On June 3, the Bureau of Land Management (BLM), under the Department of the Interior (DOI), offered 20,878 acres of federal land in Utah for oil and gas development at competitive auction. Only two parcels, totaling just 833 acres, were leased. This was the seventh onshore lease sale of 2025 and the first in Utah since 2023. 

The United States holds vast onshore mineral resources owned by American taxpayers. BLM leases grant private companies the right to drill for and sell these public resources. The federal government generates revenue from leasing through:  

• Bonus bids: upfront payments made at competitive auctions to secure drilling rights  

• Rent: annual payments from leaseholders until production begins  

• Royalties: a percentage of the value of extracted oil and gas 

Today’s federal lease sale in Utah saw little industry interest—less than 4% of the acreage offered at auction received bids. In the end, a single bidder purchased leases for two parcels at $308/acre and $389/acre, respectively.  

The two parcels leased today were the only ones originally planned for this sale. In December 2024, the Biden Administration announced that two parcels totaling 833 acres in Uintah County—Utah’s top producer of federal oil and gas—would be offered in the state’s Q2 2025 lease sale. In April 2025, the Trump Administration added eleven additional parcels in Sanpete County, bringing the total acreage available to 20,878  None of the newly added parcels added received any bids. The zero industry interest is unsurprising, since Sanpete County accounts for less than 1% of federal oil and gas production in Utah. In contrast, the original parcels in Uintah County garnered a combined average bid of $370/acre—nearly ten times the state’s 10 year average. 

The results of today’s auction demonstrate the value of strategic leasing in generating important revenue for taxpayers. Directing lease sales to areas with proven industry interest and a higher likelihood of production leads to competitive bidding and stronger returns. Preparing and offering federal land that is poorly suited for oil and gas development—or better used for other purposes—wastes taxpayer resources.   

Historically, federal lease sales in Utah have generated minimal industry interest and modest returns for taxpayers. In 2023, nearly 28,000 acres were offered for oil and gas development, but only 7,500 acres received bids. Of those, 90% were sold at the minimum bid of $10/acre—resulting in minimal revenue for both state and federal taxpayers. Leases sold at the minimum bid are also less likely to enter production, meaning they generate little in future royalty payments and tie up land that could be used for other purposes. By contrast, more targeted leasing— directing sales to appropriate locations—can increase competition and ensure oil and gas production delivers public value rather than simply boosting corporate profits. 

Recent reforms have improved the federal oil and gas leasing process and helped ensure taxpayers receive a fair return: 

• Royalty Rate Increase: The federal onshore royalty rate rose from 12.5% to 16.67%—still below what some states like Texas charge. 

• Updated Rental Rates: Leaseholders now pay $3 per acre for the first two years, $5 per acre for years 3–8, and no less than $15 per acre for years 9–10. These replace outdated 1987 rates of $1.50 per acre for years 1–5 and $2 per acre for years 6–9. 

• Higher Minimum Bid: The minimum legal bid increased from $2 per acre (set in 1987) to $10 per acre. 

• Modernized Bonding Requirements: Bonding requirements—unchanged since the 1950s and 1960s—were updated to better reflect market conditions and protect taxpayers from costly reclamation liabilities. 

• Elimination of Noncompetitive Leasing: Ending this practice closed a loophole that allowed companies to acquire oil and gas leases without competitive bidding, costing taxpayers valuable bid revenue.  

• More Strategic Leasing: Reform efforts now emphasize directing lease sales to appropriate, high-potential locations to increase competition. 

A recent TCS analysis shows a strong fiscal case for preserving critical updates to the federal onshore oil and gas leasing program. In 2024 alone, lease sales across the U.S. generated more than $164 million in auction revenue, with an average bid of approximately $2,149 per acre. This high average underscores how recent reforms have strengthened the leasing process—boosting taxpayer returns without dampening industry interest. The reforms have also significantly benefited local communities, as oil and gas lease sale proceeds are split between the federal treasury and the states where development occurs. 

However, the House-passed One Big Beautiful Bill Act seeks to roll back these improvements by reinstating noncompetitive leasing and reversing the recent royalty rate increase. Noncompetitive leasing was widely abused by speculators and consistently failed to deliver a fair value for taxpayers. From 2001 to 2020, the BLM issued more than 6,400 noncompetitive leases covering over 11 million acres. Fewer than 2% of those leases entered production within a decade, generating negligible revenue. 

Reopening this loophole—especially when combined with provisions that would drastically expand the amount of federal land offered at auction—would be particularly costly for states like Utah. Between fiscal years 2013 and 2022, 31% of acres leased in the state were sold for the old minimum bid of $2/acre and 54% were sold for less than the current minimum bid of $10/acre. Leasing federal oil and gas tracts noncompetitively or for less than $10 per acre—among other factors—suggests the leases may be unreasonably speculative and likely to be terminated without ever reaching production. Flooding the market and reopening the noncompetitive leasing loophole could allow speculators in Utah to acquire vast swaths of federal land for pennies on the dollar, blocking more productive uses like recreation, conservation, and the development of other mineral or energy resources. 

Federal lands—and the oil and gas resources they contain—belong to American taxpayers. Gutting recent leasing reforms would not only reverse hard-won fiscal gains but also expose taxpayers to greater long-term liabilities and put an abrupt end to the higher revenues currently flowing to federal and state governments.