One company missed 84 royalty reports and paid no federal penalty
Summary
Interior's inspector general reviewed how the Office of Natural Resources Revenue (ONRR) enforces compliance on federal oil and gas royalties, and found a case, No. CP23-208, where a company missed 84 required reports and understated production on 30 more. ONRR's own policy set a minimum penalty of $113,471. Investigators closed the case with a penalty of zero. It wasn't isolated: across a sample of enforcement referrals, it took ONRR's own program areas an average of 1,327 days -- three years and seven months -- to refer a confirmed violation for enforcement, and even then, only 13 percent of eligible cases actually got a penalty. A second watchdog, GAO, found the underlying royalty-adjustment system is squeezed by statute -- companies get 6 years to revise their numbers, ONRR gets 7 to catch problems -- and that as of March 2025, ONRR rolled back the one extra compliance check it had added to catch problems in large refund requests.
The three-and-a-half-year wait before enforcement even starts
collects, verifies, and distributes more than $18 billion a year in federal and Indian energy and mineral revenue. When a company misses a report or a payment, the Federal Oil and Gas Royalty Management Act⧉ requires to catch it and refer it for enforcement. Interior's inspector general sampled 34 referred cases from fiscal years 2021 through 2023 and found it took 's own program areas an average of 1,327 days -- three years and seven months -- to make that referral. Only 4 of the 34 cases were referred within a year of the first violation. Eighteen took more than three years, by which point found some companies could no longer be located or had gone bankrupt.
View data as table
| 0-1 year | 4 |
|---|---|
| 1-2 years | 8 |
| 2-3 years | 4 |
| More than 3 years | 18 |
When enforcement does act, penalties are the exception
Once a case reaches Enforcement, the agency's own rules call for its most serious tool -- an Immediate Liability Civil Penalty -- against the most egregious violations, particularly repeat offenders. From FYs 2021 through 2023, OE received 339 non-curable cases, the kind meant to trigger a penalty without a warning first. It assessed a penalty in only 43 of them, about 13 percent, at an average of $571,965 each. In a separate sample reviewed, OE closed 80 percent of cases involving missing production reports without confirming the company had actually filed the missing reports or paid what it owed.
View data as table
| Penalty assessed | 43 |
|---|---|
| No penalty assessed | 296 |
What gets assessed barely gets collected
The follow-through is thinner still. OE assessed $29.6 million in penalties across 92 cases over the audit period; in a 9-case sample reviewed, had collected about 17 percent, referred 55 percent to the U.S. Treasury for collection, and written off 28 percent as uncollectible. Treasury's own recovery rate on referred debt is roughly 2 percent, according to officials -- meaning of the $27.7 million in royalty and civil-penalty debt referred to Treasury from FYs 2021 through 2023, the government stands to collect only a small fraction. made 13 recommendations; has resolved 10 and left 3 unresolved, and flagged 4 as significant enough to track in its reports to Congress.
A second watchdog found the clock is part of the problem
Weeks earlier, examined a different piece of the same system: the process by which companies revise the royalties they've already reported. Under the Royalty Simplification and Fairness Act of 1996⧉, companies can adjust their reported royalties for up to 6 years after the original payment. , meanwhile, can generally only issue a monetary demand for unpaid royalties up to 7 years after the original report -- leaving as little as a single year, in some cases, to catch an erroneous late adjustment before the collection window closes. For fiscal years 2014 through 2024, companies submitted enough adjustments to decrease their originally reported $96 billion in royalties by a net $2.7 billion. Not one of those 11 years came back net positive.
View data as table
| Total net adjustments, FY2014-2024 | 2,700 |
|---|---|
| Late-period adjustments, FY2014-2019 only | 300 |
Almost $300 million of those adjustments were made 4 to 6 years after the original payment -- squarely in the years has the least time left to check them. About a third of all adjustments, roughly $929 million, arrived within the first year; the rest came later. typically doesn't start an audit until about 3 years after a company first reports, and aims to finish within 18 months -- a schedule that leaves little room once a late adjustment lands. 's predecessor recommended in 2008 that study shortening the adjustment window; 's own 2011 study proposed cutting it from 6 years to 3. As of August 2025, Congress has not acted on it.
And ONRR just removed one of its own checks
approved $352 million in company refund requests from FY2014 through FY2024 and denied about $30 million; 14 companies have appealed at least 24 of those decisions, covering more than $104 million, with 12 cases still pending before the Interior Board of Land Appeals as of June 2025. Since 2019, had sent large or late refund requests to compliance staff for an extra review. As of March 2025 -- while 's audit was underway -- decided that step wasn't required by statute and reverted to its pre-2019 process. Under the new process, refund staff no longer have a documented procedure to even tell compliance staff which refunds were approved. 's matter for Congress: shorten the statutory adjustment window. Interior concurred with three of 's four recommendations and only partially concurred with the one requiring it to keep compliance staff informed of approved refunds.
The takeaway
- A specific company shows what the average obscures. Case CP23-208 had 84 missing reports, 30 understated ones, 11 other open violations, and $37,824 in unpaid royalties. 's own policy required a minimum $113,471 penalty. It assessed zero -- consistent with a system where only 13 percent of eligible cases got any penalty at all.
- The two watchdogs found different failures in the same machine. DOI documented an enforcement arm that refers cases slowly and rarely penalizes; documented a verification system squeezed by its own statutory deadlines and a compliance safeguard chose to remove in March 2025, as was actively reviewing it.
- Congress has had the fix recommended since 2011 and hasn't acted. 's own study proposed shortening the royalty-adjustment window from 6 years to 3, which says would give more time to catch errors before its collection authority expires. It remains unimplemented.
Enforcement-timeliness, penalty-assessment, and collection figures are from DOI Report 2024-CR-008, ' Needs To Consistently Enforce Compliance and Timely Revenue Collection' (January 21, 2026), based on 's review of a sample of referral and enforcement cases from fiscal years 2021 through 2023 -- not the full population of 's enforcement activity. Royalty-adjustment, refund, and statutory-framework figures are from -26-107669, 'Oil and Gas Royalties: Congress and Interior Should Strengthen Safeguards to Better Ensure Accurate Payments' (November 25, 2025). Both were read directly. The two reports examine distinct functions within -- enforcement of confirmed violations versus the timeliness of royalty verification and adjustment -- and their findings are not combined into a single figure anywhere in this piece.
Sources(2) ▾
- U.S. Department of the Interior, Office of Inspector General, ONRR Needs To Consistently Enforce Compliance and Timely Revenue Collection (2026-01-21) — Report No. 2024-CR-008. Downloaded directly from oversight.gov (200 OK, 3,603,963 bytes). Read in full: Results in Brief, Introduction/Background, both Results of Audit sections (referral timeliness, penalty assessment and escalation, case-closure verification), Conclusion, and the full Recommendations Summary with 's responses. oversight.gov · original document
- U.S. Government Accountability Office, Oil and Gas Royalties: Congress and Interior Should Strengthen Safeguards to Better Ensure Accurate Payments (2025-11-25) — -26-107669, addressed to Rep. Jared Huffman. Direct fetch from gao.gov returned a 403 (Akamai block on non-browser requests); downloaded instead via the Wayback capture below. Read in full: Highlights, the royalty-collection and adjustment/refund process background (including RSFA's 6-year adjustment / 7-year collection statutory framework), Figures 3-8 with surrounding text on net adjustments, late-period adjustments, and refunds, the voluntary-agreements and refund-review-process findings, Conclusions, Matter for Congressional Consideration, all four Recommendations for Executive Action, and Interior's written response in Appendix I. gao.gov · original document
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In Case No. CP23-208, a federal oil and gas lessee failed to file 84 required production reports between January 2021 and April 2023 and understated its output on 30 more. The company owed $37,823.50 in unpaid royalties and already had 11 other open violation cases. 's own enforcement policy set the minimum penalty at $113,471 -- three times the royalties owed. Investigators closed the case and told the company by email it would face no penalty at all. Interior's inspector general found this wasn't an outlier: it's what 's enforcement program does routinely, and a separate report found the royalty-verification system underneath it is running out of time by statutory design -- and just lost one of its safeguards.