The Highlights

• Fourth federal oil & gas lease sale in Nevada this year, and first replacement sale in state.
• None of the 20,600 acres of public land re-offered for oil and gas development were leased.
• Today’s sale results were not unsurprising. Leases offered in Nevada frequently go unsold or are issued at the $10 per acre minimum bid.
• 20,600 acres will now be available to be leased noncompetitively—without paying even the $10 per acre minimum bid—and at a below-market royalty rate.

On September 30, the Bureau of Land Management (BLM) offered 14 parcels of public land, totaling 20,600 acres, in Nevada for oil and gas development. The exact same land offered today was offered two weeks ago in Nevada’s third oil and gas lease sale. Nothing sold at the September 16th auction, and nothing sold today.

Despite the evident lack of industry interest in developing oil and gas in Nevada, the federal government continues to offer large tracts of public land for development. Offering land with little proven industry interest costs taxpayers in administrative time and resources. Re-offering the same land immediately after a failed lease sale is even more wasteful.

Now, the 20,600 acres offered at today’s auction will be available to be leased noncompetitively— a process that routinely generates less revenue for federal and state taxpayers, results in leases less likely to even enter production, and potentially blocks valuable public land from other productive uses.

Replacement Sales Waste Agency Resources

A “replacement sale,” is a new requirement created by Congress in July 2025. When a quarterly lease sale in certain states — Alaska, Colorado, Montana, Nevada, New Mexico, North Dakota, Oklahoma, Utah, and Wyoming — fails to receive bids on 25% or more of the acreage offered, BLM must hold a replacement sale. The same requirement applies if an auction is canceled, delayed, or deferred. Between 2015 and 2024, more than one third of all lease sales would have triggered a replacement sale, suggesting this provision could significantly increase the administrative burden on BLM.

Since its enactment, only two replacement sales have been held – and both had poor results. The first replacement sale, held on December 30th to “replace” the fourth quarter auction held in Wyoming, attracted bids from just two companies, each acquiring a single 80-acre parcel for the legal minimum bid of $10 per acre. In total, less than 1% of the available acreage was leased. The second replacement sale, held on January 8th, to “replace” the fourth quarter auction held in Colorado, attracted no bids. Today’s replacement sale in Nevada follows a similar pattern as none of the offered acreage attracted a single bid.

Parcels Not Bid on At Auction Are Available for Noncompetitive Leasing

The 20,600 acres not leased at today’s sale will become eligible for noncompetitive leasing. Under this process, parcels are awarded to the first applicant willing to pay an administrative fee, set by BLM at a minimum of $75 regardless of acreage, plus the first year’s rent. No competitive bid is required. This process, repealed by Congress in 2022, was reinstated in 2025 and enables companies to bypass market competition entirely.

Leases issued noncompetitively generate less revenue and are significantly less likely to ever enter production. According to BLM, only 1 percent of noncompetitive leases issued nationwide begin producing during their primary lease term. The Government Accountability Office found that noncompetitive leases generate five times less revenue than competitively leased land.

More than half of the 500,000-plus acres currently leased in Nevada were sold noncompetitively. To make matters worse, at least 260,000 acres were leased the day after competitive auction, meaning that companies were interested in leasing this land but intentionally chose to not participate at auction in order to save millions of dollars—money that should have gone to federal and state taxpayers. In one case, BLM leased more than 36,000 acres noncompetitively—more than was leased at competitive auction the previous day— for an administrative fee of $8,715, translating to just $0.25 per acre. This process shortchanges taxpayers while benefiting speculators and oil and gas companies looking to acquire cheap lands to claim more ‘untapped acres’ on their ledgers.

Low Royalty Rates Cost Federal and State Taxpayers Billions

Every lease issued since July 2025—competitively and noncompetitively—has been issued at the outdated 12.5% royalty rate, which is far below what states and private landowners typically charge. This below-market leasing term has shortchanged taxpayers for decades and will continue to cost state and federal taxpayers as more public land is made available for leasing.

Leasing decisions are driven by development potential and market conditions. Companies bid in competitive lease sales under both the higher 16.67% royalty rate and the lower 12.5% rate. In fact, average bids across the country were higher in 2023 and 2024 under the higher rate ($978 and $2,149 per acre, respectively) than they had been during the preceding decade ($379 per acre from 2013-2022). Royalty rates don’t impact leasing decisions, but they do have a direct impact on federal and state revenue.

According to a new report from TCS, taxpayers have lost $25 billion under the 12.5% rate over the last decade, 2016-2025. Since roughly half of federal royalty revenues are shared between the federal treasury and states, local communities lost out on more than $12 billion in funding that would have supported public schools, infrastructure, and other local priorities.

Leasing More Acres of Federal Land Does Not Increase Industry Interest or Guarantee Production

Thousands of acres of federal land in Nevada are offered every year for oil and gas development, despite little production in the state and limited industry interest at past auctions. The federal government offered 2.7 million acres of public land in Nevada at auction between 2016 and 2025, the second most in the country behind Wyoming. Less than 10% of what was offered actually sold. Today’s results are just another mark in what has become an evident trend.

Despite this lack of interest from operators, the federal government continues to offer thousands of acres of public land in Nevada every year for pennies on the dollar. This means federal agencies waste resources holding auctions that industry didn’t ask for and that any leased land is unlikely to enter production, unlikely to generate significant revenue for taxpayers, and will potentially block alternative uses such as recreation opportunities and other more economically valuable land uses.

Leasing Terms Must Support Responsible Development, Generate Revenue, and Protect Taxpayers

Federal oil and gas belong to the American people, and leasing terms should ensure taxpayers receive a fair return from the development of our valuable resources. Offering and leasing public land that is unlikely to ever produce oil and gas is a waste of our tax dollars and our public lands.

Responsible energy development and fiscal responsibility are not mutually exclusive. Curbing speculation, updating royalty rates, maintaining stronger bonding requirements, and tightening oversight should be common sense measures in our federal leasing system.