The One Big Beautiful Bill (OBBB) marks a major win for Texas energy producers and independent oil and gas operators across the country. By establishing a streamlined permitting process, rolling back costly regulations, and restoring certainty to federal leasing, this legislation ushers in a new era of American energy dominance.

As the epicenter of oil and natural gas, many of these changes will directly impact Texas operators and the expansion of energy infrastructure projects to meet growing demand. Here’s what you need to know.

Permitting

The OBBB streamlines permitting for federal energy projects and restores certainty to the LNG export approval process. A new “permit-by-rule” system cuts red tape and delays for onshore development, while reforms at the Department of Energy ensure timely decisions on LNG export authorizations. These permitting wins lay the groundwork for faster project approvals at a time when meeting growing energy demand is critical, particularly in Texas, as it expands its role in powering global markets.

Federal Land Access

OBBB also mandates consistent offshore and onshore leasing access — a historic expansion of energy production on federal lands and waters. The bill requires at least 30 offshore lease auctions in the Gulf of America through 2039, and more than 30 lease sales per year across nine key energy producing states, including New Mexico, a key partner in the Permian Basin. Further, many of the most prominent operators in New Mexico and the Gulf of America are headquartered in Texas.

To streamline development in federal lands, the bill eliminates the Expression of Interest Fee, lowering the barriers to nominating parcels for development.

These changes guarantee Texas producers consistent access to energy resources, helping secure long-term investments and job creation. The legislation also reduces royalty rates for federal onshore leases, reversing IRA-era increases and encouraging new development by lowering operational costs.

OBBB also restores pre-IRA royalty rates for offshore leases to 12.5%, down from the IRA-inflated 16.67%, reducing the cost burden for operators and making U.S. waters more competitive with global markets. With new flexibility around offshore commingling, companies can streamline production and reduce infrastructure costs, further boosting efficiency in the Gulf.

Separately, operators in New Mexico, Wyoming, and North Dakota are closely monitoring the Bureau of Land Management’s next steps to allow commingling across different types of mineral ownership—a move expected to significantly reduce operational costs while increasing flexibility and production.

Carbon Capture & Sequestration

For operators pursuing Carbon Capture & Sequestration (CCS) projects, the law enhances tax incentives for related technologies, especially when paired with enhanced oil recovery (EOR), allowing operators to reduce emissions while boosting production. The Texas Railroad Commission is also currently driving efforts to become the key permit issuer for these wells, helping with the deployment of class VI wells in the state.

Separately, operators in New Mexico, Wyoming, and North Dakota are closely monitoring the Bureau of Land Management’s next steps to allow commingling across different types of mineral ownership—a move expected to significantly reduce operational costs while increasing flexibility and production.

Methane Fee

One of the more significant developments for Texas energy producers is the 10-year pause on the federal methane emissions tax, which had been set to take effect under the Inflation Reduction Act. This pause represents an opportunity for industry to build on existing progress without the added burden of a costly, one-size fits all mandate.

While there have been differing views among producers on the long-term viability of a methane tax, the industry is united in their commitment to reduce emissions. This commitment is reflected in consistent emissions reductions across the Permian Basin and United States – clear evidence of responsible and efficient production practices.

Reasonable, cost-effective tax and regulatory policies are essential to driving investment, fostering innovation and supporting economic growth. The pause reinforces a path forward that prioritizes practical industry-led solutions and allows continued progress without sacrificing energy or economic security in the long run.

Wind and Solar

Where OBBB gives, it also takes away—particularly from the wind and solar industries. The bill accelerates the phase-out of key federal tax credits, including the Production Tax Credit (PTC) and Investment Tax Credit (ITC). Projects must now begin construction within 12 months and enter service by the end of 2027 to qualify. For developers, that’s a challenging timeline for utility-scale builds.

The bill includes stringent domestic content requirements, meaning that to qualify for tax credits, projects must use a certain percentage of materials and components—such as steel, iron, or manufactured products—that are manufactured in America. Additionally, the bill prohibits tax credits for projects that use components sourced from countries labeled as "Foreign Entities of Concern," such as China. These content rules will function as de facto disqualifiers for most wind and solar projects given the current global supply chain realities.

Leasing and financing rules have also been tightened. The bill eliminates eligibility for solar leasing structures and third-party ownership models—popular financing methods for residential and commercial solar. It also repeals five-year accelerated depreciation for renewable energy assets. In aggregate, these measures gut the financial underpinnings of new renewable projects.

EVs and Geothermal

The bill repeals all EV-related tax credits—both for consumers and manufacturers. New EVs will no longer qualify for up to $7,500 in incentives after September 2025, and charging station credits will end the following year.

Geothermal, while not subject to the same restrictions as wind and solar, is still impacted indirectly. Many geothermal projects rely on tax incentives like the Investment Tax Credit (ITC) and 45Q for enhanced systems. As these credits are phased out or tied to domestic content rules, geothermal’s already limited growth trajectory faces even greater uncertainty.

The Big Picture

OBBB signals a shift toward a more balanced regulatory environment that supports long-term production and reinforces the vital role of oil and gas in U.S. energy independence. By restoring regulatory certainty and supporting domestic industry, it paves the way for a strong future for oil and gas producers in Texas and nationwide.