Impacts of the One Big Beautiful Bill Act of 2025 (Pub. L. No. 119-21) to the Oil and Natural Gas Leasing Program

 This IM sets out the policy for implementing provisions of the OBBB (Pub. L. No. 119-21), which became law on July 4, 2025, regarding EOIs, royalty rates, timing of lease sales, and noncompetitive lease offers for the oil and natural gas program.

B. Replacement Lease Sales

As required by section 50101(c)(3) of the OBBB, the BLM will hold a replacement sale during the same fiscal year if a lease sale is canceled, delayed, or deferred. To minimize the risk of not meeting the same fiscal year requirement for replacement sales, it is recommended that third-quarter lease sales be scheduled with sufficient lead time to allow for a replacement sale before September 30th. 

The BLM may need to provide additional public participation periods, including a protest period for replacement lease sales based on a canceled, delayed, or deferred lease sale. However, before providing any additional public participation, the BLM should consult with the U.S. Department of the Interior (DOI) Solicitor’s Office to determine whether any such additional period is necessary.

In addition, if 25 percent or more of the total acres offered at a sale do not receive a bid, the BLM will hold a replacement sale within 30 days, or before the end of the fiscal year, whichever is sooner, and such sales will only include those parcels offered but not sold in the original sale. For replacement sales limited to parcels offered but not sold in an original sale, the BLM will not provide additional public participation periods, including a protest period, as these opportunities would have already been provided for all parcels included in the original sale.

III. Noncompetitive Leasing

Section 50101(a)(2) of the OBBB restored the noncompetitive leasing provisions of the MLA. Because the prior statutory non-competitive leasing provisions have been restored as of July 4, 2025, the BLM will now accept noncompetitive offers for parcels that do not receive a bid at a competitive auction held on or after July 4, 2025, or its replacement sale, if one was held. Parcels that remain unsold after the competitive auction (or replacement sale, if one was held) will continue to be available for noncompetitive leasing for two years following the last sale in which the parcel was offered. Attachment 1 provides further guidance to State offices with respect to the terms and processes for noncompetitive leasing. The current filing fee for a noncompetitive lease application is $75.

Any parcels offered in a competitive oil and gas lease sale held on or after July 4, 2025, that did not receive a bid, are available for noncompetitive leasing for two years following the last sale in which the parcel(s) were offered.

IV. Class II Reinstatements

The OBBB restored the original provisions of the MLA allowing for Class II reinstatement of noncompetitive leases. The BLM should review and process any Class II reinstatement requests received on or after July 4, 2025, in the same manner that it reviews and processes Class II reinstatement requests for competitive leases. 

V. Reversionary Leases 

The OBBB repealed the section of the Inflation Reduction Act of 2022 that removed BLM’s authority to issue reversionary noncompetitive leases. Therefore, the BLM may again issue noncompetitive reversionary leases under 30 U.S.C. § 226(b)(3)(C). Because any leases issued under this provision will contain an existing well, a lessee is required to provide a bond in accordance with 43 CFR Subpart 3104 prior to lease issuance. Attachment 1 provides further guidance with respect to issuance of leases under 30 U.S.C. § 226(b)(3)(C).

VI. Royalty Rates

The BLM will update and ensure that competitive lease sale notices reflect the current royalty rate as shown below: 

Competitive Lease: not less than 12.5 percent

Noncompetitive Lease: 12.5 percent

1930 Act, Special Act: 12.5 percent for new leases or compensatory royalty agreements under 30 U.S.C. §§ 301-306.

Class II Reinstatements: 4 percentage points greater than the royalty rate in the original lease and not less than 16.67 percent. For each succeeding reinstatement, the BLM will increase the royalty by an additional 2 percentage points.

All existing leases already issued will remain at the current royalty rate provided in the lease. 

VII.  Unleased Land Accounts

For any unleased land accounts (ULA) created on or after July 4, 2025, the BLM should use the royalty rate of 12.5 percent. For ULAs created prior to July 4, 2025, the BLM should update the royalty rate from 16.67 percent to 12.5 percent upon request of the agreement operator. In all cases, the BLM should review the existing oil and gas agreement and ensure it does not specify a royalty rate for unleased Federal minerals. If it does, the BLM must reflect that royalty rate within the existing oil and gas agreement in the ULA covering the unleased lands within the oil and gas agreement, as defined at 43 CFR § 3100.5. The BLM cannot establish a ULA at a different royalty rate than the required royalty rate specified in the oil and gas agreement for unleased federal minerals. 

VIII. Application

This IM governs BLM procedure and organization and is not a substantive rule, regulation, or other legally binding instrument. The policy it contains may not apply to a particular situation based upon the individual facts and circumstances. Nothing in this IM is intended to modify or amend any Federal laws, nor create any rights or cause of action or trust obligation that any person or party may enforce through litigation or otherwise against the United States Government or any of its employees or officers. This IM is not legally enforceable. To the extent that there is any inconsistency between the provisions of this IM and any Federal laws, the laws will control.