Tuesday, December 11, 2007

About MMS, MRM and Federal Mineral Leases

ABOUT MMS: The Minerals Management Service (MMS), a bureau in the U.S. Department of the Interior, is the Federal agency that manages the nation's natural gas, oil and other mineral resources on the outer continental shelf (OCS). The agency also collects, accounts for and disburses more than $8 billion per year in revenues from Federal offshore mineral leases and from onshore mineral leases on Federal and Indian lands.

MMS’ mission is to manage the ocean energy and mineral resources on the Outer Continental Shelf and Federal and Indian mineral revenues to enhance public and trust benefits, promote responsible use, and realize fair value.

ABOUT MRM: The MMS's Minerals Revenue Management (MRM) is responsible for management of all revenues associated with both federal offshore and onshore mineral leases. The effort is large source of federal non-tax revenues. Operationally based at the Denver Federal Center in Colorado, the Minerals Revenue Management has field offices near principal energy development areas in Texas, Oklahoma and New Mexico.

How federal mineral leases work: Some federal lands are leased to individuals and companies for minerals development. Lease holders competitively bid, initially pay a bonus and subsequently, rent for the right to develop these onshore and offshore lands. If minerals are found, extracted and sold, the federal government is entitled to a certain percentage of, or royalty on, the production.

Using computerized accounting systems, MRM processes approximately the royalties. Nationally, bonuses, rents and royalties from leases amount to several billion dollars each year (+/- $7 billion per annum). Totals fluctuate with market prices, amount of production, and the number of lease sales.

For offshore leases, the Minerals Revenue Management distributes the collected money to U.S. Treasury accounts. In recent years, annual deposits have been nearly $900 million to the Land and Water Conservation Fund and $150 million to the Historic Preservation Fund. The remainder is sent to the U. S. Treasury's General Fund. Additionally, a portion of royalties from certain offshore federal leases, adjacent to seaward boundaries of coastal states, are shared with those states.

Distribution of revenues associated with onshore federal lands is split 50-40-10, with 50 percent of the money going directly to the state within which the specific lease was located. Forty percent is sent to the Reclamation Fund of the U.S. Treasury. This special account finances the Bureau of Reclamation's water projects in 17 western states. The remaining 10 percent goes to the Treasury's General Fund.

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