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An Industry Lawyer's Perspective on the Mms Audit Process: Nice People Finish First

Dimitri Lee Seletzky, Federal and Indian Oil & Gas Royalty Valuation and Management

Beginning early last year the federal and Indian oil and gas royalty collection and audit program managed by the Department of the Interior's Minerals Management Service (“MMS”) came under intense scrutiny, thanks in part to a series of New York Times articles alleging that the MMS mismanaged the program. Coming at a time of perceived high gasoline prices, the articles fueled a storm of controversy on Capitol Hill and in the oil patch, even though major allegations made in the articles have been investigated and debunked.2 One could attempt to write off the attention focused on royalties over the past year as sound and fury without significance or relevance to the daily work of oil and gas royalty auditors and auditees, but that is quickly becoming impossible. For better or worse, the atmospherics matter. As anyone who has been through an audit with the MMS recently knows, the criticism and heightened scrutiny placed on the agency by the recent media and Congressional attention has placed enormous new burdens on the auditors and their management. Many of them must now routinely devote a significant part of their time to responding to internal and external audits, reviews, and inquiries regarding their own work, in addition to handling their old job responsibilities with no new resources.

Further clouding the atmosphere for officials at the MMS, a recent trend has emerg