The Outer Continental Shelf Lands Act (OCSLA) grants the Secretary the authority to issue leases on the OCS. Section 18(a)(4) of the OCSLA states that “Leasing activities shall be conducted to assure receipt of fair market value for the lands leased and the rights conveyed by the Federal Government.” Lessees pay bonuses, rentals, and royalties reflecting the value of the rights to explore and potentially develop and produce OCS oil and gas resources. The MMS sets minimum bid levels, rental rates, and royalty rates by individual lease sale based on its assessment of market and resource conditions as the sale approaches.

Since 1983, the MMS has used a two-phase post-sale bid evaluation process to meet the fair market value requirement. Under its bid adequacy procedures, MMS reviews all high bids received and evaluates all blocks using either tract-specific bidding factors or detailed tract-specific analytical factors to ensure that fair market value is received for each OCS lease issued. This bid adequacy process relies on both evidence of market competition and in-house estimates of tract value.

In addition to the lease fiscal terms and bid adequacy process, the MMS establishes terms and conditions to assure diligent development of leases and environmentally clean and safe operations.

Bid Adequacy Procedures:
 

	Modifications to the Bid Adequacy Procedures (FR 64 37560, 7/12/1999)
	Summary of Procedures for Determining Bid Adequacy at Offshore Oil and Gas Lease Sales: Effective

Lease and Royalty Historical Summaries:

	Gulf of Mexico Lease Terms and Royalty Relief Summary
	Gulf of Mexico Rental Rate, Minimum Bid, and Royalty Rate History