You think the NSC is screwed up? Take a look at Washington's worst run program.

• Author: Eisendrath, John
• Position: National Security Council; government royalties collection

YOU THINK THE NSC IS SCREWED UP?

You can always tell a government programisn't working well when the General Accounting Office decides it can save itself some work by starting each new report on a program with the exact same paragraph. The federal government's royalty management program, operated by the Department of Interior, is a prime example. "Historically, [Interior] has not placed a high priority on the collection of oil and gas royalties," begin the GAO's 1981, 1982, and 1983 reports. "Consequently, serious deficiencies in the collection system that were identified over 20 years ago persist today."

During the past 33 years, three task forces, oneblue ribbon panel, and five outside contractors have tried to improve the Interior's management of this huge program; the GAO, Interior's own inspector general, and five different congressional committees have weighed in with 18 reports totaling 1,319 pages.

Without success. The problem is now worsethan ever. According to a report issued last September by the House Appropriations Subcommittee on the Interior, the government may be failing to collect as much as $1 billion a year in royalties. The government, of course, disputes the exact amount, but admits that hundreds of millions of dollars did go uncollected in 1985, and that over the years, billions more have been lost. The subcommittee estimated that the undercollection rate is twice that of five years ago, and more than triple the estimated undercollection rate of 1975.

These royalties are paid on oil and gas pumpedfrom federal and Indian lands that have been leased to private companies. In exchange for their leases, companies pay 12 to 16 percent on whatever they produce, which can be a significant source of revenue; since 1979, the government has collected more than $28 billion. Indians receive all the royalties paid by companies leasing their land; states get half the royalties earned from public land inside their borders.

Now, you may have more important things toworry about than whether New Mexico is getting its fair share of royalties. It's a good bet most people in New Mexico don't even care. What everyone from Santa Fe to the Senate should care about is that the royalty management program represents government so out of control it makes the National Security Council seem orderly.

The seven percent solution

Until 1982, royalty management was done byInterior's U.S. Geological Survey (USGS), a division well respected for its scientific undertakings. But even in 1959 the GAO pointed out that the study of rocks and the collection of money have little in common. Interior informed Congress that it "seriously considered" this point in 1963 and again a year later. Interior's thoughtfulness, however, wa swiftly followed by decades of inaction.

The geologists meant well. In an early effortto straighten out the collection mess, the director of USGS in 1954 ordered a bureau-wide audit under the direction of a new chief inspector. The only problem was that the order provided no staff. For seven years the "chief" inspector was the only inspector. When the GAO noted the chief inspector had not yet conducted an audit, it suggested USGS give the poor guy some help. A small staff was assigned in 1961, but no audits were done until 1964.

For mose of the next 15 years, USGSmaintained this grueling pace. Of a sample of 5,000 leases in 1979, the GAO found that only eight had been audited. The following year, a look at 18,000 leases showed that USGS auditors had examined only 92.

To do all this work, the royalty managementprogram by 1980 employed 321...