NOTICE: These budget 

justifications are prepared

 for the Interior, Environment 

and Related Agencies 

Appropriations Subcommittees. 

Approval for release of the 

justifications prior to their 

printing in the public record of 

the Subcommittee hearings 

may be obtained through 

the Office of Budget of the 

Department of the Interior. 

The United States BUDGET Department of the Interior 

JUSTIFICATIONS
 

and Performance Information 

Fiscal Year 2011 

MINERALS 

MANAGEMENT 

SERVICE 
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MINERALS MANAGEMENT SERVICE 

FY 2011 PERFORMANCE BUDGET JUSTIFICATION 

Table of Contents 

Director’s Preface .......................................................................................................................... i 

General Statement ........................................................................................................................ 3 

Summary of MMS Budget Request .............................................................................................. 3 

FY 2011 Performance Budget Request........................................................................................ 4 

Energy for the Future .................................................................................................................. 4 

Improving Royalty and Revenue Management.......................................................................... 13 

FY 2011 Budget Highlights ....................................................................................................... 16 

Performance Summary .............................................................................................................. 21 

MMS Organization Chart.......................................................................................................... 26 

Bureau Level Performance Tables............................................................................................ 27 

Bureau Level Budget Tables...................................................................................................... 47 

Budget at a Glance - MMS Activity/Subactivity Funding.......................................................... 48 

Summary of Requirements - Royalty and Offshore Minerals Management .............................. 49 

Summary of Requirements - Oil Spill Research ........................................................................ 51 

Summary of Requirements - Total MMS Funding..................................................................... 51 

Offshore Energy and Minerals Management........................................................................... 53 

Summary of Budget Request...................................................................................................... 53 

Program Overview .................................................................................................................... 54 

Budget Overview........................................................................................................................ 62 

Renewable Energy ................................................................................................................... 67 

Summary of FY 2011 Program Changes................................................................................... 67 

Justification of FY 2011 Program Changes .............................................................................. 67 

Program Overview .................................................................................................................... 70 

Performance Overview.............................................................................................................. 71 

Leasing and Environmental.................................................................................................... 79 

Summary of FY 2011 Program Changes................................................................................... 79 

Justification of FY 2011 Program Changes .............................................................................. 79 

Program Overview .................................................................................................................... 84 

Performance Overview.............................................................................................................. 84 

Resource Evaluation................................................................................................................ 95 

Summary of FY 2011 Program Changes................................................................................... 95 

Justification of FY 2011 Program Changes .............................................................................. 95 

Program Overview .................................................................................................................... 98 

Performance Overview.............................................................................................................. 98 
Regulatory .............................................................................................................................. 111 

Summary of FY 2011 Program Changes................................................................................. 111 

Justification of FY 2011 Program Changes ............................................................................ 111 

Program Overview .................................................................................................................. 113 

Program Performance............................................................................................................. 115 

Information Management..................................................................................................... 127 

Program Overview .................................................................................................................. 127 

Program Performance............................................................................................................. 129 

Oil Spill Research .................................................................................................................. 133 

Program Overview .................................................................................................................. 133 

Performance Overview............................................................................................................ 135 

Minerals Revenue Management .............................................................................................. 139 

Summary of Budget Request.................................................................................................... 139 

Program Overview .................................................................................................................. 139 

Budget Overview...................................................................................................................... 141 

Program Management............................................................................................................. 141 

Compliance and Asset Management.................................................................................... 145 

Summary of FY 2011 Program Changes................................................................................. 145 

Justification of FY 2011 Program Changes ............................................................................ 145 

Program Overview .................................................................................................................. 152 

Performance Overview............................................................................................................ 153 

Revenue and Operations....................................................................................................... 163 

Summary of FY 2011 Program Changes................................................................................. 163 

Justification of FY 2011 Program Changes ............................................................................ 163 

Program Overview .................................................................................................................. 164 

Performance Overview............................................................................................................ 164 

General Administration ........................................................................................................ 177 

Summary of Budget Request.................................................................................................... 177 

Budget Overview...................................................................................................................... 177 

Program Overview .................................................................................................................. 179 

Executive Direction................................................................................................................ 181 

Policy and Management Improvement................................................................................ 183 

Administrative Operations ................................................................................................... 187 

General Support Services ..................................................................................................... 193 

Mineral Leasing Receipts......................................................................................................... 195 

Appendices................................................................................................................................. 217 

Appendix A - Fixed Costs and Related Changes ................................................................ 217 

Appendix B - 2011 Appropriations Language .................................................................... 221 
Appendix C - Authorizing Statutes...................................................................................... 223 

Appendix D - MAX Tables ................................................................................................... 223 

Appendix E - Employee Count by Grade............................................................................ 233 

Appendix F - Mandatory Budget and Offsetting Collection Proposals............................ 235 

Appendix G - Working Capital Fund...............................................................237 
Table of Figures 

Figure 1: Projected World Energy Consumption............................................................................ 5 

Figure 2: United States Wind Resources Map................................................................................ 7 

Figure 3: OCS Hydrocarbon Potential............................................................................................ 9 

Figure 4: Estimated volume of proved deepwater fields .............................................................. 10 

Figure 5: MMS Organization Chart.............................................................................................. 26 

Figure 6: Approximate Distribution of 2009 Costs by End Output.............................................. 66 

Figure 7: Estimated FY 2009 Renewable Energy Spending Profile............................................. 73 

Figure 8: Estimated FY 2009 Leasing and Environmental Spending Profile............................... 86 

Figure 9: Estimated FY 2009 Resource Evaluation Spending Profile........................................ 100 

Figure 10: Existing MMS 3-D Seismic Data Inventory, Gulf of Mexico .................................. 101 

Figure 11: Estimated FY 2009 Regulatory Spending Profile ..................................................... 116 

Figure 12: Estimated FY 2009 Information Management Spending Profile.............................. 131 

Figure 13: Estimated FY 2009 Oil Spill Research Spending Profile.......................................... 134 

Figure 14: Ohmsett Facility in New Jersey................................................................................. 136 

Figure 15: MRM Full ABC Costs, Allocated by Performance Goal.......................................... 143 

Figure 16: RIK Oil and Gas Sales End Date Summary.............................................................. 146 

Figure 17: Cumulative Mineral Lease Revenue Disbursements (1982-2009)............................ 166 

Figure 18: Percent of Revenues Disburse On-Time ................................................................... 168

Figure 19: Percent of Royalty Information Reported Accurately............................................... 168 

Figure 20: MMS’s Overall Data Accuracy Concept................................................................... 171 

Figure 21: Distribution of Onshore Mineral Leasing Receipts................................................... 203 

Figure 22: Distribution of Offshore (OCS Lands) Mineral Leasing Receipts............................ 207 
Table of Tables 

Table 1: Summary of MMS Budget Request.................................................................................. 3 

Table 2: Renewable Energy Crosswalk .......................................................................................... 8 

Table 3: Recent OCS Lease Sales................................................................................................. 12 

Table 4: FY 2011 Analysis of Budgetary Changes ...................................................................... 17 

Table 5: Goal Performance ........................................................................................................... 27 

Table 6: Budget at a Glance – MMS Activity/Subactivity Funding............................................. 48 

Table 7: Summary of Requirements – Royalty and Offshore Minerals Management ................. 48 

Table 8: Summary of Requirements – Oil Spill Research............................................................ 51 

Table 9: Summary of Requirements – Total MMS Funding ........................................................ 51 

Table 10: Offshore Energy and Minerals Management Summary of Budget Request ................ 53 

Table 11: OEMM Program Request Compared to FY 2010 ........................................................ 63 

Table 12: Summary of Fair Market Value and Safe Operations – All OEMM Subactivities ...... 64 

Table 13: FY 2011 Renewable Energy Request – All OEMM Subactivities............................... 65 

Table 14: FY 2011 Marine Spatial Planning ................................................................................ 65 

Table 15: OEMM Renewable Energy Subactivity Budget Summary .......................................... 67 

Table 16: OEMM Performance Overview – Renewable Energy ................................................. 76 

Table 17: OEMM Leasing and Environmental Subactivity Budget Summary ............................ 79 

Table 18: OEMM Performance Overview – Leasing and Environmental ................................... 92 

Table 19: OEMM Resource Evaluation Subactivity Budget Summary ....................................... 95 

Table 20: OEMM Resource Evaluation Program Performance Change .................................... 103 

Table 21: OEMM Performance Overview – Resource Evaluation ............................................ 108 

Table 22: OEMM Regulatory Subactivity Budget Summary..................................................... 111 

Table 23: OEMM Regulatory Program Performance Change.................................................... 122 

Table 24: OEMM Performance Overview – Regulatory Program ............................................. 123 

Table 25: OEMM Information Management Program Subactivity Budget Summary............... 127 

Table 26: OEMM Oil Spill Research Budget Summary ............................................................ 133 

Table 27: Minerals Revenue Management Summary of Budget Request.................................. 139 

Table 28: MRM Compliance and Asset Management Subactivity Budget Summary ............... 145 

Table 29: Program Performance Change.................................................................................... 152 

Table 30: MRM Performance Overview – Compliance and Asset Management ...................... 159 

Table 31: MRM Revenue and Operations Subactivity Budget Summary.................................. 163 

Table 32: MRM Performance Overview – Revenue and Operations......................................... 173 

Table 33: General Administration Summary of Budget Request ............................................... 177 

Table 34: General Administration Program Request Compared to FY 2010............................. 178 

Table 35: Executive Direction Subactivity Budget Request....................................................... 181 

Table 36: Policy and Management Improvement Subactivity Budget Request ......................... 183 

Table 37: Administrative Operations Subactivity Budget Request ............................................ 187 

Table 38: General Support Services Budget Request................................................................. 193 

Table 39: Permanent Appropriations.......................................................................................... 196 

Table 40: Mineral Revenue Payments to States ......................................................................... 200 

Table 41: Payment to Coastal States under OCSLA Section 8(g).............................................. 204 

Table 42: Payments to Gulf producing States under GOMESA 2006........................................ 206 

Table 43: Mineral Leasing Receipts by Commodity Source ...................................................... 209 

Table 44: Mineral Leasing Receipts by Account........................................................................ 210 

Table 45: Onshore Mineral Receipts, FY 2010 – FY 2011 ........................................................ 211 
Table 46: Onshore Rents and Bonuses ....................................................................................... 212 

Table 47: Federal Onshore Royalty Estimates............................................................................ 213 

Table 48: OCS Mineral Receipts, FY 2010 – FY 2011.............................................................. 214 

Table 49: OCS Rents and Bonuses ............................................................................................. 215 

Table 50: Federal Offshore Royalty Estimates........................................................................... 216 
 

 

Director’s Preface 

FY 2011 MMS PERFORMANCE BUDGET JUSTIFICATIONS 

Director’s Preface 

“So we have a choice to make. We can remain one of the world's leading importers of foreign 

oil, or we can make the investments that would allow us to become the world's leading exporter 

of renewable energy. We can let climate change continue to go unchecked, or we can help stop 

it. We can let the jobs of tomorrow be created abroad, or we can create those jobs right here in 

America and lay the foundation for lasting prosperity.” 

-President Obama, March 19, 2009 

The energy challenges that the U.S. faces are severe. The Nation imports 58 percent of the oil 

needed to fuel the country’s transportation system, economic growth, and manufacturing. Our 

reliance on an energy mix that emphasizes the combustion of carbon-based fuels has contributed 

to global warming and the enormous challenges it presents. The time has come to create new, 

clean sources of energy, and the Minerals Management Service (MMS) is poised to play a 

leading role in supporting American energy security and a clean energy economy. 

The MMS FY 2011 request is $364.8 million in direct appropriations and offsetting collections. 

This request supports the Administration’s ambitious renewable energy goals and Secretarial 

Order 3285, which established the production, development, and delivery of renewable energy as 

a top priority for the Department. This request includes a $3.5 million increase (on top of $24 

million in increases in FY 2010) to continue development and implementation of the Outer 

Continental Shelf renewable energy program with particular emphasis on developing regional 

expertise to support leasing activities offshore the Atlantic and Pacific coasts. Planned activities 

include conducting environmental reviews needed to hold competitive lease sales, processing 

noncompetitive commercial leases, coordinating extensive stakeholder participation, and 

initiating inspection and enforcement activities on leases for data collection and technology 

testing. Throughout FY 2011, MMS will continue to build the capacity necessary to develop a 

strong, nationwide offshore renewable energy program that facilitates the development of a 

robust U.S. offshore renewable energy industry. 

The MMS vision as reflected in this request will also continue a comprehensive, balanced, and 

environmentally responsible conventional energy program. Conventional offshore energy 

sources will continue to be an important source of energy, jobs, and state, Federal, and tribal 

revenues in the years ahead. To ensure that conventional energy is developed in a safe and 

environmentally responsible manner, and that the American people receive fair value for their 

resources, MMS must have the human capital, information technology, and data necessary to 

operate on a level field with the industry we regulate. 

The challenges that we face to ensure sound energy and mineral revenue management are also 

significant. The MMS has faced increased scrutiny in the last few years, as is appropriate, given 

the assets for which it is responsible. Unfortunately, a number of shortcomings and instances of 

wrongdoing have been uncovered. In response, the agency, under the leadership of Secretary 

Minerals Management Service i 
Director’s Preface 

Salazar, has aggressively implemented numerous recommendations made by the Government 

Accountability Office, the DOI Office of the Inspector General, and the Royalty Policy 

Committee Subcommittee on Royalty Management led by former U.S. Senators Bob Kerrey and 

Jake Garn. In response to these reviews, the Secretary undertook an ethics reform initiative that 

re-examined the potentially criminal conduct of a group of MMS employees, studied the 

structure of the agency’s oil and gas royalty program, and thoroughly reviewed the Department’s 

ethics regulations and policies. 

One of the first steps to restructure the royalty program was taken on September 16, 2009, when 

the Secretary announced a transitional phasing out of the Royalty-in-Kind (RIK) Program. As 

RIK oil and natural gas sales contracts expire, the oil and natural gas properties will revert to invalue status. Because RIK activities were funded through royalty receipts, and royalty-in-value 

activities are funded through appropriations, in FY 2011, MMS is requesting a $10 million 

appropriations increase to offset the corresponding loss of receipts. This will ensure that 

termination of the RIK program will not adversely affect MMS’s commitment to make certain 

that the Nation’s Federal and Indian energy and mineral revenues are accurately reported and 

paid in compliance with laws, regulations and lease terms and that the American people receive 

fair market value for their valuable energy and mineral resources. 

While significant steps have been taken to improve royalty management, upgrading royalty 

systems, processes, and oversight continues to be a significant area of emphasis in the MMS 

FY 2011 request. The request includes $1.7 million to enhance the capabilities and integration 

of compliance tools and $2.0 million for compliance, valuation, and market research staff to 

ensure proper royalty payments on processed and transported natural gas. 

The MMS FY 2011 request is designed to help reach nationwide energy security and renewable 

energy goals and improve royalty management. The responsible investments in this request will 

help enable a robust offshore renewable energy industry, ensure that conventional energy 

development occurs in a safe and environmentally responsible manner, and upgrade our royalty 

management program for the 21st century. 

ii Minerals Management Service 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Statement 

FY 2011 PERFORMANCE BUDGET 

Minerals Management Service 

General Statement 

Table 1 : Summary of MMS Budget Request 

Budget Authority ($000) 2009 

Enacted 

2010 

Enacted 

2011 

President's 

Request 

2011 

Change 

from 

2010

 ROMM Appropriation 157,373 175,217 183,587 +8,370

 Oil Spill Research Appropriation 6,303 6,303 6,303 0 

Direct Appropriations 163,676 181,520 189,890 +8,370 

Offsetting Collections 146,730 166,730 174,890 +8,160 

Total Discretionary Budget Authority 310,406 348,250 364,780 +16,530

 Payments to States 1/ 1,927,752 1,662,244 1,981,340 +319,096

 Geothermal, Payments to Counties 12,679 0 0 0 

Coastal Impact Assistance Program 250,000 250,000 0 -250,000 

Total Mandatory Budget Authority 2,190,431 1,912,244 1,981,340 +69,096 

Total Budget Authority 2,500,837 2,260,494 2,346,120 +85,626 

Total Direct FTE 2/ 1,603 1,666 1,706 +40

 Total Reimbursable FTE 130 130 96 -34 

Total FTEs 3/ 1,733 1,796 1,802 +6 

1/ Includes Mineral Leasing and Associated Payments; National Forest Fund Payments to States; Leases of Lands 

Acquired for Flood Control, Navigation and Allied Purposes; Qualified OCS revenues to Gulf producing states 

(GOMESA); and National Petroleum Reserve – Alaska state payments. 

2/ Full Time Equivalent (FTE) is a standardized unit representing the average time worked of one full-time employee over 

a year. 

3 / FTE totals shown include FTE in the Coastal Impact Assistance Program. 

The Minerals Management Service (MMS), a Federal agency within the U.S. Department of the 

Interior (DOI), manages the Nation’s oil, natural gas, and other energy and mineral resources on 

the Federal Outer Continental Shelf (OCS) as well as the mineral revenues from the OCS and 

from onshore Federal and American Indian lands. The MMS is one of America’s leading energy 

and mineral asset managers. Every American benefits from the work of MMS. From the 

gasoline that powers our cars, the natural gas that heats our homes, and the planning and 

expansion of the offshore renewable energy industry, to the benefits obtained through the 

disbursement of collected energy and mineral revenues to states, American Indians, the General 

Fund of the U.S. Treasury, the Historic Preservation Fund, and the Land and Water Conservation 

Fund, the Nation and its citizens benefit from the efforts of MMS. 

Within MMS, the Offshore Energy and Minerals Management program (OEMM) regulates OCS 

activities, including administering OCS leases, monitoring the safety of offshore facilities, and 

protecting our coastal and marine environments. Through the work of OEMM, MMS manages 

the energy and mineral resources on the 1.7 billion acres of the Nation’s OCS, which has 

potential remaining resources estimated at 101.2 billion barrels of oil and 480.1 trillion cubic feet 

Minerals Management Service 3 
 

General Statement 

of natural gas (MMS National Assessment, 2006) and significant renewable resources. Under 

MMS management, energy resources on the OCS currently supply about 25 percent of the 

Nation’s oil production and about 11 percent of its natural gas production. The MMS is also 

building a renewable energy program that will allow leasing on the OCS for the development of 

renewable energy resources such as wind, wave, and ocean current energy. 

The Minerals Revenue Management program (MRM) collects, accounts for, and disburses 

revenues from energy and mineral leases on the OCS and onshore Federal and American Indian 

lands. The MRM has collected an average of more than $13 billion annually over the past 5 

years. The MMS works to ensure that revenues are reported and paid correctly and in a timely 

manner. Each month, approximately 2,100 companies report and pay royalties associated with 

over 29,000 producing Federal and Indian leases. The MMS’ goal is to ensure that the Federal 

government is realizing fair-market value and that companies are in compliance with all 

applicable laws, regulations, and lease terms. 

FY 2011 PERFORMANCE BUDGET REQUEST 

MMS Mission Statement 

MMS’s mission is to manage the energy and mineral 

resources on the Outer Continental Shelf and Federal and 

American Indian mineral revenues to enhance public and 

trust benefits, promote responsible use, and realize fair 

value. 

The MMS receives discretionary funding for operations from three primary sources: the Royalty 

and Offshore Minerals Management (ROMM) appropriation; the Oil Spill Research (OSR) 

appropriation; and offsetting collections that are derived from certain OCS rental receipts that 

MMS is authorized to retain, inspection fees for OCS facilities, and cost recovery fees. The 

MMS is also authorized to retain a portion of revenues generated through Royalty-in-Kind (RIK) 

operations to cover associated administrative costs. 

For FY 2011, MMS is requesting a discretionary operating account level of $364.8 million, 

which includes $174.9 million in offsetting collections, $183.6 million from direct ROMM 

appropriations, and $6.3 million from OSR appropriations. 

ENERGY FOR THE FUTURE 

Our Nation’s security, economy, and quality of life depend upon secure and affordable supplies 

of energy. Unfortunately, as energy demand has increased both domestically and internationally, 

the U.S. has found itself increasingly reliant upon imported energy. Increasing energy demands 

and national security concerns require a transition to low-carbon, domestic energy sources. The 

MMS plays an important role in reaching this long term goal. 

4 Minerals Management Service 
 

General Statement 

The Energy Information Agency (EIA) projects that global primary energy demand will increase 

from 472 quadrillion British thermal units (Btu) in 2006 to 552 quadrillion Btu in 2015 (an 

increase of 17 percent) and to 678 quadrillion Btu in 2030 (an increase of 44 percent) based on 

current laws and policies, as shown in Figure 1. The EIA also projects that the inflation adjusted 

price of oil will rise to $110 per barrel in 2015 and $130 per barrel in 2030. The majority of 

growth in energy demand will occur outside of the Organization for Economic Cooperation and 

Development (OECD) countries, indicating a shift in the focus of global energy markets away 

from developed countries such as the U.S. and toward developing countries. Such dramatic 

increases in energy demand will be accompanied by significant environmental and economic 

consequences. The increase in energy demand, based on current laws and policies, is forecast to 

increase world carbon dioxide emissions by 39 percent from 29.0 billion metric tons in 2006 to 

40.4 billion metric tons in 2030 (International Energy Outlook 2009). 

Vital threats to the Nation’s well-being and security include volatile energy prices, increasing 

dependence on foreign energy supplies, and greenhouse gas emissions that result from current 

energy sources. Our challenge moving forward is to help close the existing energy gap by 

facilitating industry exploration and development of the resources, conventional and renewable, 

necessary to meet future energy demand in an environmentally responsible manner. 

Figure 1: Projected World Energy Consumption 

0 

100 

200 

300 

400 

500 

600 

700 

Quadrillion Btu 

2006 2010 2015 2020 2025 2030 

Organization for Economic Cooperation and Development (OECD) Non-OECD 

49% 

59% 

51% 

41% 

International Energy Outlook 2009 

To respond to this generational energy challenge, President Obama and Secretary Salazar have 

made clean energy development a top priority. The MMS FY 2011 budget request is part of a 

comprehensive energy program that emphasizes energy efficiency and responsible domestic 

production of renewable and conventional energy. The MMS FY 2011 budget request builds 

upon the significant progress led by the President and the Secretary in the last year toward a 

secure and clean energy future, including: 

Minerals Management Service 5 
 

 

 

 

General Statement 

•	 Awarding the first-ever exploratory leases for renewable wind energy production on the 

OCS offshore New Jersey and Delaware. 

•	 Establishing a new regional office to support renewable energy development on the 

OCS off the Atlantic seaboard. 

•	 Finalizing a long-awaited framework for renewable energy production on the OCS that 

establishes a program to grant leases, easements, and rights-of-way for orderly, safe, 

and environmentally responsible renewable energy development activities, such as the 

siting and construction of offshore wind farms on the OCS. 

•	 Publishing a report that synthesized available information on conventional and 

renewable offshore energy resources and identified data gaps. 

•	 Establishing five joint Federal/State Task Forces for the purpose of planning and 

administering renewable energy leasing activities on the OCS, with at least three more 

anticipated in FY 2010. 

The MMS FY 2011 budget request is an investment in a bold vision that is grounded in an 

analysis of opportunities and challenges in renewable energy, conventional energy, and revenue 

management. This investment offers the potential for substantial benefits in the form of 

developing a low carbon economy, improving energy security, and creating new domestic 

economic engines. 

OFFSHORE RENEWABLE ENERGY 

“Other nations have been using offshore wind energy for more than a decade. We 

made the development of offshore wind energy a top priority for Interior. The 

technology is proven, effective and available....” 

-Secretary Salazar 

Offshore renewable resources have substantial potential to supply a large portion of the Nation’s 

electricity demand. According to estimates by the National Renewable Energy Laboratory 

(NREL), developing shallow water (typically 0-30 meters) wind resources, which are the most 

likely to be technically and commercially feasible at this time, could provide at least 20 percent 

of the electricity needs of almost all coastal states. In the Atlantic alone, the NREL estimates a 

gross offshore wind resource of 1,024 gigawatts (GW). Assuming that only 40 percent is 

available because of other competing ocean uses gives an extractable resource of 410 GW. While 

the majority of this occurs in waters that are too deep for development today (due to 

technological constraints), a substantial gross resource of 253 GW does exist in shallow waters 

(< 30 m). Using the same availability assumption, that gives an extractable shallow-water wind 

resource of 101 GW, which could be developed now with current technology. As with the 

development of other resources, the economic feasibility of a given project will depend on a 

variety of factors. For wind projects, these include the unique site characteristics, proximity to 

key electricity markets, and the combination of Federal, state, and local incentives available for 

the project.1 

1

 Survey of Available Data on OCS Resources and Identification of Data Gaps (OCS Report MMS 2009-015) 

available online at http://www.doi.gov/ocs/ 

6 Minerals Management Service 
 

 

General Statement 

Figure 2: United States Wind Resource Map 

On April 22, 2009, President Barack Obama announced that the Department of the Interior had 

finalized a long-awaited regulatory framework for renewable energy generation on the OCS. 

The framework establishes a program to grant leases, easements, and rights-of-way for orderly, 

safe, and environmentally responsible renewable energy development activities, such as the 

siting and construction of offshore wind farms. 

In addition to establishing a process for granting leases, easements, and rights-of-way for 

offshore renewable energy development, the new program also establishes a formula for sharing 

certain revenues generated from OCS renewable energy projects with adjacent coastal states, as 

required by law. The OCS Lands Act (OCSLA), as amended by the Energy Policy Act of 2005, 

requires that 27 percent of revenues generated from development in the first three miles of 

Federal waters be shared with adjacent coastal states. Additionally, the regulatory framework 

will enhance partnerships with Federal, state, and local agencies and tribal governments to assist 

in maximizing the economic and ecological benefits of OCS renewable energy development. 

The Department of the Interior and the Federal Energy Regulatory Commission (FERC) cleared 

the way for the publication of these final rules by signing a Memorandum of Understanding 

(MOU) on April 9, 2009 that clarifies their agencies’ jurisdictional responsibilities for leasing 

and licensing renewable energy projects on the OCS. 

Under the agreement, MMS has exclusive jurisdiction with regard to the production and 

transportation or transmission of energy from non-hydrokinetic renewable energy projects, 

including wind and solar. FERC will have exclusive jurisdiction to issue licenses for the 

construction and operation of hydrokinetic projects, including wave and current, but companies 

will be required to first obtain a lease through MMS. 

Minerals Management Service 7 
 

General Statement 

Development of renewable energy on the OCS is an important step in meeting our 

Nation’s energy demand while simultaneously diversifying our energy portfolio and possibly 

stabilizing energy prices in the long term. The MMS Renewable Energy Program will foster a 

new offshore industry that will diversify the nation’s power supplies and create a new supply of 

environmentally preferable renewable energy for the Nation. To effectively foster this new 

industry, MMS created a new Office of Renewable Energy Programs within OEMM. This new 

office will develop and implement policy and overall management of the OCS renewable energy 

leasing and operations program and ensure compliance with departmental goals. 

In FY 2010, MMS established a new Renewable Energy budget subactivity in its budget 

structure. This subactivity will facilitate budget and management processes for this important 

program by increasing transparency, consolidating key funding for this purpose and improving 

our ability to analyze program performance. Most of the funding that supports renewable energy 

activities was previously housed in the Leasing and Environmental Subactivity (LE), with a 

small amount in the Regulatory subactivity. A cross-walk identifying these funds, and showing 

program growth, is provided below. In addition to the resources shown in the table below, 

environmental studies that support the Renewable Energy Program will continue to be funded 

through the Environmental Studies Program (ESP) element, part of the LE subactivity. Since 

renewable energy studies can also benefit the oil and gas program, their funding through the 

Environmental Studies Program provides MMS with the best opportunity to leverage its funds. 

Table 2: Renewable Energy Crosswalk ($000) a/ 

FY 2008 

Enacted 

FY 2009 

Enacted 

FY 2010 

Enacted 

FY 2011 

Request 

Leasing and Environmental 

Resource Evaluation 

Regulatory 

3,486 

0 

246 

5,344 

142 

246 

-

-

-

-

-

-

Renewable Energy Subactivity 3,732 5,732 21,413 23,635 a/ Does not include environmental studies for renewable energy, which will continue to be funded from the Leasing and Environmental 

subactivity as these studies may benefit both the Oil & Gas and Renewable Energy programs. 

OFFSHORE OIL AND GAS 

The MMS manages the oil and gas resources on the 1.7 billion acres of the Nation’s OCS, which 

is believed to contain over 60 percent of the Nation’s remaining undiscovered technically 

recoverable oil and almost 40 percent of its remaining undiscovered technically recoverable 

natural gas (OCS Report MMS 2009-015). 

Figure 3 shows remaining OCS oil and gas reserves, as well as estimated undiscovered, 

technically recoverable (UTRR) oil and natural gas for the OCS. Estimates of UTRR oil and 

natural gas for the entire OCS range from 66.6 billion barrels of oil (Bbo) to 115.1 Bbo with a 

mean of 85.9 Bbo. Similarly, gas estimates range from 326.4 to 565.9 trillion cubic feet of gas 

(Tcf) with a mean of 419.9 Tcf (OCS Report MMS 2009-015). 

8 Minerals Management Service 
 

 

General Statement 

Figure 3: OCS Hydrocarbon Potential 

In recent years, American consumers have spent over a trillion dollars a year, more than 8 

percent of the gross domestic product, on energy (Annual Energy Review 2008). The gap 

between demand for energy and domestic production is met by energy imports. The OCS is one 

of the largest sources of domestic oil and gas production in the country, with the Gulf of Mexico 

(GOM) currently contributing about 1.2 million barrels of oil and 7.7 billion cubic feet of natural 

gas per day for U.S. consumption. With over 8,000 leases and over 32,000 wells, the OCS 

supplied 25 percent of oil and almost 11 percent of natural gas that was produced domestically in 

calendar year 2008. 

Increasingly, production and discoveries are moving into deeper waters, presenting industry and 

MMS with significant engineering, logistic, and financial challenges. The 20 most prolific 

producing blocks in the GOM are located in deep water, and in 2007, approximately 70 percent 

of the GOM’s oil production and 36 percent of its natural gas were from wells in 1,000 ft of 

water or greater.2

 At the end of 2008 there were 141 producing projects in the deepwater GOM, 

up from 130 at the end of 2007. As activities continue to move into deeper waters, MMS will 

need to ensure that exploration and development is conducted in a safe and environmentally 

responsible manner while regulating cutting edge technology in distant areas under increasingly 

difficult conditions. 

2

 Deepwater Gulf of Mexico 2009: Interim Report of 2008 Highlights (OCS Report MMS 2009-016) available at 

www.gomr.mms.gov/PDFs/2009/2009-016.pdf. 

Minerals Management Service 9 
 

 

General Statement 

Figure 4: Estimated volume of proved deepwater fields in the Gulf of Mexico 

As exploration and production technology continues to advance, and frontier areas are 

considered, MMS will continue to provide an orderly and predictable schedule of competitive oil 

and gas lease sales to make Federal resources available to industry for leasing and potential 

development. Production from leases issued as a result of these sales will contribute 

substantially to future domestic oil and gas production and will provide bonuses, rentals and 

royalties to the United States Treasury and adjacent coastal states. 

5-Year OCS Oil and Gas Leasing Program 

Access to Federal offshore lands for oil and gas exploration and development begins with the 5-

Year OCS Oil and Gas Leasing Program (5-Year Program). The 5-Year Program balances the 

potential for the discovery of oil and natural gas, the potential for environmental damage, and the 

potential for adverse effects on the coastal zone. The 5-Year Program also must provide for the 

receipt of fair market value by the Federal government for land leased and rights conveyed. 

When approved, the leasing program consists of scheduled lease sales for a 5-year period, along 

with policies pertaining to the size and location of sales and the receipt of fair market value. The 

purpose of a schedule is to increase the predictability of sales in order to facilitate planning by 

industry, affected states, and the general public. The schedule indicates the timing and location 

of sales and shows the presale steps in the process that lead to a competitive sealed bid auction 

for a specific OCS area. To facilitate the scheduling of and preparation for sales in the 5-Year 

Program, the OCS is divided into administrative geographical units called planning areas. 

In preparing a new 5-Year Program, the Secretary solicits comments from coastal state 

governors and localities, tribal governments, the public, the oil and natural gas industry, 

environmental groups, affected Federal agencies, and Congress. The MMS requests comments 

at the start of the process of developing a new program and following the issuance of each of the 

first two versions: (1) the draft proposed program with a 60-day comment period; and (2) the 

10 Minerals Management Service 
 

 

 

General Statement 

proposed program with a 90-day comment period. The third and last version, the proposed final 

program, is prepared with a 60-day notification period following submission to the President and 

Congress. After 60 days, if Congress does not object, the Secretary may approve the program. 

In addition to the steps required by 

Section 18 of the OCSLA, the 

Secretary must comply with the 

requirements of the National 

Environmental Policy Act (NEPA). 

Additional scoping may occur and 

an environmental impact statement 

(EIS) on the 5-Year Program is 

prepared that covers all of the sales 

in the program. During the comment 

period on the draft EIS, public 

hearings are held in various coastal 

locations around the Nation. After 

the receipt of comments, a final EIS 

is prepared. A record of decision 

that formalizes the alternatives that 

were selected from the final EIS is also prepared. The entire 5-Year Program development 

process takes approximately two years to complete and the lease sale schedule is reviewed 

annually after its approval. 

Each lease sale proposed in the program’s schedule must also undergo a NEPA evaluation and 

presale coordination steps required by Section 19 of the OCSLA. An environmental assessment 

that is specific to the individual lease sale is usually prepared. These documents examine new 

information and changes that have occurred since the final EIS was prepared. Consultation is 

conducted with the states during the process, and consistency with each affected state’s Coastal 

Zone Management (CZM) program is determined before the lease offering transpires. 

The current 2007 to 2012 5-Year Program provides access to about 181 million acres of the 

OCS. Leasing as a result of these sales could result in production of 10 billion barrels of oil and 

45 trillion cubic feet of natural gas over 40 years. The current program is providing thousands of 

jobs and billions of dollars in revenue for Federal and governments. 

The current program includes 21 oil and gas lease sales in eight of the 26 OCS planning areas – 

12 sales in the three Gulf of Mexico planning areas, eight sales in four planning areas offshore 

Alaska and one in the Mid-Atlantic planning area, about 50 miles off the coast of Virginia. 

These areas are subject to environmental reviews, including public comment, and extensive 

consultation with state and local governments and tribal organizations before any lease sale 

proceeds. The Secretary of the Interior is currently reconsidering this program schedule in 

accordance with an April 17, 2009, decision of the U.S. Court of Appeals for the D.C. Circuit. 

Minerals Management Service 11 
 

 

 

General Statement 

Table 3: Recent OCS Lease Sales 

Sale Number Calendar Area Leases 

Accepted 

Bonus Bids 

($ Millions) 

204 August 2007 Western Gulf of Mexico 274 $287 

205 October 2007 Central Gulf of Mexico 682 $2,813 

193 February 2008 Chukchi Sea 487 $2,662 

206 March 2008 Central Gulf of Mexico 603 $3,671 

224 March 2008 Eastern Gulf of Mexico 36 $65 

207 August 2008 Western Gulf of Mexico 313 $484 

208 March 2009 Central Gulf of Mexico 328 $690 

210 August 2009 Western Gulf of Mexico 155 $111 

In July 2008, under former Interior Secretary Kempthorne, MMS was directed to begin the initial 

steps for developing a new 5-Year Program ahead of the normal schedule. The first step in the 

development of a new 5-Year Program is to request comments from all parties on what a new 5-

Year Program should consider. This action was initiated on August 1, 2008, with the publication 

of a Federal Register notice that invited submission of comments on such a plan. The governors 

of all 50 states were specifically asked for their comments, particularly on issues unique to each 

state. 

The development and publication of the Draft Proposed Program (DPP) on January 16, 2009 was 

the second major step in a multi-year process to develop a new 5-year oil and gas leasing 

program. The DPP seeks public comment on all aspects of the new program including energy 

development and economic and environmental issues in the OCS areas. 

The DPP included a total of 31 OCS lease sales in 12 areas (four areas off Alaska, three areas off 

the Atlantic coast, two areas off the Pacific coast, and three areas in the Gulf of Mexico). 

On February 10, 2009, Secretary Salazar announced his strategy for developing an offshore 

energy plan that includes both conventional and renewable energy resources. The comment 

period for the new program was extended until September 21, 2009, in order to provide 

additional time for input from states, stakeholders and affected communities. In response, more 

than 530,000 comments were received from the public regarding the development of a 

comprehensive offshore energy strategy. The MMS is carefully reviewing all of the comments 

submitted. Following the review and analysis of the comments, the next step is to initiate 

environmental analysis and public scoping opportunities associated with the five-year plan, 

required by law, for oil and gas development on the OCS. 

Secretary Salazar also directed MMS to work with the U.S. Geological Survey to assemble a 

report on offshore resources along with information regarding sensitive areas and resources on 

the OCS. This report synthesized the vast knowledge-base on OCS energy resources and 

environmental factors in one concise document.3 The report was delivered to the Secretary at 

the end of March 2009. Following publication of the report, the Secretary conducted four 

regional meetings in an effort to gain insight and comments from all stakeholders of OCS energy 

3

 Survey of Available Data on OCS Resource and Identification of Data Gaps (OCS Report MMS 2009-015) 

available online at www.doi.gov/ocs/ 

12 Minerals Management Service 
 

General Statement 

(Atlantic Coast, April 6, Atlantic City, NJ; Gulf Coast, April 8, New Orleans, LA; Alaska, April 

14, Anchorage, AK; and, Pacific Coast, April 16, San Francisco, CA). 

The MMS is poised to help increase America’s energy security and help facilitate the 

development of a clean energy economy. Future OCS planning decisions regarding conventional 

and renewable energy will be developed through transparent and inclusive processes as part of a 

comprehensive energy policy based on sound science in coordination with state and Federal 

organizations and other OCS stakeholders. 

IMPROVING ROYALTY AND REVENUE MANAGEMENT 

The MMS is one of the Federal government’s largest contributors of non-tax revenue. Mineral 

leasing receipts are derived from royalties, rents, bonuses, and other revenues, including 

minimum royalties, late payment interest, settlement payments, gas storage fees, estimated 

royalty payments, and recoupments. The MMS is responsible for the collection of all mineral 

leasing receipts from OCS lands, approximately 97 percent of Federal onshore lands, and most 

Indian lands. 

In FY 2009, MMS disbursed a total of $10.68 billion in mineral revenues to states, the Office of 

the Special Trustee for American Indians (OST) for distribution to Indian tribes and individual 

owners, other Federal agencies, and U.S. Treasury accounts. Additionally, MMS delivered oil 

valued at an estimated $268.5 million in FY 2009 to the Department of Energy for the Strategic 

Petroleum Reserve (SPR). The MMS completed oil deliveries to DOE sufficient to allow for the 

remaining SPR capacity to be filled in FY 2010. Specific beneficiaries of MMS mineral revenue 

disbursements in FY 2009 include: 

 U.S. Taxpayers — $5.74 Billion 

Mineral leasing revenues are one of the Federal government’s greatest sources of non-tax 

receipts, funding various government functions and programs through the General Fund of 

the U.S. Treasury. 

 States — $1.99 Billion 

Mineral revenues disbursed to states are, in some states, a significant element of a state’s 

financial resource picture, providing funding for local schools, roads, libraries, public 

buildings, and general operations as the states deem necessary. 

 Western Water Users — $1.45 Billion 

Mineral revenue receipts fund a significant portion of the U.S. Bureau of Reclamation’s 

water resource development and maintenance work in the western United States. Spending 

from this account is subject to appropriation. 

 Conservation and Recreation Programs — $899 Million 

MMS transfers nearly $900 million annually to the Land and Water Conservation Fund. 

Spending from this account is subject to appropriation. In recent years, this fund has been 

used to purchase or acquire through exchange about 4.5 million acres of land throughout 

America for conservation purposes and recreational use. 

Minerals Management Service 13 
 

General Statement 

 American Indian Tribes and Indian Mineral Owners — $449 Million 

Monies collected from mineral leases on Indian lands are distributed regularly to tribal 

governments or Individual Indian Mineral Owners. These funds provide direct and 

tangible benefits to thousands within the American Indian community, often as a major 

source of primary income. 

 Preservation — $150 Million 

The MMS annually transfers $150 million to the National Historic Preservation Fund. This 

fund is administered to help save the historic buildings, neighborhoods, and landscapes that 

form our communities and enrich our lives. 

The distribution of mineral leasing receipts is broken down into two broad categories, onshore 

and offshore lands. In both cases, prior to distribution, the receipts or payments are identified by 

source type (oil and gas, coal, other mineral royalties, etc); land category (acquired forest, public 

domain, OCS, etc.); and location (state or county to determine applicable share). 

Onshore collections from public domain lands leased under the Mineral Leasing Act (MLA) 

authority are shared 50 percent with the states, 40 percent with the Reclamation Fund, and 10 

percent with the General Fund of the U.S. Treasury. Alaska receives a 90 percent share of 

mineral leasing receipts for Mineral Leasing Act lands. 

Offshore receipts from rents, bonuses, and royalties are a significant source of revenue, 

accounting for an estimated $5.1 billion dollars and about 50 percent of mineral leasing receipts 

collected by MMS in FY 2009. 

Review and Reform 

The MRM program has faced increased scrutiny in the last few years, as is appropriate given the 

assets for which it is responsible. In response, the agency has aggressively implemented 

numerous recommendations made by the Government Accountability Office (GAO), the Office 

of the Inspector General (OIG), and the Royalty Policy Committee (RPC) Subcommittee on 

Royalty Management led by former U.S. Senators Bob Kerrey and Jake Garn. 

In September 2008, the OIG released three investigative reports, one of which covered 

improprieties that occurred in the RIK program between January 2002 and July 2006. In 

response, MMS has: 1) taken appropriate administrative corrective actions; 2) enhanced our 

ethics program and provided specific training to RIK employees; and 3) developed a clear, strict 

code of conduct for all MMS employees. 

On September 16, 2009, the Secretary of the Interior announced a transitional phase-out of the 

Royalty in Kind (RIK) Program. Under the RIK Phase-Out Plan, as current RIK oil and natural 

gas sales contracts expire, the oil and natural gas properties will revert to in-value status. As this 

transitional phase-out occurs, royalty obligations will revert from being collected in-kind to 

being collected in-value. This transition has significant impacts on the MMS budget that are 

outlined in FY 2011 Budget Highlights below and in the Compliance and Asset Management 

section. 

14 Minerals Management Service 
 

 

General Statement 

The RPC Subcommittee on Royalty Management report was issued on December 17, 2007. The 

report contains 110 recommendations. Of the 110 recommendations, MMS is solely responsible 

for 70 and BLM is solely responsible for 16. The remaining 24 recommendations require 

coordination among the bureaus and the Department. As of January 15, 2010, 72 of the 110 

recommendations have been completed and actions on the remaining 38 recommendations are 

underway. 

On April 15, 2009 the OIG issued a report entitled Evaluation of Royalty Recommendations 

Made to the Department of the Interior Fiscal Year 2006 – February 2009 (CR-EV-MOA-0003-

2009). This evaluation covered the 137 royalty-related recommendations from OIG, GAO, and 

the RPC Subcommittee that were made to MMS since FY 2006. The evaluation report stated 

that a sample of the actions taken was appropriate and approved. Furthermore, the report stated 

that the internal status reported in the DOI tracking system is current and accurate. The report 

did not make any new recommendations to MMS. 

Audit and Compliance Risk Strategy 

Through its audit and compliance activities, MMS ensures that the Nation’s Federal and Indian 

mineral revenues, whether received through in-kind or in-value, are accurately reported and paid 

in compliance with laws, regulations, and lease terms. The MMS plans and conducts targeted 

and random audits and special reviews of energy companies to detect and collect royalty 

underpayments as well as overpayments. Primary audit and compliance activities include 

enforcing industry compliance with lease terms and regulations, issuing enforcement orders, and 

supporting the mineral revenue litigation and appeals processes. 

In FY 2009, MMS implemented a risk-based compliance strategy to select companies and 

properties for the FY 2009 audit and compliance work plan. The risk-based strategy is designed 

to gather valuable knowledge and information to increase property and company compliance 

coverage, while focusing on the highest risk properties and companies. A risk-based approach 

enables the MMS to consistently target those companies and properties at greater risk for 

underpayment. The MMS is maintaining a strong focus on high-dollar properties and companies 

and using the risk tool to determine whether a formal audit or compliance review is required. 

Minerals Management Service 15 
 

General Statement 

FY 2011 BUDGET HIGHLIGHTS 

The MMS FY 2011 budget request is designed to increase America’s energy security by 

supporting the Administration’s aggressive renewable energy goals and Secretarial Order 3285, 

which established the production, development, and delivery of renewable energy as a top 

priority for the Department. The request contains an increase of $3.5 million to continue the 

development of an offshore renewable energy program to facilitate industry access to the 

abundant sources of offshore renewable energy and help ensure that today’s energy problems are 

solved with continued American innovation and leadership. The request continues a balanced 

and environmentally responsible conventional energy program with an increase of $4.4 million 

to ensure that fair value is received for offshore energy resources and that the increasing numbers 

of deepwater production facilities receive mandated inspections. This increase is offset by the 

redirection of $2.0 million from Environmental Studies funding. Lower priority oil and gas 

studies will be deferred or cancelled. The request also includes $1.0 million to support the 

significant role MMS will have in implementing the President’s goal of developing a coastal and 

marine spatial planning framework. 

The MMS FY 2011 budget request also emphasizes upgrading royalty management and includes 

a $10.0 million increase in appropriated funds for the transitional phase-out of RIK, which will 

be offset by an equivalent reduction in outlays from receipts used previously to fund RIK 

activities; $1.7 million to enhance the capabilities and integration of compliance tools; and an 

additional $2.0 million for compliance, valuation, and market research staff to ensure proper 

royalty payments on processed and transported natural gas. 

The MMS Royalty and Offshore Minerals Management account has traditionally been credited 

with offsetting collections to help defray the cost of MMS operations. These include certain 

rental receipts and cost recovery fees. The 2010 budget included a new inspection fee on each 

OCS above-water oil and gas facility that is subject to inspection. The FY 2011 budget request 

proposes increasing this fee by $10 million to further offset the cost of conducting inspections. 

The MMS FY 2011 budget request does not include an increase for anticipated increases in fixed 

costs in 2011. The MMS will absorb these costs through increased efficiencies within individual 

programs. 

16 Minerals Management Service 
 

 

 

 

General Statement 

Table 4: FY 2011 Analysis of Budgetary Changes ($000) 

Budget/Program Change FTE Adjustments Balance 

FY 2010 ENACTED - Direct Appropriations 181,520 

FY 2011 Initiatives/Budget Adjustments 

Renewable Energy 

Ensure Fair Market Value & Safe Operations 

Environmental Studies Redirection 

Marine Spatial Planning 

Transition to Royalty in Value* 

Ensure Proper Royalties Paid on Processed & Transported 

Natural Gas 

Enhance Capabilities and Integration of Compliance Tools 

Inspection Fee ** 

Center for Marine Resources and Environmental 

Technology 

DOI-Wide Changes (SAVE Award) 

+14 

+10 

+4 

[+34] 

+12 

+3,500 

+4,430 

-2,000 

+1,000 

+10,000 

+2,000 

+1,717 

-10,000 

-900 

-1,377 

+40 +8,370 

FY 2011 REQUEST - Direct Appropriations 189,890 

*Brackets indicate a non-add. Existing staff are being transitioned from in-kind to in-value activities and no 

additional FTE are requested. 

**The proposed increase in the inspection fee reduces the need to seek additional appropriations to fund budget 

increases. 

The following discretionary funding increases and decreases are proposed: 

Renewable Energy (+$3,500,000; +14 FTE): This multi-faceted initiative sets the stage for 

MMS to work with applicants for offshore renewable energy/alternative use projects, with a 

focus on specific needs in the Atlantic and Pacific regions. This includes staffing an Atlantic 

Renewable Energy Office that will manage leasing and operational activities associated with 

developing the exceptional wind resources found in the OCS North and Mid-Atlantic Planning 

Areas. A significant increase in workload is expected in both the Atlantic and Pacific Regions 

for conducting environmental reviews, processing commercial leases, coordinating with 

stakeholders, and conducting inspection and enforcement activities. 

Ensure Fair Market Value & Safe Operations (+$4,430,000; +10 FTE): This initiative will 

invest in the systems and people necessary to thoroughly assess the oil and gas potential and fair 

market value of OCS tracts offered for lease through purchase of critical software, hardware, 

data, and additional analysis staff. In addition, increased deepwater activity continues to present 

challenges related to ensuring safe operations. At the end of 2008, there were 141 producing 

Minerals Management Service 17 
 

 

 

 

General Statement 

projects in the deepwater GOM, up from 130 at the end of 2007. From 2009 through 2011, 

MMS expects 15 new and 4 upgraded ultra-deepwater rigs to be added to the fleet of deepwater 

rigs operating in the GOM. These ultra-deepwater rigs will be the most technically advanced 

drilling rigs in the world and MMS staff will need more time for transportation to and inspection 

of these rigs. 

Environmental Studies Redirection (-$2,000,000; 0 FTE): The Ensure Fair Market Value and 

Safe Operations initiative requires the redirection of $2.0 million from Environmental Studies 

funding. Lower priority oil and gas studies will be deferred or cancelled. 

Marine Spatial Planning (+$1,000,000; +4 FTE): The proposed initiative will enable MMS to 

coordinate Coastal and Marine Spatial Planning (CMSP) efforts within and outside the Agency, 

determine information and data needs, and make sure these needs are met to effectively 

implement CMSP policy. Coordination of CMSP with other OCS users and regulators is 

becoming more important as new uses and potential conflicts grow. With oil and natural gas, 

renewable energy, marine minerals, shipping/navigation, military uses, fishing, and others, 

competing for space on the OCS, it is becoming more important to coordinate the growing 

demand for multiple uses of the OCS. This function is critical to the integrity of the 5-Year 

Leasing Program that inherently balances these various competing interests and determines the 

size, timing, and location of leasing activity on the OCS. This initiative will complement MMS’s 

FY 2010 Multipurpose Marine Cadastre initiative, a marine information system that brings 

together data layers about environmental, physical, political, and social aspects of the OCS. In a 

single, interactively generated map, users will be able to see all official boundaries, rights, 

restrictions, and responsibilities in State and Federal waters. The MMS is coordinating and 

collaborating with many agencies and groups in the development and implementation of this 

cadastre. In FY 2011, support for Gulf of Mexico CMSP activities will be a significant focus of 

this initiative. 

Transition to Royalty in Value (+$10,000,000; [+34 FTE]): Upon termination of the RIK 

Program, the Secretary of the Interior directed MMS to “. . . ensure that the termination of the 

RIK program will not adversely affect the MMS’s commitment to ensure that the Nation’s 

Federal and Indian energy and mineral revenues are accurately reported and paid in 

compliance with laws, regulations and lease terms and that the American people receive fair 

market value for their valuable energy and mineral resources.” As RIK oil and natural gas sales 

contracts expire, RIK properties will revert to in-value status. MMS is requesting additional 

appropriated funds for the increased in-value resource needs resulting from this transition. This 

increase in appropriations will be offset by an equivalent reduction in outlays from receipts 

previously used to fund RIK activities. 

Ensure Proper Royalties Paid on Processed & Transported Natural Gas (+$2,000,000; +12 

FTE): This initiative will support the timely implementation of the RPC Subcommittee 

recommendations related to royalty compliance issues for gas plants and transportation costs and 

will improve the accuracy of gas plant information and increase audit and compliance coverage 

for transportation and processing systems. 

Enhance Capabilities and Integration of Compliance Tools (+$1,717,000; +0 FTE): This 2-

year initiative will result in a fully integrated and automated Compliance Program Tool for 

18 Minerals Management Service 
 

General Statement 

MRM, replacing and inter-relating various compliance management tools, which are currently 

offline and very manually intensive to use and maintain. Through this initiative, MMS will 

implement several overlapping recommendations from the Office of Inspector General (OIG), 

the Royalty Policy Committee, Subcommittee for Royalty Management (RPC Subcommittee), 

and the MRM Strategic Business Planning initiative. 

As a result of MMS’s analysis of base resources and current priorities, the request includes the 

following reductions and efficiencies: 

Inspection Fee: The Budget includes a $10 million increase in revenue resulting from 

increasing the inspection fee on above-water offshore facilities, first proposed in the President’s 

FY 2010 Budget, from $10 million to $20 million. 

Offsetting Collections from Rents and Cost Recoveries: For FY 2011, MMS requests to retain 

$154,890,000 of eligible offsetting rental receipts and cost recovery fees to defray the costs of 

the Bureau’s operations. This is a $1,840,000 decrease compared to the FY 2010 enacted level. 

This reduction is composed of a $340,000 reduction in eligible rental receipts, resulting from 

energy, leasing activity, and macroeconomic factors, and a $1,500,000 reduction in estimated 

cost recoveries due to refined estimates based on three years of cost recovery data. Offsetting 

rental receipts are allocated proportionally across MMS activities. Cost recovery fees solely 

impact the OEMM program. This reduction does not impact the MMS FY 2011 request for 

direct appropriations. 

Center for Marine Resources and Environmental Technology (CMRET) (-$900,000; -0 FTE): 

MMS proposes to eliminate the earmarked funding for the CMRET in order to redirect the 

funding to higher priorities. 

Department-Wide Changes (-$1,377,000;-0 FTE): 

In 2009, the President established the SAVE Award program, to challenge Federal employees 

across the government to submit their ideas for efficiencies and savings as part of the annual 

budget process. The goal of the SAVE Award is to produce ideas that will yield savings and 

improve government operations. The Department of the Interior received thousands of 

submissions on a variety of topics during the SAVE Award process which are being reviewed by 

the Bureaus. The FY 2011 budget assumes $62 million in savings from implementing SAVE 

Award proposals in three areas: travel, information technology, and strategic sourcing, which are 

described below. 

IT Reduction (-$480,000; - 0 FTE): The MMS’s Chief Information Officer (CIO) has been 

working collaboratively with the other Interior CIOs on an approach to achieve improved 

effectiveness and efficiencies in information technology. The Department anticipates savings 

from the Department-wide implementation of a common e-mail system and the consolidation of 

servers, data centers, and help desks. Although this is a multi-year effort, it is feasible to expect 

$20 million in savings in 2011, of which MMS’s share is $480,000. 

Secretary Salazar is committed to information technology reforms that will improve the 

effectiveness and efficiency of operations within the Department, including a common email 

Minerals Management Service 19 
 

General Statement 

system. Detailed planning information exists from earlier efforts to deploy a common email 

system that provides a foundation for an accelerated effort, beginning in the current fiscal year. 

The Department has conducted inventories and evaluations of servers, data centers, and help 

desks. All of the information indicates significant potential savings from the consolidation and 

reduction of this infrastructure. The Department will be working throughout FY 2010 to develop 

plans, begin deployments, and implement changes so as to realize savings beginning in FY 2011. 

Travel Reduction (-$402,000; -0 FTE): The MMS is participating in a Department-wide effort to 

reduce travel and relocation expenditures through adoption of new technologies and efficiency 

improvements accounting. Bureaus are implementing new teleconferencing, videoconferencing, 

shared Web sites, and other technologies that will enable real-time communications and shared 

access to documents that will enable more meetings to be conducted remotely and electronically. 

The proposed reduction also includes a decrease in funding for permanent change-of-station 

expenses, in response to an Office of Inspector General finding that suggests a need for greater 

control over management of these costs. The overall travel reduction would decrease the 

Department’s spending on travel and relocation to a level commensurate with actual 2008 travel 

and relocation expenditures. 

Acquisition Reduction (-$261,000; - 0 FTE): The MMS has been working collaboratively with 

other acquisition offices across the Department to prepare an Acquisition Improvement Plan. The 

Administration’s acquisition savings program allows agencies to redirect savings to other 

mission objectives, and Interior is proposing a reduction of $30 million in real savings to help 

offset other program priorities in the budget request, of which MMS’s share is $261,000. One 

option for achieving this savings is the expanded use of strategic sourcing. Currently, strategic 

sourcing is used for enterprise acquisitions for software and hardware. Expansion of strategic 

sourcing to other types of acquisitions has the potential to achieve additional savings for the 

bureaus and offices in Interior. The Office of Acquisition and Property Management, working 

with a team of bureau representatives, has developed a set of options for strategic sourcing, 

including: telecommunications, relocations, copiers/printers, heavy equipment, recycled paper, 

shuttle services, furniture, wireless communications, and training. Currently, participation by the 

bureaus is optional. 

The Department has a track record with successful strategic sourcing and plans to expand its use 

based on the advice and guidance from the Strategic Sourcing Executive Council. During 2010, 

DOI would develop its plans and begin to implement expanded strategic sourcing to realize the 

targeted savings in 2011. To achieve this level of savings, all of the bureaus would be required to 

participate. Department leadership is committed to participation in this initiative. The savings 

realized from this initiative would be included in the Department’s Acquisition Improvement 

Plan. 

Competitive Sourcing Reductions (-$185,000; -0 FTE): Through 2009, the Department was 

directed to identify amounts allocated for the costs of competitive sourcing studies. The 2011 

budget proposes to reduce the budget by $185,000 for MMS comparable to the amount that was 

identified for competitive sourcing. The primary use of these funds was related to contract 

support to help design and conduct the studies. With completion of competitive sourcing studies 

and implementation of the results, a funding decrease of $185,000 is proposed for this activity in 

2011. 

20 Minerals Management Service 
 

General Statement 

Web-Based Meetings (-$33,000; -0 FTE): This reduction is in addition to the Department-wide 

travel reduction due to MMS’s aggressive utilization of a number of web-based technologies 

which reduce the need for physical meetings and trainings. 

Fixed Costs and Related Changes [WCF Adjustment] (-$16,000; -0 FTE): To provide the 

maximum funding possible for priority program needs, the FY 2011 President’s Budget Request 

does not include an increase for anticipated increases in fixed costs in FY 2011 (estimated at 

$4.01 million). Programs will absorb these costs. Details on the estimates for FY 2011 fixed 

costs absorptions are included in Appendix A. Pay and benefits related costs will be absorbed by 

the programs proportional to the numbers of FTE employed. Rent cost increases will be absorbed 

by the programs occupying rental space. 

There is a $16,000 reduction in the FY 2011 Working Capital Fund (WCF) bill compared to FY 

2010. The FY 2011 President’s Budget is reduced accordingly. 

Mandatory Proposals and Other Reforms in the FY 2011 Budget: 

Fee on Nonproducing Oil and Gas Leases: The Budget assumes a proposal that is part of an 

Administration initiative to encourage energy development on lands and waters leased for 

development. A $4.00 per acre fee on non-producing Federal leases on lands and waters would 

provide a financial incentive for oil and gas companies to either get their leases into production 

or relinquish them so that the tracts can be re-leased to and developed by new parties. The 

proposed $4.00 per acre fee would apply to all new leases and would be indexed annually. In 

October 2008, the Government Accountability Office issued a report critical of past efforts by 

the Department of the Interior to ensure that companies diligently develop their Federal leases. 

Although the GAO report focused on administrative actions that the Department could 

undertake, this proposal requires legislative action. This proposal is similar to other nonproducing fee proposals considered by the Congress in the last several years. This will result in 

savings of $8.0 million in 2011 and $760.0 million over ten years. 

Deep Gas and Deepwater Incentives: The budget proposes to repeal Section 344 of the Energy 

Policy Act of 2005. Section 344 extended existing deep gas incentives. Based on current oil and 

gas price projections, the budget does not assume savings from this change; however, the 

proposal could generate savings to the Treasury if future oil and gas prices fall below current 

projections to levels at or under the applicable gas price thresholds. 

PERFORMANCE SUMMARY 

The mission of MMS is to manage the ocean energy and mineral resources on the Outer 

Continental Shelf and Federal and American Indian mineral revenues to enhance both public and 

trust benefits, promote responsible use, and realize fair value. 

The FY 2011 budget request of $364.8 million provides the resources needed to conduct MMS’s 

leasing, resource evaluation, regulatory, and asset management activities. The proposal also 

supports MMS’s Renewable Energy/Alternate Use program and its efforts to develop the 

Nation’s offshore renewable energy resources in an environmentally responsible manner that 

Minerals Management Service 21 
 

General Statement 

directly supports the Secretary’s High Priority Performance Goal for Renewable Energy Sources. 

Revenue management activities ensure proper collection, accounting, reporting, and timely 

disbursement of royalties. 

Performance Management 

In accordance with the Government Performance and Results Act of 1993 and with OMB policy 

and direction, the DOI Strategic Plan is currently undergoing the required triennial review and 

update. The Department is reviewing the organization and construct of the Strategic Plan in light 

of the Administration’s priorities, goals, and objectives. Although many of the end outcome 

goals and measures, intermediate measures, and other measures are expected to remain, the 

organizing principles for those goals and measures may change during this review. Therefore, 

this budget request does not directly reference the existing DOI Strategic Plan mission areas, but 

does continue to report on performance goals and accomplishments associated with the current 

slate of end outcome goals and related performance measures. 

The following are highlights of key MMS strategies for FY 2011. Additional performance 

information can be found within the Goal Performance Table. 

•	 Provide for access to energy and mineral resources: Conduct lease sales scheduled in 

the 5-Year Program (2007 to 2012); continue implementation of the Renewable Energy 

Program. 

•	 Ensure appropriate value for America’s resources: In FY 2009, MMS disbursed 

$10.68 billion in mineral revenues to states, the Office of the Special Trustee for 

American Indians (OST) for distribution to American Indian tribes and individual 

owners, other Federal agencies, and U.S. Treasury accounts. The distribution and 

disbursement function ensures that revenues are properly and timely disbursed to the 

appropriate recipients. In FY 2009, MMS achieved 99.5 percent timely disbursements. 

The FY 2010 target is 98 percent, and the FY 2011 target is 99 percent. During 2009, 

MMS implemented new compliance performance measures and targets, in response to 

OIG recommendations. The new measures replaced the previous revenue-focused 

compliance measure and focus on increased property and company compliance coverage. 

The properties and companies are primarily selected utilizing the new risk-based 

compliance strategy. 

•	 Effectively manage and provide for efficient access and development: The MMS 

conducted two lease sales in FY 2009 and plans to conduct four lease sales in FY 2010. 

The three scheduled sales in 2011 are Sale 216 (Central GOM), Sale 217 (Beaufort Sea), 

and Sale 218 (Western GOM). There is the potential for a fourth “special interest” sale in 

Alaska's Cook Inlet. 

•	 Enhance responsible use management practices: The MMS will continue to carry out 

a comprehensive program to ensure that mineral and renewable energy operations on the 

OCS are conducted in a safe and environmentally sound manner. To ensure safe and 

clean operations on the OCS, MMS routinely conducts compliance inspections. In FY 

2009, MMS conducted approximately 27,000 inspections in our Alaska, Pacific, and Gulf 

22 Minerals Management Service 
 

General Statement 

of Mexico Regions. This work has been instrumental in maintaining a high level of 

compliance among operators. These inspections are a significant part of the agency's 

efforts to ensure that offshore oil and gas activities can help meet our Nation’s energy 

needs while protecting industry workers and our Nation’s environment. In FY 2009, the 

MMS noted an estimated annual accident severity ratio of 0.15. The FY 2010 and FY 

2011 targets are 0.093 or less. This key indicator of responsible resource extraction 

activities monitors operator safety and environmental performance. During FY 2008, 

MMS achieved an estimated oil spill rate of 12.8 barrels spilled per million produced, the 

majority of which was due to damage from Hurricanes Gustav and Ike. During FY 2009, 

MMS achieved an estimated oil spill rate of 3.9 barrels spilled per million produced. The 

FY 2010 and FY 2011 performance targets are to achieve an operational oil spill rate of 

no more than 4.5 barrels spilled per million produced. 

•	 Increase the potential for production and transmission of renewable energy 

resources. In support of the Secretary’s High Priority Goal on renewable energy 

sources, MMS manages the Renewable Energy Program on the Federal OCS. In 

November 2009, MMS issued four limited leases for renewable energy testing and data 

collection on the OCS. In 2010, MMS plans to issue Requests for Interest (RFI) for 

commercial wind facilities offshore Delaware and Rhode Island. Massachusetts and 

New Jersey have also expressed interest in moving forward with RFIs off their respective 

states in FY 2010 once their State renewable energy assessment initiatives are complete. 

Performance for Key Increases 

The MMS proposal supports the President’s objectives for strengthening our energy security and 

ensuring fair return on energy and mineral assets. Proposed initiatives also contribute to the 

Administration’s emphasis on renewable energy and climate change. The FY 2011 funding 

increases will be used to: 

•	 Expand the OCS renewable energy program in the Atlantic and Pacific regions; 

•	 Initiate environmental studies to prepare for renewable energy lease issuances and for 

post lease environmental monitoring; 

•	 Maintain technological capabilities to evaluate offshore resources for fair market value; 

•	 Increase capabilities to inspect deepwater fixed and floating facilities; 

•	 Streamline and enhance production and gas plant accountability; 

•	 Increase risk-based audit/compliance coverage; 

•	 Enhance compliance tools integration and capability; and 

•	 Ensure proper royalties paid on transported and processed natural gas. 

One goal of MMS is to ensure that the country receives fair value by collecting, accounting for, 

substantiating, and disbursing mineral revenues associated with Federal and Indian lands. The 

proposed increases enable MMS to invest in financial management, audit, and compliance 

capabilities. These increases include: improving and streamlining production reporting, 

enhancing the oil and gas production accountability and verification processes, implementing a 

risk-based compliance strategy, and increasing property/company coverage. More information 

about these increases can be found within the MRM subactivity sections. 

Minerals Management Service 23 
 

General Statement 

The MMS also plays an important role in the Secretary’s and President Obama’s national energy 

strategy by securing OCS energy for the Nation. The requested funding increases enable MMS 

to continue its role in providing access to important national energy supplies. Some of these 

increases include: implementing the Renewable Energy Program, funding conventional energy 

needs, and upgrading royalty management. 

Renewable Energy High Priority Performance Goal 

The Renewable Energy Initiative supports the Renewable Energy High Priority Performance 

Goal (HPPG) and is key to the overall development of the Renewable Energy program. 

As with all programs, MMS management closely monitors the renewable energy program. One 

of the mechanisms used to monitor the renewable energy initiative and MMS’ contribution 

toward the renewable energy HPPG is via performance metrics. The Department is developing a 

set of internal measures and milestones to monitor and track achievement of the High Priority 

Performance Goals. Progress in these areas will be reported and reviewed throughout the year 

by the Deputy Secretary’s Operations Planning Group to identify and address any need for 

enhanced coordination or policy measures to address barriers to the achievement of the HPPG. 

The first step in the leasing process is to identify a proposed lease area and determine whether or 

not there is competition for that area. If MMS determines that there is competition, it will 

undertake an approximately 2-year public consultation and decision process. MMS tracks the 

number of formal actions it publishes in the Federal Register to initiate the leasing process for 

renewable energy (i.e., Requests for Interest). MMS intends to initiate three leasing processes 

for offshore development of renewable energy during FY 2010 and four in FY 2011. 

The MMS will issue two types of leases for renewable energy activities─ commercial leases for 

development and power generation or transmission; and limited leases for resource assessment 

and technology testing. MMS tracks the number of leases issued (both limited and commercial) 

for renewable energy activities. To issue commercial leases, MMS must conduct a multi-year, 

multi-step process entailing information gathering, consultation with interested and affected 

parties, NEPA review and compliance, and analysis in light of other applicable Federal 

requirements for each affected state. Because of this lengthy process, the number of commercial 

leases issued is not expected to significantly increase until FY 2012 and beyond. The number of 

leases issued is highly dependent on the amount of interest and demand for the leases. In 

November 2009, MMS issued four limited leases for testing and data collection on the OCS (3 in 

New Jersey and 1 in Delaware). 

Comprehensive environmental analyses are an essential but lengthy part of the overall OCS lease 

planning process. They are highly dependent on the level of interest in potential leasing areas 

and whether the lease issuance process will be competitive or non-competitive. 

The MMS recognizes the importance of coordinating and consulting with local and Federal 

stakeholders to develop a comprehensive renewable energy program for the OCS. MMS tracks 

coordination and consultation activities. During FY 2010, MMS anticipates eight cooperative 

planning and leasing efforts undertaken with relevant Federal agencies and affected state, local, 

24 Minerals Management Service 
 

General Statement 

and tribal governments. In the first quarter of FY 2010, five Federal/State Task Forces have been 

established. 

Process Improvements 

The MMS strives to maintain current levels of performance by: improving operational 

efficiencies; focusing resources on accomplishment of core mission work; leveraging resources 

to fund new workload demands; and reallocating funds to accomplish planned performance 

goals. The MMS will continue to pursue productivity and quality improvements for carrying out 

the mission while reducing its cost. 

The MMS effort to optimize resources to complete mission work is evident in MMS’s 

commitment to budget and performance integration. The MMS continues to refine cost and 

performance reporting capability to provide information to managers for improved decision 

making. In addition to MMS’s commitment to increase efficiency through the use of integrated 

budget and performance information, MMS also improves its management by working with the 

American public. The MMS continues to improve services to the public by listening closely to 

and working cooperatively with local citizens, tribal leaders, states, other Federal agencies and 

industry. Management reform and the fostering of public/private partnerships continue to be an 

integral part of MMS business operations. 

By working smarter through the development of business plans and use of performance and cost 

information, MMS is able to efficiently and effectively support accomplishment of its mission 

goals. 

Minerals Management Service 25 
 

 

 

General Statement 

Figure 5: MMS Organizational Chart 4 

4

 A formal reorganization proposal that includes an Atlantic OCS Regional Office is currently under review by the 

Department of the Interior. Following formal approval this chart will be amended. 

26 Minerals Management Service 
 

Bureau Level Performance Information 

Table 5: Goal Performance Table 

Minerals Management Service 27 
 

Bureau Level Performance Information 

 Minerals Management Service 28 
 

Bureau Level Performance Information 

Minerals Management Service 29 
 

Bureau Level Performance Information 

 Minerals Management Service 30 
 

Bureau Level Performance Information 

Minerals Management Service 31 
 

Bureau Level Performance Information 

 Minerals Management Service 32 
 

Bureau Level Performance Information 

Minerals Management Service 33 
 

Bureau Level Performance Information 

 Minerals Management Service 34 
 

Bureau Level Performance Information 

Minerals Management Service 35 
 

Bureau Level Performance Information 

 Minerals Management Service 36 
 

Bureau Level Performance Information 

Minerals Management Service 37 
 

Bureau Level Performance Information 

 Minerals Management Service 38 
 

Bureau Level Performance Information 

Minerals Management Service 39 
 

Bureau Level Performance Information 

 Minerals Management Service 40 
 

Bureau Level Performance Information 

Minerals Management Service 41 
 

Bureau Level Performance Information 

 Minerals Management Service 42 
 

Bureau Level Performance Information 

Minerals Management Service 43 
 

Bureau Level Performance Information 

 Minerals Management Service 44 
 

Bureau Level Performance Information 

Minerals Management Service 45 
 

Bureau Level Performance Information 

 Minerals Management Service 46 
 

Bureau Level Budget Tables 

Table 6: Budget At A Glance - MMS Activity/Subactivity Funding

(dollars in thousands) 

Offshore Energy and Minerals

Management

Renewable Energy a/

Leasing & Environmental 

Resource Evaluation Regulatory Program Information Management 

Total OEMM 

FY 2009 

Enacted 

FY 2010 

Enacted 

2011 Initiatives 

2011 President's

Request 

RIV 

Transition 

Ensure Fair

Market Value and 

Safe Operations 

Enhance 

Capabilities & 

Integration of 

Compliance Tools 

Renewable 

Energy 

Marine S patial 

Planning 

Ensure Pro per

Royalties Paid on

Processed & 

Transported

Natural Gas 

DOI-Wide 

Changes CMRET 

Offsetting

Collections 

54,963 

33,698 

57,268 

20,270 

21,413 

59,461 

35,285 

60,261 

20,454 

-1,150 

+2,680 

+900 

+2,500 

+1,000 +1,000 

-73

-203 

-117 -205 

-900 

-205 

-568

-329

-576 

23,635 

59,540 

36,619 

60,380 

20,454 

166,199 196,874 0 +2,430 0 +3,500 +1,000 0 -598 -900 -1,678 200,628 

Minerals Revenue Management 

Compliance & Asset Mgmt Revenue & Operations 

Total MRM 

47,965 

38,719 

50,940 

38,434 

+7,077 

+879 

+1,717 +1,850 -150 

-226 -117 

61,434 

38,970 

86,684 89,374 +7,956 0 +1,717 0 0 +1,850 -376 0 -117 100,404 

General Administration

Executive Direction 

Policy & Mgmt Improvemt Administrative Operations 

General Support Services 

Total GA 

2,741 

4,236 

17,654 

26,589 

2,818 

4,328 

20,029 

28,524 

+394 

+102 

1,013 

+535 

+150 

-14-16

-335 

-38 

-2 -3 

-7 

-33 

3,196 4,411 

20,850 

28,988 

51,220 55,699 +2,044 0 0 0 0 +150 -403 0 -45 57,445 

ROMM 

Offsetting Collections Oil Spill Research 

Minerals Management Service 

304,103 

-146,730 

6,303 

341,947 

-166,730 

6,303 

+10,000 +2,430 +1,717 +3,500 +1,000 +2,000 -1,377 -900 -1,840 

-8,160 

358,477 

-174,890 

6,303 

163,676 181,520 +10,000 +2,430 +1,717 +3,500 +1,000 +2,000 -1,377 -900 -10,000 189,890 

a/ To reflect OEMM's new authority and responsibility for OCS renewable energy, MMS has established a new subactivity, Renewable Energy, in FY 2010. Environmental studies for renewable energy will continue to be funded from the Leasing and 

Environment subactivity as these studies may benefit both the Oil & Gas and Renewable Energy Programs. 

Minerals Management Service 47 
 

 

 

Bureau Level Budget Tables Tab FTE ($000) FTE ($000) 

0 54 9,840 +14 +2,427 

-205 0 13,795 0 -205 

5 54 23,635 +14 +2,222 

0 231 25,602 +4 +647 

Offsetting Collections 0 34,506 0 34,506 0 0 0 0 0 -568 0 33,938 0 -568 

Subtotal 235 54,963 227 59,461 0 -203 4 +850 0 -568 231 59,540 4 +79 

Resource Evaluation

Appropriation 218 19,572 218 21,159 0 -117 +4 +1,780 0 0 222 22,822 +4 +1,663 

Offsetting Collections 0 14,126 0 14,126 0 0 0 0 0 -329 0 13,797 0 -329 

Subtotal 218 33,698 218 35,285 0 -117 +4 +1,780 0 -329 222 36,619 4 +1,334 

Regulatory

Appropriation 325 36,219 324 29,212 0 -205 +6 +900 0 -10,000 330 19,907 +6 -9,305 

Offsetting Collections 0 21,049 0 21,049 0 0 0 0 -576 0 20,473 0 -576 

Inspection Fee 0 0 0 10,000 0 0 0 0 0 +10,000 0 20,000 0 +10,000 

Subtotal 325 57,268 324 60,261 0 -205 +6 +900 0 -576 330 60,380 +6 +119 

Information Management

Appropriation 64 721 64 9,205 0 0 0 0 0 0 64 9,205 0 0 

Offsetting Collections 0 19,549 0 11,249 0 0 0 0 0 0 0 11,249 0 0 

Subtotal 64 20,270 64 20,454 0 0 0 0 0 0 64 20,454 0 0 

Total OEMM 

Appropriation 842 76,969 873 91,944 0 -598 +28 +6,030 0 -10,000 901 87,376 28 -4,568 

Offsetting Collections 0 89,230 0 104,930 0 0 0 0 0 +8,322 0 113,252 0 +8,322 

Total 842 166,199 873 196,874 0 -598 +28 +6,030 0 -1,678 901 200,628 +28 +3,754 

O 

Inc(+)Dec(-)

From 2010 

2011

President's

Request 

le 7: Summary of Requirements Table - Royalty and Offshore Minerals Management (ROMM)

FTE ($000) FTE ($000) FTE ($000) FTE ($000) FTE ($000) 

Renewable Energy

Appropriation 0 0 40 7,413 0 -73 +14 +2,500 0 

Offsetting Collections 0 0 0 14,000 0 0 0 0 0 

Subtotal NA NA 40 21,413 0 -73 +14 +2,500 0 -20 

Leasing & Environmental

Appropriation 235 20,457 227 24,955 0 -203 4 +850 0 

Changes Changes 

Programmatic Offsetting 

DOI-Wide Changes ffshore Energy and Minerals 

Management (OEMM) 

2009 Collections 

Enacted 

2010

Enacted 

Minerals Management Service 48 
Bureau Level Budget Tables 

Table 7: Summary of Requirements Table - ROMM (continued)

FTE ($000) FTE ($000) FTE ($000) FTE ($000) FTE ($000) FTE ($000) FTE ($000) 

Compliance & Asset Mgmt

Appropriation 377 26,465 398 27,887 0 -150 +11 +10,644 0 0 409 38,381 +11 +10,494 

Offsetting Collections 0 21,500 0 23,053 0 0 0 0 0 0 0 23,053 0 0 

Subtotal 377 47,965 398 50,940 0 -150 +11 +10,644 0 0 409 61,434 11 +10,494 

Revenue & Operations

Appropriation 173 18,719 177 16,883 0 -226 0 +879 0 0 177 17,536 0 +653 

Offsetting Collections 0 20,000 0 21,551 0 0 0 0 0 -117 0 21,434 0 -117 

Subtotal 173 38,719 177 38,434 0 -226 0 +879 0 -117 177 38,970 0 +536 

Total MRM

Appropriation 550 45,184 575 44,770 0 -376 +11 +11,523 0 0 586 55,917 +11 +11,147 

Offsetting Collections 0 41,500 0 44,604 0 0 0 0 0 -117 0 44,487 0 -117 

Total 550 86,684 575 89,374 0 -376 +11 +11,523 0 -117 586 100,404 +11 +11,030 

2011

Request 

President's 

Changes Changes Enacted 

2009 Minerals Revenue Management 

(MRM) 

Dec(-) 

Programmatic Offsetting 

DOI-Wide Changes Collections 

From 2010 Enacted 

Inc(+) 

2010 

Minerals Management Service 49 
 

Bureau Level Budget Tables Table 7: Summary of Requirements Table - ROMM (continued) FTE ($000) FTE ($000) FTE ($000) FTE * ($000) FTE ($000) 

Executive Direction

Appropriation 27 1,741 27 1,818 0 -14 0 +394 0 

Offsetting Collections 0 1,000 0 1,000 0 0 0 0 0 

Changes Changes 

Offsetting 

DOI-Wide Changes Collections 

Enacted 

2010 

Programmatic

General Administration

(GA) Enacted 

2009 

FTE ($000) FTE ($000) 

0 27 2,198 0 +380 

-2 0 998 0 -2 

Subtotal 27 2,741 27 2,818 0 -14 0 +394 0 -2 27 3,196 0 +378 

Policy & Mgmt Improvement

Appropriation 31 3,236 31 3,328 0 -16 0 +102 0 0 31 3,414 0 +86 

Offsetting Collections 0 1,000 0 1,000 0 0 0 0 0 -3 0 997 0 -3 

Subtotal 31 4,236 31 4,328 0 -16 0 +102 0 -3 31 4,411 0 +83 

Admin Operations

Appropriation 153 16,099 160 17,474 0 -335 +1 +1,163 0 0 161 18,302 +1 +828 

Offsetting Collections 0 1,555 0 2,555 0 0 0 0 0 -7 0 2,548 0 -7 

Subtotal 153 17,654 160 20,029 0 -335 +1 +1,163 0 -7 161 20,850 +1 +821 

Gen Support Services

Appropriation 0 14,144 0 15,883 0 -38 0 +535 0 0 0 16,380 0 +497 

Offsetting Collections 0 12,445 0 12,641 0 0 0 0 0 -33 0 12,608 0 -33 

Subtotal 0 26,589 0 28,524 0 -38 0 +535 0 -33 0 28,988 0 +464 

Total General Administration

Appropriation 211 35,220 218 38,503 0 -403 +1 +2,194 0 0 219 40,294 +1 +1,791 

Offsetting Collections 0 16,000 0 17,196 0 0 0 0 0 -45 0 17,151 0 -45 

Total 211 51,220 218 55,699 0 -403 +1 +2,194 0 -45 219 57,445 +1 +1,746 

Total ROMM FTE ($000) FTE ($000) FTE ($000) FTE ($000) FTE ($000) FTE ($000) FTE ($000) 

Appropriation 1,603 157,373 1,666 175,217 0 -1,377 +40 +19,747 0 -10,000 1,706 183,587 40 +8,370 

Offsetting Receipts 0 146,730 0 166,730 0 0 0 0 0 +8,160 0 174,890 0 +8,160 

Total 1,603 304,103 1,666 341,947 0 -1,377 +40 +19,747 0 -1,840 1,706 358,477 +40 +16,530 

2011

President's

Request 

Inc(+)Dec(-)

From 2010 

Minerals Management Service 50 
 

 

Bureau Level Budget Tables 

Table 8: Summary of Requirements Table - Oil Spill Research (OSR)

Oil Spill Research 2009 Enacted 2010 Enacted Changes DOI-Wide 

Programmatic 

Changes 

Changes 

Offsetting 

Collections 

2011

President's

Request

Inc(+)Dec(-)

From 2010 

FTE ($000) FTE ($000) FTE ($000) FTE * ($000) FTE ($000) FTE ($000) FTE ($000) 

Appropriation 

Offsetting Collections 

18 

0 

6,303 

0 

18 

0 

6,303 

0 

00 

00 

00 

00 

00 

00 

18 

0 

6,303 

0 

00 

00 

Total 18 6,303 18 6,303 0 0 0 0 0 0 18 6,303 0 0 

Table 9: Summary of Requirements Table - Total MMS Funding

Total MMS Enacted 2009 2010 Enacted DOI-Wide Changes Changes 

Programmatic 

Collections 

Changes 

Offsetting 

President's

Request 

2011 Inc(+)

Dec(-)

From 2010 

FTE * ($000) FTE * ($000) FTE ($000) FTE * ($000) FTE ($000) FTE* ($000) FTE * ($000) 

ROMM Direct Appropriation 

OSR Appropriation 

Total Appropriated 

Offsetting Collections 

1,603 

18 

1,621 

0 

157,373 

6,303 

163,676 

146,730 

1,666 

18 

1,684 

0 

175,217 

6,303 

181,520 

166,730 

0

0

0

0 

-1,377 

0

-1,377 

0 

+40 

0

+40 

0 

19,747 

0

19,747 

0 

0

0

0

0 

-10,000 

0

-10,000 

+8,160 

1,706 

18 

1,724 

0 

183,587 

6,303 

189,890 

174,890 

+40 

0

+40 

0 

+8,370 

0

+8,370 

+8,160 

Total 1,621 310,406 1,704 348,250 0 -1,377 +40 +19,747 0 -1,840 1,724 364,780 +40 +16,530 

* This table does not include FTE in the Coastal Impact Assistance Program (CIAP), a mandatory account for 2009, 2010, or 2011. 

Minerals Management Service 51 
 

Bureau Level Budget Tables 

This page intentionally left blank. 

Minerals Management Service 52 
 

 

Offshore Energy and Minerals Management (OEMM) 

FY 2011 PERFORMANCE BUDGET REQUEST 

Offshore Energy and Minerals Management 

Table 10: Offshore Energy and Minerals Management Summary of Budget Request 

Offshore Energy and Minerals 

Management (OEMM) 2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Renewable Energy ($000) 

FTE 

NA 

NA 

21,413 

40 

-73 

0 

2,295 

14 

23,635 

54 

2,222 

14 

Leasing and 

Environmental 

($000) 

FTE 

54,963 

235 

59,461 

227 

-203 

0 

282 

4 

59,540 

231 

79 

4 

Resource Evaluation ($000) 

FTE 

33,698 

218 

35,285 

218 

-117 

0 

1,451 

4 

36,619 

222 

1,334 

4 

Regulatory ($000) 

FTE 

57,268 

325 

60,261 

324 

-205 

0 

324 

6 

60,380 

330 

119 

6 

Information Management ($000) 

FTE 

20,270 

64 

20,454 

64 

0 

0 

0 

0 

20,454 

64 

0 

0 

Total, OCS Lands Act 

Activities 

($000) 

FTE 

166,199 

842 

196,874 

873 

-598 

0 

4,352 

28 

200,628 

901 

3,754 

28 

Other Major Resources 

Oil Spill Research 

Appropriation 1/ 

($000) 

FTE 

6,303 

18 

6,303 

18 

0 

0 

0 

0 

6,303 

18 

0 

0 

Coastal Impact Assistance 

Program 2/ 

($000) 

FTE 

250,000 

22 

250,000 

24 1/ Oil Spill Research is discussed under a separate tab. 

2/ Congress approved Coastal Impact Assistance Program (CIAP) for four years, FY 2007-FY 2010. While appropriation of new 

funds has ended, grant awards, administration, and monitoring will continue for several years. 

The Federal Outer Continental Shelf (OCS) is a major supplier of energy for the domestic 

market. In calendar year 2008, OCS leases offshore California, Alaska, and in the Gulf of 

Mexico provided 447 million barrels of oil and 2,327 billion cubic feet of natural gas, accounting 

for almost 25 percent of the Nation’s oil production and 11 percent of domestic natural gas 

production. 

The MMS is responsible for managing the Nation’s oil, natural gas, renewable energy, and other 

energy and mineral resources on the OCS. Within MMS, the Offshore Energy and Minerals 

Management program (OEMM) is responsible for OCS activities, which range from 

administering OCS leases and monitoring the safety of offshore facilities to protecting our 

coastal and marine environments. Through the work of OEMM, MMS manages the energy and 

mineral resources on 1.7 billion acres of the OCS offshore Alaska, the Atlantic and Pacific 

coasts, and in the Gulf of Mexico. OEMM is working to ensure that the OCS remains a solid 

contributor to the Nation’s energy needs through facilitation of a new offshore renewable energy 

industry, oil and gas development and careful regulation to provide for the conservation of 

nonrenewable resources. 

Minerals Management Service 53 
Offshore Energy and Minerals Management (OEMM) 

Interest in offshore oil and gas development remains extraordinarily strong. The eight lease 

sales scheduled and held through August 2009 under the 2007-2012 5-Year Program have 

brought in $10.8 billion dollars in bonus bids alone to the Nation’s Treasury. Three of these 

lease sales - two in the Central Gulf of Mexico and one in the Chukchi Sea - account for $9.1 

billion of this total. 

The MMS also manages the Renewable Energy Program on the Federal OCS. This authority 

was granted under the Energy Policy Act of 2005 (EPAct 2005). It added section 8(p) to the 

Outer Continental Shelf Lands Act (OCSLA), giving the Department the authority to grant 

leases, easements, or rights-of-way for activities on the OCS that produce or support production, 

transportation, or transmission of energy from sources other than oil and gas. Additionally, the 

Department was given the authority to grant leases, easements, or rights-of-way for other OCS 

activities that make alternate use of existing OCS facilities, such as research, education, 

recreation, and support for offshore facilities. On March 20, 2006, the Department delegated the 

authority to implement these new programs to the MMS. These authorities were further 

delegated to the offshore program. 

Given this new authority, MMS responded by altering its organization. To more accurately 

reflect the OCS energy-related components of our mission, the former name of Offshore 

Minerals Management (OMM) was changed to Offshore Energy and Minerals Management 

(OEMM). MMS also created an Office of Offshore Alternative Energy Programs to develop and 

implement policy and provide overall management of the OCS renewable energy leasing and 

operations programs. In FY 2010, a new Renewable Energy Program budget subactivity was 

established. The new office and budget structure raises the renewable energy program’s profile 

and best allows OEMM to meet the new statutory mandates and respond to unique needs of the 

regulated community. Also, on December 9, 2009, Secretary Salazar announced plans to 

establish an Atlantic Renewable Energy Regional Office. 

The Energy Policy Act of 2005 also established the Coastal Impact Assistance Program (CIAP), 

which authorizes funds to be distributed to coastal oil and gas producing states to conserve, 

protect and restore coastal areas and natural resources and mitigate the impacts of OCS oil and 

gas activities. OEMM administers this program through the approval of state plans and grant 

administration and monitoring. Congress approved appropriation of CIAP funds for four years, 

FY 2007 - FY 2010. While appropriation of new funds has ended, grant awards, administration, 

and monitoring will continue for several years. 

PROGRAM OVERVIEW 

The OEMM program manages the Nation’s Outer Continental Shelf (OCS) energy resources, 

both oil and gas and renewable energy, in consultation with affected parties to determine if they 

can be developed in an environmentally sound manner and, if leased, to regulate activities to 

ensure safety, conservation, and protection of the environment. It is headquartered in 

Washington, DC and Herndon, Virginia, with regional offices in three locations: (1) New 

Orleans, Louisiana, for the Gulf of Mexico OCS Region, including the Atlantic OCS area; (2) 

54 Minerals Management Service 
Offshore Energy and Minerals Management (OEMM) 

Camarillo, California, for the Pacific OCS Region; and (3) Anchorage, Alaska, for the Alaska 

OCS Region. 

The OEMM program oversees resource production on the OCS to ensure minimal environmental 

impacts and safe operations in mineral extraction and renewable energy activities. Leasing, 

inspections, plans and permits, and assessment activities account for the majority of the work 

that contributes to resource management on the OCS. 

In calendar year 2008, OCS leases offshore California, Alaska, and in the Gulf of Mexico 

provided 447 million barrels of oil and 2,327 billion cubic feet of natural gas, accounting for 

almost 25 percent of the Nation’s oil production and 11 percent of domestic natural gas 

production. 

The share of energy produced from the OCS will likely continue to grow over time because the 

OCS contains about 60 percent of the Nation's remaining undiscovered technically recoverable 

oil resources and 40 percent of its undiscovered natural gas resources. The MMS estimates that 

the OCS contains about 86 billion barrels of oil and 420 trillion cubic feet of natural gas in yetto-be discovered fields (2006). While the majority of this resource is in areas that were already 

open to leasing, significant resources are also located in areas that were under moratoria prior to 

October 2008. With the expiration of the annual Congressional moratoria, OCS areas with 

estimated technically recoverable resources of about 14 billion barrels of oil and 55 trillion cubic 

feet of gas are no longer subject to moratorium. Whether or how much of these areas to make 

available for development is under review as the Administration develops its comprehensive 

OCS energy strategy. 

Increasingly the Nation is turning to renewable energy as it reshapes its energy future. Great 

strides have been made towards development of renewable energy projects on the Federal OCS. 

The final regulatory framework was announced in April 2009. On June 23, 2009, MMS offered 

five noncompetitive Interim Policy (IP) limited leases offshore Delaware and New Jersey which 

would authorize meteorological and data gathering activities on the OCS from six to 18 miles 

offshore. Four leases were signed in November 2009 - three are offshore New Jersey, and one 

offshore Delaware. The fifth lease offering was declined. Another notable milestone occurred in 

September 2009, when MMS received its first two applications under its new regulatory 

structure for commercial leasing offshore the Atlantic coast. Also, MMS has now formed five 

Federal/State task forces to expedite additional renewable energy production; with at least three 

more anticipated in FY 2010. 

Conventional Energy 

Gulf of Mexico Deepwater Activities, and the first Floating Production, Storage, and 

Offloading Facility 

The strongest trend on the OCS today is the continuing development of the Gulf of Mexico 

(GOM) deepwater (i.e., more than 1,000 feet deep). The MMS Deepwater Gulf of Mexico 2009 

Report (www.gomr.mms.gov/PDFs/2009/2009-016.pdf) highlights the activities, offers trend 

analyses and describes technological advancements in this important portion of the GOM for 

Minerals Management Service 55 
Offshore Energy and Minerals Management (OEMM) 

2008. Deepwater has continued to be a very important part of the total GOM production, 

providing approximately 74 percent of the oil and 43 percent of the gas from the region in 2008 

(production data for all the Deepwater Reports is reported with a 1 year delay). In 2009, MMS 

approved 14 new technologies for use in the GOM deepwater for projects planned for first 

production from 2009 through 2011. 

The first oil production is expected in 2010 from the first floating production, storage, and 

offloading (FPSO) facility in the U.S. Gulf, the BW Pioneer vessel. It will develop the Cascade 

and Chinook Fields in the Walker Ridge area. This development project will utilize four 

technologies considered new to the U.S. Gulf, including free-standing hybrid risers to support 

subsea production flow lines from subsea wells, polyester mooring lines for the disconnectable 

floating production turret system that connects to the FPSO, electric submersible booster pumps 

to assist the flow of oil in subsea flow lines, and double-hulled shuttle tankers to transport oil 

production to U.S. Gulf Coast ports. The BW Pioneer FPSO will be able to disconnect from the 

moored floating turret system and sail out of the path of hurricanes moving into the Gulf. 

Another first for the Gulf will be the use of a ship-shape, floating production unit, the Helix 

Producer I vessel, for the Phoenix development in Green Canyon, with a planned production 

start in 2010. A disconnectable transfer system will be used to connect the subsea wells to the 

Helix Producer I, also a first for the U.S. Gulf. 

Another notable deepwater development, Perdido Regional Host, is one of the world’s deepest 

spars. Named for logs used as buoys in shipping and moored in place vertically, spar platforms 

are among the largest and most stable platforms in use in the Gulf of Mexico. It is designed to 

be nearly as tall as the Eiffel Tower, weigh as much as 10,000 family cars, and its moorings span 

an area of the seafloor roughly the size of downtown Houston. The Perdido Regional Host was 

designed to produce oil and gas from existing and potential fields within a 30 mile radius of the 

host facility in Alaminos Canyon Block 857. Installation of the topside drilling and production 

platform atop its 555-ft tall cylindrical spar was completed in March 2009 about 200 miles south 

of Freeport, Texas. The cylindrical spar floating in about 8,000 feet of water was installed and 

moored to the seafloor in August 2008. The Perdido Regional Host is designed with the capacity 

to process 130,000 barrels of oil equivalent per day with startup expected early 2010. 

In 2009, deepwater continued to play an important role in supplying our energy needs with 13 

deepwater discoveries announced and eight production start-ups from new deepwater projects in 

the Gulf including Chevron USA Inc’s Tahiti SPAR. Tahiti was installed in Green Canyon 641 

and started production in June 2009. According to Chevron, the Tahiti development is 

associated with over 400 million BOE of reserves. Another discovery announced in 2009 

includes BP’s Tiber project. The Tiber well is located about 250 miles south east of Houston at 

Keathley Canyon 102, and is the deepest well drilled to date in the GOM, with a measured depth 

of 35,055 feet. According to BP, it may contain up to 3 billion barrels of oil. Also in 2009, 

Mariner Energy announced a shallow water deep gas discovery with “more than 200 ft tvt (true 

vertical thickness) net gas pay in multiple zones” at the Smoothie #2 well on South Timbalier 

Block 49. 

56 Minerals Management Service 
Offshore Energy and Minerals Management (OEMM) 

Current OCS 5-Year Oil and Gas Leasing Program 

Sales under the current 2007-2012 Five-Year Oil and Gas Leasing Program have been very 

successful. To date, there have been eight lease sales in the Gulf of Mexico and Alaska planning 

areas resulting in high bids of $10.8 billion dollars. 

In the first quarter of FY 2010, MMS approved two separate exploration plans for Shell to drill 

up to two exploratory wells in the Beaufort Sea and up to three exploratory wells in the Chukchi 

Sea during the 2010 open water season. 

In July 2007, DOI was sued over various alleged deficiencies in the 5-Year Program for 2007-

2012. On April 17, 2009, the U.S. Court of Appeals for the District of Columbia ruled in favor of 

DOI in all but one issue. The Court vacated and remanded the Program on the single issue of the 

environmental sensitivity analysis. On May 11, 2009, the Department of Justice filed a Petition 

for Rehearing, seeking clarification of the Court's ruling, and an accompanying Declaration of 

the factual situation and the potential impacts of the ruling on the Program. On July 28, 2009, 

the Court issued an Order staying its mandate until DOI completed its environmental sensitivity 

analysis and balancing under section 18 of the OCS Lands Act. The Court also limited the April 

17 decision to three Alaska areas only--Chukchi Sea, Beaufort Sea, and North Aleutian Basin. 

Subsequently, MMS developed a new environmental sensitivity analysis and prepared an 

updated 2007-2012 Program decision document for review and decision by the Secretary. The 

Secretary is now reviewing the 2007-2012 decision document, and will decide what changes, if 

any, should be made to the Final Program. Once his decision is announced, following a 30-day 

public comment period, the Secretary will approve a final remanded Program, having taken into 

consideration all the comments received on the new analysis and required balancing. 

Next OCS 5-Year Oil and Gas Leasing Program 

In the summer of 2008, the previous Administration directed MMS to begin the initial steps for 

developing a new 5-Year Program. On August 1, 2008, MMS published a Federal Register 

Notice requesting information on whether to start a new program and what areas should or 

should not be included in a new program. More than 152,000 comments from the general public 

and nearly 200 comments from state and local governments, Congress, other Federal agencies, 

environmental and other interest groups, and energy and non-energy businesses and associations 

were received regarding the next 5-Year Program for oil and gas leasing on the OCS. 

The development and publication of the Draft Proposed Program (DPP) on January 16, 2009 was 

the second step in a multi-year process to develop a new oil and gas leasing program. The DPP 

sought public comment on all aspects of the new 5-Year Program, including energy development 

and economic and environmental issues in the OCS areas. The DPP is designed to encourage 

discussions about the OCS areas of greatest interest and potential. Any new areas that would be 

included in the final program will not be available for leasing until the 5-Year Program has been 

completed and approved, because no area can be leased without being included in the then 

current approved 5-Year Program. 

Minerals Management Service 57 
Offshore Energy and Minerals Management (OEMM) 

In February 2009, Secretary Salazar announced his strategy for developing an offshore energy 

plan that includes conventional and renewable energy resources. As part of his plan, the 

comment period for the DPP was extended for an additional 180 days to September 21, 2009, in 

order to provide additional time for input from states, stakeholders and affected communities. 

Following the closing of the comment period, all comments were summarized and categorized, 

and provided to the Secretary, who is currently examining options for a new 5-Year leasing 

program. 

Also at the direction of Secretary Salazar, the MMS worked with the U.S. Geological Survey to 

assemble a report on offshore resources along with information regarding sensitive areas and 

resources on the OCS. This report synthesized the vast knowledge-base on OCS energy 

resources and environmental factors in one concise document. The report was delivered to the 

Secretary at the end of March 2009. Following publication of the report, the Secretary 

conducted four regional meetings, covering the Atlantic Coast on April 6 in Atlantic City, NJ; 

Gulf Coast, on April 8 in New Orleans, LA; Alaska on April 14 in Anchorage, AK; and, Pacific 

Coast on April 16 in San Francisco, CA in an effort to gain insight and comment from all 

stakeholders of OCS energy. Substantive comments received at these meetings were 

summarized, and will be considered in the Secretary’s decision. 

Renewable Energy 

The OCS also has significant potential as a source of new production from renewable energy 

resources. Section 388 of the Energy Policy Act of 2005 (EPAct 2005) grants the Department 

and MMS new responsibilities over Federal offshore renewable energy and related-uses of the 

OCS. These projects include wind, wave, ocean current, solar energy, and hydrogen generation 

projects, as well as projects that make alternative use of existing oil and natural gas platforms in 

Federal waters. 

Technology and Resource Testing 

The MMS completed a Programmatic Environmental Impact Statement (EIS) in November 

2007, which examines the interface between the marine and human environment and the 

technologies and activities that generate energy from ocean renewable energy resources. Also 

published was an interim policy for Offshore Renewable Energy Resource Assessment and 

Technology Testing Activities. The interim policy invited the public to nominate areas of the 

OCS in which MMS would consider awarding limited leases that authorize data collection and 

technology testing. The interim policy was developed as a means to jumpstart resource data 

collection and technology testing activities on the OCS in advance of the final regulations. 

MMS received more than 40 nominations of areas proposed for limited leasing off the West and 

East coasts. In April 2008, based on a set of criteria including geographical and resource balance 

(e.g., East, West; wind, wave, ocean current) MMS identified a subset of 16 proposed lease areas 

for priority consideration and provided public notice of those areas for the purpose of 

determining competitive interest, as required by the Energy Policy Act of 2005, and also for 

58 Minerals Management Service 
Offshore Energy and Minerals Management (OEMM) 

receiving relevant environmental or other information. MMS received applications for six of the 

16 proposed lease areas (offshore Delaware, New Jersey, and Florida). 

On June 23, 2009, MMS offered five noncompetitive Interim Policy (IP) limited leases offshore 

Delaware and New Jersey that would authorize the installation of meteorological and data 

gathering equipment on the OCS from six to 18 miles offshore. Four of the leases were signed 

and effective November 2009. The fifth lease offering was declined. 

Regulatory Framework and Commercial Leasing 

On April 22, 2009, President Barack Obama announced that the MMS finalized the regulatory 

framework for renewable energy generation on the OCS. The framework establishes an MMS 

program to issue leases, easements, and rights-of-way for orderly, safe, and environmentally 

responsible renewable energy development activities, such as the siting and construction of 

offshore wind facilities on the OCS. Just prior to the announcement, the Interior Department and 

the Federal Energy Regulatory Commission (FERC) signed an agreement that clarified 

jurisdictional responsibilities for leasing and licensing renewable energy projects on the OCS. 

Under the agreement, the MMS has exclusive jurisdiction with regard to the production, 

transportation, or transmission of energy from non-hydrokinetic renewable energy projects, 

including wind and solar. FERC will have exclusive jurisdiction to issue licenses for the 

construction and operation of hydrokinetic projects, including wave and current, but companies 

will be required to first obtain a lease through MMS. 

MMS is currently planning to initiate commercial leasing activities offshore Delaware, New 

Jersey, Rhode Island, Massachusetts, and Virginia in 2010 and has established Federal/State task 

forces with these states to help inform MMS leasing decisions. The first task force meetings 

were held in fall 2009. The publication of the Requests for Interest (RFIs) for these states could 

take place as early as the first quarter of 2010. 

Other states that have requested that MMS formally institute Federal/State task forces include 

Maryland, New York, Florida, and South Carolina. These states are evaluating their options for 

moving forward with commercial development under the new renewable energy framework in 

line with their individual and respective state renewable energy siting initiatives/plans. 

Industry has also expressed interest in creating an Atlantic coast transmission highway located 

primarily on the OCS. The transmission line would be designed to handle large amounts of 

electricity generated from offshore wind and would connect offshore wind facilities to 

substations in states along the Atlantic coast. The transmission line would require a renewable 

energy right-of-way (ROW) to be issued by MMS. Also in the Atlantic, MMS received in 

September 2009 its first two commercial leasing requests for renewable energy off the coast of 

Virginia. 

The MMS is also evaluating the proposed Cape Wind Energy Project identified by the Energy 

Policy Act of 2005. The Final EIS, which assesses the physical, biological and social/human 

impacts of the proposed Cape Wind Energy Project and all reasonable alternatives and proposed 

mitigation, was announced on January 16, 2009. MMS is in the process of completing Section 

Minerals Management Service 59 
 

Offshore Energy and Minerals Management (OEMM) 

106 consultations under the National Historic Preservation Act. Once consultations are complete 

MMS will issue a Record of Decision (ROD) for the project. The Secretary of the Interior has 

announced his intent to reach a final decision on the project by the end of April 2010. 

In FY 2010, MMS anticipates a substantial increase in work in support of leasing OCS sites for 

the commercial generation and transmission of renewable energy, in direct relation to the efforts 

of coastal states to meet tangible goals established in the form of renewable energy portfolio 

standards (RPSs). This includes activities occurring beyond those applicable to the Mid and 

North Atlantic coasts discussed above. Elsewhere in the mid to North Atlantic, MMS is 

discussing with North Carolina the formation of a possible task force there in anticipation of 

future commercial leasing activities, and is also coordinating with Maine on renewable energy 

issues related to offshore wind. In the South Atlantic, MMS could issue up to six interim policy 

limited leases for resource assessment or technology testing: three leases for meteorological 

towers offshore Georgia and three leases for ocean current technology testing offshore the 

southeastern coast of Florida. Additionally, Florida and South Carolina have requested task 

forces and initial meetings are likely to be held in the second quarter of FY 2010. On the West 

Coast, MMS is coordinating with California, Oregon, and Washington on renewable energy 

planning issues through the West Coast Governors’ Agreement. Areas of interest there are ocean 

wave and wind-generated electricity. Also MMS participates on the state of Hawaii’s evaluation 

committee, reviewing proposals for a joint Federal/State EIS covering an inter-island cable that 

will transmit wind-generated electricity among Oahu, Molokai, Lanai, and Maui. 

Marine Spatial Planning 

“With the ever-expanding uses of coastal and ocean areas there is a need now, more than ever 

before, to consider the entire range of uses and users. From the basic concept of their value as 

ecosystems and habitats to their economic importance to communities, a more comprehensive 

approach must be taken during planning and decision making processes. Today, this approach is 

referred to as Coastal and Marine Spatial Planning, or CMSP.” 1 

Coastal and Marine Spatial Planning (CMSP) was identified as a priority by the President when 

he established the Interagency Ocean Policy Task Force (Task Force) on June 9, 2009. The Task 

Force has submitted a draft “Interim Framework for Coastal and Marine Spatial Planning” that 

defines CMSP as a “comprehensive, adaptive, integrated, ecosystem-based, and transparent 

spatial planning process, based on sound science, for analyzing current and anticipated uses of 

ocean, coastal, and Great Lakes areas”. The Minerals Management Service is the only agency 

authorized to grant renewable energy, marine mineral (sand and gravel) and oil and gas leases on 

the Outer Continental Shelf and therefore plays an integral role in the CMSP process. 

MMS has, for many years, used the principles of CMSP in carrying out is day-to-day regulatory 

and stewardship responsibilities. In its final report, An Ocean Blueprint for the 21st Century, the 

U.S. Commission on Ocean Policy found that the OCS oil and gas program”.... has a well 

institutionalized and reasonably comprehensive management regime and ....seeks to balance the 

1

 MMS Ocean Science, Volume 6, Issue 4, October/November/December 2009 

60 Minerals Management Service 
Offshore Energy and Minerals Management (OEMM) 

many competing interests involved in offshore energy activity...”. One specific example of this 

adaptive and ecosystem-based approach is MMS’ collaborative approach to its leasing process 

that includes other Federal, state, and local agencies, and other stakeholders, to identify and 

minimize user conflicts, protect the environment, and balance multiple needs. 

The MMS also updates and advances information that guides its stewardship of the ocean 

environment. For example, in cooperation with NOAA and other Federal agencies, MMS led the 

development of the Multipurpose Marine Cadastre (MMC). The MMC is a web-based spatial 

information system that shows how a particular marine area is being used, the legal boundaries, 

and more. It also allows us to “see” what natural resources, habitats, ecosystems, and species are 

in that area. 

MMS will continue its long standing practice of employing CMSP principals in its stewardship 

of the Nation’s energy resources. 

Coastal Impact Assistance Program 

OEMM administers the Coastal Impact Assistance Program (CIAP) that was authorized by the 

Energy Policy Act of 2005. It provided $250 million annually, from 2007-2010, to coastal oil 

and gas producing states to conserve, protect and restore coastal areas and natural resources and 

mitigate the impacts of OCS oil and gas activities. Funding for the administration of the 

program was provided through appropriations, with three percent of the annual program 

allocation provided in Fiscal Years 2007-2009, and 4 percent in 2010. While appropriation of 

new funds has ended, activities, such as grant awards and monitoring, will continue for several 

years. 

All states have begun submitting grant applications. As of December 30, 2009, 216 grant 

applications for $203.2 million have been received, and 102 grants have been awarded for a total 

of $131.4 million. 

 The ongoing workload now consists of amendments to state Plans, grant project submittals, 

amendments, or modifications of ongoing projects, and monitoring of projects. Some grant 

closeouts have occurred already as well. All versions of the multiple Plans and grants require 

additional technical review. The MMS utilizes a number of specialized staff to manage the 

CIAP grant process. Among them are Regional Project Officers, Grant Officers, and Fiscal 

Administrators. More information on the CIAP program can be found at 

http://www.mms.gov/offshore/CIAPmain.htm. 

Minerals Management Service 61 
 

Offshore Energy and Minerals Management (OEMM) 

BUDGET OVERVIEW 

Congress appropriates funds to the OEMM program through the Royalty and Offshore Minerals 

Management (ROMM) appropriation, and the Oil Spill Research (OSR) appropriation. 

Within the ROMM appropriation, OEMM has five subactivities that roll up to the OCS Lands 

Activity. These are Renewable Energy (REN), Leasing and Environmental (LE); Resource 

Evaluation (RE); Regulatory (RG); and the Information Management Program (IMP). 

•	 The Renewable Energy Subactivity funds: program implementation and development; 

environmental analysis, assessment, compliance work needed to plan and effect 

competitive and non-competitive leasing actions; consultation with state and local 

governments, Federal agencies, and other stakeholders; and development of a 

multipurpose marine cadastre. 

•	 The Leasing and Environmental Subactivity includes: 5-Year Program implementation, 

planning and execution; assessment of environmental impacts; protecting the coastal 

environment; protecting the OCS through compliance with guiding statutes; the Marine 

Minerals Program; and the Environmental Studies Program, which also supports the 

Renewable Energy Program. 

•	 The Resource Evaluation Subactivity includes: acquisition of geological and geophysical 

data; development and implementation of the Resource Modeling Program, including 

resource assessment and estimation; tract evaluations; field reserves inventories; and, 

economic analysis. 

•	 The Regulatory Subactivity includes: regulating OCS operations; review of OCS plans 

and permit applications; inspections and accident investigations; civil penalties and 

operator disqualification; operator training programs; annual operator performance 

reviews; management of reservoirs to maximize ultimate recovery of mineral resources; 

verification of oil and gas production levels to help ensure the public receives a fair 

return; and the Technology Assessment and Research Program. 

•	 The Information Management Program Subactivity funds: IT personnel support; shared 

services; hardware, software, training, and security activities; maintenance and technical 

support; the Technical Information Management System; and OCS Connect. 

The Oil Spill Research (OSR) appropriation funds oil spill research, oil spill prevention and 

response planning activities, and regulation of oil spill financial responsibility to support the 

Department’s strategy of enhancing responsible use management practices in the energy sector. 

Through OSR, MMS funds studies to support safe and environmentally sound offshore 

operations and to promote responsible use by improving capabilities to detect, contain, and clean 

up open ocean oil spills. 

62 Minerals Management Service 
 

 

Offshore Energy and Minerals Management (OEMM) 

FY 2011 Budget Request: In FY 2011, OEMM’s net OCS Lands Act Activities request is 

$3.8 million and 28 FTE greater than the FY 2010 enacted budget. This figure represents 

increases of $8.9 million for new and priority program funding requirements, offset by 

programmatic decreases of $5.2 million, for a net program increase of $3.8 million. Please see 

the table below for a listing of OEMM’s budgetary changes. 

Table 11: OEMM Program Request Compared to FY 2010 

Request Component Subactivity Amount FTE 

Program Changes 

• Renewable Energy 

Total 

Leasing & Environmental 

Renewable Energy 

+3,500,000 

+1,000,000 

+2,500,000 

+14 

+0 

+14 

• Fair Market Value & Safe 

Operations 

Total 

Leasing & Environmental 

Resource Evaluation 

Regulatory 

+4,430,000 

+850,000 

+2,680,000 

+900,000 

+10 

+0 

+4 

+6 

• Marine Spatial Planning Total 

Leasing & Environmental 

+1,000,000 

+1,000,000 

+4 

• Subtotal – OEMM Increases +8,930,000 +28 

• Environmental Studies Total 

Leasing & Environmental 

-2,000,000 

-2,000,000 

-0 

• Efficiencies & Offsetting Collections Total 

Renewable Energy 

Leasing & Environmental 

Resource Evaluation 

Regulatory 

-2,276,000 

-278,000 

-771,000 

-446,000 

-781,000 

-0 

• CMRET Total 

Resource Evaluation 

-900,000 

-900,000 

0 

0 

• Subtotal – OEMM Decreases -5,176,000 -0 

• Total, Program Changes +3,754,000 +28 

Fair Market Value and Safe Operations: Assuring receipt of Fair Market Value on OCS lands 

is mandated by the OCS Land Act and its amendments and remains a critical responsibility of the 

Resource Evaluation Program. Regional offices, in conjunction with headquarters oversight, 

perform the functions necessary to thoroughly assess the oil and gas potential and fair market 

value of OCS tracts offered for lease. The FY 2011 budget request includes funding to ensure 

fair market valuation of oil and gas resources and continued safe operations on the Federal Outer 

Continental Shelf. 

Minerals Management Service 63 
 

Offshore Energy and Minerals Management (OEMM) 

Table 12: Summary of Fair Market Value and Safe Operations – All OEMM Subactivities 

($000) FTE Short Description 

Program-Wide 2,650 1 

FMV Database Development 1,300 1 

Database development, design, and maintenance to support 

critical fair market value business processes (RE) 

FMV System Upgrades 500 0 

Contractor support to implement software upgrades and modify 

current MMS applications using ARC-GIS (RE) 

Block and Boundary Support 850 0 

MMS has unique functional requirements that are not available in a 

commercial off-the-shelf (COTS) GIS program. Integration of GIS 

software with the TIMS database is needed so that existing TIMS 

programs used by other MMS units will continue to be supported. 

(LEA) 

Gulf of Mexico 900 6 

Inspectors 900 6 

Additional inspectors to address the current and anticipated 

increase in deepwater fixed and floating facilities and the number 

of components that must be inspected offshore. ($900K) (RG) 

Alaska 880 3 

Geosciences 450 3 

Geologic assessments, FMV determinations, and technology 

training (RE) 

GIT 430 0 

Geological Interpretive technology tools and software licenses 

(RE) 

Ensure FMV & Safe Operations 4,430 10 

Environmental Studies 

Redirection -2,000 0 

Lower priority oil and gas studies will be discontinued to focus on 

the higher priority program activities listed above. 

Total Ensure FMV & Safe 

Operations 2,430 10 

Renewable Energy: To continue development and implementation of the Outer Continental 

Shelf (OCS) renewable energy program, $3,500,000 and 14 FTE is requested. 

MMS has established a firm foundation for its program. The final Renewable Energy regulatory 

framework was published in the Federal Register on April 29, 2009. We have made great strides 

in coordinating and consulting with our counterparts in the Federal, state, local, and tribal 

government bodies throughout the rulemaking effort, the development of studies and research 

plans, and most notably, in implementing the interim policy. Four interim policy leases were 

signed and effective in November 2009. 

Now that the program regulatory framework is complete, MMS needs to focus its attention to 

those regions of the country where activity is most likely to take place. More than half of the 

country’s identified offshore wind potential is located off the New England and Mid-Atlantic 

Coasts, where water depths deepen gradually with distance from the shore. A staff dedicated to 

working with states needs to be established to provide an easily accessible point of contact that is 

familiar with the state and local governments and sensitive to the issues and efforts underway in 

the region. Likewise, the Pacific Region expects that extensive stakeholder outreach, expansive 

and substantial analyses, and recruitment of disciplines specific to renewable energy activities 

will be required. On both coasts, environmental studies will be needed to support any 

consideration of conducting renewable energy activity on the OCS. At the same time the MMS 

64 Minerals Management Service 
 

Offshore Energy and Minerals Management (OEMM) 

Headquarters will need to conduct relevant environmental studies on issues that affect multiple 

coasts. 

The $24 million increase in MMS renewable energy funding in FY 2010 provided a strong 

foundation for the program, allowing MMS to add significant new staff and fund critical 

environmental studies that will support future agency permitting decisions. However, additional 

resources are requested in FY 2011 to meet the growing demands for the program moving 

forward. A detailed accounting of the requested increases are provided below, and explained in 

greater detail in the relevant subactivity discussion: 

Table 13: FY 2011 Renewable Energy Request – All OEMM Subactivities 

($000) FTE Short Description 

Atlantic/National Office 2,550 9 

Workforce 1,350 9 

Staff needed to support regional and national renewable energy 

activities. (REN) 

Environmental Studies 1,000 0 

Marine Mammals, Sea Turtles, Energy Market & Infrastructure, 

Seabirds, etc. (ESP/LEA) 

Inspection Services 200 0 Inspection activity of interim policy leases (REN) 

Pacific 950 5 

Workforce 750 5 

 Staff needed to support regional renewable energy activities, 

including leasing and electrical engineering disciplines. (REN) 

Task Force Support 200 0 

Needed for at least 3 Pacific states – California, Washington, 

Oregon (REN) 

Renewable Energy 3,500 14 

Marine Spatial Planning: CMSP will provide numerous ecological, social, and economic 

benefits. MMS is requesting $1,000,000 and 4 FTE to support the significant role MMS will 

have in implementing the President’s goal of developing a coastal and marine spatial planning 

framework. In FY 2011, support for Gulf of Mexico CMSP activities will be a significant focus 

of this initiative. Anticipated needs to support CMSP include funds for: 

•	 2 CMSP Coordinators 

•	 1 CMSP Environmental Scientist 

•	 1 CMSP Geospatial Scientist 

•	 Cost sharing projects with other Federal and state bodies; data acquisition, distribution, 

and quality control; electronic archiving and coordination support costs. 

Table 14: FY 2011 Marine Spatial Planning 

($000) FTE Short Description 

Workforce 600 4 

2 CMSP Coordinators, 1 CMSP Environmental Scientist, and 1 

CMSP Geospatial Scientist (LEA) 

CMSP Projects and Data Needs 400 0 

Cost Sharing Projects with Federal and state agencies, data 

acquisition, sharing, coordination, quality control (LEA) 

Marine Spatial Planning 1,000 4 

Minerals Management Service 65 
 

 

Offshore Energy and Minerals Management (OEMM) 

PERFORMANCE OVERVIEW 

The OEMM budget request supports the accomplishment of the Department’s strategic goals. 

Key performance indicators of the program’s success include holding OCS lease sales on 

schedule, ensuring safety of operations, and minimizing oil spills. 

OEMM End Outputs - The OEMM continues to work toward integrating its budget and 

performance data. As part of these efforts, OEMM is collecting, reviewing, and analyzing 

Activity-Based Cost (ABC) data to examine how OEMM activities consume resources and 

produce outputs, whether changes in cost correlate to changes in output, and whether the 

information confirms perceptions of where program dollars are being invested. OEMM ABC 

data is shown in the following figure, which illustrates program dollars spent in end output 

categories established in the ABC framework: 

CIAP Administration 

4% Plans and Permits 

Approved 

25% 

Conservation 

Assessments 

4% 

Leases Issued 

18% 

Compliance 

Inspections 

24% 

Assessed and 

Evaluated 

20% 

Other* 

4% 

Renewable Energy 

Blocks/ Tracts 

1% 

* Includes: Lease Administrative Changes, Production Verifications, Environmental 

 Compliance Assessments, Incident Investigations, Civil Penalty Cases 

Figure 6: Approximate Distribution of 2009 Costs by End Output 

66 Minerals Management Service 
 

 

OEMM-Renewable Energy 

FY 2011 PERFORMANCE BUDGET REQUEST 

Offshore Energy and Minerals Management 

Renewable Energy Subactivity 

Table 15: OEMM Renewable Energy Subactivity Budget Summary 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Renewable Energy ($000) 

FTE 

NA 

NA 

21,413 

40 

-73 

0 

2,295 

14 

23,635 

54 

2,222 

14 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Components ($000) FTE 

Program Changes 

• Renewable Energy +$2,500 +14 

• Department-Wide Changes -73 +0 

• Offsetting Collections Reductions -205 0 

Total, Program Changes +2,222 +14 

The entire renewable energy initiative totals $3.5 million. Of this amount, $2.5 million and 14 

FTE are requested in the Renewable Energy subactivity and $1.0 million in the Leasing and 

Environmental subactivity. A program-wide chart can be viewed in the OEMM Overview. 

JUSTIFICATION OF FY 2011 PROGRAM CHANGES 

The FY 2011 budget request for the Renewable Energy Subactivity is $23.6 million and 

54 FTE, a net program increase of $2.2 million and 14 FTE from the FY 2010 enacted budget. 

Renewable Energy (+$2,500,000; +14 FTE) 

In FY 2010, the President’s Budget requested resources needed to start development and 

implementation of a national renewable energy program. Prior to FY 2010, modest funding was 

used primarily for salaries and limited environmental work needed to establish a regulatory 

framework for the renewable energy program, which was completed in FY 2009. With the 

regulatory framework in place, MMS requested in the FY 2010 budget the resources needed to 

begin building a robust national program. The MMS has made great strides in moving towards 

the goals it established for itself in FY 2010, and these accomplishments are discussed in the FY 

2011 Program Performance section. 

In FY 2011, MMS is requesting only those additional funds needed to shift its attention towards 

region-specific needs in frontier areas. The FY 2011 request will provide for the development of 

regional expertise and coordination for frontier areas; knowledge of local resources; local 

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OEMM-Renewable Energy 

stakeholder consultation and collaboration; and development of substantial and expansive 

region-specific environmental analysis. These efforts will enable MMS to further identify and 

address any major challenges to issuing commercial leases for generation of renewable energy 

by increasing its visibility and accessibility to major stakeholders. 

The request will focus on funding Atlantic/Pacific specific needs, including increasing the 

capacity of the Atlantic Renewable Energy Office. The Atlantic Renewable Energy Office will 

lead pre and post-lease activities associated with developing the exceptional wind resources 

found in the OCS Mid and North Atlantic Planning Areas, driven in part by the demands of 

coastal states’ aggressive endeavors to meet renewable portfolio standards (RPS). An RPS is a 

regulation that requires the increased production of energy from renewable energy sources, such 

as wind, solar, biomass, and geothermal. The RPS mechanism generally places an obligation on 

electricity supply companies to produce a specified fraction of their electricity from renewable 

energy sources. Likewise, funding is needed for similar leasing and environmental activities on 

the west coast offshore California, Oregon, Washington and the state of Hawaii, which is 

currently discussing with MMS the placement of an inter-island transmission cable. 

Resource Needs 

Atlantic and National Offices (+$1,550,000; + 9 FTE) 

More than half of the country’s identified offshore wind potential is located off the New England 

and Mid-Atlantic Coasts, where water depths generally deepen gradually with distance from the 

shore. On December 9, 2009, Secretary Salazar announced plans to establish an Atlantic 

Renewable Energy Regional Office. Given the extent and magnitude of activity in Mid and 

North Atlantic, a dedicated regional staff will provide all Atlantic states with an easily accessible 

point of contact that is familiar with the state and local governments and sensitive to the issues 

and efforts underway in the region. The new office will enable MMS to be better situated to 

enable renewable energy development activities in an effective, efficient and consistent manner 

while being responsive to the states and developers. Additional positions will be needed to 

complete staffing of the National Office. The number and type of disciplines to be allocated 

between the Atlantic and National office will be finalized in the coming months, as the national 

program matures and regional activity increases. 

The Atlantic staff included in this request will lead preleasing and leasing activities for the 

Atlantic seaboard. During the transition to a fully functional Atlantic Regional Office, and 

subsequent funding for post-lease activities, the Gulf of Mexico office will provide post-lease 

technical expertise as needed using existing resources. This arrangement will support consistent 

and reliable interaction with states and stakeholders based on localized knowledge of the 

resources, issues and processes affecting renewable energy development in these areas and make 

optimal use of existing resources. 

To address and administer the rapid expansion of renewable energy activities occurring in all 

coastal states (Atlantic and Pacific) on a National basis, the MMS must further develop its 

National Office, or the Renewable Energy Division. The National office for renewable energy is 

expected to be positioned to address a wide range of policy issues related to this burgeoning 

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OEMM-Renewable Energy 

industry. The National office would serve as headquarters for MMS renewable energy activities, 

providing leadership, direction and guidance for all MMS regional offices involved with 

renewable energy activities. Additional staff is needed to build out staffing of the National 

Office. Currently, staff dedicated to oil and gas related work functions are assuming similar roles 

for renewable energy. 

The MMS anticipates the need for FTEs representing some or all of the following disciplines: 

data management and analysis, economic analysis, ocean engineering, environmental studies 

management, program analysis, FOIA, budget, and leasing adjudication. MMS anticipates there 

will be a modest need for inspection activity by 2011. 

Pacific Region (+$950,000; + 5 FTE) 

In FY 2011, MMS anticipates a significant increase in work required to implement the 

Renewable Energy Program on the West Coast and Hawaii. Since the area for each of these 

activities is considered to be the frontier for OCS renewable energy, extensive stakeholder 

involvement will be necessary, along with substantial and expansive analyses, to fulfill MMS 

responsibilities under the OCS Lands Act (OCSLA), as amended by the Energy Policy Act of 

2005, and various environmental laws and regulations. Resources requested include: 

•	 Workforce ($750,000; 5 FTE). FTE to support increased workload. This estimate includes 

disciplines such as leasing, electrical engineering, program analysis, and records 

management. 

•	 Task Force Support ($200,000). An Offshore Renewable Energy Task Force is needed for 

the Pacific states (California, Oregon and Washington), including tribal governments, to 

ensure that the full spectrum of agencies are involved in advising MMS about the interests 

and issues, and to define a “way forward” for providing access to OCS renewable energy 

resources. 

Environmental Studies: In addition to the above, MMS is requesting $1,000,000 in the Leasing 

and Environmental subactivity for studies needed to prepare for lease issuance and/or post lease 

environmental monitoring in the Atlantic and/or the Pacific offices. 

Performance Change Statement: 

The need to diversify and identify viable additional energy resources is a major priority for the 

American public and the Administration. This initiative will help MMS accelerate the use of the 

OCS to develop renewable energy sources while enabling MMS to maximize its responsiveness 

and efficiency to state, industry and stakeholder requests concerning renewable energy 

development on the OCS. 

The requested funding will enable MMS to initiate commercial lease sales and noncompetitive 

lease issuances in the Atlantic where development is anticipated to occur. 

The MMS plans to issue a Request for Interest (RFI) for commercial wind facilities offshore 

New Jersey, Delaware, Maryland and Virginia in FY 2010. Rhode Island and Massachusetts 

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OEMM-Renewable Energy 

have expressed interest in moving forward with an RFI off their respective states in FY 2010 

when their state renewable energy siting initiatives are complete. 

Funding will enable MMS to form task forces to work closely with Federal and state agencies 

and elected leaders of local and tribal governments to address OCS renewable energy issues at a 

high level. These activities will include development of Marine Spatial Planning efforts on the 

east and west coasts. Task forces have been established with New Jersey, Massachusetts, Rhode 

Island, Delaware, and Virginia. The governors of South Carolina, Maryland and New York have 

formally requested that MMS facilitate formation of State Task Forces. North Carolina has had 

discussions with the MMS regarding Task Force formation in anticipation of future commercial 

leasing activities. 

MMS will also be able to address its legislative mandate to ensure safe and sound operations by 

conducting inspections and enforcement activities of renewable energy technology testing and 

resource data collection facilities (meteorological towers) that are anticipated to be installed in 

spring/summer 2010 as a result of limited leases issued in FY 2009 and FY 2010 off the Atlantic. 

Renewable energy facilities/structures are new to the United States and it is imperative that 

thorough inspections are conducted from the beginning and a comprehensive approach to 

inspecting commercial facilities is developed. 

The areal extent for renewable energy technology continues to expand as technological 

improvements allow for renewable energy development to be sited in deeper water and new 

technologies come-on-line. Funding would allow MMS to continue to conduct needed baseline 

studies, monitoring studies and issue-specific studies, ensuring leasing decisions are based on 

sound science. 

If MMS does not address the needs for renewable energy projects, the government will not be 

responsive to OCSLA and the Energy Policy Act of 2005. Requests from industry for leases will 

not be processed in an orderly manner and revenues anticipated from associated activities could 

be lost. Moreover, MMS would hinder greatly the ability for states to meet their RPSs, 

particularly those with prime renewable energy resources located offshore their coasts. 

PROGRAM OVERVIEW 

The Outer Continental Shelf (OCS) has significant potential as a source of new domestic energy 

generation from renewable energy resources. Section 388 of the Energy Policy Act of 2005 gave 

the Secretary of the Interior the lead over Federal offshore renewable energy and alternate uses 

of the OCS. These renewable energy and alternate use projects include wind, wave, current, 

solar energy, and hydrogen generation projects, as well as projects that make alternative use of 

existing oil and natural gas platforms in Federal waters. On March 20, 2006, the Department 

delegated the authority to implement these new programs to MMS. 

Subsequent to passage of the Act, the Federal Energy Regulatory Commission (FERC) expressed 

concern regarding jurisdictional responsibilities governing hydrokinetic projects in Federal 

waters. On April 9, 2009, the Interior Department and the Federal Energy Regulatory 

Commission (FERC) signed an agreement that clarified their agencies’ jurisdictional 

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responsibilities for leasing and licensing renewable energy projects on the OCS. Under the 

agreement, the MMS has exclusive jurisdiction with regard to the production, transportation, or 

transmission of energy from non-hydrokinetic renewable energy projects, including wind and 

solar. FERC will have exclusive jurisdiction to issue licenses for the construction and operation 

of hydrokinetic projects, including wave and current, but companies will be required to first 

obtain a lease through MMS. 

On April 22, 2009, President Barack Obama announced that the MMS finalized the framework 

for renewable energy generation on the OCS. The framework establishes a MMS program to 

issue leases, easements, and rights-of-way for orderly, safe, and environmentally responsible 

renewable energy development activities, such as the siting and construction of offshore wind 

facilities on the OCS. 

MMS activities include: 

•	 Program implementation; 

•	 Environmental analysis, assessment, and compliance for both competitive and noncompetitive lease sales; 

•	 Conducting environmental studies to establish baseline information and determine the 

environmental effects from renewable energy development activities; and 

•	 Consultation with state and local and tribal governments, Federal agencies, and other 

stakeholders. 

PERFORMANCE OVERVIEW 

Alternative Energy/Alternate Use Program: The MMS authority for the Outer Continental 

Shelf (OCS) Alternative Energy and Alternate Use program under Section 388 of the Energy 

Policy Act of 2005 (PL 109-58) is important for future U.S. energy supplies. Under this 

authority, MMS will regulate renewable energy projects and alternate use of existing oil and gas 

platforms on the OCS. Renewable energy includes wind, wave, solar, ocean current, and 

generation of hydrogen. Alternate uses of existing facilities may include, but are not limited to, 

research, education, recreation, and support for offshore operations and facilities. Section 388 of 

the Energy Policy Act authorizes MMS to: 

•	 Ensure consultation with state and local governments, Federal agencies, and other 

stakeholders; 

•	 Ensure protection of the environment; 

•	 Grant easements, leases, or rights-of-way for alternate energy related uses of the Federal 

OCS; 

•	 Pursue appropriate enforcement actions in the event violations occur; 

•	 Require appropriate financial assurances to ensure that facilities constructed are properly 

removed at the end of their useful life; 

•	 Regulate, monitor, and determine fair return to the Nation; and 

•	 Ensure that appropriate revenue is shared with adjacent coastal states, as required by law. 

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OEMM-Renewable Energy 

The MMS completed a Programmatic Environmental Impact Statement (EIS) in November 2007 

that examined the interface between the marine and human environment and the technologies 

and activities that generate energy from ocean alternative energy resources. The final Renewable 

Energy regulatory framework was published in the Federal Register on April 29, 2009. 

MMS also announced in November 2007 the establishment of an interim policy for Offshore 

Alternative Energy Resource Assessment and Technology Testing Activities. The interim policy 

invited the public to nominate areas of the OCS in which MMS would consider awarding limited 

leases that authorize data collection and technology testing. The interim policy was developed as 

a measure to jumpstart resource data collection and technology testing activities on the OCS in 

advance of the final regulations. 

The Energy Policy Act of 2005 also directs the Secretary of the Interior, together with other 

agencies, to establish an OCS Mapping Initiative to assist in decision making related to 

renewable energy uses on the OCS. This initiative, also called the Multipurpose Marine 

Cadastre, is a multiyear endeavor that requires joint planning, interaction and commitment by 

Federal, state, local, territorial, and tribal entities working through public and private 

partnerships. The MMS has been working cooperatively with other Federal agencies to develop 

this information system, which is a repository of data such as the legal extents of authorities, and 

physical and cultural information in a common reference framework. This work is being 

facilitated through the efforts of the Federal Geographic Data Committee (FGDC)-Marine 

Boundary Working Group. 

The MMS, through the Energy Policy Act of 2005, also assumed responsibility for two existing 

offshore wind energy projects: the Cape Wind Energy project in the Nantucket Sound offshore 

Massachusetts, and the Long Island Offshore Wind Park offshore New York. 

With regard to the Long Island Offshore Wind Park, the Long Island Power Authority (LIPA) 

has been reevaluating its offshore wind park development strategy. The MMS will work with 

the State to address the disposition of the Long Island Offshore Wind Park project. 

For the Cape Wind Energy project, MMS published a Notice of Intent to prepare an EIS for the 

project in May 2006. The Draft EIS was published in the Federal Register on January 17, 2008 

and public hearings were held in March 2008. The final EIS was published on January 16, 2009. 

MMS is in the process of completing Section 106 consultation under the National Historic 

Preservation Act. Once consultations are complete, MMS will issue a Record of Decision 

(ROD) for the project. Secretary Salazar has announced his intent to reach a final decision on 

the project by the end of April 2010. 

Within its Activity-Based Costing (ABC) system, MMS is able to allocate expenses to the 

Renewable Energy activities and operations they support. Through FY 2009, the majority of 

spending for Renewable Energy has been focused on program development and environmental 

analysis and has been funded in other subactivities. As the program matures, more funding will 

be directed to providing access to the OCS for renewable energy activities as well as regulatory 

and compliance efforts. The following chart shows the estimated spending profile for FY 2009. 

Minerals Management Service 72 
 

 

 

OEMM-Renewable Energy 

REN Regulatory and 

Com pliance 

6% 

REN Environmental 

Analysis 

58% 

REN Program 

Managem ent 

36% 

Figure 7. Estimated FY 2009 Renewable Energy Spending Profile1 

FY 2011 PROGRAM PERFORMANCE – RENEWABLE ENERGY 

The MMS has made significant progress towards achieving the goals it established in the FY 

2010 President’s Budget Request. As of January 2010, the follow major activities have taken 

place: 

•	 Program Development and Implementation 

•	 Five Federal/State task forces have been established (Delaware, New Jersey, 

Rhode Island, Massachusetts, and Virginia) and meetings held in the fall of 2009. 

•	 Requests have been received from four other states (Maryland, New York, 

Florida, and South Carolina) to establish task forces and initiate discussions 

related to offshore renewable energy. 

•	 Recruitment of positions provided in the FY 2010 budget is well underway. A 

variety of position descriptions for professional and administrative support 

positions have already been classified. Positions have been, and are currently 

being, widely advertised through both competitive examining and merit 

promotion procedures. Many of the selectees are already on board and other 

positions are pending selections. 

•	 A Reorganization package to include the Atlantic Regional Office has been 

completed and is waiting approval. 

•	 Environmental Studies – Approximately 15 environmental studies are planned for FY 

2010, and most are expected to be awarded by the third quarter. 

1

 The funding for these activities was included in the Leasing and Environmental, Regulatory, and Resource 

Evaluation subactivities. 

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OEMM-Renewable Energy 

•	 Technology Assessment and Research Studies – All TAR studies scheduled for FY 2010 

have been awarded. 

•	 Multipurpose Marine Cadastre – the MOA with NOAA has been signed, and funds are 

scheduled to be provided to NOAA in February 2010 to begin work on the cadastre. 

•	 Block and Boundary Delineation Tool – Procurement award is pending a routine legal 

review. 

•	 Fair Market Return models – three of the four projects are pending procurement award 

and the statement of work for the fourth is under revision. 

•	 Development of Environmental Protocols and Monitoring - The MMS, under the 

National Ocean Partnership Program and in collaboration with NOAA and DOE, has 

released the Broad Agency Announcement (BAA): Developing Environmental Protocols 

and Monitoring to Support Ocean Renewable Energy and Stewardship. MMS anticipates 

award of up to $6.5 M in joint funding, over three to five years, to support needed work 

on relevant topics. Background information on NOPP can be found here: 

http://www.nopp.org and the actual BAA solicitation can be found at: 

http://www.mms.gov/adm/PFD/MMS_BAA_Final_29Dec09_Release_version.pdf 

Other milestone events in recent months include the signing of four Interim policy leases, three 

with New Jersey and one with Delaware, and the receipt of two commercial leasing requests for 

renewable energy off the coast of Virginia. 

Activities in FY 2011 will continue the momentum and projects begun in FY 2010. A 

substantial increase in work is expected to support leasing of OCS sites for the commercial 

generation of renewable energy, which can be categorized as follows. 

•	 Review of Renewable Energy Lease Proposals and Applications. While MMS cannot 

predict the exact number and locations of lease and Right-of-Way applications, it is likely 

that early interest in accessing OCS renewable energy resources will focus on the 

Atlantic and Pacific OCS areas and will result in the MMS initiating competitive and 

noncompetitive leasing processes. Several companies have approached MMS with wind, 

ocean wave and current energy and subsea power cable project proposals, and several 

states on both coasts have initiated efforts to accommodate offshore renewable energy 

development (e.g., New Jersey, Rhode Island, Massachusetts, Delaware, Virginia, 

Florida, California, Oregon, and Hawaii). Substantial environmental review associated 

with these lease applications and individual noncompetitive proposals will be necessary. 

This will also require extensive consultation with affected coastal states, tribal 

governments and regulatory agencies. 

•	 Preparation for Renewable Energy lease sales in FY 2011 - 2014. Work will continue 

to identify areas of competitive interest, contract environmental studies, interpret study 

results, prepare environmental compliance documents, reach out to stakeholders and 

interested parties, and begin the formal lease issuance process. 

•	 Post Lease Monitoring. MMS will need to plan and conduct post lease monitoring, 

inspection, and enforcement activities for the Interim Policy limited leases issued in FY 

2010, and the Cape Wind Offshore Wind Project, if approved. 

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OEMM-Renewable Energy 

In implementing an Alternative Energy/Alternate Use Program, MMS is committed to: 

•	 Protecting the environment and providing for safety of personnel and operations; 

•	 Cooperating, coordinating, and collaborating with others to manage the OCS resources; 

•	 Providing regulatory certainty and consistency; 

•	 Establishing a comprehensive framework for planning, permitting, and inspecting; 

•	 Providing for a fair return to the Nation for use of its resources; 

•	 Basing management decisions on detailed science and engineering reviews; and 

•	 Improving our understanding of ocean ecosystems to make sound OCS resource management 

decisions. 

In FY 2011, MMS will continue its efforts to establish a strong MMS presence in the Atlantic to 

be responsive to expected rapid development in the Mid and North Atlantic; to increase capacity 

and capabilities of MMS offices in the Pacific Region to respond to renewable energy 

development; and to continue its work on the Multi-purpose Marine Cadastre. 

The Renewable Energy Subactivity Performance Overview Table is shown on the following 

pages. 

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OEMM-Renewable Energy 

Table 16: OEMM Performance Overview – Renewable Energy 

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OEMM-Leasing and Environmental Subactivity 

FY 2011 PERFORMANCE BUDGET REQUEST 

Offshore Energy and Minerals Management 

Leasing and Environmental Subactivity 

Table 17: OEMM Leasing and Environmental Subactivity Budget Summary 

FY 2011 

Change 

DOI-Wide Program from 

2009 2010 Changes Changes Budget 2010 

Enacted Enacted (+/-) (+/-) Request (+/-) 

Leasing and Environmental ($000) 30,270 29,958 -203 1,282 31,037 1,079 

Assessment Program FTE 235 227 0 4 231 4 

($000) 24,693 29,503 0 -1,000 28,503 -1,000 

Environmental Studies Program FTE 0 0 0 0 0 0 

Leasing and Environmental ($000) 54,963 59,461 -203 282 59,540 79 

Subactivity FTE 235 227 0 4 231 4 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Components ($000) FTE 

Program Changes 

• Ensure Fair Market Value and Safe Operations +850 +0 

• Environmental Studies Reduction -2,000 +0 

• Renewable Energy – Environmental Studies +1,000 +0 

• Marine Spatial Planning +1,000 +4 

• Department-Wide Changes -203 +0 

• Offsetting Collections Reductions -568 +0 

Total, Program Changes +79 +4 

Additional resources for the Ensure Fair Market Value and Safe Operations are requested in the 

Resource Evaluation subactivity ($2.7 million; 4 FTE); and the Regulatory subactivity 

($900,000; 6 FTE). The initiative in its totality is for $4.4 million and 10 FTE. A detailed listing 

can be found in the OEMM Overview section. The cost of this initiative is partially offset by a 

$2.0 million reduction in Environmental Studies 

Additional resources for the Renewable Energy Initiative are also requested in the Renewable 

Energy Subactivity ($2.5M; 14 FTE). 

JUSTIFICATION OF FY 2011 PROGRAM CHANGES 

The FY 2011 budget request for the Leasing and Environmental Subactivity is $59.5 million and 

231 FTE, a net program increase of $0.08 million and 4 FTE from the FY 2010 enacted budget. 

Minerals Management Service 79 
 

OEMM-Leasing and Environmental Subactivity 

Ensure Fair Market Value and Safe Operations (+$850,000; +0 FTE) 

Assuring receipt of Fair Market Value on OCS lands is mandated by the OCS Land Act and its 

amendments and remains a critical responsibility of the Leasing and Environmental Program. 

Fair Market Value System Upgrades (+$850,000; +0 FTE): 

•	 Block and Boundary Support: $850,000; 0 FTE. Accurate offshore lease boundary lines 

are a foundational requirement for all MMS offshore leasing activities. Our current 

software for computing these boundaries and recording the results in the Technical 

Information Management System (TIMS) was originally written over 20 years ago for a 

punch card system – long before the availability of modern GIS software. Some new 

computational requirements were never fully supported by our old system. Even those 

that are supported require months of work with our current system. Some of those 

computations could be done in days or hours when MMS converts to modern GIS 

software. The major costs for the conversion are to add some unique MMS functional 

requirements that are not available in the commercial off the shelf GIS program, and to 

integrate the GIS software with our TIMS database, so that existing TIMS programs used 

by other MMS units will continue to be supported. 

Impacts of Not Funding: 

The difficulties with the current software will continue to thwart the efforts of MMS 

cartographers to produce products in an efficient and timely fashion. With the impending 

retirement of Mapping and Boundary Branch employees with expert knowledge of the old 

software, a complete halt to production of Official Protraction Diagrams and Supplemental 

Official Block Diagrams is possible. Official Protraction Diagrams (OPD) and Leasing Map 

(LM) boundaries cover areas of the OCS within Federal jurisdiction. They are generated by the 

Minerals Management Service (MMS) in accordance with Section 30 of the Code of Federal 

Regulations (CFR), Part 256.8. Leasing Maps are irregularly shaped areas, developed early in the 

MMS offshore minerals management program, for near-shore areas in the Gulf of Mexico. 

Official Protraction Diagrams cover the remainder of the area included in the MMS offshore 

minerals management program. 

A Supplemental Official OCS Block Diagram (SOBD) is prepared for each block intersected by 

an offshore boundary (Submerged Lands Act Boundary, Limit of "8(g) Zone", National Marine 

Sanctuaries, etc.); a diagram of a specific OCS Block showing official boundaries and areas, also 

known as a “split block.” 

A failure to have the capacity to update the offshore boundaries on these diagrams would have a 

direct impact on determining the fair market value, and resulting revenues, of potential lease 

areas. 

80 Minerals Management Service 
 

OEMM-Leasing and Environmental Subactivity 

Environmental Studies -$2,000,000; +0 FTE 

This initiative requires the redirection of $2.0 million from Environmental Studies funding to the 

Ensure Fair Market Value initiative. Lower priority oil and gas studies will be deferred or 

cancelled. 

Environmental Studies for Renewable Energy (+$1,000,000) 

The environmental research needs in support of potential offshore Renewable Energy activities 

should focus on the existing scientific knowledge base and the information gaps that need to be 

addressed should Renewable Energy activities take place off the coasts. The U.S. Atlantic and 

Pacific seaboards have not been developed for renewable energy. These coastal and offshore 

waters are home to diverse ecosystems with a wide range of marine organisms including sea 

turtles, sea birds and waterfowl, fishes and marine mammals, some of which are considered 

threatened or endangered. In addition, it remains unknown the extent to which bat populations 

may utilize the offshore environment. There remains considerable uncertainty as to where future 

renewable energy projects may occur and as these events unfold it will be necessary to gather 

additional scientific information to examine the potential socioeconomic and cultural effects of 

these projects on local communities. Studies will be designed to fill critical information gaps to 

meet the needs for future MMS environmental assessments. These studies will be designed to 

provide up-to-date information for the environmental reviews that will be conducted for energy 

projects focused in the Atlantic and Pacific. Specific research projects will be determined based 

on program developments and energy projects under consideration during FY 2011. Based on 

public input at scientific workshops, numerous stakeholder meetings, and ongoing syntheses of 

existing information, potential research likely would address marine mammals, sea turtles, and 

seabird and waterfowl distribution, abundance and use of the coastal and offshore areas and high 

resolution bathymetric mapping of topographic features. In addition to studies of living marine 

resources, research in the Pacific Region is also likely to include studies of wave attenuation for 

various designs of wave-energy devices since the Pacific area is more suitable for potential 

wave-energy projects. 

Impacts of Not Funding: 

Funding is needed to initiate studies to prepare for lease issuances and for post lease 

environmental monitoring in the Atlantic and Pacific and will address physical, biological and 

social resource issues in the areas where renewable energy applications are initially expected. 

Prior to approval of any of these activities, MMS needs baseline environmental information 

about the areas and must make an evaluation of the potential impacts of these activities on the 

marine and human environment. 

The timely acquisition of environmental information is crucial to issuing leases on the Atlantic 

and Pacific coasts. Given that these areas are considered frontier areas for energy development, 

numerous baseline and issue-specific studies are required and will take a substantial amount of 

time to complete. Without sound science for decision-making, opportunities for renewable 

energy development could be hindered or delayed. Adequate funding for environmental studies 

is critical for the success of the Renewable Energy Program. 

Minerals Management Service 81 
OEMM-Leasing and Environmental Subactivity 

Marine Spatial Planning (+$1,000,000; +4 FTE). 

Coastal and Marine Spatial Planning (CMSP) was identified as a priority by the President when 

he established the Interagency Ocean Policy Task Force (Task Force) on June 9, 2009. The Task 

Force has submitted a draft “Interim Framework for Coastal and Marine Spatial Planning” that 

defines CMSP as a “comprehensive, adaptive, integrated, ecosystem-based, and transparent 

spatial planning process, based on sound science, for analyzing current and anticipated uses of 

ocean, coastal, and Great Lakes areas”. The Minerals Management Service is the only agency 

authorized to grant renewable energy, marine mineral (sand and gravel) and oil and gas leases on 

the Outer Continental Shelf and therefore plays an integral role in the CMSP process. 

The proposed initiative will enable MMS to coordinate CMSP efforts within and outside the 

Agency, determine information and data needs, and make sure these needs are met to effectively 

implement CMSP policy. Coordination of CMSP with other OCS users and regulators is 

becoming more important as new uses and potential conflicts grow. With oil and natural gas, 

renewable energy, marine minerals, shipping/navigation, military uses, fishing, and others, 

competing for space on the OCS, it is becoming more important to coordinate the growing 

demand for multiple uses of the OCS. This function is critical to the integrity of the 5-Year 

Leasing Program that inherently balances these various competing interests and determines the 

size, timing, and location of leasing activity on the OCS. The CMSP affects the programs 

mandated by OCSLA and NEPA that are key components of the MMS mission. The MMS is 

committed to communicating, consulting, and cooperating with many diverse stakeholders in 

order to build consensus while balancing national, regional, and local interests. 

CMSP Coordinators: (2 FTE): Staff will coordinate CMSP activities related to oil and gas 

activity, marine minerals, and renewable energy. Specific examples of duties include: 

•	 Serve as representative for inter-agency collaboration with other Federal agencies to try 

and accommodate other federal concerns and national policy, while actively protecting 

the mission of MMS. 

•	 Facilitate issues affecting CMSP regional planning entities and state concerns, while 

maintaining national goals. 

•	 Work closely with OEMM counterparts in other divisions and regional offices to 

establish communication, engage in data sharing and products, determine data 

information and needs and explore regulatory efficiencies. 

CMSP Environmental Scientist (1 FTE): Staff will incorporate CMSP principles and 

regulatory requirements in environmental assessments and impact analyses. Specific duties 

include: 

•	 Identify data and information needs required for CMSP. 

•	 Coordinate and implement CMSP-related environmental requirements into 

 MMS rules, regulations and environmental review procedures. 

•	 Coordinate and develop regional guidance for implementing MSP requirements and 

processes in environmental analyses and review including the Five-Year EIS. 

82 Minerals Management Service 
 

OEMM-Leasing and Environmental Subactivity 

CMSP Geospatial Scientist (1 FTE) 

Staff will address basic information and data requirements necessary to effectively implement 

CMSP. Specific examples include: 

•	 Organize, maintain, and develop geospatial data relevant to marine spatial planning. 

• Coordination with subject matter experts such as biologists, oceanographers, and social 

scientists within MMS to determine the data needs, suitability, and relevance. 

• Conduct data quality control and assurance for MMS environmental data as well as the 

suitability of third party data for CMSP. 

• Identify data and information requirements for CMSP and develop scientific studies to 

address these needs. 

Cost Share and Data Information Needs: $400,000. The MMS will be participating in 

working groups with state/regional planning bodies and Federal agencies to coordinate CMSP 

activities and gain information on new projects that plan to use Federal resources as early as 

possible. This provides a cooperative approach for organizing and supporting state, regional and 

Federal management working groups and for funding and identifying studies and resource 

evaluation projects which are of mutual benefit. Project topics may include data information 

plans, improved data accessibility, research of new technologies, and governance process as well 

as outreach efforts. Additionally, it is anticipated that data will need to be acquired, organized, 

quality checked, archived, and distributed. Support costs, such as workshops, travel, training and 

education, will also be incurred. 

The CMSP process will improve coordination and collaboration among stakeholders in the 

ocean, facilitate the dissemination of scientific information for decision-making, and allow a 

more comprehensive approach to management. Substantial ecological, economic, and social 

benefits will result from these efforts including: 

•	 Ecosystem Based Management - The CMSP process is regional in scope and allows 

greater incorporation of ecosystem based management into the decision making process. 

•	 Climate Change - Flexible CMSP planning allows consideration and adaptation of 

management to climate change by considering large scale cumulative effects such as the 

changing distribution of species and habitats. 

•	 Efficient use of Ocean Space – The ability to optimally site ocean use for economic 

benefit. 

•	 Cost Savings - Increased coordination will increase sharing information and reduce 

redundancy in efforts such as environmental assessments. 

•	 Greater Transparency – Greater inclusion of stakeholders in the decision process will 

encourage investment in new ocean uses such as renewable energy. 

Impacts of Not Funding: The impacts of not funding this initiative include lost opportunities to 

encourage renewable energy development, reduce conflict among ocean uses, efficiently use 

ocean space and meet the environmental and economic challenges posed by climate change. 

Minerals Management Service 83 
 

OEMM-Leasing and Environmental Subactivity 

PROGRAM OVERVIEW 

The MMS plays a key role in securing ocean energy for the Nation. The MMS is a leader in 

facilitating energy development to meet the Nation’s domestic energy needs. It manages access 

to the energy and mineral resources of the Outer Continental Shelf (OCS) to help meet the 

energy demands and other needs of the Nation while balancing such access with the protection of 

the human, marine, and coastal environments. Currently, MMS administers about 8,124 active 

mineral leases on approximately 43 million OCS acres. Production from these leases will 

generate billions of dollars in revenue for the Federal Treasury and state governments while 

supporting thousands of jobs. The MMS oversees production from the OCS that represents a 

significant portion of total domestic oil and natural gas production. In calendar year 2008, OCS 

leases offshore California, Alaska, and in the Gulf of Mexico provided 447 million barrels of oil 

and 2,327 billion cubic feet of natural gas, accounting for almost 25 percent of the Nation’s oil 

production and 11 percent of domestic natural gas production. 

PERFORMANCE OVERVIEW 

The Leasing and Environmental (LE) subactivity funds the Leasing and Environmental 

Assessment Program and the Environmental Studies Program. A key indicator of performance is 

the ability to hold offshore lease sales as scheduled in the Secretary’s 5-Year Oil and Gas 

Leasing Program. The 5-Year Program 2007-2012 was developed through an extensive 

consultation process prescribed by the OCS Lands Act, and is effective from July 1, 2007 

through June 30, 2012. The Program includes 21 sales in eight of the 26 OCS planning areas – 

three areas in the Gulf of Mexico, one area in the Mid-Atlantic, and four areas offshore Alaska. 

The MMS estimates that 10 billion barrels of oil and 45 trillion cubic feet of natural gas could be 

produced over 40 years as a result of sales under consideration in the Program. The 2007-2012 

lease sale schedule can be found at: http://www.mms.gov/offshore/2007-2012LeaseSaleSchedule.htm 

Offshore oil and gas leases are awarded following the completion of an extensive, two-phase bid 

evaluation process to ensure that the Federal government receives a fair monetary return for the 

public mineral resources it makes available. Results of scheduled 2007-2012 offshore lease sales 

currently include a return of over $10.8 billion dollars: 

•	 Sale 204, Western Gulf of Mexico, was held on August 22, 2007 and MMS accepted high 

bids valued at $287,081,023 and awarded 274 leases to the successful high bidders. 

•	 Sale 205, Central Gulf of Mexico, was held on October 3, 2007 and MMS accepted high 

bids valued at $2,812,953,879 and awarded 682 leases to the successful high bidders. 

•	 Sale 193, Alaska Chukchi Sea, was held on February 7, 2008 and MMS accepted high 

bids valued at $2,662,059,563 and awarded 487 leases to the successful high bidders. 

•	 Sale 206, Central Gulf of Mexico, was held on March 19, 2008 and MMS accepted high 

bids valued at $3,671,052,702 and awarded 603 leases to the successful high bidders. 

•	 Sale 224, Eastern Gulf of Mexico, was held on March 19, 2008 and MMS accepted high 

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bids valued at $64,713,213 and awarded 36 leases to the successful high bidders. 

•	 Sale 207, Western Gulf of Mexico, was held on August 20, 2008 and MMS accepted high 

bids valued at $483,959,404 and awarded 313 leases to the successful high bidders. 

•	 Sale 208, Central Gulf of Mexico, was held on March 18, 2009 and MMS accepted high 

bids valued at $690,163,194 and awarded 328 leases to the successful high bidders. 

•	 Sale 209, Beaufort Sea, has been moved to ensure adequate environmental review and is 

tentatively scheduled for June 2010. 

•	 Sale 210, Western Gulf of Mexico, was held on August 19, 2009 and MMS accepted high 

bids valued at $111,385,124 and awarded 155 leases to successful high bidders. 

Leasing activities include planning for the Secretary’s 5-Year Program, mapping and surveying 

OCS boundaries, implementing the lease sale process, and administering leases. These activities 

enable the bureau to meet its performance goals for the number of lease sales held, the timeliness 

of these sales, and the acreage offered through these sales. In addition, the Marine Minerals 

Program is responsible for all other minerals on the OCS, including sand and gravel. 

Effective management of the energy resources on the OCS for efficient access and development 

is supported by Environmental Assessment and Environmental Studies activities. The work 

provides information necessary to ensure operations are conducted in an environmentally sound 

manner and decisions are supported by good science. 

•	 Environmental Assessment (EA) activities ensure that appropriate environmental 

information is available for planning and decision-making at all phases of OCS activities, 

from 5-Year Program planning through platform removal. This is accomplished by 

consultation with interested and affected parties, and preparation of environmental impact 

statements, environmental assessments, and related program-level reports. In FY 2008, 

MMS completed approximately 318 Environmental Assessments. 

•	 The Environmental Studies Program (ESP) funds and manages scientific research to 

better understand the OCS environment and the effects of energy and mineral resource 

exploration and development activities, and the socioeconomic impacts on the human 

environment. Environmental Studies scientific information is used in the environmental 

assessment activity and in the development of measures to mitigate predicted impacts. 

Within its Activity-Based Costing (ABC) system, MMS is able to allocate both EA and ESP 

expenses to the activities and operations they support. Further, MMS tracks the number of leases 

issued and the number of lease administrative changes as end outputs, providing the ability to 

assign the full cost of leasing and lease adjudication activities, as well as proportional shares of 

program support and general administrative costs. Similarly, direct and indirect costs of the 

Marine Minerals Program are allocated to the number of sand and gravel leases conveyed. 

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OEMM-Leasing and Environmental Subactivity 

Lease Administration 

Renewable Energy 6% 

Environmental for Oil 

and Gas Leasing Environmental for Oil 

and Gas Plans and 36%

Permits 

30% 

2% 

Leasing 

Non-Energy Minerals 14% 

12% 

Figure 8. Estimated FY 2009 Leasing and Environmental Spending Profile 

2011 PROGRAM PERFORMANCE – LEASING & ENVIRONMENTAL ASSESSMENT 

Leasing Program: The MMS will continue to play a vital role in providing access to domestic 

energy resources by implementing the OCS leasing program on a predictable schedule as part of 

a comprehensive energy plan that includes both conventional and renewable energy resources. 

In 2004, OEMM initiated the multi-year process of developing a new 5-Year OCS Oil and Gas 

Leasing Program that schedules OCS lease sales for 2007 to 2012. The 5-Year Program 2007-

2012 was approved on June 29, 2007, and is effective from July 1, 2007 through June 30, 2012. 

Shortly after the effective date of the 2007-2012 program, the Department was sued on the 2007-

2012 plan on several grounds. On April 17, 2009, the U.S. Court of Appeals for the D.C. Circuit 

issued a ruling that vacated and remanded the program on the issue of the environmental 

sensitivity analysis. On July 28, 2009, the Court issued an Order staying its mandate until the 

Department completed its environmental sensitivity analysis and balancing under the OCS Lands 

Act; the Court also clarified that its decision was limited to the Beaufort, Chukchi, and Bering 

Seas off Alaska. MMS developed a new environmental sensitivity analysis and prepared an 

updated 2007-2012 Program decision document for review and decision by the Secretary. The 

Secretary is now reviewing the 2007-2012 decision document, and will decide what changes, if 

any, should be made to the Final Program. Once his decision is announced, following a 30-day 

public comment period, the Secretary will approve a final remanded Program, having taken into 

consideration all the comments received on the new analysis and required balancing. 

In mid-2008, the previous Administration began preparation of a 5-year program with the intent 

to have a new program in place two years ahead of the usual schedule and issued a Draft 

Proposed Program for 2010-2015 on January 16, 2009 with a 60-day comment period. The 

Secretary extended the comment period an additional 180 days and held four regional meetings 

to allow for greater public input. Over 530,000 comments were received, and were tabulated, 

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summarized, and will be considered for the next decisions, beginning with the announcement of 

public meetings for scoping issues for preparation of a draft EIS. The scoping meetings will be 

followed by preparation and publication of a Proposed Program and Draft EIS for a minimum 

90-day public comment period. This will be followed by preparation and publication of a 

Proposed Final Program and Final EIS, submitted to the President and Congress for a minimum 

60 days before the Secretary may approve a new program. 

The 5-Year Program is a pivotal element of managing the Nation’s offshore mineral assets. The 

OCS Lands Act (OCSLA) requires the Department to prepare a long-range program that 

specifies the size, timing and location of areas to be considered for Federal offshore natural gas 

and oil leasing. The MMS works in consultation with stakeholders (including Federal and state 

agencies, local communities, federally recognized tribes, private industry, and the general public) 

to develop a program that not only offers access to those areas of the OCS with the most 

promising potential for development of oil and natural gas resources, but does so in an 

environmentally responsible manner. Under the 2007-2012 Program, OCS oil and gas lease 

sales will be held on an area-wide basis with annual sales in the Central and Western Gulf of 

Mexico, and less frequent sales held in the Eastern Gulf of Mexico and offshore Alaska. 

Environmental Assessment Program: As manager of energy and non-energy mineral resources, 

renewable energy resources and, alternate and related uses of existing facilities on the OCS, 

MMS has the responsibility to ensure that exploration, development, and production activities on 

the OCS are safe and environmentally sound. OCS operations are managed for continued 

compliance with key Federal statutes including, but not limited to: 

• National Environmental Policy Act (NEPA) 

• Coastal Zone Management Act (CZMA) 

• Endangered Species Act (ESA) 

• Marine Mammal Protection Act (MMPA) 

• Sustainable Fisheries Act (SFA) 

• Clean Air Act (CAA) 

• Clean Water Act (CWA) 

• National Historic Preservation Act (NHPA) 

In keeping with the principles espoused by these guiding statutes, MMS provides opportunities 

for public comment and consults with the National Oceanic and Atmospheric Administration 

(NOAA), the Fish and Wildlife Service (FWS), the Environmental Protection Agency (EPA), 

and others to develop a balanced leasing program and to promulgate regulations and permit 

requirements that protect natural and historical resources. 

The OEMM assesses potential environmental impacts of proposed actions in accordance with 

NEPA and related regulations. The NEPA process is intended to help public officials make 

decisions based on an understanding of environmental consequences and take actions that 

protect, restore, and enhance the environment. Public participation is an integral part of 

preparing an environmental impact statement (EIS) for approval of the 5-Year Program. The 

OEMM solicits external input to help identify relevant issues, alternatives, mitigation measures, 

and analytical tools. 

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OEMM-Leasing and Environmental Subactivity 

NEPA and related regulations are followed at each stage in the leasing process, starting with the 

preparation of the final programmatic EIS for approval of the 5-Year Program. The final 

programmatic EIS addresses public comments in a responsive and responsible fashion. OEMM 

then prepares an EIS or a more focused Environmental Assessment (EA) prior to each lease sale 

and for other OCS oil and gas activities on a selective basis, including operators’ plans for 

exploration and development, pipeline permit applications, seismic survey permit applications, 

decommissioning permit applications, and other related industry activities. Each environmental 

review documents the potential environmental impacts and identifies mitigation measures that 

may be necessary to avoid or minimize adverse effects of a proposal. Many environmental 

reviews of routine plans or permit applications undergo a streamlined environmental review 

(Categorical Exclusion Review (CER)), in full compliance with NEPA. CERs are only for 

activities that have been demonstrated to not cause a significant environmental impact either 

individually or cumulatively, and which have been categorically excluded from reviews under an 

EA or EIS. CERs also identify mitigation measures to avoid or minimize adverse effects of the 

proposed action or denote which proposals should be elevated to review by an EA. 

Additionally, the provisions of the CZMA ensure that covered OCS activities are consistent with 

the affected states’ coastal zone requirements. OCS lease sales, plans, and permits are subject to 

review by states that have developed Coastal Management Programs to manage and balance 

competing uses that may affect land and water use and natural resources of the coastal zone. 

MMS works to resolve any differences with the state by implementing lease stipulations and 

lease-sale activities that are consistent with stakeholder land use objectives. 

Marine Minerals Program: Under the Marine Minerals Program, MMS is responsible for 

managing all minerals on the OCS other than oil, gas, and sulfur. Key workload data monitored 

in the ABC and GPRA systems include the number of sand and gravel agreements and cubic 

yards conveyed. Performance measures include the timeliness with which MMS processes these 

agreements. Since 1995, the program has fulfilled every request for resources, conveying rights 

to nearly 34 million cubic yards of OCS sand for shore protection and coastal restoration 

projects. 

Coordination with other OCS users and regulators is becoming more important as new uses and 

conflicts grow. With mariculture, wind and wave power, artificial reefs, pipelines and fiber optic 

cables competing for space on the OCS, it is becoming more difficult to support the growing 

demand for sand resources. The MMS is committed to communicating, consulting, and 

cooperating with many diverse stakeholders in order to build consensus while balancing national, 

regional, and local interests. 

MMS has established working groups with state and Federal agencies in Florida and Louisiana 

and one for the Mid and South-Atlantic states to coordinate coastal restoration activities and gain 

information on new projects that plan to use Federal sand resources as early as possible. Such 

meetings have been very beneficial for the allocation of resources in the Marine Minerals 

Program. Previous cooperative efforts with coastal states helped identify and evaluate OCS sand 

deposits that were used for three beach nourishment projects in Maryland, four in Virginia, and 

four in Florida. An additional 14 projects have been completed which utilized OCS sand borrow 

areas identified by other state or Federal agencies for a total of 25 coastal restoration projects. 

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OEMM-Leasing and Environmental Subactivity 

2011 PROGRAM PERFORMANCE – ENVIRONMENTAL STUDIES PROGRAM 

The Environmental Studies Program (ESP) provides the solid scientific information needed for 

critical program decisions that must, by law, accommodate the delicate balance between the 

protection of the human, marine, and coastal environments and the Nation’s exploration, 

development, and production of petroleum and renewable energy resources and other marine 

minerals and energy-related alternate uses of OCS structures. 

Environmental studies are designed to address 

specific information needs concerning the 

environmental and socioeconomic state of a 

region, both before and after OCS activity. 

The scope of the ESP is as broad as the Federal 

statutes that influence the MMS environmental 

assessment activities and is geographically 

diverse, ranging from unique deepwater issues 

in the Gulf of Mexico to the extreme environment of the Alaskan arctic. Studies provide 

The Environmental Studies Program effectively 

develops mission oriented scientific research while 

simultaneously successfully leveraging funds through 

partnerships such as the National Oceanographic 

Partnership Program (NOPP). Studies developed and 

cosponsored through NOPP address topics of shared 

federal interest ranging from environmental response to 

an ice-diminished arctic, to studies of noise and marine 

mammals and topics related to exploration of 

deepwater ecosystems in areas undergoing oil and gas 

exploration in the Gulf of Mexico. 

the information necessary to develop measures to mitigate adverse impacts on the environment. 

The ESP funds applied research through environmental and socioeconomic studies to predict 

potential impacts from offshore energy and mineral development and to provide information for 

developing scientifically sound mitigating measures. Our comprehensive approach to studies 

planning and development integrates science needs from multiple energy resources and mineral 

uses of the OCS to create cost-effective and efficient research efforts to meet the needs of 

resource managers. A major program component of the ESP is focused on improving scientific 

understanding of the fate, transport and effects of discharges, and spilled materials such as oil, in 

the marine environment. The Environmental Studies Program research strategy supports 

gathering of baseline or reconnaissance information in areas before activities occur, along with 

ecosystem research and monitoring studies to meet the needs for an ecosystem-based approach to 

management decisions. 

The OCS Lands Act requires the Secretary of the Interior to monitor the human, marine, and 

coastal environments of areas to be leased or developed for offshore oil and gas resources. The 

MMS is pursuing a strategy to enhance the planning, development, and implementation of 

environmental monitoring efforts – both as a means to evaluate the effectiveness of OCS lease 

stipulations and other environmental mitigation measures, and for research on what additional 

monitoring may be needed. Importantly, ESP monitoring research is designed and undertaken to 

consider the influences of extreme weather conditions and climate change. 

External Contributions: The planning process emphasizes communication within MMS as well 

as with Federal, state, and local governments, academia, industry, and non-government 

organizations. Additionally, program oversight is provided by the OCS Scientific Committee, 

chartered under the auspices of the Federal Advisory Committee Act, which advises MMS on the 

feasibility, appropriateness, and scientific value of the ESP. Study recommendations are 

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OEMM-Leasing and Environmental Subactivity 

evaluated for program relevance, programmatic timeliness, and scientific merit. ESP research 

plans are developed in coordination with the Technology Assessment and Research program and 

the Oil Spill Research program to provide a multi-faceted, interdisciplinary bureau response to 

meet the environmental and safety needs of the offshore program. 

Partnerships: 

Award Winning Partnerships: 

•	 The MMS Environmental Studies Program (ESP) and NOAA received the DOI 

Partners in Conservation Award in recognition of “...their collaboration in 

protecting the Flower Garden Banks in their pristine condition for the enjoyment of 

future generations.” The ESP has funded research and long term monitoring 

around this coral reef located adjacent to active oil and gas production in the Gulf 

of Mexico. These studies effectively document the value of MMS research and the 

mitigations designed to protect the environment. 

•	 The NOPP presented the “Excellence in Partnering” Award to the jointly 

sponsored MMS-NOAA study of archeological and biological aspects of World War 

II shipwrecks in the Gulf of Mexico. This important collaboration featured a 

multifaceted research effort that provided new insights into the potential for 

deepwater artificial reefs and provided additional information to make management 

decisions regarding protection of deepwater shipwrecks. This project was further 

recognized in the June 2009 issue of Oceanography, the peer-reviewed journal of 

the Oceanography Society, devoted to the tenth anniversary of NOPP highlighting 

the programs greatest achievements over the past decade. 

The MMS has established key research partnerships with state universities through its Coastal 

Marine Institute (CMI) programs in Louisiana and Alaska, and through cooperative agreements 

with universities in California, Mississippi, Texas, and Alabama, where oil and gas activities 

actively occur. The Alaska CMI has a long record of working cooperatively with MMS and the 

state of Alaska thereby provides us greater flexibility in achieving research projects of mutual 

benefit to both MMS and Alaska. We plan to fully tap the world class expertise of the 

University of Alaska to carry out multi-disciplinary scientific studies vital to offshore operations. 

The Louisiana CMI conducted through the Louisiana State University continues to provide MMS 

with focused research vital to the safe and environmentally sound oil and gas development 

activities in the Gulf of Mexico. In addition, the CMI programs have provided an important 

vehicle for controlling MMS costs because CMI studies are awarded based on the availability of 

a 1:1 non-Federal match. 

ESP managers also represent the MMS (and thus, the Department) in the National 

Oceanographic Partnership Program, a collaborative community of Federal agencies working to 

improve knowledge of the ocean environment. Through this interaction, MMS has accomplished 

important research that has been highly leveraged with funding from other agencies. The MMS 

has long been involved in marine spatial planning for offshore energy and minerals and this has 

positioned MMS and the ESP to play an important role in the development of georeferenced 

ecological information. Here our experience in integrating state-of-the-art science into resource 

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OEMM-Leasing and Environmental Subactivity 

management decisions and our expertise in applying the principles of adaptive and ecosystembased management should prove invaluable. 

Strategic Initiatives: The OEMM 2007-2012 Strategic Plan includes a strategic goal to 

“Minimize Impact on the Environment.” This goal aims to prevent or minimize adverse impacts 

to the marine, coastal, and human environments by: 

•	 achieving environmental accountability and compliance; 

•	 targeting environmental and technical studies to support decisions; and 

•	 ensuring OEMM environmental program policies and procedures are effectively 

communicated. 

In 2009, MMS funded the development of an Atlantic Ocean circulation model to be used in oil 

spill modeling, should any portions of the Atlantic be leased for oil and gas in the future. In 

addition, the Gulf of Mexico OCS Region (GOMR) has completed a project to develop software 

for Gulf-wide emission inventory reporting and has initiated a project to update the emission 

inventory. MMS now generates an inventory every three years, mirroring the EPA’s inventory 

cycle. The GOMR staff regularly receives and reviews field observer reports from explosive 

structure removal operations (from NOAA-Fisheries observers) and from seismic survey vessels 

(from trained industry-supported marine mammal observers), which demonstrate industry 

compliance with MMS requirements for protection of the environment. An annual summary of 

the seismic survey marine mammal observer reports is prepared and submitted to NOAAFisheries, as required by interagency consultations under Section 7 of the Endangered Species 

Act. 

The GOMR holds an Information Transfer Meeting (ITM) every other year to share findings 

from MMS funded studies. The GOMR has also developed and implemented a science and 

technology journal to disseminate environmental research findings, on both the environmental 

and technical fronts, to the interested public. The journal MMS Ocean Science chronicles the 

science and technology used by MMS to manage offshore energy and mineral resources. The 

journal is written for the general public, news media, and interested stakeholders, giving them a 

glimpse into the extensive science and technology needed to understand the offshore 

environment and recover the resources that lay on and beneath the seafloor. Thus far, this 

journal is sent to approximately 2,000 interested parties in paper form and 500 through email 

notification. The journal is also available on the MMS website along with educational materials 

to assist teachers in preparation of lessons about the ocean environment. 

Environmental research conducted in Alaska continues to reflect focus on marine mammals’ use 

of the ecosystem with studies of the right whale, bowhead whale, polar bear, and bearded seals, 

as well as several other studies to develop baseline environmental and socioeconomic 

information and increased understanding of ecosystem processes in the Beaufort, Chukchi and 

North Aleutian Planning areas. 

Program-wide, the Environmental Studies Program will continue to seek opportunities to learn 

from global offshore energy activities and seek international research partnerships which 

enhance ecosystem knowledge and protection. 

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Table 18: OEMM Performance Overview – Leasing and Environmental 

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OEMM – Resource Evaluation 

FY 2011 PERFORMANCE BUDGET REQUEST 

Offshore Energy and Minerals Management 

Resource Evaluation Subactivity 

Table 19: OEMM Resource Evaluation Subactivity Budget Summary 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Resource Evaluation 

Subactivity 

($000) 

FTE 

33,698 

218 

35,285 

218 

-117 

0 

1,451 

4 

36,619 

222 

1,334 

4 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Components ($000) FTE 

Program Changes 

• Ensure Fair Market Value and Safe Operations +2,680 +4 

• Department-Wide Changes -117 +0 

• Offsetting Collection Reductions -329 +0 

• Center for Marine Resources and -900 +0 Environmental Technology 

Total, Program Changes +1,334 +4 

Additional resources for the Ensure Fair Market Value and Safe Operations are also requested in 

the Leasing and Environmental subactivity ($850,000; 0 FTE) and the Regulatory subactivity 

($900,000; 6 FTE). The initiative in its totality is for $4.4 million and 10 FTE. A detailed listing 

can be found in the OEMM Overview section. 

JUSTIFICATION OF 2011 PROGRAM CHANGES 

The FY 2011 budget request for the Resource Evaluation Subactivity is $36.6 million and 

222 FTE, a net program increase of $1.3 million and 4 FTE from the FY 2010 enacted budget. 

Ensure Fair Market Value and Safe Operations (+$2,680,000; +4 FTE) 

Assuring receipt of Fair Market Value on OCS lands is mandated by the OCS Land Act and its 

amendments and remains a critical responsibility of the Resource Evaluation Program. Regional 

offices, in conjunction with headquarters oversight, perform the functions necessary to 

thoroughly assess the oil and gas potential and fair market value of OCS tracts offered for lease. 

Minerals Management Service 95 
 

OEMM – Resource Evaluation 

Ensure Fair Market Value and Safe Operations (+$880,000; +3 FTE): 

•	 Workforce - $450,000 and 3 FTE. The 2007-2012 Five-Year Program calls for up to four 

lease sales in Alaska during 2011-2012. The compressed lease sale schedule will result 

in a large increase in the demand for geologic assessments and Fair Market Value 

determinations in a condensed period of time. While some legal hurdles remain with 

lease sales, the Ninth Circuit Court recently cleared all challenges to the 2007 Beaufort 

Sea Sale 202. The 3 FTE will enable these activities to take place without disrupting 

ongoing activities such as national assessments, geological & geophysical permitting, EIS 

analysis, and subsurface reservoir analysis for proposed development & production plans. 

•	 GIT - $430,000. Additional staff will require technical tools and GIT software licenses, 

as well as traditional workstation tools such as personal computers and related software 

licensing. Additional data storage capacity is also required. 

Fair Market Value Development (+$1,300,000; +1 FTE) 

The Resource Evaluation (RE) program is in need of database development, design and 

maintenance to support our fair market value critical business processes. MMS is requesting 

funding to complete and implement the following RE IT initiatives: 

•	 Petrophysical Database Development ($300,000). This database was designed as a basis 

of workflow improvements identified in the OCS Connect process and is meant to store 

petrophysical analyses (sand counts, pay, porosity, etc.) for all wells. The analyses are to 

be done as the well data is received by the region and are designed to support all regional 

organizations that use petrophysical analyses ranging from lease sale evaluations to 

reserves estimates. Currently RE does not have a petrophysical database and data from 

multiple hundreds of well evaluations are stored in individual MS Excel spreadsheets in a 

file folder type system. This data can not be queried against, limiting the effectiveness of 

this information. The longer it takes to complete this database, the more data there will 

be to migrate to the database, placing more strain on our limited IT resources. Although 

the petrophysical database does not exist, detailed system requirements were completed 

as part of the original OCS Connect Project. 

•	 Fair Market Value Database Development ($100,000). The FMV database was designed 

to capture the results of prospect analyses done for lease sales. This data is valuable for a 

wide variety of uses ranging from wide-area resource assessments to field reserves 

studies. The current FMV database was developed in MS Access. This data is at risk 

and is not accessible to anyone outside of the Geological and Geophysical Section of RE 

and is not easily searchable. Detailed requirements for the development of an FMV 

database were completed during the OCS Connect process. This effort will be contracted 

out. 

•	 Deep Shelf and Ultra Deep Water Play Data Sets ($500,000). Leading-edge, complex 

data sets are needed in order to analyze deep shelf plays and ultra-deepwater plays, like 

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OEMM – Resource Evaluation 

the Lower Tertiary, and associated reservoirs. Before data sets can be developed, studies 

are needed to provide the information on which data analysis can be performed. MMS 

will need to contract with industry experts to perform studies that will ultimately provide 

such analysis as rock properties of reservoirs and seismic data inversion, and then train 

MMS employees to integrate this new data into the current workflow process. Industry is 

currently using these analyses in determining their bids, and in decisions related to 

drilling, developing, and producing certain fields. 

•	 Expansion of the Exploration, Development, and Production Model ($400,000/1FTE). 

The current EDP model is Gulf-specific only. OEMM needs to expand this model for use 

in the Atlantic, Alaska, and Pacific Regions to assess the impact of OCS oil and gas 

activities in these areas as well. This includes economic, socio-economic, and 

environmental impacts. A geoscientist is needed to run, maintain, and coordinate the use 

of this multi-region EDP model. 

Fair Market Value System Upgrades (+$500,000; +0 FTE) 

•	 ARC-GIS Version 9.3 or higher - $500,000 and 0 FTE. The MMS (GOM) is behind in 

providing timely upgrades to GIS software. The contractor provides MMS with the latest 

versions as soon as they are published. The cost of these annual upgrades is already 

covered in the Department wide Enterprise GIS Contract. However, there are additional 

costs for MMS to implement these updates because many custom MMS applications are 

built on top of this software. These applications must all be modified and undergo testing 

and security audits before any new version can be deployed. The existing budget is not 

adequate to complete these tasks in a timely manner. Development and Production Plans 

and Lease activities are dependent on GIS more now than ever. This funding will be 

used to obtain contractors to implement ARC-GIS software upgrades and modify current 

MMS applications that use ARC-GIS. 

Impacts of Not Funding: 

o	 Reliance on antiquated systems and databases for information and data analysis 

jeopardizes and compromises our ability to perform the functions necessary to thoroughly 

assess the oil and gas potential and fair market value of OCS tracts offered for lease. 

o	 The current staffing level will not be able to handle the additional sales plus continue to 

do the upcoming national assessments, handle the increased geological and geophysical 

permitting, provide the geologic input into exploration/development scenarios for 

environmental impact statements, and do the subsurface reservoir analysis for proposed 

development and production plans. 

o	 Inability to maintain technological and subject matter expertise parity with a rapidly 

advancing industry and provide adequate training to critical positions. 

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Center for Marine Resources and Environmental Technology (-$900,000; -0 FTE): The 

Center for Marine Resources and Environmental Technology (CMRET) was reauthorized under 

the Marine Minerals Resources Research Act of 1996 and placed under oversight of the 

Department of the Interior. The MMS manages the program. The mission of the CMRET at the 

University of Mississippi is to conduct research on the exploration and extraction of minerals 

from the seabeds of the Gulf of Mexico. The CMRET in Mississippi was funded in the amount 

of $900,000 in FY 2010. 

The MMS recognizes the importance of the investigations and technological development that 

this center pursues, particularly the longer-term research. However, MMS must focus on core 

objectives. Therefore, MMS is proposing to eliminate the Congressionally earmarked CMRET 

funding in FY 2011. 

PROGRAM OVERVIEW 

Resource Evaluation (RE) activities support all Offshore Energy and Minerals Management 

(OEMM) program areas, both energy and non-energy, by conducting critical technical and 

economic analyses needed to support program decision making. RE activities identify areas of 

the OCS that are most promising for oil and gas development (including methane hydrates) 

through the acquisition and analysis of geological and geophysical data; estimate the quantities 

of undiscovered technically and economically recoverable resources that may exist and the 

volume of reserves discovered and likely to be produced; forecast future industry activity levels; 

and determine the adequacy of high bids received for individual tracts offered for lease. 

Economic and statistical analyses are performed that incorporate RE program data and 

information into overall MMS and DOI leasing policies and program decisions, such as the 

design of financial terms for lease sales. International activities provide MMS the opportunity to 

become involved in initiatives that promote better integration of safety and environmental 

concerns into offshore development decision-making. 

PERFORMANCE OVERVIEW 

Principal indicators of performance for RE include the fair market value (FMV) ratio, which 

serves as a measure of the effectiveness of OEMM tract valuation and bid adequacy procedures. 

The MMS evaluates the high bid received on each tract in relation to estimated hydrocarbon 

potential and related economic, cost, and engineering factors to determine if the bid is adequate. 

The evaluation of a high bid is based on a two-phase process. Phase 1 is conducted on a tractby-tract basis and is normally completed within a short time following the opening of bids. This 

analysis is designed to accept those high bids where competitive market forces can be relied 

upon to assure receipt of FMV. 

High bids not accepted in Phase 1 receive further evaluation in Phase 2. MMS geoscientists, 

engineers, and economists conduct detailed analyses and develop possible scenarios for oil and 

gas exploration and production from these tracts. RE staff integrate geological & geophysical, 

engineering, and economic data in a complex computer model called MONTCAR to derive 

estimates of tract values. The MONTCAR model provides a means of handling a series of 

98 Minerals Management Service 
 

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results for such variables as the timing of development and production activities, lease terms and 

conditions, project costs, reservoir performance, price forecasts and other subjective factors such 

as geologic risk. The model performs a discounted cash flow analysis, resulting in a resource 

economic value that is the mean of the range of values from more than 10,000 trials. Industry 

bids are primarily compared to MMS estimates of net present value in conjunction with market 

criteria to determine if they are acceptable. If the bid does not meet MMS FMV requirements, 

the bid is rejected and the tract is returned to the inventory for possible leasing in the area’s 

subsequent lease sale. Performance data indicate that, over the 4-year period from 2005 to 2008, 

more than half of the tracts with bids rejected through these procedures did receive acceptable 

high bids when re-offered in a subsequent sale. The number of tracts evaluated is recorded on a 

quarterly basis in the bureau’s ABC system. Data indicate that over the period from 1997 

through 2008, tracts with high bids initially rejected, when re-offered in a subsequent sale, 

received high bids representing a net gain of $472 million, an increase of 325 percent over the 

original bids. The success of these efforts is also attested to by the program’s continued success 

at achieving its annual GPRA FMV Ratio target. For each program year, the MMS expects 

competitive factors to sustain a premium ratio of about 1.8 to 1 (+/- 0.4) when comparing 

industry high bids to the MMS estimate. 

Bid Procedures Lead to Higher Returns 

MMS bid adequacy procedures have consistently resulted in higher returns in subsequent sales 

for tracts that have had bids rejected on fair market value grounds in previous sales. Since 

1984, MMS has rejected total high bids of $584.9 million in the Gulf of Mexico. Subsequently, 

the same blocks were re-offered and drew high bids of $1.521 billion, for a total net gain of 

$937.7 million. 

Within its Activity-Based Costing system, OEMM tracks the number of tracts assessed or 

evaluated as an end output, providing the ability to assign the full cost of resource evaluation 

activities, as well as proportional shares of program support and general administrative costs. 

Minerals Management Service 99 
 

 

OEMM – Resource Evaluation 

R enewable Energy 

1% 

Tract Evaluati on Assessment & 

21% Modeling 

16% 

Conservati on & 

Reserves Inventory Production 

21% Verification 

5% 

G&G Data Acquisition 

35% 

Non-Energy Mi nerals 

1% 

Figure 9. Estimated FY 2009 Resource Evaluation Spending Profile 

Geological & Geophysical Data Acquisition: The MMS develops regulations governing the 

collection of geological & geophysical data related to mineral exploration on the OCS. Permits 

are issued to industry for the acquisition of data that include stipulations that ensure exploration 

and research activities are conducted in an environmentally safe manner and will not interfere 

with other activities occurring in the area. The MMS inspects the data collected by industry and 

others and selectively acquires portions, as needed, to support the Bureau’s resource modeling 

and evaluation efforts. Interpretations of geological & geophysical data are used to prepare 

updated resource assessments, to determine the adequacy of bids submitted for leases, and to 

support decisions related to operator plans and activities, as well as a variety of studies related to 

the OCS. 

The use of three-dimensional (3-D) seismic data has become standard in the Gulf of Mexico and 

elsewhere for exploration as well as development activities. The use of 3-D reflection 

techniques not only portrays subsurface structure and stratigraphy but also reveals information 

about fluids within the subsurface. A sophisticated computer processing technique, called prestack depth migration, has revolutionized hydrocarbon exploration in the Gulf of Mexico. This 

reprocessing technique allows geoscientists to properly image salt bodies and the sediment strata 

beneath the salt, opening these areas to lower risk exploration. The MMS has in its inventory 

approximately two million line-miles of 2-D seismic information covering all portions of the 

OCS. Since 1993, MMS has acquired, primarily in the Gulf of Mexico, about 750,000 squaremiles of 3-D seismic data. 

100 Minerals Management Service 
 

 

OEMM – Resource Evaluation 

Figure 10: Existing MMS 3-D Seismic Data Inventory, Gulf of Mexico (through FY 2008) 

Resource Modeling and Assessment: Another component of the RE subactivity is Resource 

Modeling and Assessment, which addresses resource assessment, tract evaluation, field reserves 

inventories, and various economic and policy analysis needs. Since the mid-1980s, MMS has 

conducted assessments of the hydrocarbon resources throughout the OCS for the purpose of 

developing knowledge concerning the potential occurrence of mineral resources and their 

characteristics, i.e., location, type, accumulation sizes, and potential for commercial recovery. 

The MMS assesses the hydrocarbon potential and estimates the value of OCS lands through the 

use of complex computer models and methodologies that incorporate specific geological & 

geophysical information, stochastic mathematical and statistical concepts, risk analysis, 

geoscientific models, and a variety of assumptions pertaining to economic, exploration, and 

development scenarios and costs. These resource assessments provide valuable information for 

policy decision makers throughout the leasing process. Information acquired through MMS 

resource assessment activities has been instrumental in the development of the 5-Year Program 

(the determination of what planning areas to offer, and creation of exploration and development 

scenarios); oil spill analyses; the formulation and analysis of numerous legislative proposals and 

policy alternatives; NEPA analyses; and conservation-related decisions. Further, the oil and gas 

industry and the investment community often use MMS reports and data in their own 

assessments. 

The number of OCS blocks assessed is tracked on a quarterly basis in the bureau’s ABC system. 

Comparing the performance measures for acreage and resources offered illustrates that the RE 

program identifies, and the leasing program offers access to, geologic plays on the OCS that 

offer the highest potential for development of oil and natural gas. Non-energy mineral resources, 

such as sand and gravel, are also evaluated through regional geologic studies. The MMS also 

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estimates the amounts of oil and natural gas likely to be discovered and produced as a result of 

leasing, and generates potential scenarios of the future industrial activities associated with 

exploration, development, and production. Resource estimates, and exploration and 

development scenarios, provide an important basis for the Bureau’s environmental impact 

statements and other technical studies and policy analyses. 

Field Reserves Inventories: The MMS develops independent estimates of economically 

recoverable amounts of oil and natural gas contained within discovered fields by conducting 

field reserve studies. The reserve estimates are revised periodically to reflect new information 

obtained from development and production activities. Reserve studies are critical inputs to 

resource assessments, the review and approval of royalty relief applications, as analogs for bid 

adequacy determinations, and in the review of industry plans and requests. The geologic and 

engineering information also support other OCS program activities, Minerals Revenue 

Management functions, and cooperative efforts with the Department of Energy and the Energy 

Information Administration. 

Economic Analysis: The economic analysis expertise within the Resource Evaluation Program 

is often called upon to analyze regulatory and legislative proposals affecting OCS leasing, 

exploration, development, and production activities. Ad hoc studies address specific policies and 

compilations of data needed to analyze overall OCS program activities. Specific examples 

include: 

•	 Conducting economic analysis to evaluate proposed legislation and to support 

policies for lease terms, conditions, and bidding systems for individual lease sales and 

the 5-Year Program including similar activities for the renewable energy program; 

•	 Developing, updating, and reviewing procedures to ensure receipt of fair market 

value including auction and lease sale design for the renewable energy program; 

•	 Reviewing and designing policies affecting programmatic responsibilities and 

revenue receipts with concern for operator drilling and development diligence, 

government take, timely decommissioning of wells and structures, appropriate levels 

of governance, and reviewing requests for royalty relief; 

•	 Developing and maintaining economic models/databases in support of sale design, 

resource evaluation, and post-sale operational activities including royalty relief 

requests; 

•	 Designing policies and conducting analysis for implementation of fiduciary 

requirements of the Energy Policy Act of 2005 as it relates to the Coastal Impact 

Assistance and Renewable Energy/Alternate Use provisions, and the Gulf of Mexico 

Energy Security Act of 2006 as it relates to revenue sharing and credits for certain 

relinquished leases offshore Florida; and 

•	 Providing economic analysis and fiscal forecasts on minerals leasing policies, legal 

and legislative alternatives, and national energy strategies to the MMS Director, the 

Department, Office of Management and Budget, the Department of Justice, the 

Council of Economic Advisors, the Government Accountability Office, and 

Congress. 

The Performance Overview Tables for the Regulatory Subactivity are show on the following 

pages. 

102 Minerals Management Service 
 

 

 

 

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Table 20: OEMM Resource Evaluation Program Performance Change 

2007 

Actual 

2008 

Actual 

2009 

Actual 2010 Plan 2011 

Plan 

Program 

Change 

Accruing 

in 2011 

Program 

Change 

Accruing 

in Outyears 

A B=A+C C 

Percent of high 

bids accepted or 

rejected within 60 

days (PART) 

69% 41% 65% * 50% 55% 5% 0 

Total 

Actual/Projected 

Cost of All 

Metrics ($000) 

$13,300 $14,100 $12,500 $13,663 $13,736 $73 0 

Maintain the ratio 

of 1.8 to 1 (+/-0.4) 

of accepted high 

bids to MMS’ 

estimated value 

(BUR) 

2.1: 1 2.49 to 1 1.7 to 1 1.8 to 1 

(+/- 0.4) 

1.8 to 1 

(+/- 0.4) 

No 

Change 0 

Comments 

To ensure that the American public receives fair market value for the OCS resources, 

MMS must utilize similar methods and stay technologically close to industry capability. 

The data sets, tools, and technologies currently being used to identify and evaluate 

mineral resources have advanced in recent years and continue to evolve. This initiative 

will allow MMS to upgrade its resource evaluation tools to stay technologically relevant 

with industry and maintain its resource assessment and bid evaluation capacity. 

*Note: FY 2009 results include bid evaluations that MMS conducted for BLM’s lease sale 

in the National Petroleum Reserve-Alaska. 

2011 PROGRAM PERFORMANCE – RESOURCE EVALUATION 

Program Performance – Resource Evaluation (RE) Program 

Resource Assessment: The RE program, through its assessment procedures, identifies geologic 

plays on the OCS that offer the highest potential for the occurrence of oil and natural gas 

development and production. Following the identification of hydrocarbon plays, RE carries out 

thorough analysis of the play’s hydrocarbon potential and its economic viability with the help of 

complex computer models and methodologies. The assessment process incorporates specific 

geologic information, mathematical and statistical analyses, risk and probability theories, 

economic scenarios, petroleum engineering data, and a variety of additional technical 

assumptions. Besides the estimation of the undiscovered hydrocarbon resources, these studies 

help identify environmental and operational constraints as well as assist in making leasing 

decisions. Resource estimates must also be developed to support critical analyses of potential 

impacts of policy options, legislative proposals, EIS’s, and industry activities affecting OCS 

natural gas and oil activities — both current and future. 

The Geosciences aspect of the resource assessment work involves the study of the geology of an 

area; its geologic history, regional stratigraphy and geologic trends; major structural features; 

exploration history; study of source rocks, reservoir rocks, seals and trapping mechanism; and, 

the identification of the most prospective portions of a planning area in terms of hydrocarbon 

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OEMM – Resource Evaluation 

potential. Long lead times are often required to determine whether a basin may be oil- or gasprone, to identify the presence of reservoir rocks, source rocks, and traps necessary for natural 

gas and oil accumulation. The results of this work are updated as new data and information are 

generated and acquired. The RE Program is beginning work on a new assessment to support the 

next 5-Year Oil and Gas Leasing Program. 

The scale of the assessment activities range from large (i.e. regional or OCS-wide) to salespecific, i.e., individual prospects. In the early stages, the focus is on regional areas, but as more 

data and information are acquired, the focus shifts to lease sales and prospect-specific areas to be 

offered for lease, or which are related to a specific issue, (i.e., moratoria, marine sanctuaries, 

quantitative analysis of legislative proposal, etc.). Once a sale area has been identified, the RE 

Program produces more detailed mapping and analyses needed to estimate the resource potential 

of individual prospects within that area. These prospect-specific data, maps, and analyses are 

also used to determine parameters for post-sale bid analyses. 

Reserves Inventory: The DOI is required under the OCS Lands Act to “...conduct a continuing 

investigation... for the purpose of determining the availability of all oil and natural gas produced 

or located on the Outer Continental Shelf.” MMS’s Reserves Inventory Program represents a 

significant part of the Resource Evaluation scope and further contributes to: 

Energy supply forecasting; 

Public policy decisions; 

Independent assessment/verification; and, 

Assuring fair value in public/private transactions. 

The reserves inventory component of the RE Program assigns new producible leases to fields 

and establishes field limits. The RE Program also develops independent estimates of original 

amounts of natural gas and oil in discovered fields by conducting field reserve studies and 

reviews of fields, sands and reservoirs on the OCS. The Program periodically revises the 

estimates of remaining natural gas and oil to reflect new discoveries, development information 

and annual production. 

A field is an area consisting of a single reservoir or multiple reservoirs all grouped on, or related 

to, the same general geological structural feature and/or stratigraphic trapping condition. There 

may be two or more reservoirs in a field that are separated vertically by impervious strata, 

laterally by geologic barriers, or by both. Hydrocarbons (gas and oil) estimated on the basis of 

geologic knowledge to exist outside of known accumulations are undiscovered resources. 

Hydrocarbons whose location and quantity are known or estimated from specific geologic 

evidence are discovered resources. 

Fair Market Value Determination: Assuring receipt of Fair Market Value on OCS lands was 

mandated by the OCS Land Act and its amendments and remains a critical responsibility of the 

RE Program. Regional RE offices, in conjunction with headquarters oversight, perform the 

functions necessary to thoroughly assess the oil and gas potential and fair market value of OCS 

tracts offered for lease. These tracts are offered through sales that are conducted in accordance 

104 Minerals Management Service 
 

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with the OCS 5-Year Oil and Gas Leasing Program. As a result of this program, the MMS has 

become one of the largest providers of revenue for the U.S. Federal Government. 

Once a lease sale is completed and the high bidders for each tract are publicly announced, the 

MMS follows specific bid adequacy procedures to ensure that the government receives fair 

market value for the tracts receiving bids. This process is carried out in several phases and 

incorporates geological and geophysical data along with reserve, resource, engineering and 

economic information into a sophisticated discounted cash flow computer model. The goal of 

that model is to achieve estimates of fair market value on tracts receiving bids. In general, the 

tract evaluation process consists of Phase 1 and Phase 2 described below. 

Phase 1 of the process is conducted on a tract-by-tract basis and is normally completed fairly 

early following the bid opening. It is designed to accept those high bids where the competitive 

market can be relied upon to assure receipt of FMV or where Government data indicate the tract 

does not contain a viable prospect. 

Those high bids not accepted in Phase 1 receive further evaluation in Phase 2. For those high 

bids, MMS geologists, geophysicists, petroleum engineers, economists and computer scientists 

prepare detailed estimates of the economic value of oil and gas resources on each tract in Phase 

2. The high bids are then compared to Government estimates of economic value of the 

corresponding tract. That value is determined by calculating the amount of economically 

recoverable resources, estimating recovery factors, production profiles, exploration and 

development costs, operating costs, revenue streams, and performing a discounted cash-flow 

analysis. The computer simulation model performing that task also incorporates geologic and 

economic risking. The prospect-specific analyses are incorporated into the regional maps. Most 

analyses are undertaken based upon data available at the time of the sale; however, additional 

geophysical and geological data may be obtained after the sale at the discretion of the Regional 

Director. Generally, the Regional Director must accept or reject all bids within 90 days after the 

date on which they are opened. Any bid not accepted within 90 days is rejected. Companies have 

15 days to appeal any rejection. 

Regulation of Prelease Geological and Geophysical (G&G) Exploration: The general 

purpose of the regulations is to ensure that prelease exploration, prospecting, and scientific 

research operations in Federal waters do not interfere with each other, with lease operations, or 

with other uses of the area. The regulations also encourage G&G data acquisition while 

adequately protecting the investment of data gathered and still assuring equal access and 

competitive balance. Adherence to these regulations will ensure that exploration and research 

activities will be conducted in an environmentally safe manner. 

The permits, issued by the RE Regional Supervisors, set forth the specific details for each datagathering activity, which include the area where the data are collected, the timing of the datagathering activity, approved equipment and methods, and other similar detailed information 

relevant to each specific permit. 

After data have been collected by permittees, the MMS selectively acquires data that are needed 

to update the existing database. Industry uses these G&G data to determine the areas having 

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OEMM – Resource Evaluation 

potential for oil and gas production. Oil companies also use these data for preparing bids for 

lease sales. The MMS also acquires data that have been collected for scientific research 

activities, for which an approved permit or filing of notice is required. 

For each approved application, the operator receives a signed copy of the permit that outlines 

policies regarding reporting, submission, inspection, and selection of data, reimbursement, 

disclosure of information, possible sharing of data with affected states, and policies regarding 

permit modifications. 

Each Region has unique environmental concerns and these are addressed through mitigating 

measures at the Regional level. Such stipulations are available on each MMS Regional office’s 

webpage. 

The MMS tracks G&G permits by calendar year. Total permits demonstrate that most OCS oil 

and gas activity has been in the Gulf of Mexico. The Gulf of Mexico has issued 82 percent of all 

permits and is followed by the Alaska Region with 9 percent. The Pacific Region has issued 7 

percent of the permits, followed by the former Atlantic Region with about 2 percent. However, 

since 1994 activities in the Atlantic have been assigned to the Gulf of Mexico Region. With the 

addition of these responsibilities, the percentage of total permits for the Gulf of Mexico Region 

increases to 85 percent. These statistics correlate extremely well with the dominant position of 

the Central and Western Gulf of Mexico planning areas in OCS oil and gas activities. 

It should be noted that since 1969, approximately 95 percent of the permits issued were for 

geophysical exploration and that geological exploration permits accounted for only 5 percent. 

While the total number of 3-D permits compared to all permits issued is rather small (8 percent) 

when compared with the total geophysical permits issued, over the past 10 years, 3-D permits 

have averaged 49 percent of all geophysical permits. Permits for deep stratigraphic test wells or 

COST wells account for about 2 percent of the geological permits. 

The overall trends in permitting for all the Regions (i.e. Gulf of Mexico, Alaska and the Pacific) 

are similar and reflect fluctuations in the price and supply of petroleum. Some regional 

differences can be detected that are related to leasing moratoria, operating conditions, and 

hydrocarbon discoveries. Leasing moratoria and bad weather conditions have an adverse effect 

on the exploration activities. 

G&G Data Acquisition and Analysis: The main objective of the acquisition and analysis of 

G&G data is the development of maps identifying areas favorable for the accumulation of 

hydrocarbons. This is done by incorporating the data acquired through G&G surveys plus 

analyzing technical information to develop a basic knowledge of the geologic history of an area 

and its effects on hydrocarbon or strategic/critical minerals generation, distribution, and 

accumulation within the planning area. 

The primary source of the G&G data and information used by the RE Program is the oil and gas 

industry, which conducts exploration, development, and production activities on OCS lands. The 

MMS issues permits to industry for collecting pre-lease as well as post-lease G&G data. RE 

Program approves the permits of pre-lease data acquisition, while other MMS programs (e.g. 

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OEMM – Resource Evaluation 

Offshore Regulatory Program) issue permits for post-lease data collection. Permittees, as well as 

lessees, and operators are required by regulations to provide certain G&G data and information 

to MMS. The MMS selectively obtains copies of data acquired in these pre-lease activities. 

Permittees and lessees are normally reimbursed by MMS for only the cost of data reproduction. 

However, if industry has collected data in areas not under MMS jurisdiction, e.g., state waters or 

adjacent foreign waters, and MMS selects such data, MMS pays the significantly higher "market 

price" for obtaining copies of such data. The extensive amount of data and information acquired 

by MMS is used by RE geologists, geophysicists, petroleum engineers, modelers and IT 

specialists to perform a variety of analyses leading to resource evaluation, reserve inventory as 

well as determining fair market value of the auctioned tracts. 

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Table 21: OEMM Performance Overview – Resource Evaluation 

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OEMM - Regulatory 

FY 2011 PERFORMANCE BUDGET REQUEST 

Offshore Energy and Minerals Management 

Regulatory Subactivity 

Table 22: OEMM Regulatory Subactivity Budget Summary 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Regulation of Operations ($000) 

FTE 

55,768 

325 

58,761 

324 

-205 

0 

324 

6 

58,880 

330 

119 

6 

Technical Assessment and 

Research 

($000) 

FTE 

1,500 

0 

1,500 

0 

0 

0 

0 

0 

1,500 

0 

0 

0 

Regulatory Subactivity ($000) 

FTE 

57,268 

325 

60,261 

324 

-205 

0 

324 

6 

60,380 

330 

119 

6 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Component ($000) FTE 

Program Changes 

• Ensure Fair Market Value and Safe Operations +900 +6 

• Department-Wide Changes -205 +0 

• Offsetting Collections Reductions -576 +0 

Total, Program Changes +119 +6 

Additional resources for the Ensure Fair Market Value and Safe Operations are also requested in 

the Leasing and Environmental subactivity ($850,000; 0 FTE) and the Resource Evaluation 

subactivity ($2.7 million; 4 FTE). The initiative in its totality is for $4.4 million and 10 FTE. A 

detailed listing can be found in the OEMM Overview section. 

JUSTIFICATION OF FY 2011 PROGRAM CHANGES 

The FY 2011 budget request for the Regulatory Subactivity is $60.4 million and 330 FTE, a net 

increase of $0.11 million and increase of 6 FTE from the FY 2010 enacted budget. 

Ensure Fair Market Value and Safe Operations (+$900,000; +6 FTE): Increased lease sales 

and deepwater activity continue to present challenges. To ensure safe operations, MMS requests 

additional funds for inspection activities, particularly in the Gulf of Mexico, to continue to 

ensure safe operations and environmental protection and compliance. 

•	 Workforce - $900,000; +6 FTE. 

o	 The Gulf of Mexico is in need of additional inspectors to address the current and 

anticipated increase in deepwater fixed and floating facilities and the number of 

components that must be inspected offshore. 

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OEMM - Regulatory 

o	 There are currently 42 deepwater fixed and floating production facilities installed 

in the Gulf of Mexico (GOM). Most of these are in areas of the GOM inspected 

by the New Orleans and Houma Districts, including Mississippi Canyon, Green 

Canyon, Viosca Knoll, and Ewing Banks. 

o	 There are 8 facilities planned or in construction for deepwater, which are some of 

the largest and most complex in the world, including the Perdido Regional Host 

SPAR and Cascade-Chinook FPSO. 

o	 GOMR also expects an additional 15 new build and 4 upgrade ultra-deepwater 

rigs to be added to the fleet of deepwater rigs operating in the GOM from 2009 

through 2011. They are the most technically advanced drilling rigs in the world, 

and will require more time for inspections and travel to and from their remote 

locations in the GOM. These ultra-deepwater rigs will be capable of both 

exploration and development work in the Miocene and Lower Tertiary high 

pressure/high temperature (HP/HT) prospects and discoveries in water depths up 

to 12,000 feet and drilling depths up to 40,000 feet. 

o	 Additionally, the GOMR has been collecting information on gas plants that 

process Federal gas production. These gas plants contain meters utilized in the 

determination of royalty payments due the Federal government. At this time, 

meter information is being collected and in the near future the information will be 

included in the TIMS database. Subsequent to this data entry, GOMR will likely 

be required to conduct measurement inspections at these gas plant facilities that 

would include the site security and witnessing of the calibrations of the meters 

associated with the Federal processed gas. This would include plant inlet meters 

along with tail end meters that measure the residual gas and natural gas liquids. 

The above-mentioned activity along with the current work load on the inspection 

program associated with aging infrastructure, hurricane damage, and idle iron will require 

the additional FTEs in order to meet current mandated inspection goals. 

Impacts of Not Funding: 

•	 May not achieve number of required inspections. 

•	 Pre-production inspections for the new deepwater facilities may not be able to be 

conducted in the shipyard. 

•	 Gas plant meter inspections may not be completed. 

Performance Change Statement: 

Due to the increase in deepwater drilling and production operations and increased 

decommissioning work on the shelf to plug wells and remove platforms that are no longer useful 

for lease operations, MMS will need more inspectors to ensure these operations are conducted 

safe and pollution-free. Currently MMS conducts production inspections at least once per year 

on production facilities and every month on drilling rigs. MMS is seeing an increase in the 

number of deepwater major facilities being planned and installed. These facilities require a 

greater amount of time to inspect and have hundreds of safety devices installed. During a typical 

inspection each one of these safety devices may be tested along with doing paperwork checks for 

Minerals Management Service 112 
 

OEMM - Regulatory 

all documentation performed since the last inspection. Additionally, there are other operations 

that take place that MMS inspectors have difficulty getting to because they are mandated to 

complete those production and drilling inspections. There are many more operations that use 

wireline, coiled tubing, cranes and cement pumping units. These operations are the ones that 

will require more attention as these are not the most high tech systems. Also, it is very important 

that MMS investigates all major accidents and pollution incidents. The results of these 

investigations are used to educate industry of the findings and try to prevent that same type of 

incident from recurring. 

The MMS is in the process of stepping up its meter inspection program. In addition to 

conducting 100 percent site security inspections of offshore meters, MMS is now embarking on a 

mission to inspect all gas plant meters that handle Federal production (200+ meters). This will 

require additional inspection personnel to ensure we are able to conduct inspections on all these 

meters yearly. Without the additional inspectors MMS may not be able to complete the required 

inspections, much less accomplish the goal of inspecting those smaller operations that are using 

wireline, coiled tubing, crane and cementing units and meter inspections. 

With this funding MMS will be able to improve the effectiveness of operator performance audits. 

More comprehensive information will be particularly useful for performance audits that relate to 

accident investigation follow-up. Information from these audits can be used to determine what 

safety or environmental management failure caused the accident. This information will allow 

MMS to work with operators to improve safety and environmental management processes and 

procedures. Over time, these efforts should assist with lowering the number of serious injuries 

and fatalities that occur and should result in an overall improvement in the operator’s composite 

safety performance. 

PROGRAM OVERVIEW 

On behalf of the Nation, MMS regulates about 3,795 offshore production platforms and manages 

about 8,124 active oil and gas leases on approximately 43 million acres of the OCS. Recent 

noteworthy events concerning oil and gas production in the Gulf of Mexico include: 

•	 In June 2008, BP’s Thunder Horse PDQ (Production, Drilling, Quarters) facility began 

production of both oil and natural gas. Current production from this facility is 205,253 

BOPD and 168 MMCFD from 10 subsea wells. 

•	 In July 2008, BHP Billiton’s Neptune facility (GC 613) began production of both oil and 

natural gas. Current production from this facility is 15,100 BOPD and 11.9 MMCFD 

from six subsea wells. The platform is located 112 miles off the coast of Louisiana in 

approximately 4,230 feet of water. 

•	 In November 2008, Chevron’s Blind Faith facility began production of both oil and 

natural gas. Current production from this facility is 58,000 BOPD and 42 MMCFD from 

four subsea wells. The platform is located over 75 miles off the coast of Louisiana in 

approximately 6,480 feet of water. 

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•	 2009 Production: 

o	 In March 2009, BHP Billiton’s Shenzi facility (GC 653) commenced production 

of both oil and natural gas. Current production from this facility is 126,800 

BOPD and 47 MMCFD from seven subsea wells. The platform is located 175 

miles off the coast of Louisiana in approximately 4,375 feet of water. 

o	 In May 2009, Chevron’s Tahiti facility (GC 641) commenced production of both 

oil and natural gas. Current production from this facility is 123,500 BOPD and 67 

MMCFD. The platform is located 125 miles off the coast of Louisiana in 

approximately 4,000 feet of water. 

o	 Murphy’s ThunderHawk facility commenced production in July 2009. It is 

currently producing approximately 27,000 BOPD and 25 MMCFD from three 

subsea wells. 

•	 Future Production 2010: 

o	 Shell’s Perdido Regional Host facility (AC 857) is expected to commence 

production in early 2010. 

o	 Phoenix FPU (GC 237) is expected to commence production in the summer of 

2010. 

o	 Cascade/Chinook FPSO (WR 249) is expected to commence production in the 

summer of 2010. 

o	 ATP’s Mirage MinDoc (MC 941) is expected to commence production in 2010. 

The MMS OEMM Program works to assure that energy and mineral development activities are 

conducted in a safe and environmentally sound manner, with safety being a prerequisite of all 

activity on the OCS. The MMS continually seeks operational improvements that will reduce the 

risks to offshore personnel and to the environment, and continually evaluates procedures and 

regulations to stay abreast of technological advances that will ensure safe and clean operations 

and conserve the Nation’s natural resources. 

The Regulatory subactivity funds two program elements that work to assure safe and clean 

operations on the OCS: 1) Regulation of Operations and 2) Technology Assessment and 

Research (TA&R). The Regulation of Operations program oversees all aspects of offshore 

activities, from exploration and development to production and decommissioning. Key activities 

include the review of industry plans and permit requests; completion of compliance inspections 

and incident investigations; monitoring of operator safety and environmental performance; 

management of reservoirs to maximize ultimate recovery of mineral resources; and verification 

of oil and gas production levels to help ensure the public receives a fair return. The TA&R 

program supports research associated with operational safety and pollution prevention, working 

with academia, private firms, and government agencies to assess safety-related technologies and 

to perform applied research specific to operations in the OCS environment. 

In FY 2005, MMS achieved the top rating of “Effective” in a Program Assessment Rating Tool 

(PART) review of its OCS Regulatory and Compliance program. The assessment concludes 

that: 

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OEMM - Regulatory 

“The program is well managed and effectively balances the need for 

access to mineral resources with environmental protection goals. MMS 

uses both regulatory and non-regulatory means to minimize risk to the 

public and the environment and to avoid uncompensated resource loss.” 

PERFORMANCE OVERVIEW 

The full range of regulatory activities are critical elements of MMS’s overall success and 

contributed to the achievement of the top rating of “Effective” in the 2005 PART review of the 

OCS Regulatory and Compliance program. 

In addition to safety and pollution prevention, the OCS Lands Act (OCSLA) charges the 

Secretary of the Interior with the authority to require that OCS operators prevent waste and 

conserve the natural resources of the OCS, as well as protect the correlative rights therein. 

For fiscal years 2002-2008, MMS conservation management efforts 

are estimated to have increased ultimate recovery by 278.5 million 

barrels of oil (or equivalent volumes of natural gas). 

To promote these conservation objectives, MMS uses its regulatory authorities to require certain 

actions by operators to accelerate or increase production while protecting the ultimate recovery 

of minerals from a lease, and has developed a performance measure to reflect the rate of return 

for key conservation management activities. 

The Regulatory subactivity primarily supports the approval of OCS plans and permits, regulatory 

compliance and conservation of resources. The following graph displays the approximate 

spending distribution as derived from the Bureau’s ABC system. 

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OEMM - Regulatory 

Technology 

Assessment and 

Research 

Inspections/ 

Investigations 

Renewable Energy 

5% 1% 

Reservoir Mgmt/ 

Conservation 

13% 

Plans & Permits 59%

22% 

Figure 11. Estimated FY 2009 Regulatory Spending Profile 

The MMS’s Offshore Steering Committee issued an OEMM strategic plan that identifies specific 

objectives and initiatives OEMM plans to implement over the 5-year period between 2007 and 

2012. Several initiatives included in the plan address Regulatory program priorities and fall 

under the strategic goal of “Ensure Safe and Sound Operations.” The two strategic objectives 

supporting this goal are: 

•	 Maintain effective regulations and verify compliance by requiring operators to 

employ safety and environmental management systems, updating regulations to 

incorporate best practices and technological advances, and updating standards to 

reflect new information and hurricane knowledge. 

•	 Manage high-risk operations by focusing a comprehensive inspection strategy 

on facilities with the highest risk, addressing safety and pollution preventionrelated permitting issues in frontier areas, and participating in research and 

standards development for high pressure, high temperature, deepwater, and Artic 

operations. 

Recent regulatory-related initiatives include: 

•	 Review MMS Programs to Assure Safe and Environmentally Sound Operations in 

the OCS Ultra-Deepwater. Industry’s push into ultra-deepwater (greater than 

5,000 feet deep) in search of oil and gas means new, constantly evolving 

technologies. The MMS will evaluate the adequacy of funding, standards, and 

environmental and technological information base for reviews of industry plans in 

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OEMM - Regulatory 

ultra-deepwater, and propose solutions to fill any information or other gaps. 

•	 Identify and Implement Lessons Learned from Post-Hurricane Studies and 

Assessments. The MMS is studying the impact of hurricanes on the oil and gas 

infrastructure. Studies will analyze and assess consequential damage to structures 

and pipelines; determine the effectiveness of current design standards, metocean 

criteria, pollution prevention systems, and Mobile Offshore Drilling Unit mooring 

standards; and develop recommendations for changes to industry standards and 

MMS regulations, if needed. 

•	 Develop and Implement an Aging Infrastructure Plan. To ensure offshore 

infrastructure components (wells, platforms, and pipelines) remain in safe and 

useful condition, MMS will establish mechanisms for assessing and maintaining 

DOI-regulated infrastructure on the OCS. 

•	 Establish a Comprehensive and Efficient Pipeline Safety Program. The MMS manages 

over 33,000 miles of undersea pipelines that provide the means to service and transport 

approximately 25 percent of the Nation’s domestically produced oil and 11 percent of 

our natural gas from offshore wells to onshore refineries. The oil and gas pipelines on 

the OCS have not experienced catastrophic accidents or failures; however, MMS has 

concerns about the integrity of some older offshore pipeline systems and about ocean 

pollution from third party-related pipeline accidents. Additionally, as industry moves 

into deeper water and, potentially, into Arctic areas, there is a continued need to focus on 

the technology and management practices needed to design, build, and maintain safe and 

reliable pipelines suitable to these extreme environments and conditions. The MMS will 

review and update pipeline safety requirements under Subpart J of the regulations, 

continue to promote safety research, encourage cooperation between government 

agencies that share jurisdiction, and investigate possible new program initiatives toward 

the establishment of a comprehensive Pipeline Safety Program. The long-term goal is to 

develop and implement a proactive and comprehensive regulatory program that promotes 

the continued integrity of offshore pipelines; further reduces the potential for pipeline 

leaks and failures; and further protects sensitive environmental resources. 

2011 PROGRAM PERFORMANCE – REGULATION OF OPERATIONS 

The MMS’s comprehensive management program of energy and mineral operations on the OCS 

ensures that these operations are conducted in a safe and environmentally sound manner. The 

foundation of this program is a set of regulations that govern all aspects of offshore energy and 

mineral activities, from engineering specifications for offshore facilities to training requirements 

for OCS workers. The MMS continually reviews these regulations to update and revise them, 

ensuring that they include the most effective requirements for safety and environmental 

protection on the OCS. 

Review of OCS Plans and Permits: Reviews of plans and permits help to ensure that all OCS 

operators comply with regulatory standards and specific lease stipulations. The MMS performs 

detailed technical and environmental reviews of plans and permits for exploration, development, 

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OEMM - Regulatory 

and production on OCS lands, as well as permits for other activities such as the installation of 

pipelines. The ongoing effort by MMS to develop performance-based operating regulations is 

expected to generate an increasing number of operator requests for approval of alternative 

compliance programs. Prior to making approval decisions on alternative compliance, MMS must 

assess the alternatives to ensure they provide equal or greater protection than the regulatory 

requirements they would replace. The MMS will be required to commit a substantial and 

increasing amount of resources to these assessments in order to evaluate an operator’s proposed 

alternative, verify adherence to approved plans, and determine effectiveness of technologies and 

procedures employed. 

Inspections and Investigations: The OCSLA amendments mandate that annual inspections be 

performed on each permanent structure and drilling rig that conducts drilling, completion, or 

workover operations. Safety is a priority for both MMS staff and for the operations that occur 

under MMS jurisdiction, and onsite facility inspections and enforcement actions are important 

components of MMS’s safety program. The Bureau has established ambitious GPRA, PART, 

and Activity Based Costing (ABC) targets for the conduct of thousands of inspections of OCS 

facilities and operations, including coverage of tens of thousands of safety and pollution 

prevention components each year to prevent offshore accidents and spills, and to ensure a safe 

working environment. Inspections of all oil and gas operations on the OCS are performed 

annually to examine safety equipment designed to prevent blowouts, fires, spills, and other major 

accidents. In 2009, MMS inspectors completed approximately 27,000 compliance inspections. 

The MMS inspects drilling and production facilities on the OCS using both scheduled and 

unannounced inspections. Annual inspections are conducted on all platforms, but more frequent 

inspections may be conducted to focus on operators with a poor performance record, follow up 

on previous inspection findings, in environmentally sensitive areas, and to foster a climate of 

safe and pollution free operations. The MMS has developed a sampling program that allows 

inspectors to conduct an inspection using a random statistical sampling of facility equipment 

resulting in a 95 percent probability that the entire facility complies with the regulations, with the 

goal of preventing accidents on the OCS. 

When incidents do occur, MMS conducts investigations and analyzes incident-related data to 

understand the causes of incidents. Examination of long-term trends indicates that the safety and 

environmental record of the offshore industry has dramatically improved over the last 50 years. 

In 2006, MMS revised the regulatory requirements for incident reporting to clarify the reporting 

requirements and provide more precise definitions and reporting timeframes. These changes 

have resulted in a more consistent incident reporting program and the collection of more reliable 

incident information. The revisions also included requirements for reporting additional 

categories of incidents such as gas releases, incidents associated with lifting equipment, and 

incidents that result in less severe injuries than were previously reported. This additional 

information is helping MMS better identify safety concerns and trends. The MMS and other 

agencies, such as the U.S. Coast Guard, investigate accidents that result in loss of life, serious 

injuries, major fires, damage to facilities, and major spillages in order to identify causes and 

prevent future similar incidents. The MMS - USCG interagency MOA for incident investigation 

was signed March 27, 2009. This MOA will ensure effective use and coordination of our 

respective resources. In FY 2009, MMS investigated 78 incidents to determine causes and 

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OEMM - Regulatory 

analyze regulatory performance. Though ABC data indicate that these investigations account for 

less than three percent of Regulatory spending, they provide important information for MMS and 

industry. Incident investigation reports are published on MMS Regional websites, and MMS 

advises operators and lessees of safety concerns identified in the reports through the publication 

of Safety Alerts. Incident data are an important part of evaluating the performance of individual 

companies and the industry as a whole. Where appropriate, Federal agencies, including MMS, 

pursue civil and criminal penalty actions against those in violation of Federal regulations, 

especially when such violations result in, or have the potential to result in, injuries, loss of life, or 

damage to environmental resources. 

Safety and Environmental Management: Most offshore oil and gas incidents can be traced to 

human error or poorly organized operations. The MMS encourages OCS operators to use a 

companywide Safety and Environmental Management System (SEMS) to organize their 

activities to minimize risks to workers and the environment. 

The SEMS is a performance-oriented approach for integrating and managing OCS operations to 

effectively address such important safety factors as: 

• conducting safety and environmental reviews; 

• assuring the quality and integrity of critical equipment; 

• establishing safe work practices; 

• training workers; and 

• responding to emergencies. 

Performance data indicate that more than half of OCS facilities are covered under this voluntary 

program, with some indications that the safety and environmental performance outcomes of 

SEMS participants are better than industry performance as a whole. Additionally, in response to 

the 2005 PART assessment, MMS has drafted and is preparing to issue proposed regulations for 

safety and environmental management systems. The MMS proposes to require operators to 

develop and implement a SEMS to address oil and gas operations in the Outer Continental Shelf. 

The proposed SEMS rule would consist of four elements—Hazards Analysis, Management of 

Change, Operating Procedures, and Mechanical Integrity—that, until now, have not been 

covered in MMS regulations. The MMS analyzed accident panel investigation reports, incident 

reports, and incidents of noncompliance and determined that the root cause of most safety and 

environmental accidents and incidents is one or more of these four elements. The MMS believes 

that requiring operators to implement a SEMS will reduce the risk and number of accidents, 

injuries, and spills during Outer Continental Shelf activities. The proposed rule was published 

on June 17, 2009, in the Federal Register. The comment period closed September 15, 2009 

yielding 62 separate comments. These comments will be weighed and analyzed and MMS will 

publish a final rule in 2010. 

Operator Performance Reviews: The MMS conducts Annual Performance Reviews (APR) of 

each operator. The APR process captures compliance and accident information gathered through 

the OCS Inspection Program and weights that information to arrive at a final Operator 

Performance Index, as well as composite indices that are used as PART performance indicators 

for the OCS Regulatory and Compliance program. The bureau meets with those operators 

performing at the highest levels to solicit ideas for best operating practices. With the operator’s 

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OEMM - Regulatory 

concurrence, MMS shares these success stories with others through workshops, conferences, and 

other safety-related meetings. Additionally, MMS focuses compliance efforts on those operators 

whose performance does not meet certain targets. 

Civil and Criminal Penalties and Operator Disqualification: The MMS, where appropriate, 

will pursue civil and criminal penalty actions against those in violation of Federal regulations, 

especially when such violations result in, or have the potential to result in, injuries, loss of life, or 

damage to environmental resources. If an operator exhibits excessively poor, dangerous, or 

threatening performance, MMS can assess a civil penalty. In FY 2009, 21 civil penalty cases 

were paid for a total of $1.2 million in assessment. The MMS OCS Civil Penalties Program 

encourages compliance with OCS statutes and regulations through the pursuit, assessment, and 

collection of civil penalties (and referrals for the consideration of criminal penalties where 

warranted). 

The cost of administering the Civil Penalties Program is monitored in the bureau’s ABC system. 

Though less than one percent of Regulatory spending, the Civil Penalties Program is an 

important tool for enforcing compliance on the OCS. However, should the operator continue to 

perform poorly, MMS may place an operator on probation or disqualify a company from 

operating a specific facility, or all facilities, on the OCS. The disqualification process provides a 

structured means to remove operators that pose a threat to the safety of life and the OCS 

environment. 

Conservation Management: As steward of the Nation’s OCS mineral resources, MMS must 

provide for conservation of natural resources by preventing waste and ensuring ultimate recovery 

of the resources, as well as protecting the correlative rights of OCS lessees and the government. 

Conservation of oil and gas resources is an integral part of the Nation’s energy policy and a 

primary objective for the MMS Regulatory program. To promote conservation, MMS monitors 

development and production activities on the OCS and uses its regulatory authority to require 

certain actions by operators to maximize the ultimate recovery of OCS minerals once access has 

been granted. Information gained from these activities also supports other MMS requirements, 

such as reserves estimations and assessments of undiscovered resources. 

2011 PROGRAM PERFORMANCE – TECHNOLOGY ASSESSMENT & RESEARCH 

The Technology and Assessment Research (TA&R) program addresses technological issues 

associated with oil and gas operations, ranging from the drilling of exploratory wells in search of 

new reserves to the removal of platforms and related production facilities once reserves have 

been depleted. Although MMS research efforts may involve any aspect of oil and gas 

operations, particular attention is given to drilling, workover, production, completions, 

structures, pipelines, decommissioning, human factors/risk assessment, and measurement 

operations. Under the TA&R Program, MMS performs applied research in regulatory 

technologies to ensure safe, pollution-free operations and conducts applied research in the 

prevention of oil pollution and the improvement of oil spill response and clean-up (see Oil Spill 

Research budget subactivity). 

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OEMM - Regulatory 

Participation in joint projects is one of the most effective and efficient means to leverage 

available funds and disseminate research findings. Therefore, participation in jointly funded 

projects with industry, other Federal and state agencies, academia, and international regulatory 

organizations has become an important mechanism for TA&R. In 2009, the TA&R program cofunded five projects with other organizations. In 2010, the TA&R program expects to co-fund 

five projects with other organizations. Due to the many benefits that MMS has experienced 

through co-funded research, the TA&R program will continue to seek opportunities to leverage 

research dollars through joint projects for new engineering studies and conservation research. 

The expansion of industry operations into the deepwater areas of the Gulf of Mexico presents 

significant technological challenges to industry and MMS. Industry is focused upon the 

development of new concepts, operational procedures, production facilities, and transportation 

facilities to meet the physical and economic challenges created by the operating environments of 

water depths between 3,000 to 10,000 feet. In many cases, custom designs are being developed 

that employ new materials and unique operating characteristics, all of which need to be 

independently verified by MMS to ensure safety of operations and protection of the environment. 

The first commercial development of oil discoveries on the Federal portions of the Beaufort Sea 

offshore Alaska also presents special challenges to the TA&R program – particularly the forces 

that sea ice applies to surface structures (i.e., drilling or production facilities) and pipelines. 

Meanwhile, existing platforms and pipelines continue to age, and MMS is increasingly 

concerned with ensuring the integrity of these older facilities. If not properly maintained, 

offshore facilities and components will age at an accelerated rate both externally, due to the 

corrosive salt-water environment, and internally, due to the acidic/caustic nature of some 

produced well fluids. In order to manage offshore infrastructure in a safe and fully functional 

condition, it is important to properly protect and maintain wells, platforms, and pipelines through 

sound engineering standards and rigorous inspection. The MMS sponsors research to identify 

and correct specific problems associated with aging and is working closely with industry to 

ensure the continued safety of OCS facilities, workers, and the environment. 

As platforms and associated production facilities reach the end of their useful lives – as is 

currently happening in the Gulf of Mexico and offshore Southern California – decommissioning 

and removal are required. The MMS and industry are jointly funding multi-year research 

projects to assess the optimal means of decommissioning and removing these facilities. 

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OEMM - Regulatory 

Table 23: OEMM Regulatory Program Performance Change 

2007 

Actual 

2008 

Actual 

2009 

Actual 2010 Plan 2011 Plan 

Program 

Change 

Accruing 

in 2011 

Program 

Change 

Accruing in 

Out-years 

A B=A+C C 

Total Number of 

Compliance 

Inspections 

Completed 

20,567 25,650 26,978 22,000 23,000 1,000 0 

Total 

Actual/Projected 

Cost ($000) 

40,300 44,100 44,500 48,500 48,700 200 0 

Actual/Projected 

Cost Per Inspection $ 1,959 $1,719 $ 1,649 $2,204 $ 2,117 - $87 0 

Comments 

In addition to increasing the number of compliance inspections performed by 1,000, this 

initiative would provide inspectors more time to conduct operator audits, compliance review 

cases, and incident investigations. It will also allow them to concentrate on measurement 

discrepancies and gas plant inspections. 

MMS is in the process of changing its inspection strategy to a more risk-based approach. This 

strategy change means MMS is conducting more component sampling and performance 

based inspections which focus on higher risk facilities. Inspections at high risk facilities are 

more comprehensive and consume more resources than sampling inspections. In 2008 and 

2009, a concentrated effort has been made to perform more production inspections (e.g., 

meter inspections). In future years MMS anticipates focusing more resources on fewer but 

higher risk facilities particularly for the non-production type inspections. 

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Table 24: OEMM Performance Overview – Regulatory Program 

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OEMM – Information Management Program 

FY 2011 PERFORMANCE BUDGET REQUEST 

Offshore Energy and Minerals Management 

Information Management Program Subactivity 

Table 25: OEMM Information Management Program Subactivity Budget Summary 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Information Management 

Subactivity 

($000) 

FTE 

20,270 

64 

20,454 

64 

0 

0 

0 

0 

20,454 

64 

0 

0 

The FY 2011 budget request for the Information Management Program Subactivity is 

$20.4 million and 64 FTE, level with the FY 2010 enacted budget. 

PROGRAM OVERVIEW 

The IMP provides a central foundation to manage the large volume of information and data used 

in the scientific, engineering, and management activities of the MMS’s OEMM program. The 

OEMM has a sophisticated and valuable Information Technology (IT) infrastructure that 

supports data management and internal and external communications. At the core of OEMM’s 

IT capabilities is the legacy Technical Information Management System (TIMS). TIMS 

automates the business and regulatory functions of the OEMM and brings diverse information 

into a central database. This enables MMS's Regions and Headquarters to share and combine 

data; to standardize processes, forms, reports, and maps; to promote the electronic submission of 

data; to reduce the costs of establishing and maintaining duplicate databases and information 

storage and retrieval systems; to enforce data integrity through relational database technology; 

and to release accurate, consistent information to the public sector. 

The Geological Interpretive Tools (GIT) system represents the basis of essentially all OEMM 

determinations requiring critical geoscience analysis. GIT allows OEMM to improve 

productivity by quantifying analyses, analyzing digital data in three‐dimensions (3‐D), fully 

integrating geophysical and geological data analysis, and reducing risks and uncertainty in 

decision making processes. In addition, OEMM has developed an extensive Geographic 

Information System (GIS) capability for nearly all MMS offshore maps and leasing processes, 

providing the MMS the means to define, describe, analyze, and account for every acre of Federal 

offshore submerged lands. In order to effectively perform its mission, OEMM must provide 

solutions to automate information exchange while reducing errors and maintaining data quality. 

To satisfy the requirements of both internal and external stakeholders OEMM has undertaken the 

OCS Connect project. OCS Connect will leverage the existing TIMS database and integrate 

state-of‐the‐art technologies to enhance current capabilities and provide business functionality to 

meet business needs. 

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OEMM – Information Management Program 

The OEMM IT Program supports 900 government and contractor staff in four major locations. 

The technical environment is comprised of approximately 215 servers, over 150 GIT 

workstations, and approximately 350 terabytes of electronic data storage. It manages a complex 

network infrastructure, data backup and recovery solutions and specialized printing and plotting 

capabilities. In addition, the OEMM manages a comprehensive IT security program that 

monitors, identifies and seeks to prevent malicious or unauthorized activity and has developed a 

proactive vulnerability and risk assessment capability. 

Headquarters IT staff (located in Herndon, Virginia and New Orleans, Louisiana) provide singlepoint management, coordination, and standardization of OEMM IT activities, resulting in an 

efficient centralized operation. The Gulf of Mexico Region IT operations are centralized into the 

HQ structure to provide consolidated integration and operations. Some of the many 

responsibilities of this staff include: 

•	 Coordination with the Department’s and MMS’s Chief Information Officers, and 

adherence to Departmental Enterprise Architecture, Departmental Capital Planning and 

Investment Control process, and Departmental IT Security; 

•	 Leadership in the design, development, implementation, and support of the OEMM 

corporate database and application systems; 

•	 Coordination of OEMM information security activities and coordination with MMS and 

Department-wide security functions; 

•	 Leadership in design, development, integration, implementation, and support of OEMM 

and MMS architecture infrastructure; 

•	 Coordination of OEMM-wide area network activities and bureau-wide technology 

integration; 

•	 Acquisition management of all service contracts in OEMM in support of software 

development, help desk support, IT consulting, and Geoscientific Interpretive Tools to 

assist the geoscientists with the evaluation of OEMM leases and management of 

operations and environmental concerns on the OCS; 

•	 Leadership in the evaluation and integration of new IT solutions; and 

•	 Support and provide transition services for the OCS Connect project. 

The IT units in the other two MMS OCS Regions (Alaska and Pacific) provide onsite IT support 

to program staff in those localities. 

•	 Within the IMP, OEMM is responsible for maintaining its share of the bureau-wide IT 

shared services. Currently this portion of the budget supports the Exchange (e-mail) 

infrastructure, the master domain infrastructure, the Systems Management Server (SMS), 

enterprise desktop licenses, enterprise contract support, and other enterprise-wide 

systems. 

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OEMM – Information Management Program 

2011 PROGRAM PERFORMANCE 

The OEMM IT program is operating in an environment of unprecedented new and changing 

mission needs as a result of MMS program responsibilities. These include: 

•	 New MMS responsibilities for Federal offshore alternative energy and alternate uses of 

America’s offshore public lands under the 2005 Energy Policy Act. 

•	 Oversight of grants under the Coastal Impact Assistance Program (CIAP), a 4-year 

program also authorized by the Energy Policy Act. 

•	 Implementation of revenue sharing requirements under the Gulf of Mexico Energy 

Security Act of 2006 (Pub. Law 109‐432). 

•	 Ongoing changes to improve revenue collections and management processes. 

In addition to responding to conditions that affect the nature of its business, OEMM is under 

increasing pressure to address changes that affect how it will deliver IT. While the OEMM IT 

program operates in an environment of changing mission needs, new technologies and resource 

constraints, it remains committed to enhance mission support with the best technology and 

service possible. 

To this end, the Offshore Steering Committee has developed an OEMM IT Program Strategic 

Framework and Goals Plan that will serve as direction for the Offshore Program. The following 

provides a broad outline of that plan: 

Framework Goal Principle(s) 

External 1. Align IT solutions with the OEMM business 

environment, policy, goals and statutory 

requirements. 

Collaboration 

Agility 

Value 

Stewardship 

Transparency 

Governance 

Internal 2. Deliver and maintain a secure, reliable, cost 

effective, responsive technology architecture. 

Control 3. Enhance the overall management of the 

information technology program and service. 

delivery 

The OEMM IT Strategic Plan will be used as a planning document that will be compared against 

progress and updated as needed, but at least annually. Tactical plans are being developed that 

will provide detailed tasks in support of each objective within three months of strategic plan 

approval. 

In addition to implementation of the OEMM IT Strategic Plan, the following activities will be 

taking place: 

•	 First completed in May 2004, certification and accreditation is required every three years. 

OEMM continues to be on schedule, with the next reaccreditation due in FY 2010. 

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OEMM – Information Management Program 

•	 Internal Control Reviews for all OEMM systems: 

o	 To date, no material security weaknesses have been found and OEMM continues 

to be compliant with the Federal Information Security Management Act (FISMA). 

•	 Annual training for general users and expanded training for systems administrators, 

security managers, and OEMM managers. 

•	 Convening governance committees that regularly examine offshore IT needs, recommend 

reprioritization of needs based on new circumstances, and collectively recommend the 

most effective distribution of limited IMP resources. 

Also, MMS continues work on the newly re-scoped OCS Connect project, approved by the 

Departmental CIO in 2009. The Development, Modernization, and Enhancement (DME) phase 

is estimated to continue until FY 2015. The new approach is iterative, builds increments of 

functionality, employs process adaptability, and promotes useful assets that provide desired 

business outcomes using a realistic schedule. OEMM will complete the DME phase with 

funding made available by deferred spending from prior years. 

OCS Connect will narrow existing agency performance gaps by: 

•	 providing better access to the public and industry for a host of MMS services and 

information products; 

•	 decreasing cycle time to receive and process stakeholder requests; 

•	 increasing collaboration and information sharing among MMS and external stakeholders; 

•	 increasing the quantity and quality of value-added analysis of MMS data and resources; 

and 

•	 improving data and information access for the public and industry. 

The five high priorities identified for development and implementation are: 

1.	 Electronic Document Management System (EDMS) and Geographic Information 

System (GIS) foundational capabilities 

2.	 Lease Adjudication 

3.	 Plan Submittals 

4.	 Permit Requests 

5.	 Inspections 

OEMM will manage the development of OCS Connect by planning and executing three separate 

segments. The first segment began in August 2009. This segment includes EDMS, ArcGIS, and 

Company and Bonding processes and is scheduled to be complete in FY 2012. Segments 2 and 3 

cover plans, permits, inspections, and lease adjudication. 

Implementing electronic information exchange and workflow for these key business priorities 

will result in improved information access, faster processing, and greater accuracy of information 

required for OEMM and stakeholder decision-making. 

The IMP subactivity funds IT personnel, systems, hardware, software, training, shared services, 

security activities, maintenance, and technical support, as well as the OCS Connect project. 

Within the Activity-Based Costing system, MMS generally assigns IM activities to specified 

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OEMM – Information Management Program 

DOI Common Work Activities, recognizing that program-specific IT systems are developed and 

maintained to support mission processes. IT security costs are separately identified as program 

support. 

IT Application 

Development and 

Maintenance 

12% 

Leasing and 

Environment 

12% 

Resource Evaluation 

6% 

IT Security 

6% 

IT Mgmt 

52%

Regulatory 

12% 

Figure 12. Estimated FY 2009 Information Management Spending Profile 

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OEMM – Oil Spill Research Appropriation 

FY 2011 PERFORMANCE BUDGET REQUEST 

Offshore Energy and Minerals Management 

Oil Spill Research Appropriation 

Table 26: OEMM Oil Spill Research Budget Summary 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Oil Spill Research ($000) 

FTE 

6,303 

18 

6,303 

18 

0 

0 

0 

0 

6,303 

18 

0 

0 

PROGRAM OVERVIEW 

The Oil Spill Research (OSR) appropriation funds oil spill response research, Ohmsett – 

the National Oil Spill Response & Renewable Energy Test Facility, oil spill prevention and 

response planning, and regulation of oil spill financial responsibility. These activities support 

the DOI strategy of enhancing responsible use management practices in the energy sector. 

Funding for OSR activities is appropriated from the Oil Spill Liability Trust Fund (OSLTF). The 

OSLTF was initially funded through a tax of five cents per barrel of oil, collected from industry. 

Subsequent funding for the OSLTF is derived from: 

•	 Barrel Tax. The largest source of revenue has been a 5-cent-per-barrel tax, collected 

from the oil industry on petroleum produced in or imported to the United States. The tax 

was suspended in July 1993 because the Fund reached its statutory limit. It was 

reinstated in July 1994 when the balance declined below $1 billion, but expired at the end 

of 1994 because of the sunset provision in the law. The 2005 Energy Policy Act again 

reinstated the tax, effective April 2006. 

•	 Transfers. A second major source of revenue has been transfers from other existing 

pollution funds. Total transfers into the Fund since 1990 have exceeded $550 million. No 

additional funds remain to be transferred to the OSLTF. 

•	 Interest. Interest on the Fund principal from U.S. Treasury investments generates 

additional revenue. 

•	 Cost Recoveries. Another source is cost recoveries from responsible parties; those 

responsible for oil incidents are liable for costs and damages. The National Pollution 

Funds Center bills responsible parties to recover costs expended by the Fund. As these 

monies are recovered, they are deposited into the Fund. 

•	 Penalties. In addition to paying for clean-up costs, responsible parties may incur fines 

and civil penalties under the Oil Pollution Act, the Federal Water Pollution Control Act, 

the Deepwater Port Act, and the Trans-Alaska Pipeline Authorization Act. Penalty 

deposits into the OSLTF are generally between $4 million and $7 million per year. 

Minerals Management Service 133 
 

 

OEMM – Oil Spill Research Appropriation 

Oil Spill Financial 

Responsibility 

6% 

Oil Spill Research 

37% 

Oil Spill Planning and 

Compliance 

Ohmsett 

38%

19% 

Figure 13. Estimated FY 2009 Oil Spill Research Spending Profile 

As intended by the Oil Pollution Act of 1990, the companies that produce and transport oil are 

supporting research to improve oil spill response capabilities. 

The Nation's record for safe and clean offshore oil and natural gas operations is excellent. 

According to a National Academy of Sciences (NAS) study, an estimated 1,700 bbl of oil seep 

naturally each day from the seabed or coastal areas into U.S. marine waters. The NAS report 

also made estimates for North America, where natural seepage is the largest input, contributing 

63 percent of total inputs to the marine environment. In comparison, offshore oil and gas 

development, production, and transportation was found to be responsible for only 2 percent of 

the petroleum inputs in North America’s marine environment. (Citation: Oil in the Sea III: 

Inputs, Fates, and Effects, National Research Council of the National Academies, 2003). 

The loss of hydrocarbons from wells on the OCS during 2008 Hurricanes Gustav and Ike, 2005 

Hurricanes Katrina and Rita, and 2004 Hurricane Ivan was minimized by the successful 

operation of the safety valves that are required to be installed at least 100 feet below the mudline 

in each wellbore. The pipeline valves limited the potential losses from damaged pipeline 

segments. All OCS facilities in areas threatened by the storms’ approach were shut in prior to 

the hurricanes so that oil losses were mostly limited to the oil stored on the damaged platforms 

and rigs or contained in damaged pipeline sections between the check valves. 

In addition to the oil spill research described below, MMS Safety and Engineering Research in 

the TA&R program includes technical studies to understand the effects of hurricane events on 

the integrity of offshore facilities. This information can be used to identify what can be done to 

improve the integrity of these facilities. 

134 Minerals Management Service 
 

 

OEMM – Oil Spill Research Appropriation 

PERFORMANCE OVERVIEW 

MMS administers many programs and activities aimed at the prevention and mitigation of oil 

spills: 

Oil Spill Response Research (OSRR): The MMS is the principal Federal agency funding 

offshore oil spill response research. Managed in conjunction with the bureau’s Technology 

Assessment and Research Program (see OEMM - Regulatory Subactivity section), the OSRR 

program supports research to improve the capabilities for detecting and responding to oil spills in 

the marine environment. Information derived from the OSRR program is directly integrated into 

MMS’s operations and is used in making regulatory decisions pertaining to permit and plan 

approvals, safety and pollution prevention inspections, enforcement actions, and training 

requirements. The OSRR projects cover a wide spectrum of oil spill response issues, such as 

remote sensing and detection, mechanical containment and recovery, physical and chemical 

properties of crude oil, chemical treating and dispersants, in situ burning, and deepwater 

operations. Since its inception, this program has expanded capabilities to respond to an oil spill 

in the marine environment. 

Conducting an effective OSRR program means that the best available response technologies are 

identified, developed, and made available to combat spills, if and when they occur. Response 

technologies identified by the OSRR program focus on preventing spills from offshore 

operations reaching more sensitive coastal environments. The program is cooperative in nature, 

bringing together funding and expertise from research partners in government agencies, the oil 

industry, and the international community through cooperative research arrangements and 

participation in concurrent research and development projects. Many of these projects are Joint 

Industry Projects, where MMS partners with other stakeholders to maximize research dollars. 

Recent examples of oil spill response research include an assessment of using chemical herders 

to respond to oil spills, burn residue and heavy oil projects, and a review of using chemical 

treating agents to clean up oil in brackish water. In 2010, MMS will review clean up technology 

for dielectric oils, clean up of oil under ice using ground penetrating radar and laser flurosensors, 

oil mineral aggregate formation to mitigate oil spills in cold water, and biofuel spill response. 

Ohmsett - The National Oil Spill Response and Renewable Energy Test Facility: Ohmsett is 

one of the world’s largest tow/wave tanks, designed to test and evaluate full scale equipment 

detection for the containment of cleanup oil spills. Ohmsett is also developing the capability to 

test renewable energy systems such as wave generating systems. No other agency operates a 

facility like Ohmsett; in fact, major Federal clients such as the United States Coast Guard and the 

United States Navy rely on Ohmsett for their training needs. The diverse private client base of 

Ohmsett varies from major oil industry firms such as Exxon Corporation and Marine Spill 

Response Corporation to academic research institutions like the University of New Hampshire, 

University of Rhode Island, and the University of Miami. 

Ohmsett is the only facility where oil spill response testing, training, and research can be 

conducted with a variety of crude oils and refined products in varying wave conditions. 

Ohmsett is located at Naval Weapons Station Earle in Leonardo, NJ, about one hour drive south 

of New York City. The heart of Ohmsett is a large outdoor, above ground concrete test tank that 

Minerals Management Service 135 
 

 

 

 

OEMM – Oil Spill Research Appropriation 

is 667 feet long, 65 feet wide, 11 feet deep and filled with 2.6 million gallons of crystal clear 

saltwater. Ohmsett plays an important role in developing the most effective response 

technologies, as well as preparing responders with the most realistic training available. The 

facility provides testing and research capabilities to help the government fulfill its regulatory 

requirements and meet its goal of clean and safe operations. 

Many of today’s commercially available oil spill cleanup products have been tested at Ohmsett 

and a considerable body of performance data and information on mechanical response equipment 

has been obtained there. This information can be used by response planners in reviewing and 

approving facility contingency plans. Ohmsett is also the premier training site for oil spill 

response personnel. Government agencies including the USCG and USN as well as private 

industry and oil spill response organizations train their emergency response personnel in real oil 

with their own full-scale equipment. Some of the testing activities for 2009 included sunken oil 

detection, chemical herders to improve mechanical oil recovery, evaluation of the Tesoro-Crucial 

Skimmer, remote sensing, name-plate capacity pumping tests, and tests of mechanical response 

equipment. 

In March, there was also the first renewable energy test of a current energy device developed by 

the University of Mexico. This was followed by another current energy test and two wave 

energy tests in late 2009. For 2010, there will be several wave system tests, oil herder tests, a 

grooved drum skimmer test, more remote sensing tests and several USCG oil spill response 

training classes. Information on Ohmsett can be found at www.ohmsett.com. 

Figure 14: Ohmsett Facility in New Jersey 

136 Minerals Management Service 
 

OEMM – Oil Spill Research Appropriation 

Oil Spill Response and Planning: The MMS is responsible for planning, preparedness, and 

response-related activities related to oil and gas exploration, development, and production 

seaward of the coastline. Oil spill preparedness and response activities include unannounced 

drills, equipment inspections, review of Oil Spill Response Plans, participation in tabletop 

exercises, and providing support to the Federal On-Scene Coordinator during spill events. 

The bureau has established requirements for the preparation of Oil Spill Response Plans that 

provide information on how an operator would respond to an oil spill. The MMS regulations 

also outline training requirements, alternative response techniques, sensitive resource 

identification, identification of pre-trained spill management team members, locations of predesignated incident command posts, and other key elements. The MMS often collaborates with 

state response agencies to review and approve Oil Spill Response Plans for oil and gas facilities 

in state offshore waters. For the MMS, a major focus of activity is implementation of the DOI 

Emergency Preparedness & Response Strategy – Oil Discharges & Hazardous Substance 

Releases. 

Oil Spill Financial Responsibility: The MMS is responsible for implementing the financial 

responsibility provisions of OCSLA and OPA, which require companies responsible for certain 

offshore oil and gas facilities, in both Federal and state waters, to demonstrate their ability to pay 

the costs of facility oil spill discharge removal and damages. Several methods may be used to 

demonstrate oil spill financial responsibility (OSFR), including insurance, bonds, self-insurance, 

and guarantee. The amount of OSFR needed is based on facility location and the volume of the 

worst-case oil spill discharge that could occur. Extensive coordination and exchange of lease 

data takes place with affected states to ensure that the public is insulated from fiscal risk by 

ensuring that each offshore operator maintains the ability to pay for damages resulting from 

worst-case oil spill scenarios. 

Minerals Management Service 137 
 

OEMM – Oil Spill Research Appropriation 

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138 Minerals Management Service 
 

 

 

 

Minerals Revenue Management (MRM) 

FY 2011 PERFORMANCE BUDGET REQUEST 

Minerals Revenue Management 

Table 27: Minerals Revenue Management Summary of Budget Request 

Minerals Revenue 

Management (MRM) 2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

 (+/-) 

DOI-Wide 

Changes 

 (+/-)

Program 

Changes 

 (+/-) 

Budget 

Request

Compliance and Asset 

Management 

($000) 

FTE 

47,965 

377 

50,940 

398 

-150 

0 

10,644 

11 

61,434 

409 

10,494 

11 

Revenue and Operations ($000) 

FTE 

38,719 

173 

38,434 

177 

-226 

0 

762 

0 

38,970 

177 

536 

0 

Total ($000) 

FTE 

86,684 

550 

89,374 

575 

-376 

0 

11,406 

11 

100,404 

586 

11,030 

11 

Other Major Resources 

RIK Revenue Receipts for 

RIK/SPR Admin ($000) 22,000 22,000 0 -10,000 12,000 -10,000 

RIK Revenue Receipts for 

RIK/SPR Transportation ($000) 62,000 20,000 

The MMS is entrusted with an important fiduciary role by and for all Americans. Through its 

Minerals Revenue Management (MRM) program, MMS efficiently and effectively utilizes its 

financial systems and human resources to collect, account for, substantiate, and disburse 

revenues associated with mineral production from leased Federal and Indian lands. In addition, 

MMS serves as a trustee of the royalty asset from Indian trust properties and as an advocate for 

the interests of Indian mineral owners, ensuring fulfillment of our Indian trust responsibility. 

Every American benefits from the revenues generated from mineral resources, either directly 

through payments to tribes and individual Indian mineral owners (IIMOs), or indirectly through 

contributions to the Historic Preservation Fund, the Land and Water Conservation Fund, the 

Reclamation Fund, States, and disbursements to the General Fund of the U.S. Treasury. 

PROGRAM OVERVIEW 

In FY 2009, MMS disbursed $10.68 billion in mineral revenues to states, the Office of the 

Special Trustee for American Indians (OST) for distribution to Indian tribes and individual 

owners, other Federal agencies, and U.S. Treasury accounts. Additionally, MMS delivered oil 

valued at an estimated $268.5 million in FY 2009 to the Department of Energy for the Strategic 

Petroleum Reserve. 

The MMS exists in a dynamic environment, and its activities continuously evolve in response to 

Congressional mandates and industry changes. Since MMS’s formation, energy legislation and 

the energy industry have undergone significant changes. Yet MMS has consistently adapted to 

these changes while always looking for innovative improvements and operational efficiencies to 

best serve the American people. 

Minerals Management Service 139 
 

 

Minerals Revenue Management (MRM) 

Who Benefited from MMS Mineral Revenues 

Disb ursements in FY 2009 

 U.S. Taxpayers — $5.74 Billion 

Mineral leasing revenues are one of the Federal Government’s greatest sources of non-tax r eceipts 

funding va rious government functions and programs through the General Fund of the U.S. 

Treasury. 

 States — $1.99 Billion 

Mineral revenues disbursed to states are, in some states, a significant element of a state’s fin ancial 

resource picture, providing funding for local scho ols, roads, libraries, public buildings, and 

general operations as the states deem necessary. 

 Western Water Users — $1.45 Billion 

Mineral revenue receipts fund a significant portion of the U.S. Bureau of Reclamation’s water 

resource development and maintenanc e work in the western United States. Spending from the 

account is subject to appropriation. 

 Conservation and Recreation Programs — $899 Million 

MMS transfers nearly $900 million annually to the Land and Water Conservation Fund. Spending 

from the account is subject to appropriation. In recent years, this fund has been used to pur chase 

or acquire through exchange ab out 4.5 million acres throughout America for conservation 

purposes and recreational use. 

 American Indian Tribes and Indian Mineral Owners — $449 Million 

Monies collected from mineral leases on Indian lands are distributed regularly to tribal 

governments or Individual Indian Mineral Owners (IIMOs). These funds provide direct and 

tangible benefits t o thousands within the American Indian community, often as a major source of 

primary income. 

 Preservation — $150 Million 

MMS annually transfers $150 million to the National Historic Preservation Fund. This fund is 

administered to help save the histor ic buildings, neighborhoods, and landscapes that form our 

communities and enrich our lives. 

140 Minerals Management Service 
 

Minerals Revenue Management (MRM) 

FY 2011 PEFORMANCE BUDGET OVERVIEW 

The MMS is a leader in securing economic value for America by managing the revenues 

generated from the natural resources on Federal and Indian lands. Through its core business 

processes, MRM ensures optimal value for America’s mineral resources, benefiting the 

American people, states, Indian tribes, and IIMOs. The MRM is funded through two 

subactivities that closely parallel its core business processes: 

Compliance and Asset Management: This subactivity supports business processes focused 

on ensuring that the Nation’s Federal and Indian mineral revenues are accurately reported 

and paid in compliance with laws, regulations, and lease terms. The subactivity also focuses 

on providing consistency and oversight in MRM’s valuation regulations and determinations; 

market research and information gathering; and credit assurance. In addition, during FY 

2010 and 2011, the subactivity will support management of the RIK Phase-Out Plan. 

Revenue and Operations: This subactivity funds the Financial Management business 

process, which achieves economic value by ensuring that all revenues from Federal and 

Indian leases are efficiently, effectively, and accurately collected, accounted for, and 

disbursed in a timely manner. 

PROGRAM MANAGEMENT 

During 2008, MRM completed its Strategic Business Planning initiative by developing 

operational business plans through 2012 aligned with MRM program mission areas: Financial 

Management, Compliance, Indian Trust, Asset Management, and Resource and Information 

Management. 

In October 2009, MRM implemented a strategic reorganization in response to its Strategic 

Business and Operational Plans and recommendations received from employees and the 

Government Accountability Office (GAO), Royalty Policy Committee (RPC), and Office of 

Inspector General (OIG) reviews. The new organization realigned the MRM Program into three 

core mission organizations: 

• Asset Management, 

• Financial and Program Management, and 

• Audit and Compliance Management. 

The MRM continues to strengthen its coordination with other bureaus. The working relationship 

between MMS and BLM is longstanding because of the interdependent nature of our missions. 

In recent years, MMS and BLM have become more proactive in jointly pursuing common issues 

and challenges. The bureaus are working together to improve seamless electronic transfer of 

data between bureau systems, which will reduce errors from manual data entry and improve the 

reliability of data. In response to an RPC Subcommittee recommendation, the Department 

established a Production Coordination Committee (PCC) in 2008. The PCC not only coordinates 

and implements the cross cutting recommendations contained in the RPC Subcommittee Report, 

but also provides ongoing coordination of issues related to the management of Federal and 

Minerals Management Service 141 
 

 

 

 

 

Minerals Revenue Management (MRM) 

Indian mineral leases. The PCC representatives are high-level managers from the bureaus. The 

Deputy Assistant Secretary for Lands and Minerals Management chairs the PCC. In addition, 

MMS is providing support to the Department’s new Energy Reform Team, established to 

identify and implement important energy management reforms across the Department. 

Implementation of Royalty Policy Committee Recommendations 

On December 17, 2007, the Royalty Policy Committee, Subcommittee on Royalty 

Management issued a draft report titled, Mineral Revenue Collection from Federal and Indian 

Lands and the Outer Continental Shelf. The report contained 110 recommendations to 

improve royalty management. The areas with the most recommendations were Collections 

and Production Accountability, Royalty in Kind, and Audits, Compliance and Enforcement. 

Royalty Policy Committee Report 

The RPC Subcommittee Stated in its 

December 17, 2007 Report: “In general, the Recommendations by Category Collections and 

Subcommittee concludes that the Minerals 

Management Service is an effective steward of 

OCS Royalty Relief; Legislative; Production 

the Minerals Revenue Management program, 

and that MMS employees are genuinely Coordination, 

Communication, and 

concerned with fostering continued program Information Shari

improvements. The Subcommittee members 

unanimously agree that MMS is the Federal 

agency best suited to fulfill the stewardship 

responsibilities for Federal and Indian leases... 

However, a number of aspects of royalty 

management activities administered by MMS and 

the Bureau of Land Management require prompt, Audits, Compliance 

and in some cases, significant management and Enforcement; 

attention to ensure public confidence.” 27 30 

On January 25, 2008, the Secretary of the Interior ordered immediate implementation of 

recommended mineral management reforms. Many of the recommendations require 

coordination with multiple Department of the Interior agencies, including MMS, the Bureau 

of Land Management, the Bureau of Indian Affairs, and the DOI Solicitor’s Office. 

The Department developed a joint Action Plan to implement Report recommendations. The 

Assistant Secretary for Land and Minerals Management also established a coordination 

committee with representatives from BLM and MMS to coordinate crosscutting 

recommendations. 

As of January 15, 2010, 72 of the 110 recommendations have been completed and actions on 

the remaining 38 recommendations are underway. 

Royalty In Kind; 

5 3

ng; 10 

Accountability; 

35 

Since its inception in 1982, MMS, in partnership with BIA, BLM, and OST, has helped DOI 

fulfill its trust and fiduciary responsibilities to Indian beneficiaries. The MMS serves American 

Indian tribes and IIMOs by ensuring that they receive timely and accurate revenues for mineral 

142 Minerals Management Service 
 

 

 

Minerals Revenue Management (MRM) 

production on their land. The MMS also helps prepare tribes to assume a greater role in 

managing their mineral assets. 

The MRM reports quarterly performance results and Activity Based Cost (ABC) data in a timely 

and consistent manner. The MRM managers review quarterly performance and ABC data to 

assist in making decisions on resource allocation. 

Costs by MRM Performance Goal FY 2009 

RIK Net Return 

to Govt, 17% 

Compliance -

Properties and 

Companies, 

46% 

Percent Timely 

Disbursements, 

37% 

Figure 15: MRM Full ABC Costs, Allocated by Performance Goal 

To ensure effective controls over program operations and financial management systems that 

meet the objectives of the Federal Managers’ Financial Integrity Act (FMFIA), MRM conducts 

its assessments of internal controls with applicable laws and regulations in accordance with the 

Office of Management and Budget (OMB) Circular A-123, Management's Responsibility for 

Internal Controls. The objectives of this assessment are to ensure that MRM programs achieve 

their intended results; resources are used consistent with agency mission; resources are protected 

from waste, fraud and mismanagement; laws and regulations are followed; and reliable and 

timely information is maintained, reported and used for decision making. 

Based on the results of OMB Circular A-123 and internal control assessments during FY 2009, 

MMS can provide a reasonable assurance that the internal controls over the effectiveness and 

efficiency of operations and compliance with applicable laws and regulations, including FMFIA, 

are operating effectively. Further, MRM found no material weaknesses in the design or 

operation of internal controls. The MRM will also continue to follow DOI Internal Control and 

Audit Follow-up guidance and will submit a program-wide component inventory and 3-year 

internal control assessment strategy to DOI officials annually. 

The MMS is entrusted with an important fiduciary role and values the continued oversight it 

receives from the Government Accountability Office (GAO), the Office of Inspector General 

(OIG), and other external organizations. Recently, the OIG issued a report titled, Evaluation of 

Royalty Recommendations Made to the Department of the Interior Fiscal Year 2006 – February 

2009. This evaluation covered the 137 royalty-related recommendations from OIG, GAO, and 

Minerals Management Service 143 
 

Minerals Revenue Management (MRM) 

the RPC Subcommittee that were made to MMS since fiscal year 2006. The OIG concluded that 

59 of the recommendations had sufficient actions taken to consider them implemented or closed. 

The OIG also confirmed the remaining 78 recommendations as having action initiated toward 

completion or a completion date established in the corrective action plan. The evaluation report 

stated that a sample of the actions taken was appropriate and properly approved, and the internal 

status reported in the DOI tracking system is current and accurate. The report did not make any 

new recommendations to MMS. 

144 Minerals Management Service 
 

 

 

 

 

 

 

 

 

MRM – Compliance and Asset Management 

FY 2011 PERFORMANCE BUDGET REQUEST 

Minerals Revenue Management 

Compliance and Asset Management Subactivity 

Table 28: MRM Compliance and Asset Management Subactivity Budget Summary 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

 (+/-) 

DOI-Wide 

Changes 

 (+/-)

Program 

Changes 

 (+/-) 

Budget 

Request

Compliance and Asset 

Management Subactivity 

($000) 

FTE 

47,965 

377 

50,940 

398 

-150 

0 

10,644 

11 

61,434 

409 

10,494 

11 

Other Major Resources 

RIK Revenue Receipts for 

RIK/SPR Admin ($000) 22,000 22,000 0 -10,000 12,000 -10,000 

RIK Revenue Receipts for 

RIK/SPR Transportation ($000) 62,000 20,000 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Components Amount FTE** 

•	 Royalty In Kind Phase-Out/Transition to Royalty in Value* + $7,077,000 [26] 

•	 Enhance Compliance Tools Integration and Capability +$1,717,000 0 

•	 Ensure Proper Royalties Paid on Transported and 

Processed Natural Gas +$1,850,000 +11 

•	 Department-Wide Changes -$150,000 0 

Total Program Changes +$10,494,000 +11 

* Bureau-wide, a total of $10 million is requested for the RIK-RIV transition in FY 2011. In 

addition to the funds requested here, an additional $879,000 and 8 FTE is requested in the 

Revenue and Operations subactivity, and $2.044 million is requested in the General 

Administration subactivity. 

** Brackets indicate a non-add. Existing staff are being transitioned from in-kind to in-value 

activities and no additional FTE are requested. 

JUSTIFICATION OF FY 2011 PROGRAM CHANGES 

The FY 2011 Budget Request for the Compliance and Asset Management (CAM) Subactivity is 

$61.434 million and 409 FTE, a net increase of $10.494 million and 11 FTE over the FY 2010 

enacted budget. As part of a comprehensive energy strategy that includes improving royalty and 

revenue management, the budget includes staffing increases to enhance compliance tools and 

ensure that proper royalties are paid for natural gas processing and transportation. 

Minerals Management Service 145 
 

 

MRM – Compliance and Asset Management 

Royalty In Kind Phase-Out and Transition to Royalty in Value (+7,077,000; [+26 FTE]) 

On September 16, 2009, the Secretary of the Interior announced a transitional phase-out of the 

Royalty in Kind (RIK) Program. As a result, in FY 2011 MRM will require additional 

appropriated funds of $7.077 million to fund 26 FTE for compliance activities funded by the 

Compliance and Asset Management subactivity. This will ensure continued compliance coverage 

of the royalty stream. 

Background: 

As RIK oil and natural gas sales contracts expire, the oil and natural gas properties will revert to 

in-value status. As this transitional phase-out occurs, royalty obligations will revert from being 

collected in-kind to being collected in-value. There is little flexibility in transition timing because 

all existing RIK contracts expire by September 30, 2010. No new sales are anticipated. 

The MMS has begun implementing a RIK Phase-Out Plan to shift all RIK properties and 

associated mineral revenue collection and compliance activities to royalty in value (RIV). The 

table below indicates when RIK volumes will be transitioned to in-value. The MMS projects that 

all transitions will be complete by September 30, 2010, and related closeout and reconciliation 

accounting will be complete by September 30, 2011. 

Figure 16: RIK Oil and Gas Sales End Date Summary 

RIK Oil Sales Contract 

Expiration Date 

December 31, 2009 

March 31, 2010 

June 30, 2010 

September 30, 2010 

Totals 

Offshore 

FMPs 

48 

6 

4 

35 

93 

Wyoming 

Properties 

Daily Volume 

(bbls or mmbtu 

per day) 

70,600 

2,800 

5,000 

26,800 

105,200 

FMPs 

remaining 

45 

39 

35 

0 

Volume 

remaining 

34,600 

31,800 

26,800 

0 

RIK Gas Sales Contract 

Expiration Date 

October 31, 2009 

March 31, 2010 

Totals 

113 

117 

230 

86 

55 

141 

443,800 

196,600 

640,400 

BLM Helium Reserve - 

Gas Sales Contract 

Expiration Date 

March 31, 2010 10,000 

146 Minerals Management Service 
 

MRM – Compliance and Asset Management 

Justification: 

In announcing his decision to terminate the RIK Program, the Secretary of the Interior directed 

MMS to “. . . ensure that the termination of the RIK program will not adversely affect the MMS’s 

commitment to ensure that the nation’s Federal and Indian energy and mineral revenues are 

accurately reported and paid in compliance with laws, regulations and lease terms and that the 

American people receive fair market value for their valuable energy and mineral resources.” As 

RIK oil and natural gas sales contracts expire, RIK properties will revert to in-value status. MMS 

is requesting additional appropriated funds for the increased in-value resource needs resulting 

from this transition. Workload shifts from in-kind to in-value will begin in FY 2011 and may 

continue through FY 2013. This transition has significant impacts on the MMS budget. In FY 

2011, MMS projects that funding will be needed for the transition of 34 positions from in-kind to 

in-value activities, as well as for associated indirect costs throughout MMS. As a result, in FY 

2011 MMS will require additional appropriated funds of $10 million. 

Both direct and indirect costs of RIK operations are currently funded with RIK receipts, while 

non-RIK operations are funded with normal appropriated funding. As RIK operations are phasedout, ongoing indirect costs and costs associated with expanding in-value workloads will need to be 

funded from appropriated funds. The Department’s 2006 appropriation language and the Energy 

Policy Act of 2005 both require that direct and indirect costs associated with RIK activities be 

funded with RIK receipts. Therefore, upon enactment of these laws, MMS instituted policies and 

practices to ensure that appropriated funds are not used to support either direct or indirect costs of 

RIK activities and that RIK receipts did not support non-RIK activities. As a result, direct and 

indirect costs of RIK operations are spread throughout MMS, but many of the indirect activities 

funded with RIK receipts will remain, even as RIK activities decline. Some of these activities are: 

•	 a portion of the indirect costs of the MRMSS financial and compliance system, 

•	 a portion of the MRM executive direction staff and their related costs, 

•	 bureau-level administrative personnel costs that have supported RIK activities and will 

continue to be needed to support new royalty-in-value operations, and 

•	 a portion of the MMS space rental, utilities and other ongoing infrastructure costs. 

Other direct costs of RIK will be replaced by new direct costs associated with increased in-value 

workloads such as the direct costs of staff within MRM’s Asset Sales office which will be 

transitioned to in-value activities. 

The MMS projects that funding needs for the concurrent phase-out of RIK activities and the 

expansion of royalty-in-value audit and compliance activities very closely mirror each other in FY 

2011 and FY 2012. 

Impacts of Not Funding: 

Since these funds are, in effect, replacing mandatory funding that was previously available from 

RIK receipts in FY 2010 and earlier years, the requested increase in discretionary appropriations is 

not a net increase in overall program funding. With the termination of the RIK program, 

mandatory funding through receipts will no longer be available to MRM. Thus, this increase in 

Minerals Management Service 147 
 

MRM – Compliance and Asset Management 

discretionary funds is critical to avoid an overall decrease in funding for the MRM program. Not 

providing this funding would significantly disrupt the orderly phase-out of the RIK program and 

transition to in-value payments and would likely result in a significant reduction in compliance 

oversight capabilities within the MRM program. This, in turn, could be expected to result in a 

lower overall return to the Government from mineral revenue collections. 

Enhance Capabilities and Integration of Compliance Tools (+$1,717,000; 0 FTE) 

This 2-year initiative will fund MMS’s integrated implementation of several overlapping 

recommendations from the Office of Inspector General (OIG), the Royalty Policy Committee, 

Subcommittee for Royalty Management (RPC Subcommittee), and the MMS Strategic Business 

Planning initiative which relate to MRM’s mineral revenue compliance management tools. 

Background: 

Several recent external and internal assessments of the MMS Minerals Revenue Management 

(MRM) compliance activities have resulted in recommendations for significant improvement of 

MMS’s compliance management information tools. 

•	 The OIG’s December 2006 Report on the MRM Compliance Review Process which 

emphasized the need for tools to provide reliable information for managing MRM 

compliance activities, a strategy for deploying personnel between audits and compliance 

reviews, and capability to provide accurate information to stakeholders including Congress 

and the state and tribal audit organizations. 

•	 The RPC Subcommittee recommendations 4-9, 4-14, 4-17, and 4-18, emphasized 

improving the quality and reliability of compliance management information used in 

decision making, reducing manual data entry for compliance management information 

tools, and eliminating duplicate data. 

•	 MRM’s Strategic Business Planning initiatives (Compliance Business Plan and Indian 

Trust Business Plan) target integrated MRM, state, and tribal compliance activities to 

provide greater efficiency in identifying, organizing, maintaining, accessing, and analyzing 

information for effective regulatory compliance. 

Currently, MMS compliance management information is extracted from Minerals Revenue 

Management Support System (MRMSS) and used to populate multiple compliance management 

tools. The MMS currently uses several independent compliance tools to track workload, work 

progress, audit and compliance review findings and collections and performance metrics. 

Establishing and maintaining workload information in these tools is manually intensive and often 

duplicative in nature. Due to the variety of independent compliance tools, the OIG and the RPC 

Subcommittee noted MMS’s difficulty in accessing requested data, inconsistencies between tools, 

gaps in information, and duplication of manual data entry across separate tools. 

The FY 2009 Omnibus Appropriations bill, signed by the President on March 11, 2009, included 

funding for MMS to develop and implement a Risk-Based Automated Compliance tool for use in 

148 Minerals Management Service 
 

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targeting audit and compliance resources. While working on the development of this tool, MMS 

has also initiated projects to identify requirements to address the above OIG, RPC Subcommittee, 

and MMS Strategic Business Plan recommendations. Through this effort, MMS has determined 

that the most effective and cost-efficient approach to addressing these requirements is to focus on 

integration among all compliance management information tools, including the Risk-Based 

Automated Compliance tool. 

Justification: 

The MMS is planning for an expanded, holistic, and integrated approach to provide a Compliance 

Program Tool (CPT) that is scalable and flexible to ensure long-term usefulness and future 

adaptability. Current manually-intensive compliance management tools that will be fully 

automated and integrated with the MRMSS Data Warehouse, include: 

• Risk-Based Automated Compliance tool funded in FY 2009; 

• Workload Analysis tool; 

• Consolidated Work Planning process; 

• Assignment and Tracking Tool; 

• Electronic Workpapers; and 

• Compliance Performance Tracking tool. 

The MMS has developed requirements to demonstrate the inter-relationship of all of these 

compliance management tools, many of which are currently offline and very manually intensive to 

use and maintain. The MMS has also made significant progress in developing business 

requirements for a fully automated and integrated suite of Compliance Tools. These tools will 

provide one reliable and consistent source for automated, consolidated, and integrated compliance 

planning, analysis, tracking, performance accomplishment, and records management data in the 

MRMSS. 

The MMS plans for a phased-in implementation approach, with a strong focus on integration 

throughout the implementation process, while also addressing security issues to ensure availability 

of tools to our state and tribal audit partners. 

The phased-in implementation begun during FY 2009 focused on requirements for implementation 

of the risk-based automated compliance tool. That implementation will continue during FY 2010, 

ensuring focus on full integration capabilities with future phases. During FY 2010, MRM will 

also continue implementing the ongoing electronic records project, focusing on compliance 

workpapers and resulting performance tracking and reporting, ensuring full integration with riskbased automated compliance tool and future phases. During FY 2011 and FY 2012, the requested 

$1.7 million each year will provide for the fully integrated and automated Compliance Program 

Tool suite to be completed. This funding will also provide MMS the capability to address security 

issues, ensuring availability of the CPT to MMS’s state and tribal audit partners. 

Funding this initiative will ensure that MRM completes timely implementation of several open 

recommendations from the OIG and the RPC Subcommittee. The initiative will not directly 

impact achievement of MRM’s mission performance metrics, but will positively impact the 

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MRM – Compliance and Asset Management 

reliability of performance data and is expected to result in better industry compliance and higher 

overall royalty revenues to the Government in the future. 

Impacts of Not Funding: 

If not funded, MMS will not be able to implement multiple outstanding recommendations from the 

OIG and the RPC subcommittee. Continued use of several separate and manually-intensive 

compliance management tools is likely to result in further external audit findings regarding the 

reliability of MMS’s compliance management information. 

Ensure Proper Royalties Paid on Transported and Processed Natural Gas (+$1,850,000; +11 

FTE) 

The MRM proposes to increase its compliance, valuation, and market research staff by 11 FTE to 

provide reliable and timely access to gas index and location differential data for use in valuation, 

and perform reviews and audits of the targeted gas plants and transportation systems in accordance 

with a prioritized schedule based on identified risk factors to help ensure that proper royalties are 

being received. New positions will include petroleum engineers, chemical engineers, economists, 

auditors, analysts, technicians and related administrative support. Without these additional 

resources, MRM is unable to implement the RPC recommendations identified below. 

Background: 

The December 17, 2007 report to the Royalty Policy Committee titled Mineral Revenue Collection 

from Federal and Indian Lands and the Outer Continental Shelf submitted by the Subcommittee 

on Royalty Management resulted in recommendations for improvement of MMS’s compliance 

coverage for gas plants and unbundling of transportation costs. 

•	 Recommendation 3-15 emphasized improving the quality and reliability of information 

used in assessing the accuracy of royalties reported and paid on gas that is being processed 

at gas plants, where valuation determination occurs, reducing manual data entry for 

compliance management information tools, and eliminating duplicate data. 

•	 Recommendation 3-17 specifically recommended that MMS establish a prioritized gasplant compliance review or audit schedule to examine gas-plant efficiency. 

•	 Recommendation 4-26 addressed unbundling of transportation costs and revision and use 

of gas indexes for valuation. 

In FY 2010, MMS requested funding for 2 FTE to address RPC Subcommittee recommendation 3-

16. Those 2 FTE will analyze accuracy and completeness of gas plant efficiency data for use in 

compliance reviews and audits. Together, the FY 2010 and FY 2011 FTE requests will provide 

MMS the capability to address RPC recommendations related to processed and transported natural 

gas. 

Justification: 

For processed gas, MMS examines production volume reports, royalty reports, and publicly 

available data to assess whether the royalty amounts have been properly reported and paid. 

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Natural gas royalty valuation relies heavily on published index price data, adjusted by location 

differentials, to detect royalty discrepancies. The MMS expects regional published gas indices to 

be in the range of prices reported by companies with differences dependent upon the quality and 

location of the resource. 

When gas is transported to remote sales points beyond the lease boundary, pipeline companies 

charge producers a fee for providing this service. The fees charged to producers often include 

deductible and non-deductible costs, which makes calculation of allowable gas transportation and 

gas processing costs very difficult and complicates MMS compliance reviews and audits. 

Accurate calculation of royalties requires information related to lessees, payors, operators, royalty 

rates, prices, and transportation costs. 

With more than 200 gas plant systems processing gas from Federal leases, 100 different index 

points for gas, and over 500 pipeline systems transporting gas, MMS is requesting 11 FTE to: 

1) gather and maintain natural gas index values, 

2) determine location and quality differentials, 

3) Unbundle transportation fees for use in compliance risk determinations for gas plants 

 and transportation systems, including examining gas plant efficiencies, and 

4) perform reviews and audits of gas plants and transportation systems. 

Benefits 

•	 Implementation of RPC Subcommittee recommendations related to compliance issues for gas 

plants and transportation costs; 

•	 Improved accuracy of gas plant information, which is critical in determining expected 

volumes and values of processed gas and natural gas liquids for compliance purposes; and 

•	 Increased audit and compliance coverage for transportation and processing systems, resulting 

in assurance of proper collections and potential increases in collections. 

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MRM – Compliance and Asset Management 

Table 29: Program Performance Change 

2007 

Actual 

2008 

Actual 

2009 

Actual 

2010 

Plan 

2011 Base 

Budget 

(2010 Plan 

+ Fixed 

Costs 

2011 

Plan 

Program 

Change 

Accruing 

in 2011 

Program 

Change 

Accruing 

in Out -

years 

A B=A+C C D 

Cumulative percent of 

unique mineral royalty 

companies covered 

by compliance 

activities (2008-2012) 

N/A 

28.7% 

(525/ 

1,832) 

50.7% 

(906/ 

1,787) 

53.0% 

(933/ 

1,761 est.) 

55.3% 

(974/ 

1,761 est.) 

55.3% 

(974/ 

1,761 est.) 

2.3% 2.3% 

Cumulative percent of 

unique mineral royalty 

properties covered by 

compliance activities 

(2008-2012) 

N/A 

12.8% 

(3,100/ 

24,164) 

26.6% 

(6,374/ 

23,984) 

29.0% 

(7,125/ 

24,565 est.) 

32.0% 

(7,861/ 

24,565 est.) 

32.0% 

(7,861/ 

24,565 est.) 

3.0% 3.0% 

Total Actual/Projected 

Cost ($M) $53.7M $55.5M $59.2M $63.5M $63.5M $75.5 $12.0M $--

Comments 

This initiative is primarily in response to multiple RPC Subcommittee recommendations. We do not anticipate 

significant increases in unique property and company coverage as a result of this initiative. However, as 

recommended by the RPC Subcommittee, the projected audit coverage of transportation systems and processing 

plants will provide complex evaluations of allowances taken. Several FTE will be focused on improved accuracy 

of gas plant information, which is critical in determining expected volumes and values of processed gas and 

natural gas liquids for compliance purposes. Other FTE will provide increased audit and compliance coverage for 

transportation and processing systems. These evaluations, while supportive of unique company and property 

goals, will be performed on many of the same companies and properties that have already been identified as high 

risk in the strategic goals. 

Impacts of Not Funding: 

If this initiative is not funded, MRM will not be able to implement key RPC recommendations for 

improvement of MMS’s compliance coverage for gas plants and unbundling of transportation 

costs. In addition to implementing key RPC recommendations, these requested FTE would 

provide for more efficient use of audit resources and provide for additional collections. 

PROGRAM OVERVIEW 

This subactivity supports business processes focused on ensuring that the Nation’s Federal and 

Indian mineral revenues are accurately reported and paid in compliance with laws, regulations and 

lease terms. The CAM subactivity includes two major components: 

•	 Audit and Compliance, funded through appropriations in the CAM Subactivity. The 

MMS Federal and Indian compliance assurance activities represent a large and critical 

part of the operational strategy, ensuring that the Government is realizing fair market 

value and that companies are in compliance with applicable laws, regulations, and 

lease terms. 

•	 Asset Management, funded through appropriations in the CAM Subactivity and 

through RIK receipts. The MMS Asset Management activities provide consistency and 

oversight in MRM’s valuation regulations and determinations; market research and 

information gathering; and credit assurance. The Asset Management activities also 

manage the RIK Phase-Out Plan. 

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PERFORMANCE OVERVIEW 

In coordination with OMB and in response to 2006 OIG and 2007 PART recommendations, MMS 

implemented new compliance performance measures in 2009: 

•	 Cumulative percent of unique mineral royalty companies covered by compliance activities 

(2008-2012); and 

•	 Cumulative percent of unique mineral royalty properties covered by compliance activities 

(2008-2012). 

The new measures reflect the cumulative percent of unique companies and properties covered by 

MMS audits, compliance reviews, or RIK imbalance reconciliations. Only the unique companies 

and properties will be added to calculate the cumulative results from FY 2008 forward. A unique 

company or property is one not previously examined and completed since base year, FY 2008. 

The FY 2009 enacted budget included funding to implement a risk-based automated compliance 

tool to target audits and compliance reviews of properties and companies based on the highest risk 

of non-compliance. Until implemented, high-risk properties and payors are primarily being 

selected utilizing MRM’s interim risk-based targeting tools. A risk-based approach enables MMS 

to consistently target those companies and properties at greater risk for underpayment. The MMS 

is maintaining a strong focus on high-dollar properties and companies and using the risk tool in 

determining whether a formal audit or compliance review is required. 

AUDIT AND COMPLIANCE PERFORMANCE 

The MMS Federal and Indian compliance activities have yielded significant additional revenues to 

states, tribes, IIMOs, and the Federal Treasury. Since 1982, MMS’s additional collections of 

royalties and interest attributable to its compliance activities totaled over $3.5 billion. 

MMS's Audit Program Receives Clean Audit Opinion 

During FY 2008, an independent certified public accounting firm again performed a peer review of MRM’s 

audit activities, once again resulting in a clean audit opinion. The accounting firm stated: "In our opinion, 

the system of quality control for the Federal Audit Function of MMS in effect for period January 1, 2005 to 

May 31, 2008, has been designed to meet the requirements of the quality control standards established by 

the Comptroller General of the United States for a Federal Government audit organization and was 

complied with during this period to provide MMS with reasonable assurance of conforming with applicable 

auditing standards, policies, and procedures." Organizations performing audits in accordance with 

Generally Accepted Government Auditing Standard (GAGAS) must have an external peer review performed 

by independent reviewers at least once every three years. In FY 2011, MMS will undergo another peer 

review of its audit activities. 

The MMS compliance assurance activities represent a large and critical part of MMS’s operational 

strategy. Compliance assurance is performed on all types of royalties due. The MMS’s goal is to 

ensure that the Government is realizing fair market value and that companies are in compliance 

with applicable laws, regulations, and lease terms. 

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The MMS performs both compliance reviews and audits. For compliance reviews, MMS develops 

underpayment issues at the property or contract level, aggregates issues from several properties or 

contracts, and then presents findings to companies. The MMS creates efficiencies by resolving 

issues across properties and by gaining extensive property-based knowledge over time. The MMS 

performs two different compliance review processes: 

•	 For royalties paid in-value, compliance reviews apply a series of tests to the volume, 

royalty rate, value, and allowances for transportation and processing costs to determine if 

the royalty payment is reasonable on a property basis. 

•	 For royalties received in-kind RIK, MMS applies a series of tests designed to assure that it 

has received the proper royalty volume for the contract and that any transportation charges 

taken by the producer are reasonable. 

The MMS, states, and tribes also perform audits, in accordance with Generally Accepted 

Government Auditing Standards. Audits are performed on specifically targeted companies or 

properties, or for randomly selected companies. Audits can also focus on gas plants, 

transportation systems, or specific issues. 

Program Performance: Past Accomplishments & Future Goals 

Performance and Planned Accomplishments: 

In FY 2008 through FY 2009, MMS covered 50.7 percent of unique mineral companies and 26.6 

percent of unique mineral properties. By the end of FY 2010 and FY 2011, MMS is targeting 

cumulative coverage of 53 percent and 55.3 percent of unique mineral companies, respectively, 

and 29 percent and 32 percent of unique mineral properties, respectively. state and tribal partners 

report their compliance completion results to MMS on a regular basis, and are incorporated into 

the results of this measure. Royalty dollars remain a key component of the risk determination; 

therefore, there is strong probability of high revenue companies and properties being selected. 

Updates to 2010 Program Performance Targets 

The performance targets for unique companies and properties were revised from what was 

published in the FY 2010 budget because MMS exceeded previously published targets during 

FY 2009. The MMS’s previously published targets for RIK metrics have been eliminated for FY 

2010, due to the Secretary’s September 16, 2009 announcement terminating the RIK program. 

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Use of Cost and Performance Information 

In Audit and Compliance Management 

In FY 2008, MRM established a new risk-based compliance strategy. Based on the results of 

the pilot project, MRM began utilizing interim targeting and resource allocation tools to 

identify and target high risk companies and properties for its annual compliance work plan. 

The FY 2009 President’s request includes funding to implement a risk-based automated 

compliance tool to target audits and compliance reviews on those properties and companies 

identified with the highest risk of non-compliance. 

In developing its annual compliance work plan, MRM incorporates data from its interim risk 

tool with prior year performance data including cost per audit and cost per compliance review, 

current year targets, and data on available audit and compliance resources to determine the 

appropriate mix of audits and compliance reviews. 

During FY 2009, MMS closed 218 audits and 987 compliance reviews covering about 50 

percent of all royalty revenues and ensuring compliance for about $5.3 billion in royalty 

revenues. In FY 2010 and 2011, MMS projects completion of 218 and 238 audits, 

respectively, and 1,040 compliance reviews each year, again covering about 50 percent of 

royalty revenues. MRM anticipates that the full impact of the additional auditors funded in 

FY 2009 and FY 2010 would be realized in FY 2012 due to the hiring and necessary training 

during FY 2010 and 2011. 

The MMS covered 96.4 percent of high-significant risk companies and 32.9 percent of highsignificant risk properties during FY 2009. During FY 2010 and 2011, MMS will cover about 

86 percent of high-significant risk companies and approximately 43 percent of highsignificant risk properties. 

Additional Focus on Indian Trust Compliance: The MMS reviews, within three years, 100 

percent of the Indian trust mineral revenue for industry compliance with specific provisions 

contained in Indian gas leases. The January 2000 Indian gas valuation regulations require the use 

of published index prices for valuing gas produced from many American Indian leases. For leases 

in these index areas, MMS ensures that companies pay royalties based upon the proper index 

prices. 

Delegated and Cooperative Compliance Agreements with States and Tribes: The Federal Oil 

and Gas Royalty Management Act of 1982 (FOGRMA), as amended, Sections 202 and 205, 

authorized the Secretary to develop cooperative and delegated agreements with states and tribes to 

carry out certain inspection, auditing, investigation, or enforcement activities for leases in their 

jurisdiction. Currently, MMS has agreements with 11 states and 7 tribes. The states and tribes are 

working partners and an integral aspect of the overall compliance efforts. Tribes are selfempowered to perform audits on tribal mineral royalties within their reservation and the states 

perform audits on Federal leases within their boundaries. MMS conducts compliance reviews and 

audits to provide compliance coverage over properties not covered by the states and tribes. 

In FY 2009, MMS allocated $10.8 million to the states and tribes in the 202/205 program, of 

which the states and tribes expended approximately $9.7 million. In FY 2010, MMS is allocating 

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a total of $11.1 million, including $1.1 million which remained as carryover of 202/205 funds not 

expended in the prior year. MMS allocates its available budget resources for the Section 205 State 

Delegated Agreement Program and Section 202 Tribal Cooperative Agreement Program by 

analyzing cost, workload, and risk data to apply “best business case” criteria to the funding of this 

program. The mineral revenues at risk and number of producing leases are used to target “best 

business case” funding allocations among states and tribes. The MMS is working with the 

Cheyenne and Arapaho tribes of Oklahoma and the Three Affiliated Tribes of North Dakota 

(Mandan, Hidatsa, and Arikara) to establish new IPA Agreements, also known as Fellowships. 

These agreements will establish for MRM a knowledgeable representative from these tribes who 

fully understands the systems and business processes for collecting, accounting for, and 

distributing mineral revenues. 

Communication and Consultation with American Indians: In addition to the Section 202 

Tribal Cooperative Agreement Program, MMS also conducts Indian outreach sessions. The MMS 

uses several outreach methods, such as Navajo radio broadcasts and attending pow-wows, to reach 

the American Indian constituents. This reflects MMS’s goal to fulfill the Secretary of the 

Interior’s trust responsibility to American Indians. These outreach sessions enable MMS to listen 

to their concerns and suggestions for royalty accounting improvements, answer questions, identify 

and resolve mineral-related problems in partnership with the Bureau of Land Management (BLM), 

Bureau of Indian Affairs (BIA), and the Office of the Special Trustee for American Indians 

(OST). President Obama signed a memorandum on tribal consultation on November 5, 2009, 

noting the Government’s unique legal and political relationship with Indian tribal governments. 

Pursuant to Executive Order 13175, the memo directed all Federal agencies to submit a "detailed" 

tribal consultation plan in the next 90 days, with progress reports to follow. The Department is 

holding consultations in Indian Country during January 2010. The Department-wide Tribal 

Consultation Plan is scheduled to be completed by February 3, 2010. Also, as a member of the 

Department’s Tribal Energy Policy Advisory (TERA) Committee, MRM has begun partnering 

with BLM and BIA to consult with tribes about new TERA agreements – potentially empowering 

tribes to perform additional mineral-related activities on their own properties and furthering the 

goal of Indian self-determination. The MMS’s goal is to enhance trust responsibility and foster a 

positive working relationship with the Indian community. During 2009, MMS held 75 outreach 

sessions with American Indian constituents and resolved 5,474 royalty-related inquiries, a 

significant increase over the 3,985 inquiries resolved in FY 2008. FY 2010 funding provided 2 

additional FTE for Indian services, increasing inquiry and outreach services to new Indian mineral 

owners. 

Working in partnership with our sister agencies, the BLM, BIA, OST, Office of the Assistant 

Secretary of Indian Affairs (ASIA), and the U.S. Geological Survey (USGS), MMS is leading an 

effort to expand the number of Indian outreach sessions provided by developing Indian oil and gas 

training that covers all aspects of trust management including land ownership, leasing, drilling, 

production verification, lease inspection, royalty reporting, compliance, royalty disbursement, and 

financial trust accounts. The new training is tailored for tribes and IIMOs in the various regions 

where outreach is conducted as well as for Department employees who are involved in Indian oil 

and gas activities. The additional outreach sessions and the joint agency training program will 

provide Indian communities and DOI employees with opportunities to gain more knowledge of the 

full spectrum of Indian mineral resources. 

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ASSET MANAGEMENT PERFORMANCE 

The MRM is entrusted with ensuring that the American public and Indian lessors receive a fair 

and appropriate return for oil, gas, and other minerals produced from Federal and Indian leased 

lands. The MRM reorganization, effective October 1, 2009, established a new MRM Asset 

Management office that centralizes all responsibilities for administering MRM’s asset sales and 

valuation business processes including economic analysis; asset sales, accounting, and 

verification; credit management; reporting and market research; and royalty valuation. The Asset 

Management office is structured into two distinct areas, Asset Valuation and Asset Sales and 

Accounting. Centralizing these functions allows better information collection, storage, and 

analysis of market information; greater and more consistent policy oversight and regulatory 

interpretation; and enhanced economic and quantitative analysis of MRM’s entire asset 

management approach. 

The reorganization of Asset Management allows MRM to: 

•	 Identify alternatives to capture, store, and utilize market information; 

•	 Increase certainty and effectiveness of product valuation regulations; 

•	 Respond quickly to changes in market conditions; 

•	 Provide a single point for issuance of consistent product valuation determination and 

guidance; and 

•	 Centralize allowance limit approvals and other special case allowance approvals. 

Within Asset Management, the Asset Valuation office provides valuation support for production 

from Federal onshore, Outer Continental Shelf, and Indian lands. This office issues royalty 

valuation determinations and guidance under applicable regulations, approves exceptions to 

transportation and processing allowance limits, develops valuation and allowance regulations, and 

provides valuation guidance to MMS, state, and tribal personnel. Many of the 11 new FTE 

requested under our initiative, Ensure Proper Royalties Paid on Transported and Processed 

Natural Gas, will be staffed in the Asset Valuation office to provide reliable and timely access to 

gas index and location differential data for use in valuation, and to unbundle transportation fees 

for use in compliance risk determinations for gas plants and transportation systems, including 

examining gas plant efficiencies. 

The Asset Management office is also managing the RIK Phase-Out Plan. On September 16, 2009, 

the Secretary of the Interior announced a transitional phase-out of the RIK Program. The MMS 

projects that all transitions will be complete by September 30, 2010, and related closeout and 

reconciliation accounting will be complete by September 30, 2011. 

Program Performance: Past Accomplishments & Future Goals 

Proposed “Valuation of Federal Coal for Advance Royalty Purposes and Information 

Collection Applicable to All Solid Minerals” Rule: The proposed rule would establish 

alternative methods to determine the value of coal for advance royalty purposes and would amend 

various coal regulations in 30 CFR parts 203, 210, and 218, regarding data collection. MMS 

revised the previously-approved proposed regulations (with preamble), supporting statement, and 

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the Sales Summary forms and instructions, to be compatible with the detailed design of the Solids 

Compliance Program Tool. This tool was designed to achieve Congress' requirements regarding 

the calculation of coal advance royalties and to enable MMS to replace manual processes with 

automated ones. The revised proposed rule package is in the review and surname process. 

Indian Oil Valuation Rule: The MMS expects to address issues regarding the “major portion” 

calculation for oil produced from Indian leases in a negotiated rulemaking committee. The notice 

establishing the committee and announcing the organizations from which members may be 

selected was published in the Federal Register on December 19, 2008. The former Secretary of 

the Interior signed the charter on January 16, 2009. The committee is expected to convene after 

the charter has been filed and membership nominations are finalized. 

Royalty in Kind Phase-Out Project Plan: The Secretary announced his decision to terminate 

the Royalty in Kind (RIK) program on September 16, 2009 in testimony before the House Natural 

Resources Committee. The RIK Phase-Out Project will implement the Secretary’s decision. Key 

Milestones: 

•	 The Strategic Petroleum Reserve fill program was completed on December 31, 2009. 

•	 The final natural gas sales contracts, including those from the BLM National Helium 

Reserve, will expire on March 31, 2010. 

•	 The final crude oil sales contracts, including the Small Refiner program, will expire on 

September 30, 2010. 

The MRM will ensure operators begin to pay in value for the appropriate production month as 

RIK sales contracts expire and properties are converted to in-value. The MMS will continue RIK 

invoicing until all sales contracts have ended and after any invoicing issues and final adjustments 

are reconciled. Contracts for services, including transportation and processing, will be terminated 

as sales contracts expire in a joint effort between RIK and A&B Procurement. The cash-outs of 

RIK volume imbalances are a major effort that will continue until the end of the project. 

Imbalances are determined monthly on the basis of the difference between the entitled royalty 

share of production and the actual volumes delivered. 

SUBACTIVITY SUMMARY 

The MMS manages a substantial Federal monetary asset on behalf of the American public. 

Revenues from mineral leasing on public and Indian trust lands have averaged more than $13 

billion annually over the last 5 years. As such, MMS is entrusted with performing an important 

fiduciary role for the Nation. 

The MMS exists in a dynamic environment, and its activities continuously evolve in response to 

statutory and market changes. The MMS makes every effort to ensure that it continues to provide 

an unequaled government organization, measured by both performance and strict adherence to our 

fiduciary responsibilities. The full funding of the CAM FY 2011 Subactivity will ensure that 

MMS is able to perform its Federal and Indian audit and compliance and asset management 

activities effectively. 

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Table 30: MRM Performance Overview – Compliance and Asset Management Compliance and Asset Management 

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MRM – Revenue and Operations 

FY 2011 PERFORMANCE BUDGET REQUEST 

Minerals Revenue Management 

Revenue and Operations Subactivity 

Table 31: MRM Revenue and Operations Subactivity Budget Summary 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Revenue and Operations 

Subactivity 

($000) 

FTE 

38,719 

173 

38,434 

177 

-226 

0 

762 

0 

38,970 

177 

536 

0 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Components Amount FTE** 

• Royalty In Kind Phase-Out/Transition to Royalty in Value* + $879,000 [+8] 

• Department-Wide Changes -$226,000 0 

• Offsetting Collections Reduction -$117,000 0 

Total Program Changes +$536,000 +0 

* Bureau-wide, a total of $10 million is requested for the RIK-RIV transition in FY 2011. In 

addition to the funds requested here, an additional $7.077 million and 26 FTE is requested in the 

Compliance and Asset Management subactivity, and $2.044 million is requested in the General 

Administration subactivity. 

** Brackets indicate a non-add. Existing staff are being transitioned from in-kind to in-value 

activities and no additional FTE are requested. 

JUSTIFICATION OF FY 2011 PROGRAM CHANGES 

The FY 2011 Budget Estimate for the Revenue and Operations Subactivity is $38.9 million and 

177 FTE, a net increase of $536,000 over the FY 2010 enacted budget. 

Royalty In Kind Phase-Out and Transition to Royalty in Value (+879,000; [+8 FTE]) 

On September 16, 2009, the Secretary of the Interior announced a transitional phase-out of the 

Royalty in Kind (RIK) Program. In FY 2011, MMS is requesting an additional appropriation of 

$879,000 in the Revenue and Operations Subactivity to address increased workloads associated 

with RIK properties transitioned to in-value. New resources include 8 FTE to address these new 

workloads. This request is explained in detail in the Compliance and Asset Management section. 

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MRM – Revenue and Operations 

PROGRAM OVERVIEW 

The Federal Government has been collecting revenues from mineral production on Federal 

onshore lands since 1920, from American Indian lands since 1925, and from Federal offshore 

lands since 1953. In 1982, MMS was created, establishing a comprehensive, consolidated system 

for the collection, accounting, and disbursement of these revenues. Since that time, the MRM 

program has provided $210.69 billion to Federal, state, and American Indian recipients. In 

addition, MMS has delivered oil valued at an estimated $6.57 billion to the Department of Energy 

for the Strategic Petroleum Reserve. The MMS completed oil deliveries to DOE sufficient to fill 

the remaining SPR capacity in FY 2010. 

Revenue and Operations: This subactivity funds the Financial Management business process, 

which achieves economic value by ensuring that all revenues from Federal and American Indian 

leases are efficiently, effectively, and accurately collected and accounted for, and disbursed in a 

timely manner. The Revenue and Operations Subactivity includes two major components which 

provide significant benefits to the American people: 

•	 Disbursement and Financial Reporting – The MMS ensures that revenues collected 

annually from Federal and American Indian mineral leases are properly disbursed to the 

appropriate recipients. Financial statements, representing MMS financial transactions, 

ensure accurate and timely compliance with OMB and Treasury requirements. 

•	 Collection and Invoicing – The MMS receives and processes approximately 10 million 

lines of royalty and production report data each year. In addition, MMS researches and 

resolves erroneous reporting so that associated dollars can be distributed in a timely manner 

to proper recipients. Using automated exception processes, MMS also detects unmet 

financial obligations established in the lease, interest due on late payments, and violations 

of American Indian recoupment limitations. Invoices not paid by companies are subject to 

a comprehensive debt collection process. 

Through the MRM Financial Management process, MMS’s people and processes within the 

Revenue and Operations Subactivity support the MMS strategic goal to ensure that the Nation 

receives appropriate value for its mineral resources. 

PERFORMANCE OVERVIEW 

The primary financial management measure is to ensure timely disbursement of revenues to 

recipients. When disbursements are not timely, MMS must pay late-disbursement interest. One of 

MMS’s performance goals is to reduce interest payments related to late disbursements to states by 

90 percent over five years. The MMS pays late disbursement interest to states in large part 

because of problems tracking how industry payments should match their reports. Late 

disbursement interest costs during FY 2006 were about $1.85 million. However, by FY 2008, 

MRM significantly decreased late disbursement interest to $370,210, and in FY 2009 MRM only 

paid $44,221 in late disbursement interest. Our targets for FY 2010 and 2011 are to remain at least 

90 percent below FY 2006 levels. 

164 Minerals Management Service 
 

 

 

 

MRM – Revenue and Operations 

DISBURSEMENT AND FINANCIAL REPORTING PROGRAM PERFORMANCE 

The Federal Oil and Gas Royalty Management Act of 1982 (FOGRMA), as amended, requires 

monthly distribution and disbursement of payments to states and Indians for their share of mineral 

leasing revenues. Historically, the distribution and disbursement function within MRM has 

ensured that collections from Federal and Indian mineral leases are properly disbursed to the 

appropriate recipients including the U.S. Treasury, five Federal agencies, 38 states, and 41 

American Indian tribes. Over the last five years, MMS has collected and distributed on average 

more than $13 billion in annual revenues for the Nation, states, and American Indians. These 

amounts are disbursed in accordance with legislated formulas. 

The MMS has disbursed the following mineral leasing revenue amounts since 19821: 

•	 $130.89 billion to the U.S. Treasury and other Federal agencies 

•	 $ 26.98 billion to 38 states 

•	 $ 24.36 billion to the Land and Water Conservation Fund 

•	 $ 18.10 billion to the Reclamation Fund 

•	 $ 6.65 billion to 41 American Indian tribes and 30,000 Individual Indian Mineral 

Owners (IIMOs) 

•	 $ 3.75 billion to the National Historic Preservation Fund 

Approximately 62 percent of all annual collections have gone to the General Fund of the U.S. 

Treasury, 22 percent to special purpose funds that are subject to appropriation, 13 percent to states, 

and 3 percent to the American Indian community. 

1

 In addition, MMS has delivered oil valued at an estimated $6.57 billion to the Department of Energy for the Strategic 

Petroleum Reserve. 

Minerals Management Service 165 
MRM – Revenue and Operations 

Land & Water 

Historic Conservation Fund 

Preservation Fund $24.36 billion 

$3.75 billion 

Reclamation Fund 

$18.10 billion 

American Indian 

Tribes & Allottees 

$6.65 billion 

State Share 

(Offshore) 

$3.63 billion 

State Share U.S. Treasury (Onshore) $130.89 billion $23.35 billion 

Figure 17: Cumulative Mineral Lease Revenue Disbursements (1982 – 2009) 

Special purpose funds, including the Land and Water Conservation Fund (LWCF), the National 

Historic Preservation Fund, and the Reclamation Fund, have received $46.2 billion in MMScollected mineral revenues since 1982. 

Program Performance: Past Accomplishments & Future Goals 

Timely Revenue Disbursement: The MMS ensures that funds are disbursed to recipients by the 

end of the month following the month received, per statute. In 2005, MMS disbursed 98 percent 

of its revenues on a timely basis, per statute, exceeding its target of 96 percent. This increase 

resulted from a three-pronged effort of working directly with companies to increase reporting 

accuracy, increasing the accuracy of the financial system’s payment matching process, and 

enhancing the edits of the electronic reporting process to reduce the number of rejected report 

lines. In FY 2006, MRM focused on reducing Accounts Receivable and unapplied payments. 

This resulted in the processing of several older payments, which lowered our timely disbursements 

result to 94.5 percent, compared to the 96.5 percent target. Following MRM’s completion of this 

work, timely disbursements increased to 99.2 percent during FY 2008 and 99.5 percent during FY 

2009, against a 98 percent target. The targets for 2010 and 2011 are 98 percent and 99 percent, 

respectively. 

166 Minerals Management Service 
 

MRM – Revenue and Operations 

Timely Service to American Indians: In 2009, MMS transferred 100 percent of American Indian 

revenues it received to the Office of the Special Trustee for American Indians (OST) within one 

business day of identification, against a 100 percent target. To ensure prompt payment of mineral 

revenue payments to American Indian tribes and IIMOs, MMS immediately deposits American 

Indian revenues into accounts administered by OST where they are invested and subsequently 

distributed by BIA to American Indian tribes and IIMOs. The target is 100 percent for 2010 and 

2011. The BIA requires Financial Distribution Report (FDR) information in order to distribute 

funds to IIMOs. To better serve its American Indian constituents, MMS provides this lease 

distribution data to BIA twice each month. In 2009, MMS provided lease distribution data to BIA 

for 97.7 percent of royalties by the first semi-monthly distribution, against a 96.5 percent target. 

The target for 2010 and 2011 is 97 percent and 98 percent, respectively. 

Financial Accountability: The MMS’s financial system has automated internal controls and 

accounting processes to reconcile subsidiary and control accounts and to ensure proper recording 

and reporting of revenues. The MMS records financial transactions with an account structure 

consistent with the U.S. Government Standard General Ledger (USSGL). The MMS uses the 

USSGL accounts to prepare external reports to OMB and the U.S. Treasury and to prepare 

financial statements and the Annual Financial Report. 

The Chief Financial Officer’s (CFO) Act requires annual audits of DOI financial statements that 

include a thorough review of MMS’s mineral revenue custodial accounts. These audits ensure that 

MMS financial statements fairly represent the transactions recorded within the MMS financial 

management system. To ensure accurate and timely compliance with all Federal requirements, 

MMS has instituted quarterly financial statements and has accelerated the end-of-year reporting 

through the elimination of off-line processes. 

Unqualified Audit Opinion on Mineral Revenue Custodial Account: To provide greater 

assurance on the integrity of financial operations and the accuracy of financial data, MMS 

undergoes annual Financial Statement audits, including a thorough review of mineral revenue 

custodial accounts. In November 2009, the Office of the Inspector General (OIG) released the 

Independent Auditors’ Report on the Department of the Interior Financial Statements for FY 2009 

and 2008. The Independent Auditors’ Report concluded that “Interior’s financial statements as of 

and for the years ended September 30, 2009 and 2008, are presented fairly, in all material respects, 

in conformity with U.S. generally accepted accounting principles.” Their consideration of internal 

control over financial reporting resulted in the identification of six significant deficiencies for the 

Department, none of which applied to MRM. 

Minerals Management Service 167 
MRM – Revenue and Operations 

USE of COST and PERFORMANCE INFORMATION 

Company Reporting Accuracy = MMS Revenue Disbursement Timeliness 

The MMS monitors its performance in disbursing funds to recipients by the end of the month following the 

month received, per statute. Accurate reporting by companies is integral to the successful disbursing of 

funds in a timely manner. 

% of Revenues 

100.0% 

95.0% 

90.0% 

85.0% 

80.0% 

75.0% 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Plan Plan 

Year 

Figure 18: Percent of Revenues Disbursed On-Time 

In 2002, after implementation of the new systems and a court-ordered internet shutdown, company 

reporting accuracy fell to 86 percent, and MMS disbursement timeliness dropped to 80 percent. Since that 

time, both metrics have improved due to MMS focusing its resources on error resolution, in consultation 

with companies, and providing additional training to companies. During 2006, MMS processed several 

older payments, which lowered our timely disbursements result to 94.5 percent, even though companies 

reported 97.4 percent accurately. MRM has completed the older processing work and timely disbursements 

increased during FY 2008 to 99.2 and 99.5 percent during FY 2009. Company reporting accuracy was 

98.3 percent and 98.1 percent, respectively, for FY 2008 and 2009. For FY 2010 and 2011, MMS is 

targeting 98 and 99 percent disbursement timeliness, respectively. MMS is targeting 98 percent reporting 

accuracy for FY 2010 and 2011. 

% of Royalty Information 

100.0% 

95.0% 

90.0% 

85.0% 

80.0% 

75.0% 

2000 2001 2002 2003 2004 2005 

Year 

2006 2007 2008 2009 2010 

Plan 

2011 

Plan 

Figure 19: Percent of Royalty Information Reported Accurately 

168 Minerals Management Service 
 

 

MRM – Revenue and Operations 

Information Technology: Information systems and electronic government infrastructure play a 

critical role in MMS’s collection and disbursement of the Nation’s mineral revenues. The 

Minerals Revenue Management Support System (MRMSS) is contractor-owned and operated and 

uses commercial off-the-shelf (COTS) software that has been modified for MRM requirements. 

The MMS continues to ensure that its systems remain secure, interactive, web-based, and 

compliant with latest mandated accounting requirements and technologies. While the Web-based 

paradigm creates efficiencies and conforms to industry best practices, this approach creates a 

strong dependency on access to the internet. 

The MRMSS is critical to the ability of MRM to account for, and disburse mineral revenues in a 

timely fashion to Treasury, states and American Indians. Three primary IT subsystems of the 

MRMSS that are vital to the accomplishment of the MRM mission are: 

•	 The Financial subsystem, which accounts for and distributes the billions of dollars that the 

government collects from energy companies for both conventional energy and renewable 

energy on Federal and Indian lands. 

•	 The Data Warehouse subsystem, which maintains historical information from mineral 

revenues, oil and gas leases, and includes specialized tools for verifying companies’ 

compliance with laws, lease terms and regulations. 

•	 The Asset Management subsystem, which uses a suite of tailored COTS applications that 

are integrated with the Financial Management and Data Warehouse subsystems, and is 

responsible for economic analysis and managing royalties received in kind. 

Projected FY 2010 MRMSS costs total $21.7 million, comprised of $2.6 million for initiatives, 

$18.8 million for operations and support costs, and an additional $0.3 million for FTE costs, as 

reported in the Exhibit 300; MMS-MRMSS (Revision 23). FY 2011 MRMSS projections total 

$21.3 million, including $2.85 million for initiatives. 

COLLECTION AND INVOICING PROGRAM PERFORMANCE 

The MMS collects annual rental revenues and reporting information on more than 35,000 nonproducing leases and monthly royalty revenue and sales reports on more than 29,000 producing 

onshore and offshore Federal leases. 

Generally, royalty payments are due from energy companies on the last day of the month 

following the month of production. Each month, MMS receives and processes about 50,000 

royalty and production reports containing more than 800,000 lines of data from approximately 

2,000 royalty payors and 1,850 production reporters. In the process, several forms of primary data 

are collected, electronically or by hard-copy transmission, and maintained by MMS: 

•	 Property data, including information on mineral leases, mineral-producing or revenuepaying companies, and commodity purchasers; 

•	 Mineral revenue and production data, consisting of monthly-required report and payment 

data related to rents, mineral royalties, mineral production volumes; and 

Minerals Management Service 169 
MRM – Revenue and Operations 

• Market and sales data used in managing the RIK program. 

Additionally, MMS maintains non-revenue data related to leases and agreements, including the 

supporting legal information essential to execute royalty processing functions. When new leases 

or agreements are established, or when changes occur on a lease, MRM receives information from 

the Bureau of Land Management or from MMS's Offshore Energy and Minerals Management and 

must update MRM's automated reference data files attributable to Federal and Indian mineral 

leases and agreements to ensure that company reports process smoothly and to verify accurate 

payment. 

To ensure that the proper revenues on the Federal and Indian royalty share are collected, MRM 

performs automated and manual error correction of royalty and production reports, coordinating 

reporting and payment matters with industry, state governments, American Indian tribes, other 

Federal agencies, and other MMS offices. 

Each month MRM runs automated exception detection processes to ensure that industry customers 

follow Federal laws, regulations, and lease terms in their financial reporting to MRM. The 

automated exception detection processes pay customers interest for overpayments and oversufficient estimates on Federal leases. Payments are based on the IRS overpayment rate. These 

processes also bill customers for: 

•	 Late payment interest on Federal, Indian, solid mineral, and geothermal leases. 

Payments are due at the end of the month following the month of production. If 

payments are late, an assessment is made based on the IRS underpayment rate. 

•	 Insufficient estimates on Federal, Indian, solid mineral, and geothermal leases. An 

estimate allows customers to pay royalties sixty days following the end of the month of 

production versus thirty days without an estimate. However, if the estimate is not 

sufficient to cover production for that month, an assessment at the IRS underpayment 

rate is made for the calendar month or to the payment date, whichever comes first. 

•	 Over-recoupments on Indian leases. Recoupments are limited to 50 percent of monthly 

revenues for allotted leases and 100 percent of monthly revenues for tribal leases; and 

•	 Rental, minimum royalty, deferred bonus, rights-of-way, and other financial term 

exceptions. 

Receiving proper payments also includes ensuring that delinquent invoices are pursued in 

accordance with the Debt Collection Act. This is achieved through calls and letters to customers, 

demands to payors, notices to lessees/operating rights owners, demands to surety, referrals to the 

Justice Department for litigation or to the U.S. Treasury for collection, and if required, write-off of 

debt. 

170 Minerals Management Service 
 

 

MRM – Revenue and Operations 

Program Performance: Past Accomplishments & Future Goals 

Accurate Company Reporting: The MMS has several efforts underway to improve the accuracy 

of company-reported data used to collect and verify royalties, in response to the RPC 

Subcommittee report and to a recent GAO report entitled, Mineral Revenues: MMS Could Do 

More to Improve the Accuracy of Key Data Used to Collect and Verify Oil and Gas Royalties 

(GAO-09-549). The MMS subjects company-reported royalty data to more than 140 edit checks 

and has incorporated up-front edits to prevent companies who report their royalties via the Web 

from submitting erroneous data. Current technology has opened new avenues for MMS to identify 

and analyze erroneous data on a real-time basis. More recently, MMS has initiated a data mining 

effort as a second level screening process to increase the accuracy of company-reported data 

before the data is subjected to compliance reviews and ultimately to audit. 

Figure 20: MMS’s Overall Data Accuracy Concept 2 

Company reporting accuracy is key to ensuring that MMS achieves timely disbursement. In 2009, 

companies reported 98.1 percent of royalties accurately, thus, requiring MMS intervention to 

resolve royalty errors on only 1.9 percent of all royalties reported and paid. In 2010 and 2011 the 

target is 98 percent for this measure. 

2

2014 - Report of Sales and Royalty Remittance. 

OGOR - Oil and Gas Operations Report. 

Minerals Management Service 171 
MRM – Revenue and Operations 

SUBACTIVITY SUMMARY 

In summation, the MMS manages a substantial Federal monetary asset on behalf of the American 

public. Over the last five years, MMS has collected and distributed on average $13 billion in 

annual revenues for the Nation, states, and American Indians. As such, MMS is entrusted with 

performing an important fiduciary role for the Nation. 

The MMS exists in a dynamic environment, and its activities continuously evolve in response to 

industry changes. The MMS makes every effort to ensure that it continues to provide an 

unequaled government service to the American people, measured by both performance and strict 

adherence to our fiduciary responsibilities. The full funding of the Revenue and Operations 

request will provide the resources necessary for MMS to continue to ensure the proper receipt and 

timely processing of Federal and Indian mineral revenues and information. 

172 Minerals Management Service 
 

MRM – Revenue and Operations 

Table 32: MRM Performance Overview – Revenue and Operations 

Minerals Management Service 173 
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174 Minerals Management Service 
 

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176 Minerals Management Service 
 

General Administration 

FY 2011 PERFORMANCE BUDGET REQUEST 

General Administration 

Table 33: General Administration Summary of Budget Request 

General Administration 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Executive Direction ($000) 

FTE 

2,741 

27 

2,818 

27 

-14 

0 

+392 

0 

3,196 

27 

+378 

0 

Policy and Management 

Improvement 

($000) 

FTE 

4,236 

31 

4,328 

31 

-16 

0 

+99 

0 

4,411 

31 

+83 

0 

Administrative Operations ($000) 

FTE 

17,654 

153 

20,029 

160 

-335 

0 

+1,156 

+1 

20,850 

161 

+821 

+1 

General Support Services ($000) 

FTE 

26,589 

0 

28,524 

0 

-38 

0 

+502 

0 

28,988 

0 

+464 

0 

Total ($000) 

FTE 

51,220 

211 

55,699 

218 

-403 

0 

+2,149 

+1 

57,445 

219 

+1,746 

+1 

The General Administration function provides the administrative, management and policy support, 

and services that the entire MMS organization needs to carry out its primary mission of resource 

and revenue management. 

FY 2011 BUDGET OVERVIEW 

The MMS General Administration Activity consists of four subactivities: 

•	 Executive Direction, which provides bureau-wide leadership, direction, management, 

coordination, communications strategies, and outreach; 

•	 Policy and Management Improvement, which coordinates the bureau’s policy 

management, administrative appeals and strategic planning efforts; 

•	 Administrative Operations, which includes budget, finance, human resources, 

procurement, facilities, information management, and equal employment services; and 

•	 General Support Services, which ensures infrastructure support to the Minerals 

Management Service including support for the Offshore Energy and Minerals Management 

and Minerals Revenue Management programs. 

FY 2011 BUDGET REQUEST 

In FY 2011, General Administration’s request is $57.5 million and 219 FTE, a net increase of $1.8 

million and 1 FTE over FY 2010. Please see the following table for General Administration’s 

programmatic budgetary changes. 

Minerals Management Service 177 
 

 

 

 

 

 

 

 

 

General Administration 

Table 34: General Administration Program Request Compared to FY 2010 

Request Component Subactivity Amount FTE* 

Program Changes 

• Transition to Royalty in Value Total 

Executive Direction 

Policy and Management 

 Improvement 

Administrative Operations 

General Support Services 

+2,044,000 

+394,000 

+102,000 

+1,013,000 

535,000 

[+8] 

[+3] 

[+1] 

[+4] 

+0 

• Ensure Proper Royalties Paid on 

Transported & Processed NG 

Total 

Administrative Operations 

+150,000 

+150,000 

+1 

+1 

• DOI-Wide Changes 

Total 

Executive Direction 

Policy and Management 

 Improvement 

Administrative Operations 

General Support Services 

-403,000 

-14,000 

-16,000 

-335,000 

-38,000 

+0 

+0 

+0 

+0 

+0 

• Offsetting Collections 

Total 

Executive Direction 

Policy and Management 

 Improvement 

Administrative Operations 

General Support Services 

-45,000 

-2,000 

-3,000 

-7,000 

-33,000 

+0 

+0 

+0 

+0 

+0 

• Total, Program Changes +1,746,000 +1 

* Brackets indicate a non-add. Existing staff are being transitioned from in-kind to in-value 

activities and no additional FTE are requested. 

Fixed Costs and Related Changes 

Fixed costs are expected to increase by $4,016,000 over FY 2010 for all of MMS, which covers 

anticipated increases in pay, benefits and other costs. To provide the maximum funding possible 

for priority program needs, the FY 2011 President’s Budget Request does not include an increase 

for anticipated increases in fixed costs in FY 2011. The MMS will absorb these costs. 

The bureau-wide fixed cost increase is composed of the following: 

January 2010 annual pay adjustments (2.0%) +$836,000 

January 2011 annual pay adjustments (1.4%) +$1,756,000 

Employer Share – Health Benefits +$685,000 

GSA/Non-GSA Space Rental +$706,000 

Unemployment compensation +$12,000 

Workers’ compensation +$21,000 

Total Absorbed Fixed Cost Increase +$4,016,000 

Decrease – Department Working Capital Fund -$16,000 

Total Requested Fixed Cost Change -$16,000 

178 Minerals Management Service 
 

 

General Administration 

PROGRAM AND PERFORMANCE OVERVIEW 

The General Administration function provides the administrative, management and policy support, 

and services that the entire MMS organization needs to carry out its primary mission of resource 

and revenue management. In support of the two major programs, Minerals Revenue Management 

and Offshore Energy and Minerals Management, the administrative arm of MMS provides 

leadership and direction in overall management of the organization, planning and performance, 

budget, finance, human resources, information technology, and other services. Centralization of 

these administrative functions leverages resources and contributes to efficient and effective 

operations across the MMS organization. 

PERFORMANCE 

General Administration does not have performance measures specifically for its activities; rather, 

the efforts within General Administration feed into the performance measures for the functional 

programs (Offshore Energy and Minerals Management and Minerals Revenue Management). 

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180 Minerals Management Service 
 

 

 

 

General Administration 

FY 2011 PERFORMANCE BUDGET REQUEST 

General Administration 

Executive Direction 

Table 35: Executive Direction Subactivity Budget Request 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Executive Direction ($000) 

FTE 

2,741 

27 

2,818 

27 

-14 

0 

392 

0 

3,196 

27 

+378 

0 

SUMMARY OF 2011 PROGRAM CHANGES 

Request Component Amount FTE*

 Transition to Royalty in Value +$394,000 [3]

 DOI-Wide Changes -$14,000 +0

 Offsetting Collections -$2,000 +0 

Total Program Changes +$378,000 +0 

* Brackets indicate a non-add. Existing staff are being transitioned from 

in-kind to in-value activities and no additional FTE are requested. 

JUSTIFICATION OF FY 2011 PROGRAM CHANGES 

Transition to Royalty in Value (+$394,000; [3 FTE]) 

Funds are requested to maintain support levels as the RIK program is phased out. As RIK oil and 

natural gas sales contracts expire, the oil and natural gas properties will revert to in-value status. 

The MMS direct and indirect costs of RIK operations are funded through RIK receipts, while 

Royalty in Value operations are funded through appropriations. Costs associated with increasing 

in-value workloads will necessitate additional appropriated funds. The increase in appropriated 

funding will be offset by a reduction in outlays from receipts leaving the fiscal condition of the 

federal government unchanged. 

PROGRAM OVERVIEW 

The Executive Direction Subactivity comprises the Office of the Director, the Office of Public 

Affairs, and the Office of Congressional Affairs. 

Minerals Management Service 181 
General Administration 

Office of the Director (OD) 

The Office of the Director includes the Director, the Deputy Directors, and their immediate staff. 

This office is responsible for providing general policy guidance and overall leadership within the 

MMS organization, as well as managing all of the official documents of the Office of the Director. 

Office of Public Affairs (OPA) 

The OPA is responsible for MMS’s communication strategies and outreach. The goal of OPA is to 

inform the public, ensure coordinated communication, consistent messages, and the effective 

exchange of information with all customers and stakeholders. The OPA coordinates the 

implementation of an effective and inclusive outreach program to numerous target audiences, 

including state and local governments, the energy industry, related trade associations, the 

environmental community, Indian tribes, individual Indian allottees, energy consumer groups, and 

the public. 

Office of Congressional Affairs (OCA) 

The OCA serves as the primary point of contact with Congress, and is responsible for the 

coordination of all communication and outreach with Congressional offices, as well as ensuring a 

consistent message and the effective exchange of information. The OCA serves as the liaison for 

MMS on all Congressional and legislative matters that affect MMS with Congress, the Department 

of the Interior, and other Federal executive agencies. 

182 Minerals Management Service 
 

 

General Administration 

 FY 2011 PERFORMANCE BUDGET REQUEST 

General Administration 

Policy and Management Improvement Subactivity 

Table 36: Policy and Management Improvement Subactivity Budget Request 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Policy and Management 

Improvement 

($000) 

FTE 

4,236 

31 

4,328 

31 

-16 

0 

99 

0 

4,411 

31 

+83 

0 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Component Amount FTE*

 Transition to Royalty in Value +$102,000 [1]

 DOI-Wide Changes -$16,000 +0

 Offsetting Collections -$3,000 +0 

Total Program Changes +$83,000 +0

 *Brackets indicate a non-add. Existing staff are being transitioned from in-kind 

 to in-value activities and no additional FTE are requested. 

JUSTIFICATION OF FY 2011 PROGRAM CHANGES 

Transition to Royalty in Value (+$102,000; [1 FTE]) 

Funds are requested to maintain policy and management support levels as the RIK program is 

phased out. As RIK oil and natural gas sales contracts expire, the oil and natural gas properties 

will revert to in-value status. The MMS direct and indirect costs of RIK operations are funded 

through RIK receipts, while Royalty in Value operations are funded through appropriations. Costs 

associated with increasing in-value workloads will necessitate additional appropriated funds. The 

increase in appropriated funding will be offset by a reduction in outlays from receipts leaving the 

fiscal condition of the federal government unchanged. 

PROGRAM OVERVIEW 

The Policy and Management Improvement Subactivity (PMI) serves as the principle office to 

provide the Director with independent review and analysis of programmatic and management 

issues. Additionally, PMI leads, coordinates and monitors many cross-program initiatives, 

assuring a consistent, MMS-wide implementation that directly supports Congressional, 

Presidential and Departmental directives, laws, mandates and guidance. 

PMI fulfills the Director’s responsibilities in several critical areas including the resolution of 

administrative appeals, strategic and performance planning, policy and program evaluation and 

regulatory responsibilities. As an office independent of MMS’s operational programs (OEMM and 

Minerals Management Service 183 
General Administration 

MRM), PMI is vested with the responsibility to render decisions on appeals of MRM orders. PMI 

is also responsible for ensuring that programmatic plans and policies are consistent with and 

integrated into the overall bureau mission and responsibilities, as well as with Department and 

Administration policy frameworks. In addition, PMI administers and coordinates internal reviews, 

and oversees and assures implementation of recommendations made by oversight groups such as 

the Government Accountability Office and the Office of Inspector General. Evaluations of 

MMS’s existing and proposed policies and programs are conducted through economic and 

programmatic analyses. PMI efforts support two key DOI strategic goals: assuring fair value is 

received for resources and ensuring accountability of government assets. 

POLICY, APPEALS AND REGULATION PROGRAMS 

Policy Analysis 

At the request of the Director and in support of Secretarial initiatives, PMI provides policy reviews 

and analysis on a broad range of complex and controversial matters. In addition, PMI reviews 

legislation, regulations, and other documents for their policy content and provides analysis of 

proposals from outside MMS that affect MMS programs. 

Open and Nondiscriminatory Access Hotline 

Implementation of the Open and Nondiscriminatory Access Hotline began in August 2008. This 

new initiative invites shippers and others to call with concerns, if they believe they have been, or 

are being, denied open or nondiscriminatory access to oil or gas pipelines operating on the OCS 

under a Right-of-Way or other authority granted by the Department of the Interior. The Hotline 

gives callers an informal way to report problems obtaining access to OCS pipelines, not under the 

Federal Energy Regulatory Commission jurisdiction, without litigation or lengthy complaint 

proceedings. 

Royalty Policy Committee Subcommittee Report Recommendations 

In March 2007, the Secretary of the Interior appointed an independent seven-member Royalty 

Policy Subcommittee charged with reviewing mineral revenue collection practices within MMS. 

In December 2007, the Subcommittee issued a report with 110 recommendations which was 

accepted by the Secretary in January 2008. PMI tracks the recommendations and facilitates their 

implementation by MMS, BLM and the Assistant Secretary for Indian Affairs. PMI provides 

quarterly reports on the status to the Assistant Secretary for Land and Minerals and provides staff 

support to the Production Coordination Council for cross-cutting initiatives affecting multiple 

bureaus. 

Administrative Appeals 

MRM frequently determines that a company did not pay sufficient royalties or other monies and 

then orders that company to pay additional monies. Federal regulation, 30 CFR Part 290, Subpart 

B, establishes the right to appeal these orders, to the MMS Director and companies exercise this 

right by filing an appeal with MRM. 

184 Minerals Management Service 
 

General Administration 

After an appeal is filed, PMI’s appeals staff performs an independent review of the issue under 

appeal and the Associate Director for PMI, on the Director’s behalf, renders MMS’s final decision 

for federal leases and recommends final decision to the Director of Bureau of Indian Affairs for 

Indian leases. 

Regulatory Direction 

PMI manages MMS’s regulatory program and serves as liaison to the Department’s regulatory 

office, the Federal Register and the Office of Management and Budget. PMI manages and 

organizes the rulemaking process to enable the Director to assure that rules are consistent with 

policy and legislation and meet all administrative requirements. PMI, working with the MMS 

Executive Committee, prioritizes all rulemakings, tracks status, and assures that OMB, 

Departmental and Congressional requirements are met. 

PLANNING AND PERFORMANCE PROGRAMS 

Strategic Planning and Performance Management 

PMI is the organization responsible for strategic planning and ensuring a culture of accountability 

for results at MMS. PMI coordinates and guides the bureau in developing and implementing 

strategic and annual implementation plans, developing performance metrics, and ensuring that 

metrics are comprehensive and consistent with MMS policy. 

PMI works with the programs to integrate performance and activity based costing (ABC). The 

office leads efforts to strengthen decision-making and improve results through corporate-level 

analysis and review of ABC costs of program outputs, performance and financial management 

metrics, and the results of internal and external assessments. PMI leads MMS’s initiative to apply 

activity-based costing/management (ABC/M) methods to its operations. 

Program Evaluation and Review of Internal Management Controls 

PMI leads an integrated evaluation process to ensure that MMS programs operate as designed and 

that recommendations resulting from internal and external reviews are adequately addressed. All 

evaluations of MMS programs and activities are tracked, analyzed, and the status is provided 

quarterly to management. The evaluations include both internal and external reviews such as GAO 

and OIG audits, management control reviews, risk assessments, performance assessments, ABC 

data reviews, administrative reviews, financial management metrics, and other special ad hoc 

reviews of MMS programs and initiatives. 

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186 Minerals Management Service 
 

 

 

General Administration 

FY 2011 PERFORMANCE BUDGET REQUEST 

General Administration 

Administrative Operations Subactivity 

Table 37: Administrative Operations Subactivity Budget Request 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

Administrative Operations ($000) 

FTE 

17,654 

153 

20,029 

160 

-335 

0 

+1,156 

+1 

20,850 

161 

+821 

+1 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Component Amount FTE*

 Transition to Royalty in Value +$1,013,000 [+4]

 Ensure Proper Royalties Paid +$150,000 +1

 DOI-Wide Changes -$335,000 +0

 Offsetting Collections -$7,000 +0 

Total Program Changes +$821,000 +1 

*Brackets indicate a non-add. Existing staff are being transitioned from in-kind 

to in-value activities and no additional FTE are requested. 

JUSTIFICATION OF FY 2011 PROGRAM CHANGES 

The FY 2011 Budget Estimate for the Administrative Operations Subactivity is $20.9 million and 

161 FTE, with a net program change of an additional $821,000 and 1 FTE above FY 2010. 

Transition to Royalty in Value (+$1,013,000; [+4 FTE]) 

Funds are requested to maintain administrative support levels as the RIK program is phased out. 

As RIK oil and natural gas sales contracts expire, the oil and natural gas properties will revert to 

in-value status. MMS direct and indirect costs of RIK operations are funded through RIK receipts, 

while Royalty in Value operations are funded through appropriations. Costs associated with 

increasing in-value workloads will necessitate additional appropriated funds. The increase in 

appropriated funding will be offset by a reduction in outlays from receipts leaving the fiscal 

condition of the federal government unchanged. 

Ensure Proper Royalties Paid on Transported and Processed Natural Gas (+$150,000; +1 FTE) 

MMS proposes to increase its compliance, valuation, and market research staff to provide reliable 

and timely access to gas index and location differential data for use in valuation and perform 

reviews and audits of the targeted gas plants and transportation systems in accordance with a 

Minerals Management Service 187 
 

 

General Administration 

prioritized schedule based on identified risk factors to help ensure that proper royalties are being 

received. The requested increase is to address Royalty Policy Committee recommendations for 

improvements in MMS’s compliance coverage for gas plants and unbundling of transportation 

costs. With a considerable expansion of the MMS workforce under this initiative there will be a 

need for increased administrative support functions including human resources, information 

management, and facilities management support. 

PROGRAM OVERVIEW 

The Administrative Operations Subactivity consists of the following functions: Administrative 

Direction and Coordination, Emergency Management, Budget, Finance, Equal Employment 

Opportunity, Human Resources, Procurement, and Information Management. All administrative 

operations are directed and carried out at the MMS Headquarters and nationwide through six 

divisions and two administrative service centers: the Western Administrative Service Center and 

the Southern Administrative Service Center. 

Administrative Direction and Coordination: Administrative direction and coordination provides 

for oversight of all administrative activities within MMS. This oversight ensures compliance with 

laws relating to administrative activities; provides for the review, interpretation, and 

implementation of Federal executive branch administrative policies and procedures; and develops 

appropriate guidance to ensure compliance with DOI, OMB, GSA, and other executive branch 

administrative policies and regulations. This function also includes responsibility for management 

analysis functions, such as management studies and reviews, organizational reviews, delegations 

of authority and related activities, and special projects. 

Emergency Management: The Emergency Management program is responsible for providing 

emergency management services and preparing continuity of operations plans. An Emergency 

Coordinator and associated staff oversee the operations of this program. MMS has a process in 

place for reporting critical emergency incidents to the appropriate officials in a timely manner. 

Our Continuity of Operations Program (COOP) includes training and exercises, providing for 

alternate relocation facilities, alternate interoperable communications, and alternate 

database/records access. Our goal is to have appropriate emergency management plans, and 

continuity of operations plans, in place for any unplanned event or unforeseen circumstance that 

can cause significant disruption of mission functions. 

MMS continues to comply with the Office of Homeland Security’s National Incident Management 

System and Incident Command System, working closely with designated lead agencies such as the 

U.S. Coast Guard to safeguard our Nation’s energy supply. 

Budget Division: The Budget Division provides budget analysis and guidance for the formulation, 

Congressional and execution phases of the budget cycle. During the budget formulation cycle, the 

Budget Division develops and maintains all budgetary data to support MMS’s budget requests to 

the Department with submission of the Budget Proposal, to the Office of Management & Budget 

with submission of the Budget Estimates and to the Congress with submission of the Budget 

Justifications. During the Congressional phase, the Budget Division prepares capability and effect 

statements, provides answers to House and Senate questions and drafts testimony and oral 

statements for Congressional hearings. Throughout the execution phase, the Budget Division 

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General Administration 

tracks spending against line item budgets, analyzes budgetary and expense data, and provides 

regular updates to MMS executives on the status of funds. The Budget Division works closely 

with the Planning & Management Division of the Policy and Management Improvement 

Subactivity and program level performance staff to integrate performance data and information 

into all aspects of budget formulation and execution. 

Finance Division: The Finance Division is responsible for the planning and effective utilization of 

financial system resources in support of the varied operating and support programs. The Finance 

Division serves as the focal point for the implementation of the provisions of the Chief Financial 

Officer’s Act of 1990 including liaison responsibilities for the annual audit of the combined 

financial statements contained in the Annual Financial Report. 

This Division is responsible for the administrative accounting operations. Finance manages the 

administrative accounting system; audits and schedules bills for payments; collects debts; develops 

financial data; prepares financial reports; provides advice and guidance on financial matters; and 

maintains liaison with departmental offices and other federal agencies. It is a long-term goal of 

MMS to ensure that timely and accurate financial data are readily available to assist MMS 

management in making sound and justified management decisions. 

Equal Employment Opportunity Division (EEOD): The EEOD develops, monitors, and operates 

the MMS Equal Employment Opportunity (EEO) program in compliance with the Civil Rights Act 

of 1964, the Equal Employment Opportunity Act of 1972, Executive Order 11478, departmental 

directives, and other related statutes and orders. Specifically, the responsibilities of MMS-EEOD 

include: 

•	 Provide advice and guidance to managers, supervisors, and employees; 

•	 Maintenance and operation of the discrimination complaint system; 

•	 Implementation of Equal Employment Opportunity and Affirmative Employment Plans; 

•	 Implementation of programs for diversity, higher education, and related partnerships; 

•	 Administration of the Employee Assistance Program; 

•	 Administration of programs for dispute resolution alternatives; 

•	 Monitor, evaluate, and adjudicate civil rights compliance, enforcement functions covering 

EEO, and federally funded/assisted education and training programs with state and local 

governments. (Titles VI & IX to include Sections 504 & 508 of the Rehabilitation Act); 

•	 Oversight of special initiative programs designed to involve more women, minorities and 

people with disabilities in the program areas and throughout all levels of management; 

•	 Coordination of responses to Solicitors Office EEO issue requests; and 

•	 Compliance with the Departmental Office for Equal Opportunity and EEO Commission 

directives. 

Human Resources Division: The Human Resources (HR) Division develops and implements 

policies, procedures, guidelines, and standards relating to general personnel management, 

recruitment and employment, position management and classification, and employee development. 

Work includes preparing appropriate reports, performing all operational personnel services for 

Headquarters and client organizations, and providing assistance and guidance related to personnel 

matters for all regional and field installations. Focuses on employee relations and services, 

including personnel program evaluation, labor/management relations, advising employees about 

Minerals Management Service 189 
General Administration 

conflict of financial interest and standards of conduct, and administering incentive awards 

programs, family friendly programs, the Federal Equal Opportunity Recruitment Program, and 

Senior Executive Service program. In addition, the Division is responsible for the development of 

training policy and oversight of a bureau-wide Learning Management System that will serve as a 

valuable workforce planning and management tool. The HR Division will also coordinate all 

Departmental mandated employee development initiatives for implementation in MMS. 

The Human Resources Division also leads all MMS workforce-planning initiatives, which include 

analyzing the current workforce, identifying future workforce needs and preparing plans for 

building the workforce needed in the future. The long-term benefits of workforce-planning 

initiatives include the ability of MMS to meet its mission and performance goals. 

Procurement Division: The Procurement Division is responsible for the execution and 

administration of MMS contracts and financial assistance agreements. The Division provides 

acquisition and financial assistance policy guidance, cost and price analysis, and advice to 

procurement and program personnel. They conduct acquisition management and other internal 

control reviews of procurement activities. They also administer the purchase line of the MMS 

charge card program and manages the agency’s competitive sourcing program. In addition, they 

manages the Business and Economic Development Program to maximize opportunities for small, 

disadvantaged, and women-owned businesses, as well as historically black colleges and 

universities as both prime contractors and subcontractors. They also oversee all acquisition career 

management programs. 

Support Services: Support Services includes facilities management for 27 leases in MMS locations 

throughout the country, space management, mail and courier activities, bureau-wide physical 

security, the Safety and Health Management Program, voice and data communications, printing 

and publication activity, and property management and issuance of policy on these functions. The 

property management program maintains accountability records of all system-controlled property 

in the possession and control of custodial property officers and contractors and manages the 

vehicle fleet and the museum property, including an Arts and Artifacts program. 

Information Management Division: The Information Management Division (IMD) supports the 

Chief Information Officer (CIO) in his duties and responsibilities for ensuring the efficient and 

effective planning, management and acquisition of information technology and information 

resources within MMS and ensuring compliance with all DOI and federal information resources 

management policies and guidelines. 

The IMD is engaged in an ongoing effort to establish, maintain, and support an IT investment 

analysis and decision-making environment to ensure that all bureau IT investments are well 

planned, implemented, cost effective, and aligned with the MMS and DOI enterprise architecture. 

This includes managing the capital asset planning program by performing IT investment portfolio 

analysis; managing the review and submission to OMB of MMS’s Business Cases (Exhibit 300s); 

developing the Exhibit 53 (IT portfolio); and maintaining liaisons with the DOI regarding MMS 

information technology investments. 

The IMD also implements and supports the Bureau’s IT security program. The IT Security 

Manager works collaboratively with the MMS program areas IT Security Managers as well as with 

190 Minerals Management Service 
 

General Administration 

the DOI’s Office of the CIO to review and improve security plans, policies, procedures, and 

standards to reflect technological changes. The IT security efforts also include participating in risk 

assessments and management reviews of systems and networks, identifying security issues, and 

recommending mitigation. 

Field Administrative Service Centers: The Field Administrative Service Centers provide direct 

administrative support to various MMS program managers through two locations: 

•	 The Southern Administrative Service Center (SASC): The SASC, located in New 

Orleans, Louisiana, provides direct administrative support, direction, and coordination to 

programs in the Gulf of Mexico Region (GOMR), the Information Technology Division 

and the OCS Connect Project Management Office. The SASC also provides full support to 

five outlying District GOMR offices. 

•	 The Western Administrative Service Center (WASC): The WASC, located in Denver, 

Colorado, provides direct administrative support, direction, and coordination to the 

Minerals Revenue Management offices in Denver and its field entities, the Office of Policy 

and Management Improvement, and the Alaska and Pacific OCS Regions. 

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192 Minerals Management Service 
 

 

 

General Administration 

FY 2011 PERFORMANCE BUDGET REQUEST 

General Administration 

General Support Services Subactivity 

Table 38: General Support Services Subactivity Budget Request 

2009 

Enacted 

2010 

Enacted

FY 2011 

Change 

from 

2010 

(+/-) 

DOI-Wide 

Changes 

 (+/-) 

Program 

Changes 

(+/-) 

Budget 

Request 

General Support Services ($000) 

FTE 

26,589 

0 

28,524 

0 

-38 

0 

+502 

0 

28,988 

0 

+464 

0 

SUMMARY OF FY 2011 PROGRAM CHANGES 

Request Component Amount FTE 

Transition to Royalty in Value +$535,000 +0 

DOI-Wide Changes -$38,000 +0 

Offsetting Collections -$33,000 +0 

Total Program Changes +$464,000 +0 

JUSTIFICATION OF 2011 PROGRAM CHANGES 

Transition to Royalty in Value (+$535,000; +0 FTE) 

Justification: Funds are requested to maintain administrative support levels as the RIK program 

is phased out. As RIK oil and natural gas sales contracts expire, the oil and natural gas properties 

will revert to in-value status. MMS direct and indirect costs of RIK operations are funded through 

RIK receipts, while Royalty in Value operations are funded through appropriations. As RIK 

operations are phased-out, ongoing indirect costs such as a portion of the MMS space rental, 

utilities and other ongoing infrastructure costs will need to be funded from appropriated dollars. 

The increase in appropriated funding will be offset by a reduction in outlays from receipts leaving 

the fiscal condition of the federal government unchanged. 

PROGRAM OVERVIEW 

The General Support Services subactivity includes funding for shared activities and related support 

services for the entire Bureau. These include expenses such as: 

• Rental and security of office space 

• Workers’ compensation and unemployment compensation 

• Voice and Data Communications 

• The Department’s Working Capital Fund (WCF) 

• Annual building maintenance contracts 

• Mail services 

Minerals Management Service 193 
General Administration 

• Printing costs 

The two major program objectives are to provide safe and secure facilities that will contribute to 

the productivity and efficiency of the employees in achieving goals and objectives, and to provide 

appropriate services in support of MMS operating programs. 

194 Minerals Management Service 
 

Mineral Leasing Receipts 

2011 PERFORMANCE BUDGET REQUEST 

Mineral Leasing Receipts 

The discussion under this tab is divided as follows: 

Permanent Appropriations: This section refers specifically to those mineral leasing receipts 

which are permanently appropriated for making payments to states and local governments from 

revenues generated from onshore Federal lands and from certain offshore mineral leasing 

receipts. Funds are distributed into permanent accounts, and payments to states (and where 

appropriate, local political subdivisions) are made from those accounts. Permanent 

appropriations are a subset of the larger “Mineral Leasing Receipts” discussion. 

Mineral Leasing Receipts: This section comprehensively discusses both onshore and offshore 

receipts, with charts explaining the distribution of receipts, and tables with detailed breakouts. In 

addition to permanent appropriations, funds are deposited in the General Fund of the U.S. 

Treasury and various special fund accounts, with spending from those accounts subject to 

subsequent appropriation. 

PERMANENT APPROPRIATIONS 

The permanent appropriations administered by MMS provide for the sharing of mineral leasing 

receipts collected from the sale, lease, or development of mineral resources located on onshore 

Federal lands and certain offshore areas. The revenues for these payments are derived from 

bonuses, rentals, and royalties collected from Federal mineral leases and late payment interest. 

The MMS distributes these funds in accordance with various laws that specify the basis for and 

timing of payments. 

The MMS disburses all monthly mineral-leasing payments, including late disbursement interest, 

to the states, counties and parishes. Grants provided under the Coastal Impact Assistance 

Program (CIAP) are subject to MMS oversight and verification that the funds are being spent in 

a manner consistent with the authorizing legislation for these payments (Section 384 of the 

Energy Policy Act of 2005). FY 2010 is the last fiscal year to provide for a direct appropriation 

of $250 million for CIAP grants. 

The following table shows the breakout of permanent appropriations. 

Minerals Management Service 195 
 

 

 

Mineral Leasing Receipts 

Table 39: Permanent Appropriations ($000) 

Appropriation 

States 

Share 

FY 2009 

Actual 

FY 2010 

Estimate 

FY 2011 

Estimate 

Change 

from 

2010 

Mineral Leasing Associated 

Payments (MLAP) 

50% 1,838,525 1,647,999 1,960,045 +312,046 

National Forest Fund Payments to States 

(Forest Fund) 

25% 8,789 5,009 5,448 +439 

Payments to States from Lands Acquired 

for Flood Control, 

Navigation, and Allied Purposes 

(Flood Control) 

75% 38,919 2,116 2,303 +187 

Qualified OCS Revenues to Gulf 

Producing States (GOMESA) 

38% 25,240 2,220 1,894 -326 

National Petroleum Reserve - Alaska 50% 16,279 4,900 11,650 +6,750 

Subtotal, Payments to States -- 1,927,752 1,662,244 1,981,340 +319,096 

Geothermal, Payments to Counties 25% 12,679 0 0 0 

Coastal Impact Assistance Program N/A 250,000 250,000 0 

Total, Permanent Appropriations -- 2,190,431 1,912,244 1,981,340 +69,096 

Note: The revenues subject to the Gulf of Mexico Energy Security Act of 2006 (GOMESA) are disbursed to the states in 

the year after receipts are deposited to Treasury. MLAP include royalty payments to Oklahoma and late interest 

payments. 

Distribution Statutes for Permanent Appropriations 

Mineral leasing and associated payments are governed by the Mineral Leasing Act (MLA), 30 

U.S.C. 181 et seq., which provides that all states receive 50 percent of the revenues resulting 

from the leasing of mineral resources on federal public domain lands within their borders. 

Additionally, 40 percent of onshore revenues are paid to the Reclamation Fund, which funds 

western water projects. The remaining ten percent is paid into the General Fund of the U.S. 

Treasury. By law, Alaska receives no payments from the Reclamation Fund, but receives a 90 

percent share of receipts from Federal mineral leasing in that state. Mineral leasing revenues are 

derived from royalties, rents, bonuses, and other revenues, including minimum royalties, late 

payment interest, settlement payments, gas storage fees, estimated royalty payments, and 

recoupments. 

The Budget assumes a proposal that is part of an Administration initiative to encourage energy 

development on lands and waters leased for development. A $4.00 per acre fee on nonproducing Federal leases on lands and waters would provide a financial incentive for oil and gas 

196 Minerals Management Service 
 

Mineral Leasing Receipts 

companies to either get their leases into production or relinquish them so that the tracts can be released to and developed by new parties. The proposed $4.00 per acre fee would apply to all new 

leases and would be indexed annually. In October 2008, the Government Accountability Office 

issued a report critical of past efforts by the Department of the Interior to ensure that companies 

diligently develop their Federal leases. Although the GAO report focused on administrative 

actions that the Department could undertake, this proposal requires legislative action. This 

proposal is similar to other non-producing fee proposals considered by the Congress in the last 

several years. This will result in savings of $8.0 million in 2011 and $760.0 million over ten 

years. 

In support of President Obama’s goal to dramatically increase domestic renewable energy 

generation, MMS is working to expedite development of OCS renewable energy resources, such 

as wind and wave power. Receipt estimates include receipts from the renewable energy 

program, as MMS begins to implement its new authority and responsibility for OCS renewable 

energy development. Please refer to the OEMM Renewable Energy section for additional 

information. 

For FY 2011, the President’s Budget proposes to retain the current appropriations provision 

providing for a two percent deduction from state mineral revenue payments under the MLA. 

This ensures that states receiving significant payments from mineral revenue development on 

Federal lands also share in the costs of administering the Federal mineral leases from which this 

revenue is generated. In 2009, states received nearly $2 billion in Federal mineral revenue 

payments from production occurring on Federal lands, and current projections indicate these 

figures will be even higher in 2011. Relative to the overall benefits these states receive from the 

Department's mineral leasing programs, the proposed deduction is a modest sum. A similar net 

receipts sharing process was common during the Clinton Administration, until it was repealed in 

2000 during a time of Federal budget surpluses. The Budget proposes to make this deduction 

permanent through separate authorizing legislation that would take effect beginning in FY 2012. 

The Budget also assumes increases in revenues from administrative royalty reforms. The 

Administration believes that American taxpayers should get a fair return on the development of 

the resources on their public lands. A recent GAO report suggests that taxpayers could be 

getting a better return from Federal oil and gas resources, at least in some areas. In 2010, the 

Department will initiate a rulemaking to increase onshore royalty rates. The Budget assumes this 

reform will increase Federal onshore oil and gas revenues by $1 billion over the next 10 years. 

These revenue assumptions are built into the royalty receipt estimates presented in the tables 

included in this section. The Department will also initiate a more comprehensive review of the 

royalty rates from energy development on Federal land (both onshore and offshore), as 

recommended by GAO. Based on the results, BLM and MMS will implement further royalty 

reforms and rate adjustments as appropriate. 

Under 16 U.S.C. 499, states receive a Forest Fund payment equal to 25 percent of all revenue as 

a result of activities occurring in each of the national forests situated in that state. The law 

requires a state’s payment be based on national forest acreage. Where a national forest occurs in 

several states, an individual state’s payment is proportionate to its area within that particular 

Minerals Management Service 197 
Mineral Leasing Receipts 

national forest. This payment is to be used for the benefit of the public schools and public roads 

of that county or counties in which the national forest resides. 

Flood Control payments to states are shared according to the Flood Control Act of 1936 (33 

U.S.C. 701 et seq.), which provides that 75 percent of revenue collected from leasing on lands 

acquired for flood control in a particular state be shared with that state. These funds are to be 

expended as the state legislature may prescribe for the benefit of the public schools and roads in 

the county from which the revenue was collected or for defraying any of the expenses of county 

government. These types of expenses include public obligations of levee and drainage districts 

for flood control and drainage improvements. 

The Energy Policy Act of 2005 (P.L. 109-58) amended section twenty of the Geothermal Steam 

Act of 1970 (30 U.S.C. 1019 et seq.). The amendment provided that for the revenues collected 

from geothermal leasing, 25 percent were to be paid to the county in which the leased lands or 

geothermal resources are located and, for fiscal years 2006 to 2010, 25 percent were to be 

transferred to the Geothermal Steam Act implementation fund. Section 423 of the 2010 

Department of the Interior, Environment, and Related Agencies Appropriations Act, P.L. 111-88, 

cancelled the 2010 payments to the counties as well as the deposit to the Geothermal Steam Act 

implementation fund. (As noted above, FY 2010 is the last year deposits to geothermal 

implementation fund were authorized by the Energy Policy Act of 2005.) The 2011 President's 

Budget proposes terminating payments to counties in FY 2011 and thereafter since these 

payments are inconsistent with the normal 50/50 revenue sharing arrangements under the MLA 

and set an undesirable precedent for future expansion of revenue sharing with local governments. 

The Gulf of Mexico Energy Security Act of 2006 (P.L. 109-432) opened additional areas in the 

Gulf of Mexico for offshore oil and gas leasing. The Act provided that 50 percent of revenues 

from these open areas (termed “qualified OCS revenues”) be disbursed to Gulf producing states 

(Accounts 5535.1 and 5535.2) and to the Land and Water Conservation Fund (Accounts 5005.9 

and 5005.9), with specific provisions for allocation during FY 2007 – 2016. Beginning in 2017, 

the Act would share additional revenue from any new leases signed after enactment in the 

current program areas of the Gulf. The revenue would be shared in the same percentages (37.5 

percent to Gulf States and 12.5 percent to LWCF) as for the newly opened areas. However, this 

additional revenue sharing is subject to a cap of $500 million per year (through 2055); revenues 

in excess of this cap would be deposited in the Treasury. The National Park Service (NPS) 

currently administers and disburses payments for the Land and Water Conservation Fund. 

The Energy Policy Act of 2005 also amended section thirty-one of the Outer Continental Shelf 

(OCS) Lands Act (43 U.S.C. 1356 et seq.) and authorizes the Secretary of the Interior to 

distribute to producing states and Coastal Political Subdivisions (CPSs), $250 million for each of 

the fiscal years 2007 through 2010. This funding is shared among six producing states 

(Alabama, Alaska, California, Louisiana, Mississippi, and Texas) and 67 eligible CPSs within 

those states, based upon allocation formulas prescribed by the Act. Funding for the 

administration of this program was provided through appropriations, with three percent of the 

annual program allocation provided in Fiscal Years 2007-2009, and 4 percent in 2010. While 

appropriation of new funds has ended, activities, such as grant awards and monitoring, will 

continue for several years. 

198 Minerals Management Service 
 

Mineral Leasing Receipts 

Funds are awarded as grants for approved coastal impact assistance plans for the following 

purposes: 

•	 Conservation, protection or restoration of coastal areas, including wetlands; 

•	 Mitigation of damage to fish, wildlife or natural resources; 

•	 Planning assistance and administrative costs; 

•	 Implementation of a marine, coastal or comprehensive conservation management plan; 

and, 

•	 Mitigation of the impact of OCS activities through funding of onshore infrastructure 

projects and public service needs. 

The distribution formula is based on the amount of qualified OCS revenues generated in each 

producing state related to the total OCS revenues. Of each state’s allocable share, 35 percent is 

to be distributed to coastal political subdivisions based on population, coastline, and distance to 

applicable OCS leases. 

Calculation of States’ Payments 

Each permanent appropriation has a respective account in the United States Treasury. The 

FY 2009 actual payments are taken directly from year-end Treasury Statements. The amount on 

these statements represents the revenue that was paid out of each of the Treasury accounts that 

correspond to the permanent appropriations. Fiscal year estimates for payments to states are 

based on revenue estimates for each source type (oil, gas, coal, etc.), the appropriate distribution 

for each land category, as specified in the distribution statutes, and the amount of mineral 

receipts disbursed to that state (which is a percentage of the total mineral receipts disbursed to all 

states) for the prior year. Table 40, Mineral Revenue Payments to States, outlines the actual and 

estimated onshore mineral leasing revenue payments to states for FY 2009, FY 2010, and 

FY 2011. 

Minerals Management Service 199 
 

 

 

 

 

Mineral Leasing Receipts 

Table 40: Mineral Revenue Payments to States ($000) 

FY 2009 FY 2010 FY 2011 

Actual Estimated Estimated 

States: Payments Payments Payments 

Alabama 2,210 1,912 2,267 

Alaska 32,650 19,574 29,103 

Arizona 253 226 269 

Arkansas 3,321 2,117 2,448 

California 51,315 45,996 54,705 

Colorado 187,319 167,904 199,697 

Florida 2 2 2 

Idaho 1,482 1,329 1,580 

Illinois 176 10 10 

Indiana 14 8 9 

Kansas 1,596 1,422 1,691 

Kentucky 437 224 244 

Louisiana 914 691 811 

Michigan 837 654 761 

Minnesota 13 8 8 

Mississippi 583 343 376 

Missouri 2,060 1,174 1,277 

Montana 46,559 41,734 49,636 

Nebraska 31 27 33 

Nevada 20,845 18,685 22,223 

New Mexico 388,527 348,264 414,207 

N. Dakota 61,155 25,633 30,296 

Ohio 453 82 92 

Oklahoma 3,942 3,185 3,781 

Oregon 661 592 704 

Pennsylvania 43 2 3 

S. Dakota 951 852 1,013 

Texas 7,407 3,582 4,036 

Utah 128,636 115,306 137,139 

Virginia 143 45 49 

Washington 346 310 368 

West Virginia 400 97 105 

Wyoming 957,232 858,034 1,020,502 

Total** 1,902,512 1,660,024 1,979,446 

Notes: 

- Payments include Mineral Leasing Associated Payments, National Forest Fund Payments to States, 

Payments to States from Lands Acquired for Flood Control, Navigation and Allied Purposes, National 

Petroleum Reserve – Alaska, royalty payments to Oklahoma and late interest payments. Payments in 2009 

and 2010 are reduced by the Net Receipts Sharing provision enacted in the 2009 and 2010 Appropriations 

Acts and proposed in the 2011 President’s Budget. 

- All years exclude payments made to coastal States under the Outer Continental Shelf Lands Act and 

Geothermal Revenue Sharing Payments to Counties under the Energy Policy Act of 2005. 

200 Minerals Management Service 
 

Mineral Leasing Receipts 

MINERAL LEASING RECEIPTS 

Mineral leasing receipts are derived from royalties, rents, bonuses, and other revenues, including 

minimum royalties, late payment interest, settlement payments, gas storage fees, estimated 

royalty payments, and recoupments. The MMS is responsible for the collection of all mineral 

leasing receipts from all OCS lands, approximately 97 percent of Federal onshore lands, and 

most Indian lands. 

The remaining Federal onshore mineral leasing collections include those payments that are made 

semi-annually or annually, including the payment made to Alaska for NPRA and payments made 

for leasing activities on acquired national grasslands. National grassland collections, which are 

shared between the General Fund of the U.S. Treasury and counties, are administered by the 

BLM and by the U.S. Department of Agriculture (USDA). All monies collected on Indian lands 

by MMS are deposited in the Treasury accounts controlled by the Office of Special Trustee 

(OST). MMS notifies OST of these deposits on a daily basis. Based on information received 

from MMS and the Bureau of Indian Affairs, OST instructs Treasury to make payments to Tribal 

and Indian allottee accounts. 

The disposition of these collections between the General Fund of the U.S. Treasury, other 

Federal funds, and the states and counties is determined by statute. Legislation also determines 

how receipts are classified for budgetary purposes. Mineral leasing receipts are classified as 

offsetting receipts because they arise from business-type transactions with the public versus 

governmental receipts that arise from the Government's power to tax or fine. Offsetting receipts 

are further defined as: 1) Proprietary receipts, which offset Department of the Interior budget 

authority and outlays (most onshore receipts); and 2) Undistributed proprietary receipts, which 

offset total Federal budget authority and outlays as a bottom-line adjustment (all OCS receipts). 

Distribution of Mineral Leasing Receipts 

The distribution of mineral leasing receipts is broken down into two broad categories, onshore 

and offshore lands. In both cases, prior to distribution, the receipts or payments received are 

deposited into a holding or suspense account until the accounting system has identified the 

payments by the following three criteria: 

• Source type (oil and gas, coal, other mineral royalties, etc); 

• Land category (acquired forest, public domain, OCS, etc.); and 

• Location (state or county to determine applicable share). 

This identification process takes approximately one month if payors have filed their reports 

correctly. 

Minerals Management Service 201 
Mineral Leasing Receipts 

Onshore Mineral Leasing Receipts 

After the payments are identified by the above three criteria, they are redirected immediately into 

all accounts based on land category and source type (see Figure 21 for a visual representation of 

the distribution of onshore mineral leasing receipts). In addition, detailed state information is 

necessary to disburse state revenue shares to each state’s Treasury. 

The collections from public domain lands leased under the Mineral Leasing Act (MLA) authority 

are shared fifty percent with the states (Account 5003), forty percent with the Reclamation Fund 

(Account 5000.24) for western water projects, and ten percent with the General Fund of the U.S. 

Treasury. The 2011 President’s Budget proposes to make permanent the current two percent 

deduction from state mineral revenue payments under the MLA. The General Fund share is 

deposited into two accounts depending on whether the collections are from rents and bonuses 

(Account 1811) or from royalties (Account 2039). Alaska receives the fifty percent state share 

and the forty percent Reclamation Fund share of mineral leasing receipts for Mineral Leasing 

Act lands. 

Collections from the National Petroleum Reserve-Alaska lands (NPRA) are made to Alaska for 

its fifty percent share of the NPRA receipts. Since there is currently no production on the 

NPRA, the entire General Fund share, fifty percent, is derived from rents and bonuses (Account 

1811). 

The Energy Policy Act of 1992, P.L. 102-486, requires the Secretary of the Interior to disburse 

monthly to States all mineral leasing payments authorized by Section 6 of the Mineral Leasing 

Act for Acquired Lands. Therefore, MMS distributes the revenue collections from lands 

acquired for flood control, navigation and allied purposes, giving twenty-five percent of the total 

to the General Fund of the U.S. Treasury (either Account 1811 or 2039) and seventy-five percent 

to the States (Account 5248.1). The MMS distributes revenue collections from National Forest 

Lands, depositing seventy-five percent in the General Fund of the U.S. Treasury (Account 

5008.1) and providing twenty-five percent to the States (Account 5243.1). 

202 Minerals Management Service 
 

 

Mineral Leasing Receipts 

Figure 21: Distribution of Onshore Mineral Leasing Receipts 

Minerals Management Service 203 
 

Mineral Leasing Receipts 

Offshore (OCS Lands) Mineral Leasing Receipts 

After distinguishing payments by source type, land category, and location, the receipts derived 

from OCS lands are deposited into accounts according to revenue source: rent, bonus, or royalty. 

Figure 22 provides a visual representation of the distribution of offshore mineral leasing receipts. 

In order to bid on an OCS lease tract offered for sale, a bidder must submit an upfront cash 

deposit equal to one-fifth of the entire proposed bid. The deposit flows into Escrow Account 

6705 and accrues interest until MMS determines that the proposed bonus is at least equal to the 

fair market value of the tract. The interest earned on collections held in Escrow is deposited into 

a separate account that is not listed on the receipt tables contained in this document (Account 

1493). 

If the bid is rejected, the one-fifth upfront deposit, plus interest, is returned to the bidder. If 

accepted, the one-fifth upfront deposit, the remaining four-fifths of the bonus, along with the first 

year’s rent are deposited into Account 1820 for OCS rents and bonuses. Future OCS rents, due 

yearly until production begins, are also deposited into Account 1820. The OCS royalties, due 

from payors at the end of the month following each month of production, are deposited into 

Account 2020. 

Under Section 8(g) of the OCS Lands Act, payments made to coastal states for their 27 percent 

share of OCS collections within the 8(g) zone, which is the area approximately three miles 

seaward from the State/Federal boundary, flow through Account 6707. Table 41 provides 

information on the 8(g) payments to coastal States. 

Table 41: Payments to Coastal States under OCSLA Section 8(g) 

($000) 

FY 2009 

Actual 

Payments 

FY 2010 

Estimated 

Payments 

FY 2011 

Estimated 

Payments 

Alabama 8,830 12,842 15,883 

Alaska 9,944 14,462 17,887 

California 6,979 10,150 12,553 

Louisiana 22,317 32,456 40,142 

Mississippi 451 656 811 

Texas 6,130 8,915 11,026 

Total 54,651 79,479 98,302 

204 Minerals Management Service 
 

Mineral Leasing Receipts 

The OCS receipts are the main funding source of the mandated $900 million required for the 

Land and Water Conservation Fund (LWCF). Each year, a portion of OCS receipts are 

distributed to the LWCF (Accounts 5000.7 and 5000.8), which is administered by the National 

Park Service. Also, $150 million is deposited annually into the Historic Preservation Fund 

(Accounts 5140 and 5140.3). For both funds, accounting procedures require payments to be 

made from OCS rents and bonuses, and then any further needed payments to be made from OCS 

royalties. 

Payments to the Gulf producing states under the Gulf of Mexico Energy Security Act of 2006 

(37.5 percent of receipts from certain leases) flow through Accounts 5535.1 and 5535.2; an 

additional 12.5 percent of funds from these leases are deposited into the LWCF (5005.1 and 

5005.9) and are available for expenditure without further appropriation. The funding is intended 

to be used primarily for coastal protection and restoration and is available in the year following 

the year in which the revenues are collected. 

Minerals Management Service 205 
 

 

 

 

 

 

 

Mineral Leasing Receipts 

Table 42: Payments to Gulf producing States under GOMESA 2006:1 

(thousands of dollars) 

FY 20092 

Actual 

Payments 

FY 2010 

Estimated 

Payments 

FY 2011 

Estimated 

Payments 

ALABAMA 6,179 543 464 

BALDWIN COUNTY ALABAMA 713 63 53 

MOBILE COUNTY ALABAMA 832 73 62 

LOUISIANA 6,347 558 476 

ASSUMPTION PARISH LOUISIANA 52 5 4 

CALCASIEU PARISH LOUISIANA 70 6 5 

CAMERON PARISH LOUISIANA 82 7 6 

IBERIA PARISH LOUISIANA 70 6 5 

JEFFERSON PARISH LOUISIANA 139 12 10 

LAFOURCHE PARISH LOUISIANA 79 7 6 

LIVINGSTON PARISH LOUISIANA 66 6 5 

ORLEANS PARISH LOUISIANA 146 13 11 

PLAQUEMINES PARISH LOUISIANA 165 14 12 

ST. BERNARD PARISH LOUISIANA 98 9 7 

ST. CHARLES PARISH LOUISIANA 63 6 5 

ST. JAMES PARISH LOUISIANA 53 5 4 

ST. JOHN THE BAPTIST PARISH LOUISIANA 58 5 4 

ST. MARTIN PARISH LOUISIANA 56 5 4 

ST. MARY PARISH LOUISIANA 57 5 4 

ST. TAMMANY PARISH LOUISIANA 93 8 7 

TANGIPAHOA PARISH LOUISIANA 69 6 5 

TERREBONNE PARISH LOUISIANA 107 9 8 

VERMILION PARISH LOUISIANA 64 6 5 

MISSISSIPPI 5,506 484 413 

HANCOCK COUNTY MISSISSIPPI 249 22 19 

HARRISON COUNTY MISSISSIPPI 538 47 40 

JACKSON COUNTY MISSISSIPPI 590 52 44 

TEXAS 2,159 190 162 

ARANSAS TEXAS 21 2 2 

BRAZORIA TEXAS 33 3 3 

CALHOUN TEXAS 28 2 2 

CAMERON TEXAS 32 3 2 

CHAMBERS TEXAS 19 2 1 

GALVESTON TEXAS 46 4 3 

HARRIS TEXAS 105 9 8 

JACKSON TEXAS 15 1 1 

JEFFERSON TEXAS 37 3 3 

KENEDY TEXAS 30 3 2 

KLEBERG TEXAS 22 2 2 

MATAGORDA TEXAS 39 3 3 

NUECES TEXAS 29 3 2 

ORANGE TEXAS 21 2 2 

REFUGIO TEXAS 14 1 1 

SAN PATRICIO TEXAS 15 1 1 

VICTORIA TEXAS 16 1 1 

WILLACY TEXAS 18 2 1 

TOTAL 25,240 2,220 1,894 

1

 Payments shown in the above table reflect individual payments made to states, counties and parishes. State payment totals are separate 

from payments made to the counties and parishes. Payments are disbursed to the states in the year after receipts are deposited to 

Treasury. 

2 2009 Actual Payments include proceeds from Sale 208. 

206 Minerals Management Service 
 

Mineral Leasing Receipts 

Figure 22: Distribution of Offshore (OCS Lands) Mineral Leasing Receipts 

Minerals Management Service 207 
 

Mineral Leasing Receipts 

Alaska Escrow Account and the Environmental Improvement Fund 

On June 19, 2000, the U.S. Supreme Court issued a final decree regarding the State/Federal 

boundary of areas leased for oil and gas exploration in the Beaufort Sea between 1979 and 1991. 

Prior to resolution of this dispute, sale bonuses collected during this time, and associated rental 

payments, were deposited into Account 6704. The resolution permitted the release of the funds 

that had been held in the Treasury Escrow Account. 

As required by the Department of the Interior and Related Agencies Appropriations Act, P.L. 

105-83, as amended, one-half of the principal and one-half of the interest were deposited into the 

Environmental Improvement and Restoration Fund. The Law requires that the corpus of the 

Fund be invested. 20 percent of the interest earned by the Fund is permanently appropriated to 

the Department of Commerce. Congress can appropriate the remaining 80 percent of the interest 

earned through annual appropriations for the specific purposes outlined in the law. The 

remaining one-half principal and one-half interest were deposited into the General Funds of the 

U.S. Treasury. 

Receipts Charts for Onshore and Offshore Mineral Leasing 

Information regarding the estimated onshore and offshore mineral leasing receipts is included in 

the following charts: 

• Table 43: Mineral Leasing Receipts by Commodity Source; 

• Table 44: Mineral Leasing Receipts by Account; 

• Table 45: Onshore Mineral Receipts; 

• Table 46: Onshore Rents and Bonuses; 

• Table 47: Federal Onshore Royalty Estimates; 

• Table 48: Outer Continental Shelf Mineral Receipts; 

• Table 49: OCS Rents and Bonuses; and 

• Table 50: Federal Offshore Royalty Estimates. 

208 Minerals Management Service 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Leasing Receipts 

Table 43: Mineral Leasing Receipts by Commodity Source ($000) 1/ 

FY 2010 

Estimate 

FY 2011 

Estimate 

FY 2012 

Estimate 

FY 2013 

Estimate 

FY 2014 

Estimate 

FY 2015 

Estimate 

Onshore Mineral Leasing 

Onshore Rents and Bonuses 

Oil and Gas 151,836 164,912 151,598 169,521 154,971 168,375 

Coal 338,563 637,184 987,400 901,185 911,495 828,838 

Geothermal 12,584 12,658 12,758 12,857 12,957 13,057 

Oil Shale 0 0 0 2 2 40 0,041 

All Other 20 20 20 20 20 20 

Subtotal, Rents and Bonuses 503,003 814,774 1,151,776 1,083,585 1,079,445 1,410,331 

Onshore Royalties 

Oil and Gas 2,169,095 2,472,943 2,589,732 2,669,900 2,780,751 2,899,519 

Coal 665,731 697,975 739,425 777,532 796,122 809,732 

Geothermal 14,701 17,879 18,177 18,475 17,780 18,078 

All Other (including oil shale) 28,389 28,389 28,389 28,389 28,389 35,107 

Subtotal, Royalties 2,877,916 3,217,187 3,375,724 3,494,297 3,623,043 3,762,436 

Fee on onshore nonproducing oil and gas 

new leases 2/ 0 5,000 11,000 17,000 23,000 29,000 

Total, Onshore Receipts 3,380,919 4,036,961 4,538,500 4,594,882 4,725,488 5,201,767 

Other Receipts 

Royalty-in-Kind fees 20 20 20 20 20 20 

Sale of publications 110 110 110 110 110 110 

Total, Other Receipts 130 130 130 130 130 130 

Outer Continental Shelf (OCS) 

OCS Rents and Bonuses 539,990 537,660 520,830 407,860 423,140 413,550 

OCS Royalties 3/ 2,994,761 6,688,714 7,621,684 8,406,395 8,724,910 9,053,347 

Fee on offshore nonproducing oil and gas 

new leases 4/ - 3,000 11,000 21,000 30,000 38,000 

Total, OCS Receipts 3,534,751 7,229,375 8,153,514 8,835,255 9,178,050 9,504,897 

TOTAL, MINERAL RECEIPTS 5/ 6,915,800 11,266,466 12,692,144 13,430,267 13,903,668 14,706,794 

1/ Onshore receipts for oil and natural gas include a reduction for Acquired Natural Grasslands. OCS receipts include reductions for MMS's 

Offsetting Collections, SPR, 8(g) Payments to States, and Ultra-Deepwater and Unconventional Natural Gas Research Fund. 

2/ Estimates reflect onshore revenues anticipated from the 2011 Budget proposal to impose a $4/acre fee on nonproducing new leases. 

3/ 2010 projections reflect estimated recoupments based on the Kerr-McGee judgement that ruled that price thresholds may not be applied to 

deepwater royalty relief included in leases issued from 1996 to 2000. 

4/ Estimates reflect offshore revenues anticipated from the 2011 Budget proposal to impose a $4/acre fee on nonproducing new leases. 

5/ Small discrepancies may occur due to rounding. 

Minerals Management Service 209 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Leasing Receipts 

Table 44: Mineral Leasing Receipts by Account ($000) 1/ 

FY 2010 

Estimate

FY 2011 

 Estimate 

FY 2012 

Estimate 

FY 2013 

Estimate 

FY 2014 

Estimate 

FY 2015 

Estimate 

Onshore Mineral Leasing Receipts 

1811.00 Rents and Bonuses 49,306 86,018 119,252 117,825 111,890 150,376 

2025.00 Fee on nonproducing oil and gas new leases - 5,000 11,000 17,000 23,000 29,000 

2039.00 MLR Royalties 2/ 321,546 361,834 382,762 394,991 409,243 427,745 

5000.24 Reclamation Fund 1,326,453 1,581,732 1,803,178 1,817,823 1,873,078 2,055,673 

5003.02 Payments to States 2/ 1,647,996 1,960,042 2,208,893 2,226,833 2,294,521 2,518,199 

5045.00 Payments to Alaska from Oil & Gas Leases (NPRA) 4,900 11,650 5,350 12,100 5,200 11,950 

5134.00 Payment to Oklahoma (Royalties) 3 3 3 3 3 3 

5243.10 Forest Fund, States share 5,009 5,448 5,614 5,763 5,918 6,090 

5248.10 Flood Control, States shares 2,116 2,303 2,371 2,445 2,509 2,582 

5573.10 Rent from mineral leases (Permit Processing Fund) 23,562 22,878 

5574.10 Geothermal Lease Revenues, County share 

5575.10 Geothermal Lease Revenues, DOI share 

5576.10 Leases from Naval Petroleum Reserve #2 29 53 77 100 125 150 

Subtotal, Onshore Receipts 3,380,920 4,036,961 4,538,500 4,594,883 4,725,487 5,201,768 

Other Receipts 

2419.10 Royalty-in-Kind fees 20 20 20 20 20 20 

2259.00 Sale of publications 110 110 110 110 110 110 

Subtotal, Other Receipts 130 130 130 130 130 130 

 Outer Continental Shelf (OCS) Receipts 

1820.00 OCS Rents and Bonuses 3/ - - - - - -

5535.1 OCS Rents and Bonuses, State share from qualified leases 5/ 2,220 1,894 1,541 1,545 2,303 2,321 

5005.9 OCS Rents and Bonuses, LWCF share from qualified leases 4/ 740 631 514 515 768 774 

2020.00 OCS Royalties 2,235,531 6,177,481 7,093,936 7,765,522 8,098,072 8,415,551 

5535.2 OCS royalties, State share from qualified leases 5/ - - 38 188 675 2,025 

5005.1 OCS royalties, LWCF share from qualified leases 4/ - - 13 63 225 675 

5005.70 Land & Water Conservation Fund (OCS R & B) 387,030 385,135 368,775 255,800 270,070 260,455 

5005.80 Land & Water Conservation Fund (OCS royalties) 509,230 511,234 527,699 640,623 625,938 635,096 

5140.00 Historic Preservation Fund (OCS R & B) 150,000 150,000 150,000 150,000 150,000 150,000 

5572.10 OCS Revenues, Coastal Impact Assistance 250,000 - - - - -

2025.00 Fee on nonproducing oil and gas new leases - 3,000 11,000 21,000 30,000 38,000 

Subtotal, OCS Receipts 3,534,751 7,229,375 8,153,515 8,835,256 9,178,051 9,504,897 

TOTAL, MINERAL RECEIPTS 6/ 6,915,801 11,266,466 12,692,145 13,430,269 13,903,668 14,706,795 

1/ Accounts 5573, 5575, and 5576 are administered by the Bureau of Land Management; however, MMS provides the estimates for these accounts as part of the overall mineral 

revenue estimates. Accounts 5535.1, 5535.2, 5005.9, 5005.1 are formed from the Energy Security Act of 2006. 

2/ Accounts 2039 and 5003 reflect Net Receipts Sharing provision enacted in 2009 and 2010 and proposed in 2011 Budget. 

3/ This amount is the remaining after all transfers to LWCF and the Historic Preservation Fund. 

4/ Accounts 5005.1 and 5005.9 LWCF are transferred to the National Park Service. 

5/ Revenues will be disbursed to the states in the following year from account 5535.

6/ Estimates are subject to change; small discrepancies may occur due to rounding. 

210 Minerals Management Service 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Leasing Receipts 

Table 45: Onshore Mineral Receipts, FY 2010-FY 2011 

FY 2010 

Estimate 

FY 2011 

Estimate Change Explanation 

Rents & Bonuses 

Oil & Gas 151,836 164,912 +13,076 Increase in bonuses, rents remain constant 

Coal 338,563 637,184 +298,621 Increase in bonuses 

Geothermal 12,584 12,658 +74 Assumption of consistent rents & bonuses 

All Other (including oil shale) 20 20 0 Assumption of consistent rents & bonuses 

Subtotal, Rents & Bonuses 503,003 814,774 +311,771 

Royalties 

Oil & Gas 2,169,095 2,472,943 +303,848 Increase in oil price estimates 

Coal 665,731 697,975 +32,244 Increase in production 

Geothermal 14,701 17,879 +3,178 Assumption of consistent royalties 

All Other (including oil shale) 28,389 28,389 0 Assumption of consistent royalties 

Subtotal, Royalties 2,877,916 3,217,187 +339,271 

Fee on onshore nonproducing oil and 

gas new leases 0 5,000 +5,000 New Initiative 

Total Onshore Mineral Receipts 1/ 3,380,919 4,036,961 +651,042 

1/ Estimates are subject to change; small discrepancies may occur due to rounding. 

Minerals Management Service 211 
Mineral Leasing Receipts 

Table 46: Onshore Rents and Bonuses ($000) 1/ 

FY 2010 

Estimate 

FY 2011 

Estimate 

FY 2012 

Estimate 

FY 2013 

Estimate 

FY 2014 

Estimate 

FY 2015 

Estimate 

Oil and Gas 

Rents Lower 48 52,042 50,674 49,307 47,940 46,572 45,205 

Bonuses Lower 48 90,000 90,800 91,300 97,119 97,580 98,719 

Subtotal, Oil and Gas 142,042 141,474 140,607 145,059 144,152 143,924 

Coal 

Rents 1,300 1,300 1,300 1,300 1,300 1,300 

Bonuses 337,264 635,885 986,103 899,887 910,198 827,540 

Subtotal, Coal 338,564 637,185 987,403 901,187 911,498 828,840 

Geothermal 

Rents and Bonuses 12,626 12,700 12,800 12,900 13,000 13,100 

Oil Shale 

Rents and Bonuses 0 0 0 2 2 400,041 

Other Minerals 

Rents and Bonuses 21 21 21 21 21 21 

TOTAL, Rents & Bonuses 2/ 493,253 791,380 1,140,831 1,059,169 1,068,673 1,385,926 

1/ Amounts differ from the "Mineral Leasing Receipts by Source" table. The oil and gas estimates in this table do not 

reflect Naval Petroleum Reserve and Negotiated Settlement estimates. 

2/ Estimates are subject to change; small discrepancies may occur due to rounding. 

212 Minerals Management Service 
 

 

 

 

 

Mineral Leasing Receipts 

Table 47: Federal Onshore Royalty Estimates (in millions of volume and dollars) 1/ 

FY 2010 

Estimate 

FY 2011 

Estimate 

FY 2012 

Estimate 

FY 2013 

Estimate 

FY 2014 

Estimate 

FY 2015 

Estimate 

Oil 

Oil Volume (MMBbl) 105.04 103.93 102.86 101.81 100.75 99.68 

OMB Price/Bbl (in whole $s) $68.41 $71.17 $72.82 $74.09 $75.49 $77.03 

Royalty Rate 0.111 0.111 0.111 0.111 0.111 0.111 

Oil Royalties ($M) $800.829 $824.264 $834.679 $840.588 $847.593 $855.641 

Royalty Rate Initiative 2/ $0.000 $0.000 $0.000 $2.357 $9.507 $19.195 

Subtotal Oil Royalties ($M) $800.829 $824.264 $834.679 $842.945 $857.100 $874.836 

Gas 

Natural Gas Volume (bcf) 3.081 3.120 3.153 3.180 3.199 3.212 

OMB Price/Mcf (in whole $s) $3.61 $4.38 $4.63 $4.77 $4.90 $5.04 

Royalty Rate 0.109 0.109 0.109 0.109 0.109 0.109 

Gas Royalties ($M) $1,212.375 $1,493.034 $1,592.942 $1,654.303 $1,712.192 $1,767.351 

Royalty Rate Initiative 2/ $0.000 $0.000 $0.000 $4.737 $39.218 $80.963 

Subtotal Natural Gas Royalties ($M) $1,212.375 $1,493.034 $1,592.942 $1,659.039 $1,751.410 $1,848.313 

CO2 Royalties $40.776 $41.924 $44.375 $46.425 $48.210 $49.721 

Gas Plant Products $102.956 $104.843 $110.154 $114.543 $118.320 $121.550 

Subtotal Gas Royalties ($M) $1,356.106 $1,639.800 $1,747.470 $1,820.007 $1,917.940 $2,019.584 

Total, Oil & Gas Royalties ($M) $2,156.935 $2,464.064 $2,582.149 $2,662.953 $2,775.040 $2,894.421 

Coal Royalties $666.036 $698.295 $739.764 $777.888 $796.487 $810.102 

Geothermal Royalties $14.800 $18.000 $18.300 $18.600 $17.800 $18.200 

All Other Royalties $28.389 $28.389 $28.389 $28.389 $28.389 $28.389 

TOTAL ONSHORE ROYALTIES ($M) 3/ $2,866.161 $3,208.749 $3,368.602 $3,487.830 $3,617.717 $3,751.112 

1/ Amounts differ from the "Mineral Leasing Receipts by Source" table. The oil and gas estimates in the "Mineral Leasing Receipts by Source" table 

include a reduction for Acquired National Grasslands. 

2/ Estimates incorporated FY 2011's Budget proposal to increase onshore royalty rates. 

3/ Estimates are subject to change; small discrepancies may occur due to rounding. 

Minerals Management Service 213 
 

 

 

 

 

 

 

 

 

 

 

Mineral Leasing Receipts 

Table 48: OCS Mineral Receipts, FY 2010 – FY 2011 ($000) 1/ 

FY 2010 

Estimate 

FY 2011 

Estimate Change Explanation 

Rents & Bonuses 

Rents 84,690 83,370 -1,320 Assumption of consistent rents 

Bonuses 447,955 473,246 +25,290 Increase in production and price estimates 

Rents & Bonuses - Renewable Energy 1,200 1,700 +500 Assumption of consistent rents & bonuses for RE 

Subtotal, Rents & Bonuses 533,845 558,316 +23,970 

Royalties 

Oil 4,193,739 5,285,919 +1,092,180 Increase in price and production estimates 

Gas 1,230,889 1,497,585 +266,696 Increase in price estimates 

SPR and 8(g) Reductions -247,479 -98,308 +149,171 Increase due to SPR 

Kerr-McGee Recoupments 2/ -2,136,000 0 +2,136,000 Projected recoupments from Kerr-McGee judgement 

Subtotal, Royalties 3,041,149 6,685,196 3,644,047 

Fee on nonproducing oil and gas new leases - 3,000 +3,000 New Initiative 

Total OCS Mineral Receipts 3/ 3,574,995 7,246,512 3,671,017 

1/ Rent totals are net of MMS offsetting collections and can change according to amounts stated in the MMS appropriations language. 

2/ Projections reflect estimated recoupments based on the Kerr-McGee judgement that ruled that price thresholds may not be applied to deepwater royalty relief 

included in leases issued from 1996 to 2000. 

3/ Amounts differ from the "Mineral Leasing Receipts by Source" table since they do not reflect the Ultra-Deepwater transfers. Small discrepancies may occur 

due to rounding. 

214 Minerals Management Service 
 

 

 

Mineral Leasing Receipts 

Table 49: OCS Rents and Bonuses (in millions of dollars) 

Sale Number Sale Date (FY) Sale Area High Bids % in FY 8(g) to States Receipt Estimate 1/ 

FY 2010 Estimate 

210 late 09 Western Gulf of Mexico 113 100% 1 112 

213 mid 10 Central Gulf of Mexico 334 100% 3 331 

215 late 10 Western Gulf of Mexico 107 0% 0 0 

213 mid 10 Central GOM - ESA 5 100% 0 5 

Bonuses Subtotal 448 

Rents 84 

Rents - subject to ESA 1 

Rents & Bonues - Renewable Energy 1 

FY 2010 TOTAL 534 

FY 2011 Estimate 

215 late 10 Western Gulf of Mexico 107 100% 1 106 

209 ear 11 Beaufort 15 100% 0 15 

212 mid 11 Chukchi 48 100% 1 47 

220 mid 11 Atlantic 43 100% 0 43 

216 mid 11 Central Gulf of Mexico 261 100% 2 259 

218 late 11 Western Gulf of Mexico 88 0% 0 0 

216 mid 11 Central GOM - ESA 4 100% 0 4 

Bonuses Subtotal 473 

Rents 82 

Rents - subject to ESA 1 

Rents & Bonues - Renewable Energy 2 

FY 2011 TOTAL 558 

FY 2012 Estimate 

218 late 11 Western Gulf of Mexico 88 100% 1 87 

219 ear 12 Cook Inlet 3 100% 0 3 

214 ear 12 North Aleutian Basin 62 100% 1 61 

mid 12 Beaufort 21 100% 0 21 

221 mid 12 Chukchi 28 100% 0 28 

222 mid 12 Central Gulf of Mexico 233 100% 2 231 

late 12 Western Gulf of Mexico 88 0% 0 0 

222 mid 12 Central GOM - ESA 3 100% 0 3 

Bonuses Subtotal 434 

Rents 82 

Rents - subject to ESA 1 

Rents & Bonues - Renewable Energy 4 

FY 2012 TOTAL 521 

FY 2013 Estimate 

late 12 Western Gulf of Mexico 88 100% 1 87 

mid 13 Central Gulf of Mexico 230 100% 2 228 

late 13 Western Gulf of Mexico 87 0% 1 0 

mid 13 Central GOM - ESA 3 100% 0 3 

Bonuses Subtotal 319 

Rents 75 

Rents - subject to ESA 1 

Rents & Bonues - Renewable Energy 12 

FY 2013 TOTAL 407 

FY 2014 Estimate 

late 13 Western Gulf of Mexico 87 100% 1 86 

mid 14 Central Gulf of Mexico 225 100% 2 223 

mid 14 Beaufort 23 100% 0 23 

late 14 Western Gulf of Mexico 81 0% 0 0 

mid 14 Central GOM - ESA 3 100% 0 3 

Bonuses Subtotal 336 

Rents 70 

Rents - subject to ESA 1 

Rents & Bonues - Renewable Energy 13 

FY 2014 TOTAL 420 

FY 2015 Estimate 

late 14 Western Gulf of Mexico 81 100% 1 80 

mid 15 Central Gulf of Mexico 225 100% 2 223 

late 15 Beaufort and other small 23 100% 0 23 

mid 15 Central GOM - ESA 3 100% 0 3 

Bonuses Subtotal 329 

Rents 65 

Rents - subject to ESA 1 

Rents & Bonues - Renewable Energy 15 

FY 2015 TOTAL 411 

1/ Rent estimates are subject to change based on cost recoveries recouped on an annual basis and totals are net of MMS offsetting 

collections. Small discrepancies may occur due to rounding. 

Minerals Management Service 215 
Mineral Leasing Receipts 

 

 

 

 

Table 50: Federal Offshore Royalty Estimates (in millions of dollars) 

FY 2010 

Estimate 

FY 2011 

Estimate 

FY 2012 

Estimate 

FY 2013 

Estimate 

FY 2014 

Estimate 

FY 2015 

Estimate 

Oil (Million Barrels) 

Alaska 1/ 1 13 22 29 25 21 

POCS 23 22 22 21 21 20

 Total GOM 500 586 629 672 677 670 

Royalty Free Production (Deep Water) 2/ 89 92 81 81 86 77 

GOM Royalty Production 410 493 549 591 592 593 

Total Royalty Production 434 528 593 641 638 634 

Royalty Rate 3/ 0.12 0.12 0.12 0.12 0.13 0.13 

OMB Price/Bbl $78.00 $81.14 $83.02 $84.47 $86.07 $87.82 

Subtotal Oil Royalties $4,193.74 $5,285.92 $6,102.55 $6,758.57 $6,902.83 $7,057.41 

Adjustments to Federal Royalty Receipts from Energy Security Act of 2006 

Royalties subject to ESA 0 0 0 0 1 4.05 

Revised Federal Royalty Receipts $4,193.74 $5,285.92 $6,102.59 $6,758.91 $6,904.22 $7,061.46 

Gas (Billion Cubic Feet) 

POCS 46 45 44 43 41 41

 Total GOM 2,265 2,280 2,293 2,370 2,473 2,599 

Royalty Free Production (Deep Gas) 2/ 117 84 57 32 6 0 

Royalty Free Production (Deep Water) 2/ 472 513 504 510 508 523 

GOM Royalty Production 1,676 1,682 1,731 1,828 1,958 2,076 

Total Royalty Production 1,722 1,727 1,775 1,871 1,999 2,117 

Royalty Rate 0.15 0.15 0.15 0.15 0.15 0.15 

OMB Price/Mcf $4.72 $5.74 $6.06 $6.24 $6.42 $6.60 

Subtotal Gas Royalties $1,230.89 $1,497.59 $1,627.85 $1,768.48 $1,946.10 $2,121.44 

Adjustments to Federal Royalty Receipts from Energy Security Act of 2006 

Royalties subject to ESA 0 0 0 0 0 1.35 

Revised Federal Royalty Receipts $1,230.89 $1,497.59 $1,627.86 $1,768.59 $1,946.56 $2,122.79 

Total Oil and Gas Royalties $5,424.63 $6,783.50 $7,730.45 $8,527.50 $8,850.78 $9,184.24 

Adjustments 

8(g) Payments to States -79.48 -98.31 -112.02 -123.57 -128.23 -133.01 

SPR 4/ -168.00 

Kerr-McGee Recoupments 5/ -2,136.00 

Settlements 3.71 3.71 3.71 3.71 3.71 3.71 

NET FEDERAL OCS ROYALTIES 6/ $3,044.86 $6,688.91 $7,622.14 $8,407.65 $8,726.26 $9,054.94 

1/ Alaska production is net of 27 percent that goes to the State for 8(g) payments. 

2/ Royalty Free Production is GOM production which is not subject to royalties because of the deep water royalty relief and deep gas royalty 

relief. Royalty relief price thresholds are expected to be exceeded. 

3/ Composite effective royalty rates which include transporation allowance costs are reflected in the assumptions. 

4/ No royalty oil is expected to be transferred to SPR in 2011 - 2015. 

5/ Estimated recoupments for the Kerr-McGee judgement that ruled that price thresholds may not be applied to deepwater royalty relief 

included in leases issued from 1996 to 2000. 

6/ Small discrepencies may occur due to rounding. 

216 Minerals Management Service 
 

Appendix A 

Appendix A: Fixed Costs and Related Changes ($000s) 

Additional Operational Costs from 2010 and 2011 January Pay Raises: 

FY 2010 

Budget 

Change 

FY 2010 

Revised 

FY 2011 

Change 

1. FY 2010 Pay Raise, 3 Qtrs. in FY 2010 Budget 

Amount of Pay Raise Absorbed 

+2,459 

[0] 

+2,459 

[0] 

0 

n/a 

2. FY 2010 Pay Raise, 1 Quarter (Enacted 2%) 

Amount of Pay Raise Absorbed 

n/a 

[0] 

n/a 

[0] 

0 

[+836] 

3. FY 2011 Pay Raise (Assumed 1.4%) 

Amount of Pay Raise Absorbed 

n/a 

[0] 

n/a 

[0] 

0 

[+1,756] 

These adjustments are for an additional amount needed to fund estimated pay raises for Federal 

employees. 

Line 1, 2010 revised column is an update of 2010 budget estimates based upon an enacted 2.0% 

increase. 

Line 2 is the amount needed in 2011 to fund the enacted 2.0% January 2010 pay raise from 

October through December 2010. 

Line 3 is the amount needed in FY 2011 to fund the estimated 1.4% January 2011 pay raise from 

January through September 2011. 

Other Fixed Cost Changes: 

FY 2010 

Budget 

Change 

FY 2010 

Revised 

Change 

FY 2011 

Change 

More or Less Pay Days Than Previous Year 

Number of paydays is constant in FY 2011. 

n/a n/a 0 

FY 2010 

Budget 

Change 

FY 2010 

Revised 

Change 

FY 2011 

Change 

Employer Share of Federal Health Benefit Plans 

Amount Absorbed 

+628 

[0] 

+628 

[0] 

0 

[685] 

Minerals Management Service 217 
 

Appendix A 

The adjustment is for changes in the Federal Government’s share of the cost of health insurance 

coverage for Federal employees. For 2011, the increase is estimated at 7.0%. The estimated cost 

increase will be absorbed. 

FY 2010 

Budget 

Change 

FY 2010 

Revised 

Change 

FY 2011 

Change 

Workers Compensation Payments 

Amount Absorbed 

-61 

[0] 

-61 

[0] 

0 

[+21] 

Reflects changes in the costs of compensating injured employees and dependents of employees 

who suffer accidental deaths while on duty. Costs for 2011 will reimburse the Department of 

Labor, Federal Employees Compensation Fund, pursuant to 5 U.S.C. 8147(b) as amended by 

Public Law 94-273. The estimated cost increase will be absorbed. 

FY 2010 

Budget 

Change 

FY 2010 

Revised 

Change 

FY 2011 

Change 

Unemployment Compensation Payments 

Amount Absorbed 

+12 

[0] 

+12 

[0] 

0 

[12] 

The adjustment is for estimated changes in the costs of unemployment compensation claims to 

be paid to the Department of Labor, Federal Employees Compensation Account, in the 

Unemployment Trust Fund, pursuant to Public Law 96-499. 

FY 2010 

Budget 

Change 

FY 2010 

Revised 

Change 

FY 2011 

Change 

Working Capital Fund 

Amount Absorbed 

+438 

[0] 

+438 

[0] 

-16 

[0] 

The Working Capital Fund funding estimate for 2011 is being reduced by $16,000 compared 

with 2010 by reallocating internal priorities and reducing lower priority services. 

FY 2010 

Budget 

Change 

FY 2010 

Revised 

Change 

FY 2011 

Change 

Rental Payments to GSA and Others 

Amount Absorbed 

+1,446 

[0] 

+1,446 

[0] 

0 

[706] 

This adjustment is for changes in costs payable to General Services Administration and others 

resulting from changes in rates for office and non-office space as estimated by GSA, as well as 

the rental costs of other currently occupied space. These costs include building security and may 

218 Minerals Management Service 
 

-16 

Appendix A 

also include costs of mandatory, disaster-related office relocations. The estimated cost increase 

will be absorbed. 

Total, Fixed Costs and Related Changes – Budgeted in FY 2011 

Total, Fixed Costs and Related Changes – Absorbed in FY 2011 [+4,016] 

Fixed costs are expected to increase by $4,016,000 over FY 2010 for all of MMS, which covers 

anticipated increases in pay, benefits and other costs. The MMS will absorb these costs. 

Minerals Management Service 219 
Appendix A 

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220 Minerals Management Service 
 

Appendix B 

2011 Appropriations Language 

Minerals Management Service 

Note: Brackets indicate the language will be deleted; italics represent new language. 

Royalty and Offshore Minerals Management (ROMM) 

For expenses necessary for minerals leasing and environmental studies, regulation of industry 

operations, and collection of royalties, as authorized by law; for enforcing laws and regulations 

applicable to oil, gas, and other minerals leases, permits, licenses and operating contracts; for 

energy-related or other authorized marine-related purposes on the Outer Continental Shelf; and 

for matching grants or cooperative agreements, [$175,217,000] $183,587,000, to remain 

available until September 30, [2011] 2012, of which [$89,374,000] $100,404,000 shall be 

available for royalty management activities; and an amount not to exceed [$156,730,000] 

$154,890,000, to be credited to this appropriation and to remain available until expended, from 

additions to receipts resulting from increases to rates in effect on August 5, 1993, and from cost 

recovery fees: Provided, That notwithstanding 31 U.S.C. 3302, in fiscal year [2010] 2011, such 

amounts as are assessed under 31 U.S.C. 9701 shall be collected and credited to this account and 

shall be available until expended for necessary expenses: Provided further, That to the extent 

[$156,730,000] $154,890,000 in addition to receipts are not realized from the sources of receipts 

stated above, the amount needed to reach [$156,730,000] $154,890,000 shall be credited to this 

appropriation from receipts resulting from rental rates for Outer Continental Shelf leases in effect 

before August 5, 1993: Provided further, That for fiscal year 2011 and each fiscal year 

thereafter, the term “qualified Outer Continental Shelf revenues”, as defined in section 

102(9)(A) of the Gulf of Mexico Energy Security Act, division C of Public Law 109-432, shall 

include only the portion of rental revenues that would have been collected at the rental rates in 

effect before August 5, 1993: Provided further, That not to exceed $3,000 shall be available for 

reasonable expenses related to promoting volunteer beach and marine cleanup activities: 

Provided further, That notwithstanding any other provision of law, $15,000 under this heading 

shall be available for refunds of overpayments in connection with certain Indian leases in which 

the Director of MMS concurred with the claimed refund due, to pay amounts owed to Indian 

allottees or tribes, or to correct prior unrecoverable erroneous payments[: Provided further, That 

for the costs of administration of the Coastal Impact Assistance Program authorized by section 

31 of the Outer Continental Shelf Lands Act, as amended (43 U.S.C. 1456a), in fiscal year 2010, 

MMS may retain up to 4 percent of the amounts which are disbursed under section 31(b)(1), 

such retained amounts to remain available until expended]. 

For an additional amount, [$10,000,000] $20,000,000 to remain available until expended, which 

shall be derived from non-refundable inspection fees collected in fiscal year [2010] 2011, as 

provided in this Act: Provided, That to the extent that such amounts are not realized from such 

fees, the amount needed to reach [$10,000,000] $20,000,000 shall be credited to this 

appropriation from receipts resulting from rental rates for Outer Continental Shelf leases in effect 

before August 5, 1993. (Department of the Interior, Environment, and Related Agencies 

Appropriations Act, 2010.) 

Minerals Management Service 221 
 

Appendix B 

Oil Spill Research 

For necessary expenses to carry out title I, section 1016, title IV, sections 4202 and 4303, title 

VII, and title VIII, section 8201 of the Oil Pollution Act of 1990, $6,303,000, which shall be 

derived from the Oil Spill Liability Trust Fund, to remain available until expended. (Department 

of the Interior, Environment, and Related Agencies Appropriations Act, 2010.) 

MMS Administrative Provision 

Notwithstanding the provisions of section 35(b) of the Mineral Leasing Act, as amended (30 

U.S.C. 191(b)), the Secretary shall deduct 2 percent from the amount payable to each State in 

fiscal year [2010] 2011 and deposit the amount deducted to miscellaneous receipts of the 

Treasury. (Department of the Interior, Environment, and Related Agencies Appropriations Act, 

2010.) 

Justification for Proposed 2011 Appropriation Language Changes 

Making Permanent the Technical Correction of Gulf of Mexico Energy Security Act 

Revenue Sharing. 

The technical correction, first enacted in FY 2009, allows MMS to continue to utilize eligible 

rental receipts as offsetting collections which have provided a key portion of the Bureau’s 

operating budget since FY 1995. The intent of the proposed change is to make this correction 

permanent rather than request it annually. 

222 Minerals Management Service 
 

 

 

 

Appendix C 

Appendix C: MMS Authorizing Statutes 

Outer Continental Shelf (OCS) Lands Program 

43 U.S.C. 1331, et seq.

P.L. 109-432 

P.L. 109-58 

43 U.S.C. 4321, 4331-4335, 

4341-4347 

16 U.S.C. 1451, et seq. 

16 U.S.C. 1531-1543 

42 U.S.C. 7401, et seq. 

The Outer Continental Shelf (OCS) Lands Act of 1953, as 

amended, extended the jurisdiction of the United States to 

the OCS and provided for granting of leases to develop 

offshore energy and minerals. 

The Gulf of Mexico Energy Security Act of 2006 required 

leasing certain areas in the Central and Eastern Gulf of 

Mexico Planning Areas within one year of enactment 

(December 20, 2006); and established a moratoria on 

leasing in remaining areas in the eastern planning area and 

a portion of the central planning area until 2022. 

The Energy Policy Act of 2005 amended the OCS Lands 

Act to give authority to the Department of the Interior to 

coordinate the development of an alternative energy 

program on the OCS and also to coordinate the energy and 

non-energy related uses in areas of the OCS where 

traditional oil and natural gas development already occur. 

The National Environmental Policy Act of 1969 required 

that federal agencies consider in their decisions the 

environmental effects of proposed activities and that 

Agencies prepare environmental impact statements for 

Federal actions having a significant effect on the 

environment. 

The Coastal Zone Management Act of 1972, as amended, 

established goals for ensuring that Federal and industry 

activity in the coastal zone be consistent with coastal zone 

plans set by the States. 

The Endangered Species Act of 1973 established 

procedures to ensure interagency cooperation and 

consultations to protect endangered and threatened species. 

The Clean Air Act, as amended, was applied to all areas of 

the OCS except the central and western Gulf of Mexico. 

OCS activities in those non-excepted areas will require 

pollutant emission permits administered by the EPA or the 

States. 

Minerals Management Service 223 
 

 

 

 

Appendix C 

16 U.S.C. 470-470W6 The National Historic Preservation Act established 

procedures to ensure protection of significant 

archaeological resources. 

30 U.S.C. 21(a) The Mining and Minerals Policy Act of 1970 set forth the 

continuing policy of the Federal Government to foster and 

encourage private enterprise in the orderly and economic 

development of domestic mineral resources and reserves. 

30 U.S.C. 1601 The Policy, Research and Development Act of 1970 set 

forth the continuing policy et seq. of the Federal 

Government to foster and encourage private enterprise in 

the orderly and economic development of domestic mineral 

resources and reserves. 

33 U.S.C. 2701, et seq. The Oil Pollution Act of 1990 established a fund for 

compensation of damages resulting from oil pollution and 

provided for interagency coordination and for the 

performance of oil spill prevention and response research. 

It also expanded coverage of Federal requirements for oil 

spill response planning to include State waters and the 

transportation of oil. The Act also addressed other related 

regulatory issues. 

43 U.S.C. 1301 The Marine Protection, Research, and Sanctuaries Act of 

1972 provided that the Secretary of Commerce must 

consult with the Secretary of the Interior prior to 

designating marine sanctuaries. The MMS provides 

information and comments regarding the mineral resource 

potential in areas being considered for designation as 

marine sanctuaries. 

16 U.S.C. 1361-1362, 

1371-1384, 1401-1407 

The Marine Mammal Protection Act of 1972 provides for 

the protection and welfare of marine mammals. 

P.L. 104-58 The Deepwater Royalty Relief Act provides royalty rate 

relief for offshore drilling in deepwater of the Gulf of 

Mexico (GOM). 

Minerals Revenue Management Program 

25 U.S.C. 397, et seq. The Indian Mineral Leasing Act of 1891, as amended, 

authorizes mineral leasing on land bought and paid for by 

American Indians. 

 224 Minerals Management Service 
 

 

 

 

 

 

Appendix C 

25 U.S.C. 396, et seq.

25 U.S.C. 396-396(g), et seq.

30 U.S.C. 181, et seq.

43 U.S.C. 1331, et seq. 

30 U.S.C. 1001, et seq. 

30 U.S.C. 181, et seq. 

25 U.S.C. 2101, et seq. 

30 U.S.C. 1701, et seq. 

110 Stat. 1700 

The Indian Minerals Leasing Act of 1909 authorizes oil and 

gas leases on American Indian allotted lands. 

The Indian Mineral Leasing Act of 1938 authorizes oil and 

gas lease on American Indian Tribal lands and provides 

uniformity with respect to leasing of Tribal lands for 

mining purposes. 

The Mineral Leasing Act of 1920 (MLA) provides for 

classification and leasing of coal, oil, oil shale, natural gas, 

phosphate, potassium, sulfur, and sodium and the payment 

of bonuses, rents, and royalties on such leases. 

The Outer Continental Shelf Lands Act of 1953 provides 

for granting of leases to develop offshore energy and 

minerals; provides for bonuses, rents, and royalties to be 

paid in connection with such leases; and calls for sharing 

certain revenues with coastal states. 

The Geothermal Stream Act of 1979 authorizes the 

Secretary to issue leases for the development of geothermal 

energy and provides for receipt sharing with the States. 

The Combined Hydrocarbon Leasing Act of 1981 provides 

for combined hydrocarbon leases and receipt sharing with 

the States for such leases within their boundaries. 

The Indian Minerals Development Act of 1982 provides 

that any American Indian Tribe may enter into lease 

agreements for minerals resources within their boundaries 

with the approval of the Secretary. Allotted landowners 

may join Tribal mineral agreements. 

The Federal Oil and Gas Royalty Management Act of 1982 

(FOGRMA) provides for comprehensive fiscal and 

production accounting and auditing systems to provide the 

capability of accurately determining oil and gas royalties, 

interest, fines, penalties, fees, deposits, and other payments 

owed and to collect for such amounts in a timely manner. 

The Federal Oil and Gas Royalty Simplification and 

Fairness Act of 1996 (P.L. 104-185) changes the royalty 

collection program by establishing a 7-year statute of 

limitations, limits of appeals, requires the government to 

pay interest on royalty overpayments, changes definitions, 

and allows for delegation of certain functions. 

Minerals Management Service 225 
 

 

Appendix C 

P.L. 105-277 Omnibus Act of 1999 General Provisions Department of 

the Interior Sec. 130 Oil Valuation Rider Sec. 139 - Small 

Refiner Ratification of Payments. 

P.L. 102-486 The Energy Policy Act of 1992 requires the Secretary of 

the Interior to disburse monthly to States all mineral leasing 

payments authorized by Section 6 of the MLA. 

P.L. 106-393 The Mineral Revenue Payments Clarification Act of 2000, 

Title V of the Secure Rural Schools and Community SelfDetermination Act of 2000, repealed Net Receipts Sharing 

whereby States no longer paid for a portion of the Federal 

cost to administer the Federal Onshore mineral leasing 

program. 

P.L. 108-447 The Consolidated Appropriations Act of 2005 provided that 

late disbursement interest owed to states be made from 

current receipts from bonuses, royalties, interest collected 

from lessees and designees, and rentals of the public lands 

and outer continental shelf which are not payable to a state 

or the Reclamation Fund. 

P.L. 109-54 The Department of the Interior, Environment and Related 

Agencies Appropriations Act of 2006 provided that MMS 

may under the royalty-in-kind program, or under its 

authority to transfer oil to the Strategic Petroleum Reserve, 

use a portion of the revenues from royalty-in-kind sales to 

pay for transportation to wholesale market centers or 

upstream pooling points, to process or otherwise dispose of 

royalty production taken in kind, and to recover MMS 

transportation costs, salaries, and other administrative costs 

directly related to the royalty-in-kind program. 

P.L. 109-432 Gulf of Mexico Energy Security Act of 2006 requires 

sharing with Gulf producing states revenues generated from 

leases entered into after the date of enactment of the Act in 

certain Gulf OCS areas. 

Permanent Appropriations Distribution 

16 U.S.C. 499 Provides for forest fund payments to a state of 25 percent 

of all monies received during any fiscal year from each 

national forest be paid at the end of that year to the state in 

which that forest is situated. 

 226 Minerals Management Service 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix C 

33 U.S.C. 701, et seq.

General Administration 

31 U.S.C. 65 

31 U.S.C. 3901-3906 

31 U.S.C. 3512 

5 U.S.C. 552 

31 U.S.C. 7501-7507 

41 U.S.C. 35045 

41 U.S.C. 351-357 

41 U.S.C. 601-613 

44 U.S.C. 35 

44 U.S.C. 2101 

40 U.S.C. 4868 

31 U.S.C. 3501 

31 U.S.C. 3501 

31 U.S.C. 3711, 3716-19 

31 U.S.C. 1501-1557 

5 U.S.C. 1104 et seq. 

31 U.S.C. 665-665(a) 

41 U.S.C. 252 

18 U.S.C. 1001 

18 U.S.C. 287 

The Flood Control Act of 1936 provides that 75 percent of 

flood control revenue collected be shared with the State in 

which it was collected. 

Budget and Accounting Procedures Act of 1950 

Prompt Payment Act of 1982 

Federal Managers Financial Integrity Act of 1982 

Freedom of Information Act of 1966, as amended 

Single Audit Act of 1984 

Walsh Healy Public Contracts Act of 1936 

Service Contract Act of 1965 

Contract Disputes Act of 1978 

Paperwork Reduction Act of 1980 

Federal Records Act 1950 

Federal Acquisition Regulation of 1984 

Privacy Act of 1974 

Accounting and Collection 

Claims 

Appropriation Accounting 

Delegation of Personnel Management Authority 

Anti-Deficiency Act of 1905, as amended 

Competition in Contracting Act of 1984 

False Claims Act of 1982 

False Statements Act of 1962 

Minerals Management Service 227 
 

 

 

 

 

 

Appendix C 

41 U.S.C. 501-509 

41 U.S.C. 253 

41 U.S.C. 401 

15 U.S.C. 631 

15 U.S.C. 637 

10 U.S.C. 137 

15 U.S.C. 638 

10 U.S.C. 2306(f) 

Secretarial Order No. 3071 

Oil Spill Research 

33 U.S.C. 2701, et seq. 

33 U.S.C. 2701, et seq. 

43 U.S.C. 1331, et seq. 

Executive Order 12777 

Federal Grant and Cooperative Agreement Act of 1977 

Federal Property and Administrative Services Act of 1949 

Office of Federal Procurement Policy Act of 1974, as 

amended 

Small Business Act of 1953, as amended 

Small Business Act Amendments of 1978 

Small Business and Federal Competition Enhancement Act 

of 1984 

Small Business Innovation Research Program of 1983 

Truth in Negotiations Act of 1962 Authorization 

Established the Minerals Management Service in January 

1982, under authority provided by Section 2 of 

Reorganization Plan No. 3 of 1950 (64 Stat. 1262). 

Title VII of the Oil Pollution Act of 1990 authorizes the use 

of the Oil Spill Liability Trust fund, established by Section 

9505 of the Internal Revenue Code of 1986, for oil spill 

research. 

Title I, Section 1016, of the Oil Pollution Act of 1990 

requires a certification process which ensures that each 

responsible company, with respect to an offshore facility, 

has established, and maintains, evidence of financial 

responsibility in the amount of at least $150,000,000 to 

meet potential pollution liability. 

Section 21(b) of the Outer Continental Shelf Lands Act, as 

amended, requires the use of the best available and safety 

technologies (BAST) and assurance that the use of up-todate technology is incorporated into the regulatory process. 

Signed October 18, 1991, assigned the responsibility to 

ensure oil spill financial responsibility for OCS facilities to 

the Secretary of the Interior (Minerals Management 

Service). 

 228 Minerals Management Service 
 

 

 

 

 

 

 

MAX Tables - Appendix D 

Minerals Management Service 

Royalty and Offshore Minerals Management (ROMM) 

Program and Financing 

(dollars in millions) 

Treasury Account ID: 14-1917 

FY 2009 

Estimate 

FY 2010 

Estimate 

FY 2011 

Estimate 

Obligations by program activity 

Direct program 

00.01 OCS Lands 77 72 105 

00.02 Minerals Revenue Management 45 45 56 

00.03 General Administration 35 38 40 

01.92 Total direct program 157 175 201 

Obligations by program activity 

Reimbursable program 

09.01 OCS Revenue Receipts 151 187 200 

09.02 Reimbursable (RIK) 32 37 12 

09.03 Reimbursable (from other agencies) 8 8 8 

09.99 Total reimbursable program 191 232 220 

10.00 Total new obligations 348 407 421 

Budgetary resources available for obligation 

21.40 Unobligated balance, start of year 52 62 52 

22.00 New budget authority (gross) 344 383 402 

22.10 Resources available from recoveries 14 14 14 

23.90 Total budgetary resources available for obligation 410 459 468 

23.95 Total new obligations -348 -407 -421 

24.40 Unobligated balance carried forward, end of year 62 52 47 

New budget authority (gross), Discretionary 

40.00 Appropriation 157 175 184 

40.35 Appropriation permanently reduced 0 0 0 

43.00 Appropriation (total discretionary) 157 175 184 

Net budget authority and outlays 

89.00 Budget authority 157 175 184 

90.00 Outlays 142 170 178 

Minerals Management Service 229 
 

 

 

 

 

 

 

 

 

 

 

 

MAX Tables - Appendix D 

Minerals Management Service 

Royalty and Offshore Minerals Management (ROMM) 

Object Classification 

(dollars in millions) 

Treasury Account ID: 14-1917 

FY 2009 

Estimate 

FY 2010 

Estimate 

FY 2011 

Estimate 

ROMM (Annual Appropriation & Offsetting Collections) 

11.1 Personnel Compensation: Full-time permanent 125 134 139 

12.1 Civilian personnel benefits 32 33 35 

21.0 Travel and transportation of persons 4 3 3 

23.1 Rental Payments to GSA 18 18 18 

23.3 Communications, utilities, and misc. charges 1 1 1 

25.2 Other services 161 123 153 

26.0 Supplies and materials 2 2 2 

31.0 Equipment 6 4 4 

99.0 Total ROMM * 348 407 421 

*Note: The total on Line 99.0 matches the Total Appropriation and Offsetting Collections on the table below, 

both of which roughly show in which categories funds are allocated, obligated, and expended (outlay). 

Minerals Management Service 

Royalty and Offshore Minerals Management (ROMM) 

Account Object Class Information 

 (dollars in millions) 

Treasury Account ID: 14-1917 

FY 2010 

Fixed Costs and 

 Related Changes 

Programmatic 

Changes FY 2011 

Object Class FTE AMT FTE AMT FTE AMT FTE AMT 

Total Appropriation 

And Offsetting Collections 

*1.666 *$407 --- -$1 +40 +$15 *1,706 *$421 

Total personnel compensation 

and personnel benefits 

--- $167 --- 0 --- +$7 --- $174 

Travel and transportation of 

persons 

--- $4 --- 0 --- 0 --- $4 

Rents --- $18 --- 0 --- 0 --- $18 

Communications utilities, and 

misc. charges 

--- $1 --- 0 --- 0 --- $1 

Other services --- $209 --- -$1 --- +$8 --- $216 

Supplies and materials --- $2 --- 0 --- 0 --- $2 

Equipment --- $4 --- 0 --- 0 --- $4 

**FY 2010 Total FTE is 1708 (1666 for ROMM +24 for CIAP + 18 for Oil Spill) 

**FY 2011 Total FTE is 1748 (1706 for ROMM +24 for CIAP + 18 for Oil Spill) 

 Minerals Management Service 230 
 

 

 

 

 

 

 

 

 

 

 

MAX Tables - Appendix D 

Minerals Management Service 

Oil Spill Research (OSR) 

Program and Financing 

(dollars in millions) 

Treasury Account ID: 14-8370 

FY 2009 

Estimate 

FY 2010 

Estimate 

FY 2011 

Estimate 

Obligations by Program activity 

00.01 Direct program activity 7 6 6 

10.00 Total new obligations 7 6 6 

Budgetary resources available for obligation 

22.00 New budget authority (gross) 7 6 6 

23.95 Total new obligations -7 -6 -6 

New budget authority (gross), detail, Discretionary 

40.26 Appropriation (trust fund) 6 6 6 

Net budget authority and outlays 

89.00 Budget authority 6 6 6 

90.00 Outlays 7 6 6 

Treasury Account ID: 14-8370 

Minerals Management Service 

Oil Spill Research (OCS) 

Object Classification 

(dollars in millions) 

FY 2009 

Estimate 

FY 2010 

Estimate 

FY 2011 

Estimate 

Direct obligations 

11.1 Full-time permanent 2 2 2 

25.2 Other services 5 4 4 

99.9 Total new obligations 7 6 6 

Minerals Management Service 

Oil Spill Research (OSR) 

Account Object Class Information 

 (dollars in millions) 

Treasury Account ID: 14-8370 

FY 2010 Estimate 

Amount 

Uncontrollable & 

Related Changes 

Programmatic 

Changes 

FY 2011 

Budget Request 

Object Class FTE AMT FTE AMT FTE AMT FTE AMT 

Total Appropriation 18 $6 --- 0 --- 0 18 $6 

Total personnel 

compensation 

--- $2 --- 0 --- 0 --- $2 

Other services --- $4 --- 0 --- 0 --- $4 

Minerals Management Service 231 
 

MAX Tables - Appendix D 

This section is currently under development. 

 Minerals Management Service 232 
 

 

Appendix E 

Appendix E: Employee Count by Grade 

FY 2009 

Actual 

FY 2010 

Enacted 

FY 2011 

Request 

Executive Level 14 14 14 

Subtotal 14 14 14 

GS-15 72 75 76 

GS-14 241 250 256 

GS-13 455 472 483 

GS-12 393 408 418 

GS-11 140 145 149 

GS-10 7 7 7 

GS-9 90 93 96 

GS-8 58 60 62 

GS-7 101 105 107 

GS-6 46 48 49 

GS-5 30 31 32 

GS-4 14 15 15 

GS-3 2 2 2 

GS-2 0 0 0 

GS-1 0 0 0 

Subtotal 1,649 1,712 1,752 

Total 1,663 1,726 1,766 

Note: The numbers in this table represent the actual number of Full-Time employees 

by grade level as of the end of the prior fiscal year and projected for the current and 

the budget fiscal years. These numbers differ from FTE calculations, because by 

definition, FTE numbers represent Full-Time Equivalent employees. FTE 

calculations are based on hours worked, not the number of employees. 

Minerals Management Service 233 
 

Appendix E 

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234 Minerals Management Service 
 

 

 

 

 

 

 

 

 

 

 

Appendix F 

Appendix F 

Minerals Management Service 

FY 2011 Mandatory Accounts and Offsetting Collections 

Appropriations Proposals 

GOMESA Technical 

Correction on 

Revenue Sharing 

First enacted in FY 2009, a technical correction of the Gulf of Mexico Energy Security 

Act allows MMS to continue to utilize eligible rental receipts as offsetting collections. 

The FY 2011 President's Request is proposing language to make this correction 

permanent rather than request it annually. 

Net Receipts Sharing The FY 2011 President's Reques t two percent deduction from 

state mineral revenue payments under the Mineral Leasing Act. In FY 2012 a 

mandatory proposal will be made to make this deduction permanent. 

t retains the curren 

 Authorizing Proposals 

Geothermal Pa yments 

(see BLM Budget 

Justifications) The Energy Policy Act of 2005 (P.L. 109-58) amended section twenty of the Geothermal 

Steam Act of 1970 (30 U.S.C. 1019 et seq.). The amendment provides that for the revenues 

collected from geothermal leasing, 25 percent are to be paid to the county in which the leased 

lands or geothermal resources are located and 25 percent are to be transferred to the 

Geothermal Steam Act implementation fund. Section 423 of the 2010 Department of the 

Interior, Environment, and Related Agencies Appropriations Act, P.L. 111-88, cancelled the 

2010 revenues to be paid to the counties and to the Geothermal Steam Act implementation 

fund, which is also the last year deposits to such accounts were authorized by the Energy 

Policy Act of 2005. The 2011 President's Budget proposes terminating payments to counties 

in FY 2011 and thereafter since these provisions are inconsistent with the normal 50/50 

revenue sharing arrangements under the MLA and set an undesirable precedent for future 

expansion of revenue sharing with local governments. 

Fee on Nonproducing 

Leases 

The Budget assumes a proposal that is part of an Administration initiative to encourage 

energy development on lands and waters leased for development. A $4.00 per acre fee on nonproducing Federal leases on lands and waters would provide a financial incentive for oil and 

gas companies to either get their leases into production or relinquish them so that the tracts 

can be re-leased to and developed by new parties. The proposed $4.00 per acre fee would 

apply to all new leases and would be indexed annually. In October 2008, the Government 

Accountability Office issued a report critical of past efforts by the Department of the Interior 

to ensure that companies diligently develop their Federal leases. Although the GAO report 

focused on administrative actions that the Department could undertake, this proposal requires 

legislative action. This proposal is similar to other non-producing fee proposals considered 

by the Congress in the last several years. This will result in savings of $8.0 million in 2011 

and $760.0 million over ten years.

Deep Gas and Deepwater 

Incentives 

The budget proposes to repeal Section 344 of the Energy Policy Act of 2005. Section 344 

extended existing deep gas incentives. Based on current oil and gas price projections, the 

budget does not assume savings from this change; however, the proposal could generate 

savings to the Treasury if future oil and gas prices fall below current projections to levels at 

or under the applicable gas price thresholds. 

Minerals Management Service 235 
 

Appendix F 

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236 Minerals Management Service 
 

Appendix G 

Minerals Management Service 

2011 Working Capital Fund Centralized Bill 

(Dollars in thousands) 

2010 

2009 Pres 2010 2011 

Account Actual Budget Estimate Estimate 

Invasive Species Council 36.5 37.8 37.8 37.8 

Invasive Species Coordinator 5.9 6.4 6.4 6.4 

Document Management Unit 0.0 0.0 0.0 0.0 

Alaska Field Office 13.3 12.4 12.4 12.4 

Alaska Resource Library and Information Services 73.1 73.1 73.1 73.1 

Departmental News and Information 18.9 19.7 19.7 19.7 

Departmental Museum 0.0 44.5 44.5 

Conservation and Educational Partnerships 6.2 6.3 6.3 6.3 

FedCenter 2.7 2.7 2.7 2.7 

CPIC 4.0 4.6 4.6 4.6 

Activity Based Costing/Management 25.3 24.6 24.6 24.6 

Travel Management Center 13.4 2.0 2.0 2.0 

e-Gov Travel 28.5 8.6 8.6 8.6 

Interior Collections Management System 2.5 2.5 2.5 2.5 

Space Management Initiative 7.6 8.1 8.1 8.1 

Renewable Energy Certificates 4.7 0.0 0.0 0.0 

SBA Certifications 11.2 11.2 11.2 11.2 

Planning and Performance Management 28.2 30.3 30.3 30.3 

Alternative Dispute Resolution Training 2.5 1.2 1.2 1.2 

Center for Organizational Analysis 12.3 10.5 0.0 0.0 

DOI Access (HSPD-12) 21.9 4.9 4.9 4.9 

Department-wide OWCP Coordination 5.4 7.6 7.6 7.6 

Accountability Team 10.7 12.0 12.0 12.0 

Labor Relations Tracking System 0.0 0.7 0.7 

DOI LEARN 16.8 8.1 22.0 41.8 

OPM Federal Employment Services 13.3 11.9 11.9 11.9 

DOI Executive Forums 0.0 2.9 2.9 

Financial Management Training 0.0 33.9 33.9 

SESCDP & Other Leadership Programs 0.0 4.7 4.7 

Online Learning 0.0 12.8 12.8 

Learning and Performance Center Management 0.0 16.4 16.4 

Albuquerque Learning & Performance Center 0.0 3.6 3.6 

Anchorage Learning & Performance Center 0.0 15.6 15.6 

Denver Learning & Performance Center 0.0 70.8 70.8 

Washington Learning & Performance Center 0.0 54.8 54.8 

EEO Complaints Tracking System 0.7 0.0 0.8 0.8 

Special Emphasis Program 1.2 1.2 1.2 1.2 

Accessible Technology Center 7.5 7.6 7.6 7.6 

Occupational Health and Safety 22.1 35.7 36.3 37.0 

Health and Safety Training Initiatives 4.9 4.8 4.2 3.5 

Safety Management Information System 15.5 0.0 0.0 0.0 

Security (Classified Information Facility) 8.2 10.9 10.9 10.9 

Law Enforcement Coordination and Training 14.0 20.9 20.9 20.9 

Security (MIB/SIB Complex) 0.0 288.5 288.5 

Minerals Management Service 237 
 

Appendix G 

Minerals Management Service 

2011 Working Capital Fund Centralized Bill 

(Dollars in thousands) 

2010 

2009 Pres 2010 2011 

Account Actual Budget Estimate Estimate 

Victim Witness 0.0 0.0 3.9 

Interior Operations Center (Watch Office) 38.3 46.7 46.7 48.6 

Emergency Preparedness 14.2 16.7 16.7 18.7 

Emergency Response 18.6 20.9 20.9 26.7 

Enterprise Services Network 465.8 478.9 478.9 525.6 

Web & Internal/External Comm 14.5 10.9 10.9 10.9 

Enterprise Architecture 116.0 106.5 106.5 112.2 

FOIA Tracking & Reporting System 23.4 45.4 45.4 51.9 

Threat Management 0.0 18.2 18.2 18.2 

IT Security 63.6 65.1 65.1 73.6 

Capital Planning 71.0 54.2 54.2 54.2 

Privacy (Information Management Support) 6.6 6.8 6.8 18.9 

Data Resource Management Program 5.6 5.6 5.6 0.0 

IT Security Certification & Accreditation 125.3 125.3 125.3 125.3 

Electronic Records Management 27.1 27.7 27.7 27.7 

Active Directory 40.9 35.9 35.9 49.1 

Enterprise Resource Management 10.6 12.5 12.5 12.5 

e-Authentication 7.9 8.5 8.5 0.0 

IOS Collaboration 0.0 24.3 24.3 24.3 

Networx 32.1 34.6 34.6 0.0 

Trusted Internet Connection 10.4 28.4 28.4 0.0 

Data-at-Rest 11.4 1.0 1.0 1.0 

Logging Extracts 4.3 9.0 9.0 9.0 

OCIO Project Management Office 6.6 25.9 25.9 25.9 

IT Asset Management 0.0 4.4 8.9 8.9 

Continuous Monitoring 0.0 4.4 0.0 0.0 

Two-Factor Authentication 15.1 1.8 1.8 0.0 

Active Directory Optimization 21.4 19.0 19.0 0.0 

Contingency Reserve 3.7 3.7 3.7 3.7 

CFO Financial Statement Audit 1,269.8 1,325.7 1,325.7 1,325.7 

Enterprise Geospatial Information Management 13.3 15.7 15.7 15.7 

e-Government Initiatives (WCF Contributions Only) 109.2 107.1 107.1 107.1 

Ethics 6.0 14.4 14.4 14.4 

ALLEX Database 3.6 3.6 3.6 3.6 

FOIA Appeals 30.2 33.9 33.9 33.9 

NBC 106 Mainframe Replacement 20.6 0.0 0.0 0.0 

NBC IT Security Improvement Plan 15.4 21.7 21.7 21.7 

Information Mgmt. - FOIA and Records Management 12.2 12.3 12.2 12.3 

Safety Management Information System 0.0 38.0 37.8 38.0 

Labor Relations Tracking System 0.0 1.4 0.0 0.0 

EEO Complaints Tracking System 0.0 0.8 0.0 0.0 

Telecommunications Services 91.9 95.2 94.7 95.0 

Integrated Digital Voice Communications System 78.4 80.3 79.9 80.2 

Desktop Services 0.0 11.7 11.7 11.7 

238 Minerals Management Service 
 

Appendix G 

Minerals Management Service 

2011 Working Capital Fund Centralized Bill 

(Dollars in thousands) 

2010 

2009 Pres 2010 2011 

Account Actual Budget Estimate Estimate 

Audio Visual Services 16.9 15.4 15.3 15.4 

SIB Cabling 24.4 2.7 2.7 2.7 

Voice/Data Switching 21.7 21.7 21.6 21.7 

FPPS/Employee Express - O&M 352.9 366.3 361.9 368.8 

HR LoB W-2 Surcharge 22.2 15.1 14.9 14.9 

DOI Executive Forums 2.9 2.9 0.0 0.0 

Financial Management Training 33.2 33.9 0.0 0.0 

Learning and Performance Center Management 16.5 16.4 0.0 0.0 

SESCDP & Other Leadership Programs 4.8 4.7 0.0 0.0 

DOI LEARN 0.0 13.9 0.0 0.0 

Albuquerque Learning & Performance Center 2.8 3.6 0.0 0.0 

Anchorage Learning & Performance Center 14.8 15.6 0.0 0.0 

Denver Learning & Performance Center 63.5 70.8 0.0 0.0 

Online Learning 12.8 12.8 0.0 0.0 

Washington Learning & Performance Center 48.1 54.8 0.0 0.0 

Interior Complex Management & Services 39.3 53.7 53.5 45.3 

Family Support Room 1.4 1.4 1.4 1.4 

Property Accountability Services 4.4 26.1 30.4 30.5 

Vehicle Fleet 4.6 4.6 4.8 4.8 

Moving Services 8.6 8.8 11.4 11.5 

Shipping and Receiving 19.6 20.2 15.7 15.8 

Safety and Environmental Services 0.0 23.2 23.0 23.1 

Space Management 13.1 13.4 13.3 13.4 

Security (MIB Complex) 276.6 288.5 0.0 0.0 

Federal Executive Board 6.7 6.8 6.9 6.9 

Health Unit 13.1 13.7 13.6 13.7 

Passport & Visa Services 20.9 21.5 22.1 22.2 

Mail and Messenger Services 73.5 80.3 79.9 80.2 

Blue Pages 21.0 21.0 0.0 -0.0 

Mail Policy 8.5 8.6 8.5 8.6 

Special Events Services 2.8 2.9 2.9 2.9 

Cultural Resources & Events Management 8.9 8.9 8.9 7.5 

Partnership Schools & Commemorative Programs 3.9 3.9 3.9 3.9 

Departmental Museum 38.0 44.5 0.0 0.0 

Departmental Library 74.9 77.7 77.3 80.3 

FBMS Hosting 477.0 477.0 477.0 477.0 

FBMS Master Data Management 0.0 1.6 1.6 1.6 

Transportation Services (Household Goods) 4.8 5.0 4.2 4.2 

Financial Systems (including Hyperion) 19.8 18.9 18.8 18.9 

IDEAS 88.3 89.1 88.6 89.0 

NBC FBMS Conversion 0.0 9.6 9.6 9.6 

Aviation Management 389.9 492.3 489.4 484.0 

TOTAL 5,501.3 5,865.8 5,824.8 5,850.4 

Minerals Management Service 239 
 

 

Appendix G 

Minerals Management Service 

Minerals Management Service 

2011 Working Capital Fund Direct Bill 

(Dollars in thousands) 

2009 2010 PY 2010 2011 

Account Actual Collections Estimate Estimate 

FBMS Change Orders 25.0 25.0 25.0 

Federal Assistance Award Data System 2.4 2.4 2.4 

Departmental Medals 0.0 0.2 0.0 0.0 

DOI LEARN 0.0 0.0 0.0 

DOI Access (HSPD-12) 167.6 66.0 133.1 

Labor and Employee Relations 3.3 3.3 3.3 

Anchorage Learning & Performance Center 0.0 1.5 1.5 

Denver Learning & Performance Center 0.0 3.6 3.7 

On-Line Learning 0.0 22.7 27.1 

Washington Leadership & Performance Center 0.0 4.8 5.1 

EEO Training 0.3 0.7 0.7 

Oracle Licenses and Support 220.5 228.1 273.7 328.4 

Microsoft Enterprise Licenses 545.2 2.6 546.8 546.8 

Anti-Virus Software Licenses 41.0 49.2 59.1 

IT Security 0.0 16.7 0.0 0.0 

Enterprises Services Network 308.0 304.3 309.6 

Federal Relay Service 0.0 1.5 1.6 

Tape Restoration (Cobell Litigation) 0.0 22.5 0.0 0.0 

Live e-Mail Capture (Cobell Litigation 24.8 137.5 0.0 0.0 

Message Journaling (Cobell Litigation) 0.0 3.0 0.0 0.0 

Tape Search Request (Cobell Litigation) 0.0 5.4 0.0 0.0 

IT Security Audit (Cobell Litigation) 0.0 2.4 0.0 0.0 

Legacy Tape Storage (3-year Live Capture - Cobell 

Litigation) 1.6 10.3 0.0 0.0 

Zantaz Audit Center Licenses (Cobell Litigation) 0.0 1.4 0.0 0.0 

Zantaz Professional Services (Cobell Litigation) 0.0 5.2 0.0 0.0 

Historical Tape Storage (Cobell Litigation) 0.0 6.4 0.0 0.0 

e-Mail Archiving (Cobell Litigation) 312.4 174.9 413.0 496.0 

FY 2005 CFO Audit 0.0 82.8 0.0 0.0 

FY 2008 CFO Audit 0.0 1.5 0.0 0.0 

FY 2009 CFO Audit 45.3 0.0 0.0 

FY 2010 CFO Audit 0.0 74.9 0.0 

FY 2011 CFO Audit 0.0 0.0 50.5 

Federal FSA Program 0.0 50.3 53.2 56.0 

ESRI Enterprise Licenses 0.0 117.1 117.1 

Creative Communications 24.8 25.7 26.0 

Facilities Reimbursable Services 37.9 15.5 15.8 

Reimbursable Mail Services 2.4 1.6 1.7 

Client Liaison and Product Development Division 5.2 4.7 4.8 

Personnel & Payroll Systems Division 65.8 2.0 2.0 

HR Management Systems Division 11.9 30.6 19.6 

Quicktime Services 0.0 69.5 71.4 

Customer Support Services Division 8.0 8.3 8.6 

240 
 

 

Minerals Management Service 

2011 Working Capital Fund Direct Bill 

(Dollars in thousands) 

Account 

2009 

Actual 

2010 PY 

Collections 

2010 

Estimate 

2011 

Estimate 

Appendix G 

Government-Wide Forums 5.0 0.0 0.0 

Washington Leadership & Performance Center 27.6 0.0 0.0 

Albuquerque Learning & Performance Center 4.6 0.0 0.0 

Anchorage Learning & Performance Center 0.5 0.0 0.0 

Denver Learning & Performance Center 16.0 0.0 0.0 

On-Line Learning 14.0 0.0 0.0 

TOTAL 1,921.2 751.1 2,121.6 2,316.7 

Minerals Management Service 241 
 

Appendix G 

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242 Minerals Management Service