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Investigators Find Poor US Oil, Gas Management

WASHINGTON (AP) - Congressional investigators have concluded U.S. management of oil and gas leases on federal lands and waters is the newest high risk area of the government - and may be costing taxpayers billions of dollars.

The Government Accountability Office said the Interior Department doesn't know whether it's being shortchanged on oil and gas revenue that is one of the largest nontax sources of federal funds. Revenues totaled about $9 billion in the 2009 financial year.

The GAO report, obtained by The Associated Press, said the Interior Department's management of the leases and production has been beset by persistent problems in hiring, training and retraining staff.

The National Commission on the BP Deepwater Horizon Oil Spill found that in addition to missteps by the three companies involved, government regulators lacked the authority, the resources and technical expertise to prevent the disaster.

The investigators found that Interior Department agencies were unable to verify production levels.

"Without such verification, Interior cannot provide reasonable assurance that the public is collecting its legal share of revenue from oil and gas development on federal lands and waters," the report said.

In 2010, the Bureau of Land Management and the formerly named Minerals Management Service "experienced high turnover rates in key oil and gas inspection and engineering positions," the report found.

Interior has since reorganized the MMS and plans to hire additional staff with expertise in oil and gas inspections and engineering. But those plans are not complete and it remains unclear whether the hiring and training program will succeed, the GAO said.

The report added, "GAO is concerned about Interior's ability to undertake this reorganization while providing reasonable assurance that billions of dollars of revenues owed the public are being properly assessed and collected."

The GAO is Congress' investigative arm. It regularly reports on troubled government programs that it considers high risk.