NEW ORLEANS – Anthony “Tony” Marino, a Member with Gordon Arata specializing in energy transactions and regulatory matters, explains the major provisions of the “One Big Beautiful Bill Act” (OBBBA), the new law signed by President Trump on July 4.
The legislation aims to dramatically expand oil and gas production in the United States, both on federal lands and offshore, by increasing oil and gas leasing, reducing costs for energy companies, and speeding up environmental reviews—changes with significant implications for Louisiana’s energy sector.
Federal Land Lease Auctions
Under OBBBA, the government is required to hold auctions every three months to lease federal land for oil and gas drilling in certain states. “Each fiscal year, the Secretary of the Interior must conduct at least four lease sales in certain states, including Wyoming, New Mexico, Colorado, Utah, Montana, North Dakota, Oklahoma, Nevada, and Alaska,” explains Marino.
If no one bids on a parcel of land during a lease auction, OBBBA requires the government to offer the leasing rights again without competitive bidding, which makes it easier for companies to acquire those rights more cheaply.
Offshore Leasing Expands Under OBBBA
OBBBA also mandates significant offshore leasing activity. Offshore, there must be at least 30 oil and gas lease sales in the Gulf over the next 15 years, with large areas of offshore drilling rights offered each time.
“Each lease sale must offer a minimum of 80 million acres, assuming sufficient unleased acreage is available,” said Marino.
Under OBBBA, companies drilling offshore can also now combine oil and gas from different underground layers in one well, in a process called “downhole commingling,” unless it is proven unsafe or wasteful.
“OBBBA mandates approval of applications for downhole commingling of production from multiple reservoirs in a single wellbore in the Gulf,” said Marino.
This change allows oil and gas companies to save money and boost production.
Louisiana in Line for Greater Share of Revenue
OBBBA increases the share of revenue that Gulf Coast states receive from offshore oil and gas operations.
Historically, oil and gas companies pay the federal government for drilling rights and production in the Gulf, and a portion of that money is shared with Gulf Coast states to help fund projects like coastal restoration and hurricane protection. The annual cap on how much these states could receive was previously set at $500 million, but OBBBA raises that limit to $650 million per year through 2035, allowing states like Louisiana to gain more from offshore oil and gas activity.
In addition, OBBBA reduces the royalties that companies pay to the government when drilling on federal lands and waters, lowering them from about 16.67% to 12.5%. This change is intended to encourage more drilling activity.
“This reduces the minimum royalty rates for both onshore and offshore oil and gas leases on federal lands to 12.5%, reversing the increases implemented under the Inflation Reduction Act, which had raised rates to 16.67%,” said Marino. “This lower royalty rate is designed to incentivize greater investment in oil and gas development by reducing operational costs associated with federal leases.”
Accelerated Environmental Reviews
Large energy projects usually have to go through detailed environmental studies, which can take years. Under OBBBA, federal agencies are required to complete these reviews much faster—in about six months for Environmental Assessments (EAs) and one year for Environmental Impact Statements (EISs).
“The goal of these accelerated timelines is to streamline the regulatory process, reduce delays, and expedite approvals for energy projects, ensuring quicker project execution while still addressing environmental considerations effectively,” said Marino.
OBBBA also allows companies to pay additional fees to guarantee that federal agencies complete environmental reviews within the required timeframes.
About Gordon Arata
At Gordon Arata , we thoroughly understand our clients’ business and are skilled problem solvers. We represent savvy clients across a wide array of industries. Prominent among these are energy, , banking & finance, chemical & industrial, construction, real estate, telecommunications and public utilities. With offices strategically located in Louisiana and Texas, we continue to evolve to meet the demands of our clients across the Gulf Coast and beyond.
The firm’s energy expertise has taken it from Louisiana and Texas to the Outer Continental Shelf (GOA, Pacific & Alaska OCS Regions) and the North Slope of Alaska to the Tilodiran and Boral fields of Colombia to the Bass Straits of Australia. We’re in our element as one of the Gulf Coast’s premier oil, gas, and energy firms.
