On the 4th of July 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law.
After some amendments by the Senate of H.R.1, OBBBA was passed largely intact with a push for strong energy policies to enhance fossil fuel production and a rollback of environmental regulations. Major natural resources and energy provisions in OBBBA include resumption of quarterly onshore lease sales, mandates for offshore lease sales, a reduction of royalty rates for both onshore and offshore federal leases, and the introduction of a pay-to-play option for non-federal entities to expedite the National Environmental Policy Act (NEPA) review process.
SUMMARY
Quarterly Lease Sales: Mandates the Department of the Interior to immediately resume quarterly onshore oil and gas lease sales, reinforcing the requirement for the Bureau of Land Management (BLM) to hold such sales every quarter. These sales must adhere to the Mineral Leasing Act. Each fiscal year, the Secretary of the Interior must conduct at least four lease sales in certain states, including Wyoming, New Mexico, Colorado, Utah, Montana, North Dakota, Oklahoma, Nevada, and Alaska.
Noncompetitive Leasing: If lands do not receive bids during a lease sale or the highest bid is below the national minimum, they must be offered for noncompetitive leasing. It should be noted that unlike the original version of the H.R. 1, the OBBBA does not definitively mandate a 30-day deadline.
Mandatory Lease Sales: Requires at least 30 offshore oil and gas lease sales for the Gulf over the next 15 years, starting in August 2025 and occurring twice annually thereafter. Each lease sale must offer a minimum of 80 million acres, assuming sufficient unleased acreage is available.
Downhole Commingling: Mandates approval of applications for downhole commingling of production from multiple reservoirs in a single wellbore in the Gulf, unless conclusive evidence shows the practice would be unsafe or reduce recovery. OBBBA mandates approval of applications for downhole commingling of production from multiple reservoirs in a single wellbore in the Gulf.
Revenue Sharing: Raises the cap on the distribution of Outer Continental Shelf (OCS) revenues from $500 million to $650 million for fiscal years 2026 through 2035 under the Gulf of Mexico Energy Security Act.
Reinstatement of 12.5% Royalty Rates: Reduces the minimum royalty rates for both onshore and offshore oil and gas leases on federal lands to 12.5%, reversing the increases implemented under the Inflation Reduction Act, which had raised rates to 16.67%. This lower royalty rate is designed to incentivize greater investment in oil and gas development by reducing operational costs associated with federal leases.
Accelerated NEPA Reviews: To expedite project approvals, OBBBA sets strict deadlines for environmental assessments (EAs) and environmental impact statements (EISs) under the National Environmental Policy Act (NEPA). Specifically, it requires EAs to be completed within 180 days of payment and EISs within one year of the Notice of Intent’s publication. The goal of these accelerated timelines is to streamline the regulatory process, reduce delays, and expedite approvals for energy projects, ensuring quicker project execution while still addressing environmental considerations effectively.
Optional Expedited Review: Allows project sponsors to pay a fee equal to 125% of the anticipated costs of an expected agency activity to prepare an EA or EIS, ensuring completion within the specified timelines.