Interior Proposes Red Tape Cuts for Oil and Gas
Published Date: 6/30/2026
Proposed Rule
Summary
The government is proposing new rules to make oil, gas, and coal reporting easier and cheaper for companies and the federal government. These changes aim to boost energy production by cutting red tape and clarifying how appeals are handled. Industry folks need to send their thoughts by August 31, 2026, so don’t miss the deadline!
Analyzed Economic Effects
5 provisions identified: 4 benefits, 1 costs, 0 mixed.
More Transportation Costs Deductible
ONRR proposes to allow additional transportation-related deductions (including flow assurance, pipeline remediation, certain platform equipment costs, and directly allocable platform-space and buoyancy costs) when calculating transportation allowances. BOEM's analysis in the proposal indicates industry could retain about $205 million per year as a result of increased deductions on the Gulf of America OCS.
Default Valuation Rule Removed
The agency proposes to remove the regulatory "default provision" (30 CFR 1206.105 and 1206.144) and the associated "misconduct" definition in 30 CFR 1206.20. This change eliminates ONRR's previously available fallback method for setting royalty value and is intended to reduce ambiguity and inconsistent application for lessees.
Index Valuation Option Expanded
ONRR proposes to let lessees elect an index-based valuation for residue gas and NGLs (and extend it to arm's-length sales), change the price base from the highest bidweek to the average (midpoint) bidweek index price, and update transportation adjustments. ONRR estimates about $2 million in reduced administrative costs to lessees for calendar years 2020–2024, elections must be made lease-by-lease, cannot be changed more often than once every two years, cannot be retroactive, and ONRR may require supporting records.
Index Price Change May Raise Bonus Bids
Changing the Federal gas index base from the highest bidweek price to the average bidweek index price and updating transport adjustments may affect Federal receipts and lease competition. The Bureau of Land Management estimates this could produce about a $2.4 million increase in bonus bids within one year of the final rule.
No Negative Royalty Reporting
The proposed rule states a lessee may not report royalty values of less than zero for Federal unprocessed gas, residue gas, and NGLs (i.e., values reported must be zero or positive). This replaces prior language and clarifies that negative reported values are not allowed.
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Key Dates
Department and Agencies
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