H.R. 5638, the Geothermal Royalty Reform Act, changes how royalty payments are calculated for companies that lease federal land to produce electricity from geothermal energy sources. Under current law, royalty rates depend on the total production from a lease over its first 10 years, but this bill shifts the calculation so that royalties are based on production from each individual electric generating facility, starting from the date that specific facility begins operating rather than the lease's overall start date. The bill defines a "geothermal electric generating facility" as a power plant with its associated equipment, such as turbines and cooling systems, and clarifies that separate facilities are treated individually for royalty purposes unless they share a turbine. This change primarily affects energy companies operating geothermal power plants on federal leases, potentially allowing new facilities built later on an existing lease to benefit from the lower introductory royalty rate for their own first 10 years of operation, rather than being subject to rates based on when the original lease began producing. The bill does not include new appropriations and would take effect upon enactment, applying to future royalty calculations under the Geothermal Steam Act of 1970.
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