BLM Updates Royalties on Wasted Federal Oil and Gas
Published Date: 6/24/2026
Proposed Rule
Summary
The Bureau of Land Management is updating rules about royalties on oil and gas lost from onshore Federal and Indian leases. These changes make it easier for operators to follow the rules and speed up how royalties are figured out. If you’re involved, get your comments in by August 24, 2026, because this could affect how much money is paid or saved.
Analyzed Economic Effects
5 provisions identified: 2 benefits, 1 costs, 2 mixed.
Remove APD Waste Plan Requirement
If you operate oil or gas wells on Federal or Indian leases, the BLM proposes to remove the rule that required a Waste Minimization Plan (WMP) or a 100% gas-capture self‑certification with an application for permit to drill (APD). The BLM estimated the recurring cost of that requirement at $400,000 annually and proposes to eliminate it to reduce compliance burdens.
Drop LDAR Program Requirement
The BLM proposes to eliminate the 2024 Rule's required Leak Detection and Repair (LDAR) programs for operators. The agency estimated LDAR would cost operators $16.8 million annually while producing about 555,000 Mcf of additional captured gas with an annual royalty value of $210,000.
Eliminate Flaring Limits (Mcf/Bbl)
The proposed rule would remove the 2024 Rule limits on royalty-free flaring that set per-month thresholds of 0.08, 0.07, 0.06, and 0.05 Mcf per barrel of oil for years 1–4 and thereafter. Removing these numeric caps would reduce accounting and royalty obligations for operators but also reduce some royalty revenue to lessors.
No Royalties on Unmerchantable Gas
The BLM proposes to add that flaring of gas deemed unmerchantable—when the operator demonstrates poor gas quality—would be treated as an unavoidable (royalty-free) loss. Operators who can show the gas is unmerchantable would not pay royalties on that gas.
New Venting/Flaring Measurement ID
The proposed rule would add a new requirement that operators apply for a Venting and Flaring Measurement Point (VFMP) number to use for monthly production accounting on Oil and Gas Operations Reports (OGORs). This creates a new administrative task for operators to track venting and flaring at a designated measurement point.
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Key Dates
Department and Agencies
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