The One Big Beautiful Bill (OBBB) takes aim at an often-overlooked feature of the federal regulatory state: the accumulation of fines, fees, and penalties that create a burdensome environment and stifle American opportunity. By reducing or eliminating some of these hidden costs, lawmakers have found a path to restore balance, lower compliance costs, and create a pro-growth climate for Americans.
By curtailing penalties and reducing fees that give regulations their enforcement mechanism, the OBBB effectively neutralizes programs that have raised costs and placed undue burdens on American citizens. The OBBB delivers regulatory relief by removing hidden costs from the economy and putting the American people first.
Penalties Do Not Promote Prosperity
Many federal regulations impose penalties, fines, and fees to ensure compliance. However, in some cases, the public benefit of the regulation is minimal, and the cost of compliance is high. The OBBB eliminates or reduces some of these penalties so drastically that the underlying programs lose their bite.
Six Ways the OBBB Reduce Fees and Lowers Costs for Americans
- CAFE Standards: The OBBB zeros out Corporate Average Fuel Economy (CAFE) penalties that imposed steep costs for automakers and drove up vehicle prices. The CAFE standards require auto manufacturers to meet minimum average fuel efficiency standards for vehicles. The minimum standard gradually increases over time at a rate beyond what manufacturers can reasonably achieve, driving up new vehicle costs by $7,200 for consumers. By removing penalties for non-compliance with CAFE standards, Congress prioritized consumer affordability while allowing innovation to continue without heavy-handed mandates.
- Suppressor Tax: For the last few decades, firearm owners faced a $200 transfer tax on suppressors. A suppressor is a device that can be mounted on a gun to reduce the sound of a gunshot. A suppressor does not completely silence the gunshot. Instead, it mitigates the muzzle blast to reduce noise pollution and help protect both the shooter’s ears and the faculties of those around them. This tax meant that every time someone transferred possession of a suppressor, they had to pay the $200 tax. Because of the way that suppressor transference works, this could add up to as much as $600 when transferring across state lines. The OBBB reduces that tax to zero, effectively eliminating this regulation and reducing compliance burdens for law-abiding citizens seeking a safer way to shoot.
- Land Nomination Fee: The Inflation Reduction Act (IRA) introduced a $5 per acre fee for energy developers to express interest in leasing federal land and nominate it for leasing. The OBBB removes this fee entirely, clearing the way for more energy projects, more investment, and more American jobs without unnecessary costs.
- Methane Penalty: The OBBB repealed an IRA provision that penalized methane emissions. The IRA enacted a penalty by imposing royalty payments on methane gas that was emitted or flared. Gas flaring is the process of burning off excess methane gas from oil and gas production. Flaring provides a safe way to dispose of toxic, flammable, and corrosive gases that cannot be released directly into the atmosphere in their original form. In the case of methane, flaring converts the methane into CO2 and water vapor which are much less toxic to the environment than the methane itself. Eliminating this fine disguised as a royalty payment helps encourage the development of energy production and reduce regulatory burdens.
- Mining Royalty Fees: Royalty rates can function as a financial penalty for energy production on U.S. land. They compound the burdens a producer already faces by adding an additional cost to the bid and rental payments already paid. The IRA raised royalty rates for energy production, adding substantial costs to mining projects and decreasing their potential profit. While the OBBB did not do away with these mining royalties entirely, it did restore them to their pre-IRA levels and reduced a de-facto tax for land and energy development.
- Onshore and Offshore Oil and Gas Royalty Fees: The IRA increased the royalty rates for onshore and offshore oil and gas production to a minimum rate of 16.67% and a cap of 18.75% for offshore leases. This provision also included a higher minimum of 20% for producers who failed to follow all relevant lease provisions, including climate reporting requirements. The OBBB puts onshore rates at their pre-IRA level of 12.5% and sets offshore royalty rates to between 12.5% and 16.67%. The higher royalty rate or fee for those who do not follow lease terms is also reduced back to 16.67%. These adjustments do not remove royalty payments entirely, but they do have a positive impact on economic growth by reducing the financial penalty for energy development.
Rolling Back Penalties, Promoting Growth
These examples highlight the One Big Beautiful Bill’s efforts to scale back the punitive side of federal regulation. By removing the teeth from outdated programs, it ensures that the regulatory state serves the public good rather than acting as a hidden tax on families and businesses.
These changes do more than reduce compliance costs. They fundamentally alter the incentive structure. When penalties disappear, a regulation’s power to punish is reduced and programs that once stifled economic activity fade into the background. This is an incredibly efficient way to dismantle costly rules while preserving accountability.
Policymakers should continue this work. The OBBB’s model for regulatory reform provides a successful and sustainable path for future reconciliation bills. Congress should build on the OBBB’s success and pursue reforms that reduce or eliminate penalties where they do not align with public benefit. The result will be a regulatory environment that is predictable and focused on promoting prosperity.
