New Fees for Drilling on Federal Lands Take Effect Soon
Published Date: 4/29/2026
Rule
Summary
Starting June 29, 2026, new rules will update how fees, rentals, and royalties work for oil and gas companies leasing federal land. These changes follow a big law passed in 2025 and mainly affect companies drilling on public lands, possibly changing how much they pay. If anyone has strong objections, they can speak up by May 29, 2026, before the rules kick in.
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Analyzed Economic Effects
6 provisions identified: 2 benefits, 2 costs, 2 mixed.
New Leases: Minimum 12.5% Royalty
For production from Federal oil and gas leases issued after the One Big Beautiful Bill Act, the royalty rate will be not less than 12.5 percent (replacing the 16.67 percent rate set by the Inflation Reduction Act). This rule takes effect June 29, 2026 unless significant adverse comments are received by May 29, 2026.
Subpart 3109 & Noncompetitive Leases
The rule establishes a minimum royalty rate of 12.5 percent for leases issued under subpart 3109 and specifies a 12.5 percent royalty rate for all non-competitive leases.
Reinstated Leases: Higher Formula
For reinstated leases, royalty equals the rate used for new leases at the time of reinstatement plus 4 percentage points, plus an additional 2 percentage points for each succeeding reinstatement; in no case will the royalty on a reinstated lease be less than 16.67 percent.
Existing Leases Left Unchanged
The rule does not amend existing oil and gas leases that already have royalty rates higher than 12.5 percent; those existing lease royalty terms remain in place.
Comment Deadline and Effective Date
The direct final rule is effective on June 29, 2026 unless significant adverse comments are received by May 29, 2026; significant adverse comments could lead the agency to withdraw or revise the rule before that date. Comments may be submitted at regulations.gov under docket BLM-2025-0138.
Potential Increase in Federal Production
The preamble states that economic theory suggests the quantity of Federal oil or gas produced may increase under the OBBB provisions (which lower production costs) compared to the IRA provisions (which raised costs).
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