The House Committee on Natural Resources has initiated an investigation into the methodology employed by the Office of Natural Resources Revenue (ONRR) in calculating federal royalties from energy production on federal lands and waters. Concerns have been raised regarding the lack of internal controls at ONRR, which may lead to conflicts of interest and uncertainty in the determination of federal royalties.

In a letter addressed to ONRR Director Howard Cantor, Chairman Bruce Westerman, Chairman Paul Gosar, and Chairman Pete Stauber expressed their apprehensions. They highlighted the Committee's concerns regarding ONRR's audit goals, commitment to prior audits, and guidance provided to energy producers on federal lands. They also questioned ONRR's interpretation of existing regulations.

One particular issue raised in the letter pertains to the Royalty Simplification and Fairness Act (RSFA). The legislation states that ONRR "shall allow a credit or refund" to a payor when an overpayment is identified during an audit. However, reports have surfaced suggesting that ONRR has repeatedly refused to accept overpayments identified during audits on ONRR's CMP-2014 form. Allegations have also been made that ONRR employees may have manipulated audit results to meet enforcement goals.

The committee expressed concern over the potential conflicts of interest arising from such practices. They noted that other federal agencies and many states exclude enforcement results from quantitative compliance goals for this very reason. The Committee finds it troubling that ONRR's adoption and implementation of enforcement-related metrics may inadvertently encourage auditor malfeasance.

The investigation seeks to shed light on the internal controls, audit goals, and enforcement-related metrics utilized by ONRR. The ultimate objective is to ensure transparency and fairness in the calculation of federal royalties from energy production on federal lands and waters.

The full letter from the House Committee on Natural Resources to ONRR Director Howard Cantor can be accessed [here](insert link).

The initiation of this investigation underscores the importance of maintaining integrity in the calculation of energy royalties. As Chairman Westerman aptly stated, "The Committee is concerned that the purported conduct may encourage conflicts of interest and uncertainty in the calculation of federal royalties." It is crucial for the ONRR to address these concerns and work towards establishing a robust and impartial methodology for determining federal royalties.

To find out more, go to this link: https://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=415351