"The shift stems from the sweeping law President Donald Trump signed in July that rolls back the minimum federal royalty rate to 12.5%. That rate - the share of production value companies must pay to the government - held steady for a century under the 1920 Mineral Leasing Act. It was raised to 16.7% under the Biden administration in 2022."
"States receive nearly half the money collected through federal royalties, depending on where production takes place. The environment and economics research group Resources for the Future estimates a roughly $6 billion drop in collections over the coming decade. The stakes are highest in New Mexico, the largest recipient of federal mineral lease payments. The state could could forgo $1.7 billion by 2035 and as much as $5.1 billion by 2050, according to calculations by economist Brian Prest at Resources for the Future."
Federal law rollback reduces the minimum federal royalty rate to 12.5% from the 16.7% level set in 2022, restoring the century-old 12.5% baseline under the 1920 Mineral Leasing Act. States receive nearly half of federal royalty collections, so lower rates translate into significant revenue losses nationwide. Estimates project about a $6 billion decline in federal collections over the next decade, with New Mexico facing the largest state-level losses — roughly $1.7 billion by 2035 and potentially $5.1 billion by 2050. The revenue reduction will gradually affect budgets because leases allow a 10-year window to begin production, and could strain funding for early childhood education, savings, Medicaid, and mental health programs.
Read at Fast Company
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