State audit reveals DNR shortfalls in royalties collected

BATON ROUGE, LA (WAFB) - Louisiana has been receiving royalties from the oil and gas industry on the minerals collected from its lands and waterways for decades. In fact, the State Department of Natural Resources says $2.8 billion was collected between 2008 and 2012.

A 23-page report by the Louisiana Legislative Auditor released Monday says during that time, the Office of Mineral Resources is reviewing less of those royalties.

"While it may look like they are still collecting a large amount that's based on times when their audit coverage was higher and now that their audit coverage is lower and they're identifying less in years to come, people will see they will probably see that they're collecting less as well," said Nicole Edmonson, Director of Performance Audits.

The state audit also reveals that the Department of Mineral Resources issued $12.8 million in late fees for royalties but eventually waived $5.8 million of those fees.

"Any royalty they're short on being all or part is due and that is never waived," said DNR Communications Director Patrick Courreges.

Courreges says late fees are only waived when a company can prove late or non-payment was a mistake and adds that is better than a costly legal process.

"It's been felt that is a strong incentive to companies for them to self report and cooperate, to tell the ones that do work with us, the ones that do catch their own mistakes, if you come to us with this it will be better for you than us finding on our own," said Courreges.

Don Briggs is President of the Louisiana Oil and Gas Association and says the millions in waived late fees is small compared to the amount these companies pay the state annually. In a statement released Riggs says:

"$1.2 billion was contributed to the state coffer last year through royalty payments, severance taxes, leases and bonuses, this dollar amount is not a severe divide. This is less than 1% underpaid out of the total amount."

Edmonson says uncollected  payment is always an issue especially for a state that routinely has budget concerns.

"From what we found it's still $5.8 million that were assessed in fees that were ultimately waived and $5.8 million in these budget times for many state agencies would be a lot of money," said Edmonson.

She also adds that DNR officials worked with the state auditor every step of the way and says the office recognized areas for improvement and will make changes moving forward.

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