Place rice in medium bowl and add enough water to cover by 2 inches. Gently swish to release starch. Pour off water. Repeat 4–5 times until water runs almost clear. Drain using fine mesh strainer.
Bring 2¾ cups water to boil covered in small saucepan. Add salt and pepper, cover to keep hot.
Heat butter in large saucepan over medium-high heat until foam begins to subside. Add onion and sauté until softened but not browned, about 4 minutes.
Add rice and stir to coat grains with butter. Cook until edges of rice grains begin to turn translucent, about 3 minutes.
Stir hot seasoned water into rice, return to boil, then reduce heat to low, cover, and simmer until all liquid is absorbed, about 16–18 minutes.
Off heat, remove lid and place a folded kitchen towel over saucepan, replace lid. Let stand 10 minutes, then fluff rice with fork and serve.