BLM resets federal oil and gas royalty rates to a 12.5% minimum
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This rule updates federal oil and gas leasing rules to match a 2025 law and restores the minimum royalty rate on new federal leases to 12.5%. It replaces the earlier 16.67% rate tied to the Inflation Reduction Act, removes outdated rate provisions, and adds updated rules for non-competitive and reinstated leases. The practical impact is on oil and gas operators leasing federal land managed by the Bureau of Land Management. Companies should update royalty calculations and lease assumptions for new, non-competitive, and reinstated leases, but existing leases with higher royalty rates are not changed by this rule. The agency is accepting comments, and the rule becomes effective June 29, 2026 unless significant adverse comments are filed.
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Key Changes
- Restores the federal oil and gas royalty minimum to 12.5% for leases issued after the 2025 law.
- Deletes outdated regulatory text tied to the now-repealed 16.67% rate.
- Updates rules for non-competitive and reinstated leases to match the new statutory framework.
Obligations
What this law requires
For Federal oil and gas leases issued after the OBBB’s enactment, the royalty rate must be not less than 12.5% of the production removed or sold.
For Federal oil and gas leases issued after the enactment of the OBBB, the royalty rate prescribed in the lease must be not less than 12.5 percent.
For leases issued under subpart 3109 of 43 CFR part 3100, a minimum royalty rate of 12.5 percent must be applied.
Leases issued under subpart 3109 must carry a minimum royalty rate of 12.5%.
For all non-competitive leases, the royalty rate must be 12.5 percent.