On February 20, the Bureau of Land Management (BLM), under the Department of the Interior (DOI), held an auction for oil and gas leases on federal land in New Mexico. The sale offered seven parcels totaling 1,317 acres, all of which were leased. This was the second federal onshore oil and gas lease sale of 2025.

The 1,317 acres leased in today’s sale received an average bid of $15,673 /acre—more than four times greater than the average bid for lease sales in New Mexico between 2010 and 2020, before outdated fiscal rates had been updated. These results show recent reforms to the federal onshore leasing program help ensure American taxpayers receive a fair return on the oil and gas resources we all own.

The critical reforms first passed in 2022 support responsible oil and gas development, require companies to pay competitive market rates, and reduce financial risks for taxpayers. These changes include:

• A federal onshore royalty rate of 16.67% (up from 12.5% and still below rates charged by states like Texas).
• Rental rates of $3/acre for the first two years, $5/acre for years 3-8, and no less than $15/acre for years 9-10 (raised from outdated 1987 rates set under President Reagan at $1.50/acre for years 1-5 and $2/acre for years 6-9).
• A minimum legal bid of $10/acre (increased from $2/acre, set in 1987).

• Updated bonding rates, which had not been adjusted since the 1950s and 1960s. This update better reflects market conditions and protects taxpayers from costly cleanup liabilities.
• More targeted leasing, directing sales to appropriate locations to help make auctions more competitive and ensure oil and gas production benefits taxpayers rather than just padding corporate balance sheets.

A recent TCS analysis of federal onshore lease sales in 2024 shows a strong fiscal case for maintaining critical updates to the onshore oil and gas leasing program. Across all states, lease sales last year had an average bid of $2,149 per acre, generating more than $164 million at auction. This high average bid underscores how recent reforms have improved the leasing process, leading to higher returns for federal and state taxpayers, as half of all revenue from the federal leasing program is shared with the state where the leasing occurs.

In New Mexico, lease sales under these updated terms have been highly competitive and raised significant revenue for the state. Average bids per acre for federal lease sales in New Mexico in 2023 and 2024 ­—roughly $21,500/acre and $27,200/acre, respectively— were the highest in over a decade and more than five times greater than the state’s average bid per acre in sales held between 2010 and 2020.

Prior to the changes enacted by Congress in 2022, taxpayers lost billions in potential revenue due to below-market royalty rates, particularly in states with significant oil and gas production like New Mexico. If the current royalty rate of 16.7%—instead of the outdated rate of 12.5%—had been applied to oil and gas production on federal lands in New Mexico from FY2013 to FY2022, taxpayers would have received an additional $5.4 billion in revenue.

Taxpayers have also faced substantial liabilities from under-bonded wells on federal land. Private entities leasing federal lands for oil and gas development are required to post a bond to cover the cost of land reclamation after production ends. However, outdated bonding requirements failed to account for rising cleanup costs, leaving taxpayers exposed to an estimated $1.05 billion in potential liabilities from producible wells in New Mexico at the end of FY2022.

New Mexico plays a vital role in domestic energy production, but ensuring its long-term benefits hinges on fiscally responsible management. Federal lands and their resources belong to American taxpayers. Continuing smart leasing practices in New Mexico and across the country is essential to ensuring fiscal accountability and protecting taxpayer dollars by properly valuing America’s natural resources.