Bidding Systems for Leases in the Outer Continental Shelf

This rule amends the regulations of the Minerals Management Service (MMS) to modify the bidding systems available for use on tracts offered for lease under the Outer Continental Shelf Lands Act (OCSLA). The change gives the Secretary of the Interior more flexibility in setting the terms of a lease sale. This rule provides four methods of modifying the existing alternative bidding systems: (1) setting the minimum prescribed royalty rate charged on Federal offshore leases below 12\1/2\ per centum but greater than zero per centum; (2) permitting operating allowances when computing payment obligations under the lease; (3) suspending or deferring royalty for a specific time period, volume, or value of production; and (4) expanding the methods for calculating royalty rates under variable royalty systems to include product prices, as well as value and amount of production, with the ability to use different formulas across time periods. The rule does not affect existing leases.