US Interior Dept dispenses record $23.4 bln in '08

By Ayesha Rascoe

WASHINGTON, Nov 20 (Reuters) - The U.S. Interior Department said on Thursday it dispensed a record $23.4 billion from energy production to state, American Indian and federal accounts during fiscal year 2008.

The distributed funds came from royalties, rents, and bonuses the Minerals Management Service collected from companies for use of federal lands for onshore and offshore production. One Congressional leader said the department, hit by a scandal involving energy companies and staff members, should have collected more.

Out of the money disbursed in 2008, $2.59 billion went to 35 states as their share of federal revenues from energy production within their borders. In addition, $17.3 billion went to the U.S. Treasury and $534 million went to 34 American Indian Tribes and 30,000 American Indian mineral owners.

"Particularly in today's economic environment, these revenues represent an increasingly important source of funding for many federal, state and tribal budgets," Interior Secretary Dirk Kempthorne said in a statement.

High energy prices and more than $10 billion in bonus bids paid for leases to explore the Outer Continental Shelf in the Gulf of Mexico and Alaska contributed to the department's record disbursement.

The previous record for distributed funds was set in fiscal year 2006 at $12.8 billion, while the department gave out $11.6 billion in 2007.

Wyoming received the most money from the department in 2008 at $1.2 billion for oil, gas and coal production in the state. New Mexico took in the second largest amount at $614 million.

U.S. Rep. Nick Rahall, chairman of the House of Representatives Natural Resources Committee, said the money distributed by the Interior Department does not represent the full amount owed to the American people.

"In these tough economic times, as fiscal needs continue to grow and our budget becomes increasingly constrained, the need to stop the hemorrhaging of money owed for drilling on our public lands and waters is more apparent than ever," Rahall said in a statement.

Rahall, a Democrat from West Virginia, said he plans to work with President-elect Barack Obama's administration to reform the oil and gas royalty system.

The Interior Department came under fire in September for a scandal involving MMS workers who had sex, used drugs and took gifts from workers at oil and gas companies regulated by the department.

At a Congressional hearing on the issue, Interior Department Inspector General Earl Devaney said these actions might have led to losses in royalty money. (Reporting by Ayesha Rascoe; Editing by David Gregorio)