Why It Matters

The Congressional Research Service (CRS) updated its report, "Considerations for Federal Leasing of Onshore Energy: Oil and Gas and Geothermal Power," on September 14, framing federal energy leasing as a policy question involving both established and emerging resources. The report says the Bureau of Land Management administers onshore energy and mineral resources on federal lands, covering more than 700 million acres of the federal subsurface mineral estate. Congress has debated whether current leasing and permitting requirements meet federal priorities, including multiple use and sustained yield, reliable electricity, energy security, environmental protection, and fiscal security through federal leasing revenue.

Both resources can provide baseload electricity generation, and the report identifies differences between them in scale and maturity, carbon intensity, renewability, investment and risk profile, and growth potential. The central policy tension is whether federal rules can support energy development while addressing drilling-related risks that include groundwater impacts, induced seismicity, and surface disturbance.

The Big Picture

The Mineral Leasing Act of 1920 generally supplies the statutory authority for federal oil-and-gas leasing, while the Geothermal Steam Act of 1970 governs federal geothermal leasing. BLM uses resource management plans to identify available lands, desired outcomes, allowable uses, and anticipated management actions before considering parcel-specific projects. Both oil-and-gas and geothermal leasing processes require bids, rents, and royalties, with rents paid before energy production and royalties generally beginning once production starts.

The minimum oil-and-gas royalty is 12.5% of production value, while geothermal royalties range from 1% to 2.5% during the first 10 years of production and from 2% to 5% thereafter. Nonproductive leases are another congressional concern: in fiscal year 2025, 5,707 of 29,354 onshore oil-and-gas leases and 522 of 610 geothermal leases were not producing.

Environmental review operates through the National Environmental Policy Act (NEPA), which generally calls for an environmental impact statement when significant effects are reasonably foreseeable and an environmental assessment when significance is uncertain or significant effects are not expected.

The Bottom Line

The report identifies six areas for congressional consideration, including bonding and reclamation, royalty authority, nonproductive leases, noncompetitive leasing, permitting timelines, and NEPA review. The 2024 rule raised those minimums to $150,000 per lease and $500,000 statewide, while a proposed rule published in June would rescind the increases and return the amounts to $10,000 and $25,000.

Congress also changed the royalty and leasing landscape through P.L. 119-21, which reduced the minimum federal oil-and-gas royalty to 12.5 percent, eliminated royalties on vented or flared methane, and reinstated noncompetitive leasing.

Spot something wrong? Report an issue with this article