President Trump signed the 'One Big Beautiful Bill' into law on March 31, a sprawling energy and infrastructure package that cuts federal oil and gas royalty rates from 12.5% to 8% — the lowest level since the Mineral Leasing Act of 1920.
The bill also reduces rental rates for non-producing leases, extends lease terms from 10 to 15 years, and limits environmental review periods to 12 months. The Congressional Budget Office estimates the royalty cut alone will reduce federal revenue by $18 billion over the next decade.
Interior Secretary Doug Burgum hailed the law as 'unleashing American energy dominance.' But environmental groups called it 'a giveaway to polluters.' The law applies to all new leases on federal lands and waters, which cover approximately 700 million acres.
State and tribal opposition
New Mexico, which derives 38% of its state budget from federal oil and gas royalties, estimates it will lose $1.2 billion annually under the new rates. Governor Michelle Lujan Grisham said the state may challenge the law's preemption of state royalty authority.
Several Native American tribes, including the Navajo Nation, have also protested, noting that royalties fund schools, healthcare, and infrastructure on tribal lands. 'This is theft from our children's future,' said Navajo Nation President Buu Nygren.
This is a giveaway to polluters at the expense of taxpayers, states, and tribes. We will explore every legal option to stop it.
Industry groups praised the law, predicting a surge in drilling permits. The American Petroleum Institute said it expects 15,000 new jobs in the oil patch by 2028.
