Federal Oil and Gas Royalty Management State and Tribal Coordination

The Department of the Interior Departmental Offices funds audits and investigations of oil and gas royalty payments on federal lands through cooperative agreements with states and federally recognized tribes under Assistance Listing 15.427, with the most recent grant award disbursed on October 1, 2024.

The program delegates authority to state and tribal governments to conduct audits, compliance reviews, and related investigations of oil and gas royalties attributable to leased federal lands within their jurisdictions, ensuring compliance with federal statutes, lease terms, regulations, and policies. Activities funded include personnel costs, facilities, equipment, travel, and training necessary to perform audits and investigations in coordination with the Office of Natural Resources Revenue (ONRR). Recipients develop annual audit and compliance review work plans identifying the type of work, covered leases and agreements, payors, scheduled completion dates, and performance goals. Work is reimbursed monthly or quarterly throughout the fiscal year.

The program has disbursed 88 cooperative agreements totaling $155.6 million in combined federal dollars obligated since 2001. Award activity has fluctuated over the past five years, with 10 awards in 2022 and 3 to 4 awards annually in other recent years. Cooperative Agreements comprise 95 percent of the portfolio, with a small share of Project Grants. The Department of the Interior Departmental Offices Interior Business Center has funded 38 awards worth $131.7 million (85 percent of federal dollars), while the Department of the Interior Office of the Secretary has funded 43 awards worth $22.7 million.

Recent grant awards range widely in magnitude. The Blackfeet Tribe received $592,561 for a 36-month cooperative agreement effective October 1, 2024 to conduct audits of oil and gas royalty payments on federal lands within the tribe's jurisdiction. Wyoming Department of Audit was awarded $10.5 million for a 36-month period beginning October 1, 2022. Colorado Department of Revenue received $3 million for a similar period beginning October 1, 2022. North Dakota State Auditor received $2.9 million for audits starting October 1, 2022.

For recipients on the federal fiscal year cycle, applications are due June 1st annually; those on alternative fiscal year cycles (such as state fiscal years) submit by April 1st. The program reviews proposals through a 180-day approval cycle. Agreements are effective for three years with an option to renew for an additional three years, though projects are funded on a year-to-year basis with subsequent-year funding subject to receipt and approval of revised work plans and budgets.