in Sections A  and  B.
Additionally,   synopses    of   additional   Royalty
Management  System  issues regarding  the  Office  of
Inspector   General's   underpayment   of   royalties
initiative and the General Accounting Office's review
of costs for onshore minerals  leasing  programs  are
presented in Section C.

A.  IMPROVEMENTS MADE IN THE ROYALTY MANAGEMENT SYSTEM

Peer Review

In our  report "External Quality Control Review of the Audit
Divisions,  Minerals  Management Service" (98-I-398), issued
in April 1998, we concluded  that the Service was performing
audit  work  that  was  generally  in  compliance  with  the
Service's Audit Procedures  Manual  and with the "Government
Auditing  Standards," issued by the Comptroller  General  of
the United  States.   Further,  we  found that the Service's
audits were conducted professionally, audit conclusions were
adequately supported, and auditors were  usually  current in
their continuing education requirements.  Although  we found
minor deficiencies in the areas of audit management, such as
supervisory review of the auditors' assessment of compliance
with  laws  and  regulations,  quality control, supervision,
timeliness of report products, and working paper quality, we
did not find that these weaknesses  adversely  affected  the
Service's  audit  findings  and conclusions.  The report did
not contain any recommendations.

Followup of Offshore Minerals Leasing Activities

In our March 1998 evaluation  report  "Followup  of Offshore
Minerals  Leasing  Activities" (No. 98-I-385), which  was  a
followup review of recommendations  contained  in  our audit
report   "Offshore  Minerals  Leasing  Activities,  Minerals
Management Service" (No. 94-I-179), issued in December 1993,
we  found  that  the  Service  had  acted  expeditiously  to
implement the  recommendation  to  evaluate  the adequacy of
minimum bonus bids and annual rental fees before  each lease
sale  to  ensure  that the Federal Government received  fair
value  for offshore  oil  and  gas  leases.   The  Service's
implementation  of  the recommendation resulted in increased
rental  fees per acre  that  generated  an  additional  $141
million in  lease revenues between September 1993 and August
1997,  which  was  $20.7  million  more  than  the  estimate
contained in Audit  Report  No.  94-I-179.   In our followup
review,  we  estimated that leases issued between  September
1993  and  August   1997   will   generate   an   additional
$194 million  in increased lease revenues during the  period
of 1998 through  2001.   The followup report did not contain
any new recommendations.

Financial Reporting

Based  on four audits of the  financial  statements  of  the
Service  and  the  Bureau,  we  concluded  that the combined
financial statements and accompanying notes presented fairly
the results of financial operations for both the Service and
the Bureau for this biennial review period.

Our  audit  reports  "Minerals Management Service  Financial
Statements for Fiscal  Years  1995 and 1996" (No. 97-I-445),
issued  in February 1997, and "Minerals  Management  Service
Financial  Statements  for  Fiscal Years 1996 and 1997" (No.
98-I-382), issued in March 1998,  presented  an  unqualified
opinion  regarding the financial operations of the  Service.
The audits  found  that  the  internal  control structure in
effect  at  year-end  was  sufficient  to  safeguard  assets
against  loss  from unauthorized use or disposition;  ensure
that transactions  were executed in compliance with laws and
regulations;  ensure   that   transactions   were   properly
recorded,  processed, and summarized; and provide reasonable
assurance that  any  losses, noncompliance, or misstatements
that  are  material to the  financial  statements  would  be
detected.  The reports did not contain any recommendations.

Our January  1997 report "Bureau of Land Management Combined
Comparative  Financial  Statements for Fiscal Years 1995 and
1996" (No. 97-I-319) and  our January 1998 report "Bureau of
Land   Management   Consolidated    Comparative    Financial
Statements for Fiscal Years 1996 and  1997"  (No.  98-I-234)
presented  an  unqualified opinion on the Bureau's financial
statements.  We found that the Bureau's financial statements
were presented in  conformity  with the accounting standards
and  policies  described  in  the  notes  to  the  financial
statements  and that supplemental financial  statements were
fairly stated in relation to the financial statements  taken
as  a  whole.   Additionally,  we  found  that  the Bureau's
internal control structure in effect at fiscal year-end  was
sufficient   to   safeguard   assets   against   loss   from
unauthorized  use  or  disposition; ensure that transactions
were  executed  in compliance  with  laws  and  regulations;
ensure that transactions  were properly recorded, processed,
and summarized; and provide  reasonable  assurance  that any
losses, noncompliance, or misstatements that are material to
the financial statements would be detected.  The reports did
not contain any recommendations.

B.  IMPROVEMENTS NEEDED IN THE ROYALTY MANAGEMENT
    SYSTEM

Three  Office  of  Inspector General audit reports indicated
that  improvements  were   needed  in  the  Federal  Royalty
Management System as follows:

     -  The  Service  and the Bureau  need  to  improve  the
methodologies used in computing  cost  sharing reductions to
promote  an equitable proration of mineral  leasing  program
cost recovery.   In our October 1997 report "Costs Recovered
Through Net Receipts Sharing Deductions, Minerals Management
Service and Bureau  of  Land  Management"  (No. 98-I-79), we
found  that  the  cost  sharing  deductions  were   computed
efficiently  and  deducted  from the states' mineral leasing
receipts   on   a   timely   basis.    However,   we   noted
inconsistencies in the methods  used to compute cost sharing
deductions, which resulted in the  inequitable  distribution
of  mineral  leasing program costs.  As a result, the  costs
deducted from states' mineral leasing receipts during fiscal
years 1994 through  1996 were overstated by $8.8 million, or
about 11.6 percent.  We recommended that the Service and the
Bureau establish consistent policies and procedures to guide
the net receipts process  and  to improve communication with
the states.  The Service responded  to our recommendation by
stating  that  it  had requested and received  Congressional
approval to use one  cost  pool for the states' computations
and that this would help to prevent the overcharging of cost
deductions to the states.  We  further  recommended that the
Bureau  obtain  a Solicitor's opinion on whether  preleasing
costs were allocable  deductions  to  the states.  Regarding
the  preleasing  costs, the Bureau subsequently  obtained  a
Solicitor's opinion  dated April 14, 1998, which stated that
preleasing costs are deductible.   Regarding  the cost pool,
the Service, in an August 17, 1998, memorandum,  stated that
it  had completed the project of consolidating and  updating
its policies  and  procedures,  had  provided  copies to the
Bureau  of Land Management and the Forest Service,  and  had
presented  the  revised  procedures  to the State and Tribal
Audit Committee at a June 1998 meeting.

     - The Service needs to improve the  efficiency  of  its
automated information systems by applying modern designs and
processes,  and the Service needs to ensure that application
software is adequately  tested  and documented.  In our July
1997  report  "The  Royalty Management  Program's  Automated
Information Systems, Minerals Management Service" (No. 97-I-
1042), we found that  the  Service  was  using  outdated and
inefficient data structures which were difficult  to  change
and  improve.   Additionally,  the  Service did not test its
application  software programs sufficiently  to  ensure  the
operational effectiveness of the software programs.  We also
found that the  Royalty Program's automated systems were not
adequately  documented   in   accordance   with  established
standards.  As a result of these deficiencies,  the  Program
unnecessarily  incurred  about  $3.2  million  annually  for
contractor  support  of  the automated systems and for added
work  to  detect  and  correct   errors   and   problems  in
application   processing.    Our   report   contained  seven
recommendations   to   improve   the   Service's   automated
information   systems   processing.    We   considered   one
recommendation    resolved    and    implemented   and   six
recommendations   resolved   but   not   implemented.    The
unimplemented recommendations were referred to the Assistant
Secretary for Policy, Management and Budget  for tracking of
implementation.

     -  The  Service  needs to improve the general  controls
over  its automated information  systems.   Our  March  1998
report  "General  Controls  Over  the  Automated Information
System,  Royalty  Management  Program,  Minerals  Management
Service"   (No. 98-I-336)   stated  that  the  Service   had
established general controls  over its automated information
systems but that these controls were inadequate in the areas
of  risk  assessment;  security  policies,  procedures,  and
awareness; logical access controls;  software change control
practices; separation of duties; use of  available mainframe
security software; and inclusion of appropriate hardware and
software systems in the Program's disaster  recovery  plans.
These  weaknesses increased the risk of unauthorized access,
modification,  and  disclosure  of  Program  data; theft and
destruction  of  software  and  sensitive  information;  and
potential loss of Program system and function  capability in
the event of a disaster or system failure.  Our audit report
contained  23 recommendations to the Service to improve  the
controls over  the  Program's  automated information.  While
the Service strongly disagreed with  the "characterizations"
that general controls over automated systems were inadequate
as presented in the report, the Service  agreed  to at least
partially implement 20 of the 23 recommendations.  The three
unresolved    recommendations   concerned   security-related
personnel policies  and  procedures  and  classifications of
sensitive  computer  resources.   The  Service  stated  that
existing  controls and classifications were  adequate.   The
three recommendations  have  been forwarded to the Assistant
Secretary  for  Policy,  Management  and  Budget  for  audit
resolution.

C.  ADDITIONAL ROYALTY MANAGEMENT SYSTEM ISSUES

Underpayment of Royalties Initiative

In a major initiative undertaken  by the Office of Inspector
General,  in  conjunction  with  the  Fraud  Section,  Civil
Division,   U.S.   Department   of   Justice,  and   various
U.S. Attorneys' offices throughout the  United  States,  the
Office  of Inspector General has identified and investigated
fraudulent royalty underpayments on Federal mineral leases.

For example,  the Office of Inspector General, the Bureau of
Land Management,  and the Minerals Management Service joined
forces during 1997  with  the  U.S. Attorney's Office, Civil
Division,  District of New Mexico,  Albuquerque, New Mexico,
in a joint investigation into allegations  that  a Texas oil
company defrauded the Service by not paying royalties due on
condensate  produced  on  land  leased  from  the Bureau  in
southeastern   New  Mexico  between  1988  and  1994.    The
production of the  unreported condensate was discovered by a
Bureau inspector who was responding to an oil pipeline break
on  the  Bureau  lease.   An  Office  of  Inspector  General
investigator and Bureau  and  Service personnel subsequently
conducted reviews of oil production  and  purchasing records
that verified that more than $40,000 in condensate  had been
produced  and  sold.   However, the company reported to  the
Service that no production  of  condensate  had occurred and
that therefore no royalties were due the Service.

Based  on  the  results  of  the  investigation,  the   U.S.
Attorney's  Office took action against the company under the
Affirmative Civil  Enforcement  program,  which provides for
treble  damages  under the False Claims Act in  civil  false
claims against the  Government.   The U.S. Attorney's Office
notified  the  oil  company that the Government  would  seek
civil recoveries and  treble  damages  in  Federal  district
court  if  the  company did not reach a settlement agreement
with the Government.   In April 1997, the oil company, while
admitting no wrongdoing, agreed to a civil settlement to pay
$200,000  to  the  Government.   Additionally,  the  company
agreed to file corrected  production  reports for the leases
affected.

Costs for States' Onshore Programs

The  Congress  asked  the  General  Accounting   Office   to
determine  whether  the  costs borne by Wyoming, New Mexico,
and California for managing Federal minerals were comparable
to the costs for these states' own minerals programs.

The  General  Accounting  Office's   February   1997  report
"Minerals  Management,  Costs  for Onshore Minerals  Leasing
Programs in Three States" (No. GAO/RCED-97-31)  stated  that
states received about half of the $936 million generated  by
the   development  of  Federal  onshore  leaseable  minerals
nationwide  in  fiscal  year 1996.  According to the report,
the  Federal  Government  spent   nearly   $114 million   to
administer  its onshore leaseable minerals program in fiscal
year 1996, and  the states will repay the Federal Government
$22 million (about  19  percent) of that amount.  The report
further  stated  that  in fiscal  year  1996,  Wyoming,  New
Mexico,  and  California  received  almost  $358 million  in
revenues from Federal onshore  leaseable  minerals  and that
those   states  have  paid  almost  $14.6 million  (about  4
percent)  of  the  Federal  Government's  fiscal  year  1996
onshore  minerals  leasing  program  costs.  The report also
stated that onshore development on land  owned  by the three
states generated combined revenues of $148 million in fiscal
year  1996 and that the states' combined costs for  managing
onshore  mineral  development, which included development of
private lands, totaled about $19 million (about 13 percent).

The  report  stated  that  because  of  differences  between
Federal and state programs  and  because the states reviewed
did  not  have  similar  land  use planning  processes,  the
program costs of the three states could not be "meaningfully
compared."  The report did not contain any recommendations.


                                                  APPENDIX 1


AUDIT AND EVALUATION REPORTS ISSUED

Report
Number                                         Title
Issue Date


OFFICE OF INSPECTOR GENERAL

MINERALS MANAGEMENT SERVICE

98-I-398 External  Quality  Control Review of the Audit Divisions
                                          April 1998

98-I-385 Followup of Offshore  Minerals  Leasing  Activities
                                          March1998

97-I-445 Minerals Management Service Financial Statements
                                          February1997
for Fiscal Years 1995 and 1996

98-I-382 Minerals Management Service Financial Statements
                                          March 1998
for Fiscal Years 1996 and 1997

98-I-79 Costs  Recovered  Through  Net  Receipts  Sharing
Deductions
                                          October
                                          1997

97-I-1042 The Royalty Management Program's Automated
                                          July
                                          1997
Information Systems

98-I-336General  Controls Over the Automated Information
System,                                   March
                                          1998

Royalty Management Program

     BUREAU OF LAND MANAGEMENT

97-I-319 Bureau of Land Management Combined Comparative
                                          January
                                          1997

Financial Statements for Fiscal Years 1995 and 1996

98-I-234 Bureau of Land Management Consolidated
Comparative                               January
                                          1998

Financial Statements for Fiscal Years 1996 and 1997


GENERAL ACCOUNTING OFFICE

MINERALS MANAGEMENT SERVICE

RCED-97-31    Costs for Onshore Minerals LeasingFebruary
                                          1997
    Programs in Three States
                                                 APPENDIX 2


            ESTIMATED DOLLAR IMPACT
          OF REPORTS INCLUDED IN THE
BIENNIAL REPORT FOR FISCAL YEARS 1996 AND 1997


Report Funds To Be Put Potential Additional
Number       Report  Title                    To      Better
Use
                            Revenues



98-I-385  Followup of Offshore Minerals Leasing $214.7 million[1]
Activities

97-I-1042The Royalty Management Program's $3.2 million
Automated Information Systems,
Minerals Management Service


**FOOTNOTES**

*  Multiyear.   Of this amount, $20.7 million was identifiable to
a recommendation made in Audit Report  No.  94-I-179,  issued  in
December  1993.
This additional revenue was derived based on data obtained during
our followup evaluation (Report No. 98-I-385, issued in March 1998)
in which we found that the Minerals Management Service's implementation
of the recommendation resulted in increased revenues.

                                                                        APPENDIX 3

                        STATUS OF PRIOR REPORT RECOMMENDATIONS


                                  Recommendations
                                      Addressee of
                                  Recommendations
                                  Concurred With/
                                  Recommendations
                                  Made      Resolved
                                  Director, Minerals
                                  Management Service
                         31             28

          Director, Bureau of Land
          Management                                    2
          2


               Total                                        33
               30
                                                                 APPENDIX 4




ILLEGAL OR WASTEFUL ACTIVITIES SHOULD BE REPORTED

TO THE OFFICE OF INSPECTOR GENERAL BY:

Sending written documents to:



Within the Continental United States

U.S. Department of the Interior
Office of Inspector General
1849 C Street,N.W.
Mail Stop 5341
Washington, D.C. 20240

Calling:

Our 24 hour
Telephone HOTLINE
1-800-424-5081 or
(202) 208-5300

TDD for hearing impaired
(202) 208-2420 or
1-800-354-0996



Outside the Continental United States


Caribbean Region

U.S. Department of the Interior
Office of Inspector General
Eastern Division- Investigations
1550 Wilson Boulevard
Suite 410
Arlington, Virginia 22209

Calling:
(703) 235-9221


North Pacific Region

U.S. Department of the Interior
Office of Inspector General
North Pacific Region
238 Archbishop F.C. F'lores Street
Suite 807, PDN Building
Agana, Guam 96910


Calling:
(700) 550-7428 or
COMM 9-011-671-472-7279