Statement of Frank Rusco, Dir., Natural Resources and Environment, GAO. The Dept. of the Interior oversees oil and gas activities onleased federal lands and waters. Revenue generated from federal oiland gas production is one of the largest nontax sources of federalgovernment funds, accounting for about $9 billion in FY 2009. Since the April 2010 explosion on board the Deepwater Horizon, Interior has been restructuring the bureaus that oversee oil and gas development. Specifically, Interior's Bureau of Land Mgt. (BLM) oversees onshore federal oil and gas activities; the Bureau of Ocean Energy Mgt., Regulation, and Enforcement (BOEMRE) created in May 2010 oversees offshore oil and gas activities; and the newly established Office of Natural Resources Revenue (ONRR) is responsible for collecting royalties on oil and gas produced from both onshore and offshore federal leases. Prior to BOEMRE, the Minerals Mgt. Service's (MMS) Offshore Energy and Minerals Mgt. Office oversaw offshore oil and gas activities and revenue collection. In 2011, GAO identified Interior's management of oil and gas resources as a high risk issue. This testimony discusses GAO's work in this area, which identified challenges in five areas: (1) reorganization, (2) balancing responsibilities, (3) human capital, (4) revenue collection, and (5) development of existing leases. This is a print on demand report.