Office of State Lands Needs to Strengthen Processes for Issuing Leases, Rights of Way

An evaluation of the Office of State Lands’ (OSL) management of leases and rights of way found OSL does not have formal rules and regulations in place governing the issuance of all types of leases, does not have reliable data in its database, and does not have a sufficient inspection and enforcement process to handle the problem of illegally occupied state property.

OSL generates revenue for the State by managing leases and rights of way for state lands and water bottoms. It issues leases to individuals and businesses that want to build and maintain docks, campsites, and other structures on state lands, and issues rights of way to companies installing pipelines, cables, and utilities.

This is the second report LLA has released on the OSL and its operations. The first one, which was released in August, found OSL does not have a current and comprehensive inventory of state lands, as required by law.

In the latest report, auditors found that OSL needs to strengthen its processes to ensure it effectively manages leases and rights of way. Specifically, they found that OSL had not established formal rules and regulations detailing how to issue and manage certain types of leases and rights of way. Without criteria such as rental price and time limits, OSL cannot ensure it is managing these leases and rights of way consistently and fairly.

OSL also did not maintain sufficient and reliable data on properties in its database. As a result, it cannot use data to effectively monitor leases and rights of way. Auditors found the database had incorrect information on 59 (32.2 percent) of the 183 leases and rights of way reviewed.

In addition, OSL had not established a sufficient inspection and enforcement process to identify and address illegally occupied state properties, which can result in lost revenue and increased liability for the State. OSL did not conduct inspections to determine if lessees were still using properties even though lease payments had not been made or when lessees did not respond to questions about lease renewals. OSL also did not inspect properties with expired leases and rights of way to see if there was infrastructure that might pose a risk to the State or to identify unauthorized encroachments on state lands.