Revenues and Disbursements from Oil and Natural Gas Leases on Onshore Federal Lands

Federal revenues from oil and natural gas production on federal lands support a range of federal and state programs and activities. The Bureau of Land Management (BLM) is the primary federal agency responsible for administering oil and gas leases and development on onshore federal lands. Over the years, Congress has passed various laws directing how BLM collects and administers these revenues, most recently with P.L. 119-21, the FY2025 reconciliation law, often referred to as the One Big Beautiful Bill Act. In addition, the Trump Administration, through the issuance of executive and secretarial orders, has prioritized increasing oil and gas leasing and production on federal lands. Total domestic production of crude oil and natural gas in FY2024—the most recent year for which data are available for both federal and nonfederal production—was the highest in the history of the United States for each commodity. A subset of this total came from crude oil and natural gas produced on federal lands. Oil and natural gas production from onshore federal lands contributed 14% and 10% to each total in FY2024, respectively. Oil and gas producers must pay certain fees to develop and produce these commodities on federal lands. Numerous provisions in law affect revenue collection and disbursement from oil and natural gas leases and production on federal lands. The Federal Land Policy Management Act (FLPMA; 43 U.S.C. §1701 et seq.) establishes statutory authority for BLM to manage the federal subsurface mineral estate. The onshore oil and natural gas programs are generally governed by the Mineral Leasing Act of 1920 (MLA; 30 U.S.C. §§181 et seq.), as amended. The MLA also governs how federal revenues from oil and gas production are collected and disbursed. In states other than Alaska, 40% of revenues arising from oil and gas leasing on federal lands are deposited into the Reclamation Fund, and 50% of revenues are deposited to the state in which the lease is located. Alaska receives 90% of revenues from oil and gas leasing and extraction. The 10% remainder in all states goes to the General Fund of the U.S. Department of the Treasury (Treasury). Disbursements to all states are assessed a 2% administrative fee, which is also deposited in the Treasury. Revenues from oil and natural gas leases on onshore federal lands totaled $7.517 billion in FY2025. This represented 93% of total federal revenues from all types of energy and mineral leasing on onshore federal lands. These revenues are composed of royalties ($7.191 billion); bonuses ($156.5 million); other revenues, including settlement agreements, interest payments, and fees from applications for permits to drill ($161 million); and rents ($8.1 million). Disbursements of onshore oil and gas revenues for FY2025 totaled $7.324 billion. This included payments of $3.510 billion to state and local governments; $2.787 billion to the Reclamation Fund; $247 million to other funds; and $779 million to the General Fund of the Treasury. Legislation passed in the 119th Congress reverted several changes made by the 117th Congress to onshore oil and gas leasing revenues (see table in Appendix B). The law commonly known as the Inflation Reduction Act of 2022 (IRA; P.L. 117-169) amended the MLA’s provisions for onshore oil and gas leasing, such as increasing the minimum bid required for a lease, increasing rental rates, increasing the minimum royalty rate, assessing new royalties on flared or vented methane, eliminating noncompetitive leasing, and implementing a fee to nominate lands for consideration to lease. The FY2025 reconciliation law (P.L. 119-21) reverted some of these changes, reducing royalty rates back to pre-IRA levels, repealing royalties on flared or vented methane, reinstating noncompetitive leasing, and repealing the fee to nominate lands for consideration to lease. The 119th Congress has considered further changes to policies affecting the collection and disbursement of revenues from oil and gas development on federal lands. Some of the proposed changes would reverse provisions of the IRA that remain in statute, such as minimum required bids and rental rates. Given the high percentage of federal oil and gas revenues that comes from royalties, changes to the minimum royalty rate represent the most direct means of altering revenues and disbursements from oil and natural gas leases, under normal market conditions. Other proposals would alter the current revenue allocation scheme so that states would no longer be assessed the 2% administrative fee currently deposited in the Treasury.