HR-5638-119
Placed on the Union Calendar, Calendar No. 575.
Sponsored by Mike Kennedy (R-UT)
What it does
This bill would amend the Geothermal Steam Act of 1970 to require that royalties paid on federally leased geothermal resources be calculated separately for each individual electric generating facility, rather than on a per-lease basis. It would define a "geothermal electric generating facility" as a distinct unit unless it shares a turbine with another facility, and would reset the 10-year reduced royalty period (a lower rate for new production) to begin from each facility's individual "in-service date" — the date it begins operating — rather than from the start of the lease.
Who benefits
Geothermal energy developers and operators who add new generating units to existing leases, as each new facility would qualify for its own 10-year reduced royalty period. Investors in geothermal energy projects who would see improved financial returns on expansion. Utilities and electricity consumers in geothermal-heavy states (Nevada, California, Utah, Idaho) who may benefit from increased geothermal capacity. Domestic renewable energy supply chains that support geothermal construction and equipment manufacturing.
Who is hurt
The federal government and, by extension, U.S. taxpayers, who may receive lower royalty revenues if operators restructure or expand facilities to maximize access to reduced-rate periods. States that receive a share of federal geothermal royalties (typically 50% under existing law) could see reduced revenue distributions. Competing energy sources — including other renewables and natural gas — that do not receive equivalent royalty treatment on federal lands.
Supporters argue
Supporters argue that the current per-lease royalty structure penalizes operators who invest in expanding geothermal capacity on existing leases, because new generating units do not qualify for the reduced introductory royalty rate that new leases receive. They contend that resetting the 10-year period per facility would incentivize additional capital investment in geothermal energy — a reliable, baseload renewable source — on already-permitted federal land, accelerating domestic clean energy production without requiring new land disturbance.
Opponents argue
Opponents argue that allowing each new facility on an existing lease to reset the reduced royalty clock effectively extends a financial subsidy indefinitely, enabling operators to avoid paying full royalty rates on mature, profitable leases by continuously adding generating units. They contend this would reduce federal and state royalty revenues from public lands without a demonstrated need, since geothermal development has expanded under existing royalty structures, and that the public should receive fair market value for the use of publicly owned resources.
Constitutional context
This bill modifies royalty terms for federally owned resources under Congress's Property Clause authority (Art. IV, §3, cl. 2), which grants Congress broad power to manage and dispose of federal lands and resources. No active constitutional tension is implicated; this is a straightforward statutory modification of an existing federal leasing program.
Checks and balances
Congress sets royalty terms for federal geothermal leases; the Department of the Interior (Bureau of Land Management) administers and enforces the royalty collection system; the Office of Natural Resources Revenue audits payments and ensures compliance.
Historical precedent
The Energy Policy Act of 2005 previously modified the Geothermal Steam Act to establish the current two-tier royalty structure (lower rates for the first 10 years of production), which this bill would now recalibrate on a per-facility basis.