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RCED-85-139 1 (1985-08-26)

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 BY THE US, GENERAL ACCOUNTING OFFICE

 Report To The Chairman, Subcommittee On

 Oversight And Investigations

 Committee On Energy And Commerce

 House Of Representatives



 Reasons And Current Outlook For

 The Sale Of Federal Royalty Oil To

 Small And Independent Refiners



 The Department of Interior receives a
 royalty from oil produced on federal lands.
 Interior can take the royalty as a cash
 payment or a portion of the oil itself, which
 it can then sell to small and independent
 refiners who are determined to be in need
 of crude oil supplies. Sales of this so-called
 royalty oil have been held about every 3
 years since 1970. In early 1985, Interior
 announced its intention to terminate the
 program because of its declining im-
 portance and proposed legislation to that
 effect. While GAO sees no compelling
 need to legislatively restrict Interior's
 ability to hold future royalty oil sales now
 or in the future, it has identified several
 ways to improve the program's effective-
 ness.

 This report examines Interior's basis for
the most recent sales and the current
status and need for the royalty oil program
and discusses ways in which its ad-
ministration might be improved if future
sales are held.


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                                                         GAO/RCED-85-139
   lCeou <4                                              AUGUST 26, 1985

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