U.S. Department of the Interior

Minerals Management Service

Reinventing the

Minerals Managment Service:

A Year of Progress and Accomplishments
Message from the Director

I am proud to make available this report on the initiatives and accomplishments of the

Minerals Management Service during the past 12 months. In the spirit of President

Clinton's and Vice-President Gore’s movement to reinvent the federal government,

MMS is changing dramatically the way it does business. We have a renewed commitment to common-sense government, which means giving people good service, creating

partnerships to get the job done more efficiently, getting back to basics and eliminating

bureaucracy that no longer makes sense. As this report documents, we have made

great progress in translating this commitment into real results.

I wish to thank the employees of MMS whose dedication, hard work, and professionalism have enabled us to achieve so much so quickly. Their contributions, often under

trying circumstances, have been remarkable. I am grateful also to our stakeholders—

State and local governments, industry, environmental and other public interest organizations, and the public for their continuing counsel and support. Many of the initiatives

undertaken this year result from their advice and recommendations.

We have made great progress in the past 12 months in creating a new MMS, but these

efforts are a beginning, not a conclusion. The reinvention of MMS is an ongoing process in which we continually strive for excellence. We actively solicit your cooperation

and recommendations in this endeavor.
Reinventing the MMS: A Year of Progress and Accomplishments ii

industry, the environmental and scientific communities and general public. MMS is making

available to stakeholders as much information

as possible on its current and proposed plans

and programs. Giving stakeholders the information they need to be informed and giving them a

greater voice in the issues increases opportunities for consensus and will help avoid the conflicts of the past.

Enhancing Environmental Stewardship

In all our discussions, stakeholders make it clear

that they will accept OCS minerals activities off

their coasts only if the operations are consistent

with their environmental values. In responding

to their concerns, MMS works hard to ensure

that the offshore leasing, exploration, development and production activities for which it has

regulatory oversight are conducted in accordance with the highest level of environmental

standards. This environmental commitment has

earned MMS national recognition. MMS has

sought to make the environmental review process more accessible to the public and others

by writing its environmental documents in plain

English and by focusing on relevant environmental issues. In addition to its offshore oil and

natural gas activities, MMS is working with

several coastal States to identify offshore sand

deposits with potential to be used for the restoration of eroding beaches and to protect environmentally sensitive coastal wetlands.

Striving to Be the Best Minerals Resource

Manager

MMS has been aggressive in reforming its

regulatory regime to reduce and eliminate

unnecessary or duplicate requirements, increase regulatory flexibility and minimize compliEXECUTIVE SUMMARY

The Minerals Management Service (MMS) of

the Department of the Interior (DOI)—the federal agency that manages the Nation’s natural

gas, oil and other mineral resources on the

Outer Continental Shelf (OCS), and collects,

accounts for, and disburses about $4 billion year

in revenues from offshore federal mineral leases

and from onshore mineral leases on federal and

Indian lands—has been in the vanguard of

President Clinton’s and Vice-President Gore’s

initiative to reinvent the federal government.

MMS is committed to common-sense government, which means giving people good service,

creating partnerships to get the job done more

efficiently, getting back to basics, and eliminating bureaucracy that no longer makes sense.

This status report presents a summary of

MMS’s accomplishments to meet its reinvention

and continuous improvement goals. In seeking

to achieve these goals, we believe we can

continue to reduce costs for the government and

the public; improve customer service; ensure

timely, accurate, and efficient mineral revenue

collections and disbursements; and facilitate

mineral development, while ensuring receipt of

fair market value and safe, environmentally

sound OCS operations.

Providing All Stakeholders an Informed Voice

in Decision Making

MMS recognizes that the involvement of its

stakeholders is essential to developing the

policies and programs necessary to achieve its

reinvention goals. To this end, MMS has solicited greater stakeholder input into its policy

formulation and decision making processes.

These efforts address both the royalty management and offshore minerals management programs and involve input from States, tribes,
Reinventing the MMS: A Year of Progress and Accomplishments iii

ance costs. In addition, MMS has been a leader

in the movement to remove the “gobbledygook”

from government regulations. This effort was so

successful that the Vice President presented

MMS with a National Performance Review

Hammer award.

MMS has sought to reduce the cost of MMS

regulations, while ensuring safe and clean oil

and natural gas operations on the OCS. For

companies producing offshore, MMS has provided clear guidance on how to obtain royalty

relief, reduced unnecessary oil spill reporting

requirements, and experimented with a new

approach to safety and environmental management regulation.

Through a number of administrative and regulatory changes and through working with the

Congress on statutory changes where needed,

MMS has made it easier for companies to pay

their royalties while ensuring the receipt and

distribution of the correct amount of royalties

and other revenues. Actions in this area include

imposing time limits on audits, making it easier

to recoup certain overpayments, reducing

reporting requirements, and experimenting with

a new approach to royalty collection. MMS is

promoting electronic commerce to increase

efficiency for everyone and is increasing the use

of alternative dispute resolution in order to

resolve problems more quickly.

Focusing Our Limited Resources on Our

Primary Goals

MMS has moved quickly to adopt the

President’s goals of “working smarter” and

“doing more with less.” MMS has developed

and issued its first long-term strategic plan. In

addition, MMS has begun to develop performance measures at all levels of the organization

that are outcome-based and will enable MMS to

effectively assess progress toward achieving

long-term goals, with a focus on improved

customer service. These major initiatives will

achieve greater efficiency and more effective

use of resources in administrative services such

as financial accounting, personnel, procurement

and information management.

Providing International Leadership in the

Environmentally Sound Development of

Offshore Mineral Resources

As a recognized leader in federal resource

management, MMS is sharing its expertise and

experience with numerous countries throughout

the world. Many of these nations, such as

Russia, Romania, Poland and Hungary, are

making the difficult transition from centrally

planned to free market economies. MMS

employees have conducted numerous training

sessions and workshops in these countries to

assist them in adapting to the new way of doing

business. Particular emphasis has been placed

on the need to conduct their mineral leasing and

operations programs in accordance with sound

environmental practices.

We have made great progress in the past 12

months in creating a new MMS, one that listens

better to its stakeholders, places environmental

protection at the top of its priorities, regulates

smarter with less burden on industry, uses its

personnel and funds more efficiently, and

shares its experience and knowledge with those

countries newly striving to develop their mineral

resources in free market economies. These

efforts are a beginning, not a conclusion; we

view the reinvention of MMS as an ongoing

process. We will continue to strive for excellence. We actively solicit the comments and

recommendations of all stakeholders and other

interested parties in this endeavor.
REINVENTING THE MINERALS MANAGEMENT SERVICE:

A Year of Progress and Accomplishments

September 1996

revenue losses to States and tribes and no

increase in reporting burdens on industry.

MMS has listened to its stakeholders and has

renewed and redoubled its commitment to goals

and objectives of government reinvention.

Based on stakeholder suggestions growing out

of the devolution proposal and other internal

initiatives, MMS has made significant strides in

improving the way it does business. MMS has

sought to improve customer service; ensure

timely, accurate, and efficient mineral revenue

collections and disbursements; reduce costs for

the government and the public; and facilitate

mineral development while ensuring receipt of

fair market value and safe, environmentally

sound Outer Continental Shelf (OCS) operations.

This status report presents a summary of

MMS’s accomplishments to meet its reinvention

and continuous improvement goals of:

• Providing all stakeholders an informed voice

in decision making;

• Strengthening environmental stewardship;

• Striving to be the best minerals resource

manager;

• Focusing our limited resources on our

primary goals; and

• Providing international leadership in the

environmentally sound development of

offshore mineral resources.

U. S. Department of the Interior

Minerals Management Service

A quiet revolution in the federal government

began on March 3, 1993, when President

Clinton announced the National Performance

Review (NPR) initiative. The goal of this effort

was nothing short of reinventing government

and the way it operates. In the words of the

President, “... it’s time our government adjusted

to the real world, managed its affairs in the

context of an economy that is informationbased, rapidly changing, and puts a premium on

speed and function and service, not rules and

regulations.”

The Minerals Management Service (MMS) of

the Department of the Interior (DOI)—the federal agency that manages the Nation’s natural

gas, oil and other mineral resources on the

Outer Continental Shelf, and collects, accounts

for, and disburses about $4 billion year in revenues from offshore federal mineral leases and

from onshore mineral leases on federal and

Indian lands—has been in the vanguard of the

reinvention movement. MMS is committed to

common-sense government, which means

giving people good service, creating partnerships to get the job done more efficiently, getting

back to basics and eliminating bureaucracy that

no longer makes sense.

One year ago the DOI withdrew its earlier

proposal to devolve the MMS to States, tribes,

and other parts of DOI. After the devolution

proposal’s announcement, stakeholders had

said that breaking up MMS was unacceptable.

But these same stakeholders made it clear that

they were not satisfied with the status quo of

MMS operations. They voiced support for

efforts to reduce the cost of MMS programs to

industry, States and others, while ensuring no
Giving stakeholders the information they need to be informed and giving

them a greater voice in the issues increases opportunities for consensus

and will help avoid the conflicts of the past.

Reinventing the MMS: A Year of Progress and Accomplishments 2

We have made great progress toward these

goals in the past 12 months. In this process, we

are creating a new MMS, one that listens better

to its constituents and the public, places environmental protection at the top of its priorities,

regulates smarter with less burden on industry,

uses its personnel and funds more efficiently,

and shares its experience and knowledge with

those countries newly striving to develop their

mineral resources in free market economies.

These efforts are a beginning, not a conclusion;

we view the reinvention of MMS as an ongoing

process. We will continue to strive for excellence. We actively solicit the comments and

recommendations all stakeholders and other

interested parties in this endeavor.

The major reinvention initiatives undertaken by

MMS in the last year are summarized in the

sections below.

PROVIDING ALL STAKEHOLDERS AN

INFORMED VOICE IN DECISION MAKING

MMS recognizes that the involvement of its

stakeholders is essential to developing the

policies and programs necessary to achieve its

reinvention goals. To this end, MMS has solicited greater stakeholder input into its policy

formulation and decision making processes.

These efforts address both the royalty management and offshore minerals management programs and involve input from States, tribes,

industry, the environmental and scientific communities and general public. MMS is making

available to stakeholders as much information

as possible on its current and proposed plans

and programs. Giving stakeholders the information they need to be informed and giving them a

greater voice in the issues increases opportunities for consensus and will help avoid the conflicts of the past. Specific activities and accomplishments are described below.

California Offshore Oil and Gas

 Energy Resources (COOGER) Study

The MMS Pacific OCS Region is continuing its

efforts to foster better communications and

coordination between MMS and coastal counties

in southern California. One result of MMS’s

work with these counties is the COOGER study,

which was initiated in 1995 and will be completed in 1997. This is a joint Federal/county/

industry planning effort that addresses present

and future oil and natural gas energy development from existing but as yet undeveloped

leases offshore Santa Barbara, Ventura, and

San Luis Obispo counties.

The expected benefits of this study could be

considerable:

• providing counties with data they need for

planning and decision making;

• providing more certainty to lessees about

how they might proceed with future development; and

• potential increase in revenues to the Treasury from future production.

Alaska Stakeholders Task Force

The MMS obtained the advice of an Alaska

Regional Stakeholders Task Force in order to

have early input on the views of various constituents about the program for OCS leasing in

the Alaska Region in the 1997-2002 timeframe.

Task Force members included representatives

form the Alaska Native, subsistence, and environmental communities; from the commercialfishing and oil and gas industries; and from

local, Federal, and State governments, Coastal

Districts, and Coastal Resource Service Areas.

Members were responsible for soliciting information from their constituents, and local meetings

were conducted throughout the state.
The Task Force made ten recommendations

that were accepted by the Secretary of the

Interior and which were incorporated into the

draft Proposed Final 5-year OCS program for

1997-2000. Following public review of the draft

proposed program, the Task Force made three

additional recommendations which were

adopted in the proposed final program.

The Task Force was formed by the OCS Policy

Committee, which advises the Secretary of the

Interior on the OCS natural gas, oil and minerals

program, to provide affected stakeholders the

opportunity to identify issues and provide recommendations early in the lease sale planning

process.

Assessment of Environmental Information in

 Moratoria Areas

On November 8, 1995, in response to the

Department’s request, the OCS Policy Committee and the OCS Scientific Committee of the

Minerals Management Advisory Board established a Joint Subcommittee on Environmental

Information for Select OCS Areas Under Moratoria. The Joint Subcommittee will conduct an

independent review and evaluation of areas

under legislative and executive moratoria. The

Subcommittee will assess environmental information and studies requirements in light of

budgetary constraints, offshore oil and natural

gas state-of-the-art technology, the offshore

industry’s environmental record, industry interest, and the nature of the potential hydrocarbon

resources in the areas under review. The Subcommittee is expected to have a draft report

later this year. The Policy and Scientific Committees must approve the final report.

Outreach Activities in the Florida Panhandle

For the past two years, MMS has been actively

involved with “outreach” efforts in the northwest

Florida area (the Panhandle). Representatives

of the Gulf of Mexico OCS Region have held

meetings with local leaders and groups, participated in conferences, and made speeches to

large audiences (primarily civic groups). This

form of dialogue and consultation is aimed at

opening lines of communication and minimizing

misinformation, as well as building a degree of

trust that can be used to work through new

issues as they arise. To date, some 200 individuals representing 100 different organizations

have been contacted by members of the Gulf of

Mexico Region’s Florida Panhandle Outreach

Team.

During May and June 1996, representatives

from the Gulf of Mexico OCS Region briefed

more than 30 individuals and groups in the

Panhandle area. The owner of a local dive shop

extended an invitation to members of the Gulf of

Mexico Region’s Dive Team to appear on their

local television show to discuss the ways that

MMS protects the marine environment. The

MMS Director has made two trips to Florida

since September 1995 and has met with a

variety of public interest groups, local business

associations, and elected officials in the area.

MMS will continue to consult extensively with

and provide information to the public, local

governments, and other organizations in this

area.

National Resource Assessment/Gulf of

 Mexico Atlas Project

In addition to environmental information, MMS

also collects information on the natural gas and

oil resources believed to underlie various Federal offshore areas. On June 6, 1996, MMS

announced the availability of An Assessment of

the Undiscovered Hydrocarbon Potential of the

Nation’s Outer Continental Shelf, which presents

the results of a multi-year study by MMS to

estimate the amounts of undiscovered natural

gas and crude oil resources that may exist on

the nation’s OCS. Compared to previous verReinventing the MMS: A Year of Progress and Accomplishments 3

MMS believes it can best reinvent its activities and serve the

needs of its customers by working closely with its constituents.
sions of this resource assessment (conducted

every five years or so), MMS was able to make

this version available to a wider audience by

publishing it on the MMS Internet home page

(Website: www.mms.gov).

In a similar vein, MMS published the first results

of the Offshore Gulf of Mexico Atlas Project on

its Internet home page in April 1996. In order to

pursue its regulatory duties, MMS maintains

extensive geologic and reservoir engineering

files, including all well logs, all available paleontological reports, and complete history of natural

gas and oil production. This data has now been

organized into a Gulf-wide geologic framework

in the Atlas, with the goal of assisting exploration geologists, as well as academia and state

professionals, in identifying areas of greatest

resource potential.

The Atlas is a joint effort of MMS, the University

of Texas Bureau of Economic Geology, the Gas

Research Institute, the U. S. Department of

Energy, Louisiana State University and the

Alabama State Geological Survey. In the Atlas,

more than 10,000 productive sands from about

1,100 fields have been placed into one of 91

producing hydrocarbon plays. Two separate

Atlas volumes will be produced: Volume 1 for

Miocene and older plays, due out October 1996,

and Volume 2 for Plio-Pleistocene plays, due

out April 1997.

Royalty Policy Committee (RPC)

To obtain timely and constructive advice on the

Department’s procedures and policies for collecting royalties on Federal and Indian leases,

the Department established the RPC as part of

the Minerals Management Advisory Board. The

RPC met for the first time in September 1995.

MMS believes it can best reinvent its activities

and serve the needs of its customers by working closely with its constituents. The RPC

includes representatives of States, tribes, Indian

allottees, industry, Federal agencies, and the

public. Seven subcommittees report to the RPC

on issues including:

Reinventing the MMS: A Year of Progress and Accomplishments 4

• audit

• report streamlining

• disbursements to States, tribes, and

allottees; calculation of deductions

for costs associated with onshore

Federal mineral activities

• appeals, settlements, and Alternative

Dispute Resolution

• phosphate, trona, and other leasable

non-energy minerals

• coal

• alternatives to conventional royalty

collection methods

The report streamlining and audit subcommittees have already reported their findings to the

RPC. The report streamlining subcommittee

identified numerous opportunities to reduce the

reporting burdens on payors by eliminating

unnecessary and duplicate requirements. The

audit subcommittee recommendations will

provide additional clarity in planning and coordination, notification when an audit is initiated,

communication with companies, and training.

MMS expects to begin implementing many of

their recommendations in the near future and is

studying the feasibility of the other recommendations in conjunction with the work underway to

implement the recently enacted Royalty Simplification and Fairness Act.

Services to Indian tribes and Allottees

The Indian Minerals Steering Committee (IMSC)

was created in 1994 as a means to bring managers from the Bureau of Indian Affairs (BIA),

the Bureau of Land Management (BLM), and

MMS together to develop a stronger government-to-government relationship, a strengthened partnership with tribes through self-determination and self-governance, and improved

communications with tribes and allottees. By

improving communications among all parties

involved, the IMSC is making progress toward

faster resolution of issues through collaboration

and consensus.

Working under the charter of the IMSC, the

MMS Office of Indian Royalty Assistance
organized and coordinated significant improvements in Departmental outreach and communication with Indian mineral owners:

• Field staff from the BIA, BLM, and MMS

worked together to plan and implement a

coordinated, consistent outreach schedule

throughout Indian country, following a model

developed and used successfully by the

Muskogee Area BIA office.

• The tri-bureau team reinvented how they

communicate with Indian allottees by developing high quality, understandable, consistent outreach and allottee educational

materials. For example, MMS coordinated a

tri-bureau project to develop clear, concise

answers to mineral-related questions frequently asked by allottees at outreach

meetings. These Q’s & A’s became part of

the outreach “tool kit,” enabling staff from all

three bureaus to deal with the full range of

questions. The Q’s & A’s are also included as inserts to the monthly oil and gas

payment reports sent to allottees.

• Aided by BLM’s National Training Center

staff, the team then provided field staff from

all three bureaus week-long training sessions to improve their presentation skills and

confidence in conducting public outreach

meetings. (Sessions have been held in

Tulsa, OK and Farmington, NM, and another

was scheduled for September 1996 in

Billings, MT.)

Four Corners Indian Trust Services

 Laboratory

A 1995 reinvention laboratory, under the auspices of the Vice President’s National Performance Review, studied how to improve the

Farmington, NM, office for allottee minerals

management. The Indian Minerals Steering

Committee has endorsed most of the recommendations, which will bring BIA, BLM, and

MMS functions into a single office responsible

for all aspects of managing Navajo allotted

leases. The initiative resulted in a recommendation to establish a two-to-three year pilot program to test the integration of the functions of

the three bureaus under a single line of management and supervision. The recommendation

also included the consolidation of minerals

management functions currently performed in

other locations into the local Four Corners office

to make use of the office’s better knowledge of

local mineral conditions.

Negotiated Rulemakings

• Federal Gas Valuation

On November 6, 1995, MMS proposed new

regulations for the valuation of natural gas

produced on Federal lands, based on the recommendation of the Federal Gas Valuation

Negotiated Rulemaking Committee. This Committee included representatives from oil and gas

companies (both majors and independents),

trade associations, States, and MMS. The

proposed rule would allow the lessees in many

instances to use published indices as a basis for

calculating their royalties.

When comments on the proposed rule indicated

that the consensus believed to have been

reached by the Committee was opposed by

several of the parties involved, MMS decided to

reconvene the Committee to further consider the

proposal and several possible alternatives or

modifications to it. While this process showed

how difficult it can be to reach consensus

among parties with differing interests, it also

demonstrated the value of opening up communications among the involved parties. Such

communications help MMS make decisions

based on adequate information and assure all

affected parties that their opinions are heard and

carefully considered.

• Indian Gas Valuation

Similarly, MMS established a negotiated

rulemaking committee to develop new regulations for determining the value, for royalty

purposes, of natural gas produced from Indian

lands. MMS decided to conduct this effort

Reinventing the MMS: A Year of Progress and Accomplishments 5
separately from the parallel effort for Federal

lands because of the trust relationship between

the federal government and Indian tribes and

allottees and the different terms used in Indian

leases. The goal of the Indian Gas Valuation

Negotiated Rulemaking Committee is to publish

regulations that will maximize royalty revenues

for Indian tribes and allottees consistent with the

Secretary of the Interior’s discretion to establish

value. The regulations

will also benefit the oil

and natural gas industry

by providing clear guidance that minimizes the

information required to

properly compute royalty timely. Less paperwork and fewer reporting

requirements for industry

means lower operating

costs. MMS expects to

publish a Notice of Proposed

Rulemaking in September 1996.

Making Information Available Electronically

• MMS Internet Home Page

In September 1995, MMS entered the world of

the Internet by establishing a site on the World

Wide Web (www.mms.gov) to provide timely

information to the public about MMS activities.

This responds to suggestions from MMS and the

NPR recommendation to provide the public

more avenues to information held by government agencies. The content is expanding

rapidly from press releases and general information that were on the initial home page, and now

includes Federal Register notices (including new

regulations), statistical information, environmental studies information, and oil and natural gas

resource information (see more on these last

two topics below). MMS plans to expand the

content soon to include the major statutes and

regulations governing MMS activities, as well as

policy documents and appeals decisions. The

MMS home page is linked to the home pages

for the Royalty Management Program, the

Offshore Program, the Offshore Regional

Reinventing the MMS: A Year of Progress and Accomplishments 6

Offices, the Office of Administration & Budget,

and the Office of Policy & Management Improvement.

• Environmental Studies Program

Information System (ESPIS)

MMS is making the results of over $600 million

worth of biological, sociological, chemical, and

oceanographic research available on the Environmental Studies Pro-

 gram Information Sys-

 tem (ESPIS). This

 system, available

 from the MMS World

 Wide Web site, allows

 for full text searching

 capabilities of over 700

 technical summaries of

 its research. Over the

 coming months,

access to the full text of

these research reports will be added.

This initiative will help ensure that MMS provides States and local communities with the

information they need concerning the exploration for and development of offshore resources.

It also will ensure that the academic and scientific communities have efficient access to the

results of MMS-sponsored research.

• Wide Area Network Links to States

and tribes

MMS has nearly completed a two-year project to

expand its Wide Area Network (a link between

various local area networks, which in turn link

together desktop computers) to the offices of 17

States and tribes that have entered into cooperative audit agreements with the Royalty

Management Program. Currently, twelve of

these offices can effectively access MMS

E-mail, bulletin boards, and certain computer

applications. This provides State and tribal

auditors with faster and more effective access to

the data they need, and provides for better

communications between and among these

auditors and MMS staff.

In September 1995, MMS

entered the world of the

Internet by establishing a

site on the World Wide

Web (www.mms.gov).
ENHANCING ENVIRONMENTAL

STEWARDSHIP

In all our discussions, stakeholders make it clear

that they will accept OCS minerals activities off

their coasts only if the operations are consistent

with their environmental values. In responding

to their concerns, MMS

works hard to ensure

that the offshore

leasing, exploration, development and production activities for which

it has regulatory oversight

responsibility are conducted in accordance with

the highest level of environmental standards.

This environmental commitment has earned

MMS national recognition. MMS has sought to

make the environmental review process more

accessible to the public and others by writing its

environmental documents in plain English and

by focusing on relevant environmental issues.

Specific activities and accomplishments are

described below.

Flower Garden Banks

On June 3, 1996, MMS received a 1996 Federal Environmental Quality Award presented by

the President’s Council on Environmental

Quality and the National Association of Environmental Professionals. The award recognizes

excellence achieved through implementing the

National Environmental Policy Act (NEPA). The

MMS award was for environmental work done in

the Flower Garden Banks National Marine

Sanctuary in the Gulf of Mexico offshore Texas.

The Flower Garden Banks, which have been

designated as a National Marine Sanctuary, are

a pair of colorful coral reefs off the Texas coast

near active oil and natural gas development

projects regulated by MMS. Dr. Marc C. Bruner,

President of the National Association of Environmental Professionals, said the agency was

“...commended for its actions to integrate environmental values into its agency mission and its

Reinventing the MMS: A Year of Progress and Accomplishments 7

commitment to excellence in environmental

decision making.”

Environmental Impact Statement (EIS)

 Reforms

MMS announced on June 12, 1996, that it would

be taking steps to produce

shorter, more readable

 EIS's. As part of the

 Administration’s

call to simplify and

streamline govern-

 ment, future EIS’s pre-

 pared by MMS will describe the proposed action in

simple, non-technical terms; be written in plain

English and eliminate jargon; and focus on

relevant environmental issues, eliminating

redundant material and unnecessary background information. These changes should

result in environmental impact statements

shortened by 25 percent or more. While MMS

EIS’s may never become leisure reading, we’re

working to make them clearer and less intimidating for most people. MMS will ask for feedback

on the new EIS format as part of the regular EIS

public comment process.

MMS prepares EIS documents for its 5-year

OCS natural gas and oil leasing programs, as

well as for proposed individual lease sales.

MMS plans to reverse the trend toward longer

EIS documents, beginning with the combined

EIS for proposed lease sales 166 and 168 in the

Gulf of Mexico scheduled for 1997.

Beach Restoration

MMS has established cooperative projects with

ten coastal States to identify and assess suitable offshore sand resource deposits with

potential to help restore eroding beaches and

strengthen barrier islands so as to ensure

protection for coastal wetlands. The goal of

these projects is to locate specific deposits and

to determine if they are geologically and environmentally appropriate, as well as economically

feasible.

While MMS EIS’s may never

become leisure reading,

we’re working to make them

clearer and less intimidating

for most people.
Reinventing the MMS: A Year of Progress and Accomplishments 8

In addition to its offshore oil and

natural gas activities, MMS is working with several coastal States to

identify offshore sand deposits with

the potential to be used for restoration of eroding beaches and protection of environmentally sensitive

coastal wetlands.

STRIVING TO BE THE BEST MINERALS

RESOURCE MANAGER

MMS has been aggressive in reforming its

regulatory regime to reduce or eliminate unnecessary or duplicate requirements, increase

regulatory flexibility and to minimize compliance

costs. In addition, MMS has been a leader in

the movement to remove the “gobbledygook”

from government regulations. This effort was so

successful that the Vice President presented

MMS with a National Performance Review

Hammer award.

MMS has sought to reduce the cost of MMS

regulations, while ensuring safe and clean oil

and natural gas operations on the OCS. For

companies producing offshore, MMS has provided clear guidance on how to obtain royalty

relief, reduced unnecessary oil spill reporting

requirements, and experimented with a new

approach to safety and environmental management regulation.

Through a number of administrative and regulatory changes and through working with the

Congress on statutory changes where needed,

MMS has made it easier for companies to pay

their royalties while ensuring the receipt and

distribution of the current amount of royalties

and other revenues. Actions in this area include

imposing time limits on audits, making it easier

to recoup certain overpayments, reducing

reporting requirements, and experimenting with

a new approach to royalty collection. MMS is

promoting electronic commerce to increase

efficiency for everyone and is increasing the use

of alternative dispute resolution in order to

resolve problems more quickly. Specific activities and accomplishments are described below.

Federal Oil and Gas Royalty Simplification

 and Fairness Act

On August 13, 1996, President Clinton signed

into law the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996. The legislation supports the MMS efforts in finding and

implementing new ways to improve and streamSince early 1995, when MMS completed the first

negotiated lease under the terms of a 1994 law

governing the use of offshore sand, MMS has

received three new requests for sand leases to

support governmental shore protection initiatives—from Louisiana (for barrier island restoration), by the Navy (for shore protection at a

Norfolk, VA naval facility), and from South

Carolina (for a shore protection project at Myrtle

Beach).

Oil Spill Research Assistance

MMS has shared the results of its extensive oil

spill research activities with other agencies to

help protect the environment from spills unrelated to offshore oil and natural gas operations.

In response to a request by the Council on

Environmental Quality (CEQ), MMS provided an

oil spill trajectory analysis for use in assessing

and mitigating the risk of exporting Alaska North

Slope crude oil to the Far East. The analysis

was used to develop protective measures for

coastal resources along the Aleutian Islands

and the southeast coast of Alaska.

MMS has developed small, satellite-tracked

buoys that mimic the movement of spilled oil on

the ocean surface. These buoys have been

deployed in several recent spills by the National

Oceanic and Atmospheric Administration and

the U.S. Coast Guard and have been found

useful in spill response activities. Recent

deployments have occurred at tanker spills off

Galveston, TX, and off the coast of Puerto Rico.
Reinventing the MMS: A Year of Progress and Accomplishments 9

line the federal royalty program. Staff members

from MMS had worked intensively with staff

from congressional committees to develop

legislative language that would simplify the

royalty collection process for Federal leases

without lessening the amount of royalties due

the American people.

Among other things, the Act:

• establishes certainty with a seven-year

statute of limitations for all royalty collections;

• establishes equity by requiring payment of

interest to companies on overpayments to

the government and by allowing the refund

of overpayments to all federal leaseholders

on the same basis;

• encourages simplicity in the royalty management program; and

• opens new opportunities for states to share

in the responsibility for royalty collection.

MMS had already begun to take action related

to these initiatives and will move expeditiously to

implement fully the Act’s provisions.

Royalty Law and Policy Reforms

MMS has pursued numerous other initiatives, as

discussed individually below, over the past year

to reduce the costs—both for government and

industry--associated with the royalty collection

process without compromising the amount of

revenues received.

• Reporting simplification

In February 1996, MMS took action to significantly reduce reporting burdens by eliminating

the requirement for royalty payors to file special

forms prior to deducting transportation or processing allowances for Federal leases. In

addition, MMS proposed simplification to the

Payor Information Form that companies are

required to file when making royalty payments.

The MMS also supports the provisions of the

recently enacted Royalty Simplification and

Fairness Act that will lead to further simplification of reporting, and is working with industry,

States, and Indian representatives through a

subcommittee of the Royalty Policy Committee

to implement specific actions to reduce reporting

burdens.

• Reduced assessments for late and

erroneous reporting

In October 1995, MMS announced that it would

stop charging fees to companies that filed late

and/or incorrect royalty reports of their production levels and royalty calculations. This change

was made in order to better meet the purpose of

these fees, which was to encourage timely and

accurate reporting—not to punish or penalize.

Since MMS began assessing for faulty reporting,

companies reduced their error rates, from over

18 percent in 1984 for certain reports to less

than three percent in 1995.

Given that reporting quality has improved to a

very high level, MMS decided to stop charging

companies for filing late and erroneous reports.

Everyone benefits with this approach—industry

no longer is billed for minor deviations from

reporting regulations, and MMS does not have

to process approximately 1,000 annual assessment bills and the associated administrative

appeals. Error rates on royalty and production

data have not increased since assessments for

erroneous reporting were suspended. However,

late reporting has increased slightly. The impact, if any, of the increase in late reporting on

workloads and data integrity will be monitored to

ensure its result is a win-win for both government and industry.

• Royalty Policy Board process

Occasionally, new issues arise concerning

royalty payments that were not anticipated in the

statutes or regulations governing royalty collections. Sometimes, MMS's delays in providing

guidance on how to deal with such issues has

lead to protracted disputes over the amount of
royalties that lessees should pay. In order to

reduce these delays, MMS established an

internal decision making body in 1995, known as

the Royalty Policy Board, to address such

issues as they arise and provide timely guidance.

MMS has built into the Board’s decision making

processes mechanisms for obtaining input from

stakeholders. For example, in November 1995,

before making a decision on the appropriate

way to calculate royalties due on coalbed methane, the Board heard individual presentations by

representatives of natural gas producers, one

State, and an Indian tribe. In another issue

considered by the Board in June 1996, the

Board invited a company to participate in an

informal hearing on a precedent-setting appeal

prior to the Board making a decision. By including affected parties at an early stage in the

consideration of royalty policy issues, the Board

expects to make better decisions and to provide

all parties with the assurance that their points of

view were carefully considered before decisions

were made.

Of course, MMS will continue to bill companies

for additional royalties where evidence of underpayments is found. But the initiatives described

in this report should help to make it less onerous

for companies to pay royalties and should help

to ensure that they know how much they owe at

the earliest possible time. Thus, at the same

time that MMS is cleaning up royalty collection

issues from the past, the bureau is reinventing

itself in such a way as to avoid such issues in

the future.

Electronic Commerce

MMS is making substantial progress toward its

goal of receiving, by the end of 1997, all of its

incoming operations, production and royalty

reports in electronic form. MMS offers a variety

of electronic reporting and payment options to

industry, including electronic data interchange,

magnetic tape, diskettes, and electronic mail.

Electronic reporting decreases reporting errors,

minimizes delays, and eliminates manual reentry of data. This leads to reduced costs for

Reinventing the MMS: A Year of Progress and Accomplishments 10

MMS and industry as well as faster disbursement of revenues to the proper accounts in the

U.S. Treasury and to State and Indian recipients.

In addition to filing reports electronically, companies can use electronic commerce to pay royalties, rents, bonuses and assessments, and can

receive bills for collection electronically.

MMS’s Office of Administration and Budget is

also making progress toward greater use of

electronic commerce for various activities

related to procuring supplies and services,

paying bills, collecting amounts due the Government, and reimbursing employees for travel and

other expenses. One example of this is the

effort to prototype use of electronic invoicing

using the Internet to pay universities for work

done under cooperative agreements.

Guidelines for Extraordinary Processing

 Cost Allowances

One specific result of MMS efforts to provide

companies with better guidance on how to pay

royalties is the publication of guidelines for

applying for extraordinary processing cost

allowances. Current gas valuation regulations

allow a lessee to apply for an extraordinary

processing cost allowance if the lessee can

demonstrate that the costs are, by reference to

standard industry conditions and practice,

extraordinary, unusual or unconventional. Until

the publication of these guidelines, however,

companies had little information about what

factors MMS would consider in deciding whether

or not their processing costs were “extraordinary.” These guidelines have already been

used to approve one request for an extraordinary processing cost allowance, and they should

help other companies determine, in advance,

whether or not their costs are likely to qualify for

such an allowance.

Royalty Gas Marketing Pilot

During 1995, MMS experimented with a new

way to collect royalties in-kind in order to see if
the method could reduce administrative costs for

government and industry, eliminate most disputes over the amount of royalties due, and

ensure that the government would receive about

the same amount of revenue as it does when

collecting royalties in-value. During the operation of this pilot project, called the Royalty Gas

Marketing Pilot, MMS took approximately 50

billion cubic feet of gas, totaling over $72 million

in-kind, and sold it at the lease to competitively

selected marketers. The royalty gas was provided by 14 lessees who volunteered to participate in, and helped MMS design, the pilot.

MMS will complete its evaluation of the pilot by

the end of September 1996 and, based on the

evaluation, will decide whether and how to

proceed with additional royalty-in-kind initiatives.

Oil Spill Reporting Reform

In addition to reporting to MMS, operators of

offshore oil and natural gas platforms must file

reports on all oil spills with the National Response Center, which is staffed by the U.S.

Coast Guard. To reduce the reporting burden

and eliminate duplicate reporting requirements,

MMS announced that effective May 31, 1996, it

would no longer require operators to report to

MMS oil spills of less than a barrel. For spills of

less than one barrel (which comprise 95 percent

of all oil spills currently reported), the National

Response Center will forward the reports to

MMS. For spills of one barrel or more, MMS will

continue to require lessees to notify MMS

directly, which will give MMS more time to work

with the operator to respond to these more

significant problems.

This simple, common-sense change reduces

industries’ reporting requirements for oil spills by

95 percent, while not compromising MMS’s

environmental stewardship goals.

Alternative Dispute Resolution (ADR)

MMS is using ADR in support of several key

functions of the organization, including: improving communication and developing better relationships with employees, customers and constituents; creating opportunities to resolve

disputes using a wide range of solutions; and

reducing costs and processing times associated

with litigation and appeals.

These ADR philosophies and techniques are

being utilized throughout MMS for conflict

avoidance and the resolution of past differences

in the following key areas:

• Working hand-in-hand with State and local

regulators on issues concerning development and production from OCS leases.

• Providing better Indian services and the

continuous upgrading of those services.

• Resolving disputes with industry concerning

the amount of royalty money owed to the

Federal Government. This is being accomplished by settling older disputes by negotiation and compromise rather than litigation.

The settlement process has resulted in the

collection of millions of dollars of disputed

royalty money. By using this process over

the past few years, MMS has settled in

excess of 150 cases on appeal and collected

over $400 million in disputed royalty dollars.

• Settling disputes with industry over whether

compensation was due for companies’

inability to explore and develop their OCS

leases offshore southwest Florida, North

Carolina, and in Bristol Bay offshore Alaska.

In July 1995, after considerable effort by

MMS, the Solicitor’s Office, and the Department of Justice, the Government settled all

claims filed by companies with respect to

their OCS leases offshore southwest Florida

and in Bristol Bay. No active leases remain

in these areas. In addition, the Federal

Government settled with three companies

regarding similar issues with their leases off

North Carolina.

The recent settlements reduce the Federal

Government’s and companies’ expenses

related to the litigation and allow both parties

Reinventing the MMS: A Year of Progress and Accomplishments 11
Reinventing the MMS: A Year of Progress and Accomplishments 12

leases in the Central and Western Gulf of

Mexico. The first applications for deep water

royalty relief under the Act are expected later

this year, approximately one year after the date

of enactment.

These regulations represent an attempt to

implement the Act in a way that is consistent

with its purpose: to promote development of

deep water oil and natural gas resources but at

the same time ensure a fair return to the public.

In addition, the regulations were intended to

make it as easy as possible for qualified applicants to receive relief, while ensuring that MMS

would have enough information to make sound

decisions. MMS will be reviewing comments

received on these rules and will consider early

experience in operating under the rules so that

any necessary improvements to the regulations

can be made at the earliest opportunity.

• Guidelines for royalty relief on producing

leases

For many years, MMS has had authority to grant

royalty relief as necessary to increase production from currently producing leases. However,

MMS previously provided companies with only

vague advice on how they should go about

applying for such relief. Few companies ever

applied for relief, and MMS handled each application in an ad hoc manner. In December 1995,

MMS changed its historical practice by announcing standardized procedures for handling requests for royalty relief on producing leases.

This announcement was followed by the publication of detailed guidelines in June 1996. With

these new guidelines, companies can determine

in advance whether they are likely to qualify for

royalty relief, and they can be assured that MMS

is prepared to handle their royalty relief requests

in a more standardized, businesslike manner.

to focus their efforts on more productive

activities. Efforts are continuing to settle the

remaining issues with respect to some

companies’ leases offshore North Carolina.

Royalty Relief

• Implementation of OCS Deep

Water Royalty Relief Act of 1995

The President signed the OCS Deep Water

Royalty Relief Act on November 25, 1995. The

Act required MMS to develop implementing

regulations within 180 days of enactment. The

MMS gathered input from interested parties,

conducted internal analyses, and prepared three

regulations to help implement this new Act

within the mandated timeframe.

Two of these regulations, covering requirements

for new leases, were issued in time for MMS to

hold a lease sale in the Central Gulf of Mexico in

April 1996 with special provisions for deep water

tracts, as required by the Act. The first regulation, published as a final rule in February 1996,

allows MMS to set royalty rates at less than 12.5

percent, or to suspend royalties for a prespecified time period, amount of revenues, or

amount of production. The second regulation,

published as an interim rule in March 1996,

established specific requirements on how the

new law would apply to MMS lease sales. The

April 1996 lease sale set records for the number

of bids received and number of tracts receiving

bids. Bidding on deep water tracts was particularly strong, with 471 tracts in greater than 200

meters of water receiving high bids totaling $259

million.

Finally, MMS sent to the Federal Register the

third regulation in May 1996. This interim rule

established the requirements for companies to

request royalty relief for existing deep water

These regulations represent an attempt to implement the Act in a

way that is consistent with its purpose: to promote development of

deep water oil and natural gas resources but at the same time ensure a fair return to the public.
Increased Flexibility in Granting

 Suspensions of Production or Operations

In July 1996, MMS issued revised guidelines for

obtaining Suspensions of Production (SOP) and

Suspensions of Operations (SOO). The guidelines, contained in a Letter to Lessees and

Operators (LTL), are designed to provide flexibility to lessees and encourage the exploration and

production of OCS leases.

MMS invited companies and industry groups to

submit comments on all aspects of the OCS

program and participate in public meetings MMS

organized. In November 1995, MMS held a

workshop in New Orleans to discuss the suspension program and related issues. The LTL

addresses many of the issues raised at the

workshop.

Industry indicated that because of the increasingly complex geology of the structures where

oil and natural gas exploration is occurring,

more time is needed for data analysis before

conducting exploratory drilling. The new LTL

clarifies MMS’s ability to grant SOP’s to give

lessees time for geophysical acquisition and

analysis. If the lessee is committed to developing the lease, MMS can grant an SOP that

includes enough time for a program of seismic

work designed to select a location for an additional development well, improve structural

location, or site an additional well needed to

properly size production facilities.

The LTL also continues an earlier policy of

granting an SOP due to uneconomic market

conditions, with the aim of preventing premature

abandonment of leases and the loss of recoverable resources.

Oil Pollution Act of 1990 Implementation

MMS is charged with implementing a provision

of the Oil Pollution Act (OPA) of 1990 requiring

that all “offshore facilities” that handle oil must

obtain $150 million in financial guarantees to

ensure that they can pay clean-up costs and

damages resulting from any oil spills from their

facilities. However, because of the way “offReinventing the MMS: A Year of Progress and Accomplishments 13

shore facility” and other terms are defined in

OPA and related legislation, this requirement

applies not only to large offshore oil and natural

gas producers who historically have had to

maintain such guarantees, but also to thousands

of small businesses and other entities located

on inland lakes, rivers, streams, and wetlands.

These entities pose little if any risk of a serious

oil spill. The cost of obtaining the guarantees

would be prohibitive for these entities and they

would most likely go out of business if these

provisions were fully enforced.

At the request of the Assistant Secretary, Land

and Minerals, the OCS Policy Committee established a subcommittee to recommend how the

OPA should be amended to ensure that sufficient funds would be available to pay clean-up

costs and damages should an oil spill occur

while avoiding imposing onerous and unwarranted financial burdens. The subcommittee,

composed of representatives from State and

local governments, the oil and natural gas

industry, boating and marina trade associations

and environmental groups, made a number of

recommendations to meet this objective. With

minor modifications, Secretary Babbitt endorsed

the subcommittee recommendations.

MMS has worked intensively with the Congress

and other interested parties to develop legislative language that conforms to subcommittee

recommendations as endorsed by the Secretary

and that would rectify this problem.

• Proposal to lift the Joint Bidding Ban

Provisions of the Energy Policy and Conservation Act (EPCA) effectively prohibit joint bidding

by the largest oil companies for OCS oil and

natural gas leases. The ban, initiated in 1975, is

unwarranted and results in unnecessary administrative costs for government and industry.

Removal of the ban may increase the pace of oil

and natural gas development in the deep water

areas of the Gulf of Mexico by permitting the

major oil companies to share the enormous

technical and financial risks involved in these

activities.
Reinventing the MMS: A Year of Progress and Accomplishments 14

The concept of SEMP is to shift

emphasis from compliance with

specific regulatory requirements

to systematically identifying and

mitigating risks associated with

offshore operations.

Award recognizes teams that dramatically

improve the way the government does business.

The following excerpt from a revision of the

Royalty Management Program’s “Dear Payor”

letter is just one example of how MMS publications have been made clearer and more concise.

Before:

“Insufficient estimates also result in interest

charges. These exceptions are generated when

the actual royalties reported for a given sales

month exceed the previously paid royalty estimates for that lease. In the “Dear Payor” letter

dated July 8, 1991, and the Federal Register, 57

FR 3435 (January 29, 1992), MMS informed you

of the procedure for calculating interest for

insufficient estimates. If the enclosed invoice(s)

includes charges for insufficient estimates, a

detailed Insufficient Estimate Report used to

calculate these charges is also enclosed.”

After:

“To avoid penalties as well as further interest,

you must pay this bill by its due date.”

Annual Requests for Input on Regulatory

 Reduction

In May 1996, MMS issued a Federal Register

notice providing the public with an update on its

efforts to review existing regulations and asking

the public for help in identifying regulations that

should be eliminated, as well as regulations that

should be retained but revised. This was the

third annual request for such input.

MMS has worked closely with the Department of

Energy and congressional staff to develop

amendment language that would lift the current

prohibitions while permitting the Secretary of the

Interior to reimpose the ban if joint bidding is

found to have adversely affected competition or

the receipt of fair market value.

Safety and Environmental Management

 Program (SEMP)

MMS is continuing efforts to work cooperatively

with industry to develop a new approach to

safety and environmental management and to

address more effectively the human and organizational errors that are the leading causes of

accidents. The concept of SEMP is to shift

emphasis from compliance with specific regulatory requirements to systematically identifying

and mitigating risks associated with offshore

operations.

MMS began working on this concept in 1991,

and the American Petroleum Institute published

a Recommended Practice (RP75) in 1993 that

generally captured the elements of what should

be contained in an effective SEMP. Rather than

simply impose SEMP as a regulatory program,

however, MMS launched a two-year program

under which a number of offshore operators

agreed to voluntarily implement SEMP and

provide data that will help to determine its

effectiveness and cost. After two joint MMS/

industry surveys conducted in January 1995 and

January 1996, MMS decided to extend the

voluntary program by an additional year in order

to determine whether and to what extent it

would be effective to implement this concept in

regulations.

Plain English Initiative

MMS has been a leader within the Department

of the Interior for efforts to write regulations and

similar documents more clearly. This “Plain

English” initiative has been so successful that

MMS received the Vice President’s National

Performance Review Hammer Award on

March 12, 1996. The Vice President’s Hammer
Regulatory Process Review Team

In 1996, MMS formed a team to evaluate its

regulatory process and develop recommendations for making the process more efficient by

eliminating unnecessary steps and reducing

delays. The report should be completed by the

end of September 1996.

FOCUSING OUR LIMITED RESOURCES

ON OUR PRIMARY GOALS

MMS has moved quickly to adopt the

President’s goals of “working smarter” and

“doing more with less.” MMS has developed

and issued its first long-term strategic plan. In

addition, MMS has begun to develop performance measures at all levels of the organization

that are outcome-based and will enable MMS to

effectively assess progress toward achieving

long-term goals, with a focus on improved

customer service. These major initiatives will

achieve greater efficiency and more effective

use of resources in administrative services such

as financial accounting, personnel, procurement

and information management.

Strategic Planning and Performance

 Measurement

In the spring of 1996, MMS developed and

issued its first MMS long term strategic plan.

Long-term and tactical planning had been

implemented by each program office, but prior

to 1994, no overarching, long-term strategy

existed at the Bureau level. The plan was

developed through a bottom-up, top-down

approach that provides long-term goals and

strategies. Through participation as a Government Performance and Results Act Pilot, MMS

developed and implemented measures for some

of its goal areas and is continuing to develop

measures for all its critical functions. MMS’s

strategic planning is well on schedule with

requirements set out in the Government Results

and Performance Act, and MMS has been

recognized as a leader in this area by the

Department and oversight organizations.

Reinventing the MMS: A Year of Progress and Accomplishments 15

The MMS is making substantial progress on

almost all of the regulations identified in these

reviews. Some specific examples of how MMS

is responding to industry requests to reform

regulations include:

• Increasing flexibility at end of lease term

In response to suggestions from many lessees,

MMS proposed a regulatory change that would

increase from 90 to 180 days the time allowed

between operations for an offshore natural gas

and oil lease to continue beyond its primary

term. The proposed change was published in

the Federal Register on April 25, 1996.

This proposal emerged from an annual request

by MMS for suggestions on regulatory improvements. Some industry respondents to that

request stated that changes in industry exploration practices have increased the time necessary to collect and analyze data associated with

drilling operations. Also, many operations

require considerably more time as industry is

now focusing its efforts in areas such as deep

water and subsalt.

• Eliminating allowance forms

On February 12, 1996, MMS published a final

rule that eliminates most allowance forms filing

requirements for oil, natural gas, and coal

produced from Federal leases. This rule eliminates a substantial reporting burden on the

industry. Because MMS is more current with its

audits than it was when these requirements

were imposed in the 1980’s, MMS no longer has

as much need for these forms. Even without the

forms, MMS retains its capability to monitor the

regulatory allowance limits for oil and natural

gas as set out in the 1988 valuation regulations.

• Revising training regulations

In November 1995, MMS published a proposed

rule that would rewrite all of its regulations

regarding training requirements for offshore

workers in a plain English format and at the

same time reduce the burden on offshore

operators.
Reinventing the MMS: A Year of Progress and Accomplishments 16

Common Reference Database

 Reengineering

The MMS has implemented the first phase of

changes recommended by a special National

Performance Review Laboratory that reengineered the MMS mineral lease and payor data

processes. Implementation of this recommendation reduced

processing times for

Payor Information Forms by

50 percent

and cut expenditures on this

activity by $650,000

per year, allowing MMS

to strengthen its compliance

program.

MMS has begun to develop performance measures at all levels of the

organization that are outcome-based

and will enable MMS to effectively

assess progress toward achieving longterm goals, with a focus on improved

customer service.

MMS 2000 - Template for the Future

MMS has responded to the Vice President’s call

to “do more with less” with a comprehensive

reorganization plan that focuses resources on

our core missions. In December 1995, MMS

issued a draft reorganization plan to all its

employees for their review and input. After

considering the comments received, MMS

management issued the final plan, called MMS

2000 -Template for the Future, in the spring of

1996. The next step is to obtain needed approvals from the Department of the Interior and

congressional committees.

The changes in this plan have been designed to

result in a more efficient and effective organization, to make MMS more responsive to its

overall mission, and to move the MMS of today

toward the MMS envisioned in its strategic plan.

The results of the plan will include reducing

management layers, realigning staffing levels,

and providing increased opportunities for the

delegation of decision making to lower levels.

While these changes are being implemented,

MMS also must meet workload increases in

some areas, particularly where industry is

exhibiting a strong interest in leasing and development activities.

Cooperation with Other Departmental

Efforts on Accounting Systems

The Office of Surface Mining, the Minerals

Management Service, and the Office of the

Secretary recently agreed to pool their resources to ensure that any improvements to

financial operations in one organization will be

 developed in a cooperative and

 participative environ-

 ment with the

 other two. For

 example, the

 three organiza-

 tions are de-

 veloping an

 improved property

 management system that

will provide for the tracking of property and provide automated interfaces with computerized

systems for procurement and accounting. By

working together, the organizations are reducing

duplication of efforts. Similarly, the participants

are working together to develop a common

system for automating processes that account

for small purchases using government-issued

credit cards and for expenses associated with

official travel.

Franchising Personnel and Other Services

MMS entered into an Intra-Agency Agreement

on August 10, 1995, to provide human resources services for the Office of the Secretary

of the Interior. Under this agreement, MMS is

currently servicing 942 employees in the Office

of the Secretary and affiliated offices throughout

the country. This initiative is consistent with the

tenets of the National Performance Review and

with recommendations of the President’s Management Council concerning administrative

services. It is the Bureau’s first major “franchising” effort, and provides benefits to both parties

involved: the Office of the Secretary receives

quality human resources services at a decreased cost, and MMS continues to maintain a

viable servicing capability.
Information Technology Acquisition Support

MMS developed several major information

technology acquisitions and awarded contracts

in support of all bureaus and offices within the

Department of the Interior. These acquisitions

included contracts for high-end workstations and

servers ($12 million over 6 years) and software

products and services ($20 million over 6 years).

Personnel from MMS now are working on three

other high-volume acquisitions open to Departmental users that will be completed by the end

of September 1996.

These efforts help to reduce administrative

overhead throughout the Department, while

taking advantage of MMS’s technical expertise.

MMS’s success in these acquisition efforts has

attracted even the interest of the Air Force,

which is interested in using MMS to provide

support for acquisition of network software.

Faster Ways to Obtain Contracted Services

MMS recently completed an acquisition using an

oral presentation solicitation process to speed

and simplify the award of several contracts.

Customers within MMS were highly complimentary of the oral presentation format and appreciated the opportunity for open exchange with key

personnel. Industry also voiced enthusiasm for

the new approach. The process in one case

reduced the time needed to award the contract

by two-thirds.

In order to supplement MMS’s diminishing inhouse resources for performing Environmental

Impact Statements (EIS) on short notice, three

to four contracts are being created. Rather than

issuing a “traditional” Request for Proposals,

interested parties were asked to submit capabilities statements in direct response to a notice

published in the Commerce Business Daily.

This notice attracted considerable interest and

will help to award the contracts much faster than

would have been possible using the traditional

approach.

Reinventing the MMS: A Year of Progress and Accomplishments 17

PROVIDING INTERNATIONAL

LEADERSHIP IN THE

ENVIRONMENTALLY SOUND

DEVELOPMENT OF

OFFSHORE MINERAL RESOURCES

As a recognized leader in federal resource

management, MMS is sharing its expertise and

experience with numerous countries throughout

the world. Many of these nations, such as

Russia, Romania, Poland and Hungary, are

making the difficult transition from centrally

planned to free market economies. MMS

employees have conducted numerous training

sessions and workshops in these countries to

assist them in adapting to the new way of doing

business. Particular emphasis has been placed

on the need to conduct their mineral leasing and

operations programs in accordance with sound

environmental practices.

Cooperation with Russia

MMS has been working on a number of initiatives to promote sustainable development of

Russia’s oil and natural gas resources and to

cooperate on issues related to development of

offshore resources. MMS has been conducting a

series of training sessions requested by the

Russian Government and funded by the U.S.

Agency for International Development (USAID).

The focus of these sessions has been to share

the lessons learned in the U.S. offshore oil and

gas program so as to enable Russia to develop

a program of its own that will attract private

investment, while ensuring safe and environmentally sound operations. One consequence

of this training was a proposal to hold a simultaneous sale in the Chukchi Sea which would

involve offering oil and natural gas rights in both

U.S. and Russian waters. This initiative is

currently on hold because of the difficulty of

operating in this region. Another initiative is a

Russian proposal to have MMS help several

Ministries and Committees in Russia develop a

safety and environmental regime for the Russian

offshore, including offshore Sakhalin Island.
Reinventing the MMS: A Year of Progress and Accomplishments 18

As a recognized leader in federal resource

management, MMS is sharing its expertise and

experience with numerous countries throughout

the world.

International lending organizations have expressed interest in supporting this initiative as

well as interest from the Government of Norway

to partner with MMS. The underlying goal is to

see if it is possible for the Russians to put in

place a safety and environmental regime that

will attract private investment while assuring

safe and environmentally sound operations.

Final decisions on funding are expected this fall.

Other Training Programs

MMS is expanding previous efforts, funded by

the USAID and joined by several other parts of

the Interior Department, to provide technical

assistance and training to Hungary in managing

its mineral resources in a free-market economy.

Following the end of the Hungary project in

November 1995, MMS planned a seminar on

the management of mineral resources in Eastern Europe, held in Budapest in June 1996. The

seminar, hosted by the Hungarian Mining Office

and the USAID, focused on progress made by

former Soviet Union states to convert mineral

resource development to a free-market

economy. It included participation by officials

from the mineral agencies of Romania and

Bulgaria, the Department of the Interior, Bechtel,

and the USAID. Minerals experts from Bulgaria,

Croatia, Kazakhstan, Romania, Poland, and

Slovenia also attended and expressed an

interest in holding additional seminars in some

of these countries.

Similarly, in January 1995, MMS held a threeday workshop on oil spill response in Jakarta,

Indonesia. This workshop, which was cosponsored by the MMS and the Indonesian

Agency for the Assessment and Application of

Technology, was funded by the Department of

State and U.S.-Asia Environmental Partnership.

The workshop included presentations by U.S.

and Indonesian experts on applicable laws and

regulations, oil spill response contingency

planning and techniques, and remote sensing/

trajectory analysis.

Several follow-up activities were identified,

including the need to: conduct a comparative

study of the Makassar Strait and the Florida

Strait to determine necessary oil spill response

capability; strengthen Indonesian oil spill response capabilities relative to notification and

communication systems, oil spill response,

training, and demonstrations; and develop

baseline mapping/sensitivity, mapping/modeling

for selected areas.

MMS recently received a request from the

Indian Oil and Natural Gas Corporation to cosponsor a similar effort in India. Plans are

underway for a joint international workshop on

oil spill response and cooperation to be held in

Mumbai (formerly Bombay) in November 1996.

In the spring of 1996, a small group of MMS

staff met in Mexico City with representatives of

the Mexican National Academy of Sciences and

with managers in the environmental and engineering divisions of PEMEX (the Mexican

national oil company). These discussions

covered research on platform corrosion, earthquake and storm effects, and oil spill modeling

and mitigation. At the close of two successful

and cordial meetings, the Mexican officials

expressed interest in continuing efforts to share

information and research findings with MMS.
The Department of the Interior Mission

As the Nation’s principal conservation agency, the Department of the Interior has responsibility

for most of our nationally owned public lands and natural resources. This includes fostering

sound use of our land and water resources; protecting our fish, wildlife, and biological diversity;

preserving the environmental and cultural values of our national parks and historical places; and

providing for the enjoyment of life through outdoor recreation. The Department assesses our

energy and mineral resources and works to ensure that their development is in the best interests

of all our people by encouraging stewardship and citizen participation in their care. The Department also has a major responsibility for American Indian reservation communities and for people

who live in island territories under U.S. administration.

The Minerals Management Service Mission

As a bureau of the Department of the Interior, the Minerals Management Service’s (MMS)

primary responsibilities are to manage the mineral resources located on the Nation’s Outer

Continental Shelf (OCS), collect revenue from the Federal OCS and onshore Federal and Indian

lands, and distribute those revenues.

Moreover, in working to meet its responsibilities, the Offshore Minerals Management Program

administers the OCS competitive leasing program and oversees the safe and environmentally

sound exploration and production of our Nation’s offshore natural gas, oil and other mineral

resources. The MMS Royalty Management Program meets its responsibilities by ensuring the

efficient, timely and accurate collection and disbursement of revenue from mineral leasing and

production due to Indian tribes and allottees, States and the U.S. Treasury.

The MMS strives to fulfill its responsibilities through the general guiding principles of: (1) being

responsive to the public’s concerns and interests by maintaining a dialogue with all potentially

affected parties and (2) carrying out its programs with an emphasis on working to enhance the

quality of life for all Americans by lending MMS assistance and expertise to economic development and environmental protection.