Sec. 224. ROYALTIES AND NEAR-TERM PRODUCTION INCENTIVES
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## SEC. 224 ROYALTIES AND NEAR-TERM PRODUCTION INCENTIVES ###
(a)Royalty Section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 1004) is further amended— ####
(1)in subsection
(a)by striking paragraph
(1)and inserting the following: > > #### “(1) > > a royalty on electricity produced using geothermal resources, other than direct use of geothermal resources, that shall be— > > > ##### “(A) > > not less than 1 percent and not more than 2.5 percent of the gross proceeds from the sale of electricity produced from such resources during the first 10 years of production under the lease; and > > > ##### “(B) > > not less than 2 and not more than 5 percent of the gross proceeds from the sale of electricity produced from such resources during each year after such 10-year period;” > ; and ####
(2)by adding at the end the following: > > ### “(c) Final Regulation Establishing Royalty Rates > > In issuing any final regulation establishing royalty rates under this section, the Secretary shall seek— > > > #### “(1) > > to provide lessees a simplified administrative system; > > > #### “(2) > > to encourage new development; and > > > #### “(3) > > to achieve the same level of royalty revenues over a 10-year period as the regulation in effect on the date of enactment of this subsection. > > > ### “(d) Credits for In-Kind Payments of Electricity > > The Secretary may provide to a lessee a credit against royalties owed under this Act, in an amount equal to the value of electricity provided under contract to a State or county government that is entitled to a portion of such royalties under section 20 of this Act, section 35 of the Mineral Leasing Act (30 U.S.C. 191), except as otherwise provided by this section, or section 6 of the Mineral Leasing Act for Acquired Lands (30 U.S.C. 355), if— > > > #### “(1) > > the Secretary has approved in advance the contract between the lessee and the State or county government for such in-kind payments; > > > #### “(2) > > the contract establishes a specific methodology to determine the value of such credits; and > > > #### “(3) > > the maximum credit will be equal to the royalty value owed to the State or county that is a party to the contract and the electricity received will serve as the royalty payment from the Federal Government to that entity.” > . ###
(b)Disposal of Moneys From Sales, Bonuses, Royalties, and Rents Section 20 of the Geothermal Steam Act of 1970 (30 U.S.C. 1019) is amended to read as follows: > > ## “SEC. 20 DISPOSAL OF MONEYS FROM SALES, BONUSES, RENTALS, AND ROYALTIES > > > ### “(a) In General > > Except with respect to lands in the State of Alaska, all monies received by the United States from sales, bonuses, rentals, and royalties under this Act shall be paid into the Treasury of the United States. Of amounts deposited under this subsection, subject to the provisions of subsection
(b)of section 35 of the Mineral Leasing Act (30 U.S.C. 191(b)) and section 5(a)(2) of this Act— > > > #### “(1) > > 50 percent shall be paid to the State within the boundaries of which the leased lands or geothermal resources are or were located; and > > > #### “(2) > > 25 percent shall be paid to the county within the boundaries of which the leased lands or geothermal resources are or were located. > > > ### “(b) Use of Payments > > Amounts paid to a State or county under subsection
(a)shall be used consistent with the terms of section 35 of the Mineral Leasing Act (30 U.S.C. 191).” > . ###
(c)Near-Term Production Incentive for Existing Leases ####
(1)In general Notwithstanding section 5(a) of the Geothermal Steam Act of 1970, the royalty required to be paid shall be 50 percent of the amount of the royalty otherwise required, on any lease issued before the date of enactment of this Act that does not convert to new royalty terms under subsection (e)— #####
(A)with respect to commercial production of energy from a facility that begins such production in the 6-year period beginning on the date of enactment of this Act; or #####
(B)on qualified expansion geothermal energy. ####
(2)4-year application Paragraph
(1)applies only to new commercial production of energy from a facility in the first 4 years of such production. ###
(d)Definition of Qualified Expansion Geothermal Energy In this section, the term “**qualified expansion geothermal energy**” means geothermal energy produced from a generation facility for which— ####
(1)the production is increased by more than 10 percent as a result of expansion of the facility carried out in the 6-year period beginning on the date of enactment of this Act; and ####
(2)such production increase is greater than 10 percent of the average production by the facility during the 5-year period preceding the expansion of the facility (as such average is adjusted to reflect any trend in changes in production during that period). ###
(e)Royalty Under Existing Leases ####
(1)In general Any lessee under a lease issued under the Geothermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) before the date of enactment of this Act may, within the time period specified in paragraph (2), submit to the Secretary of the Interior a request to modify the terms of the lease relating to payment of royalties to provide— #####
(A)in the case of a lease that meets the requirements of subsection
(b)of section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 1004) (as amended by section 223), that royalties be based on the schedule of fees established under that section; and #####
(B)in the case of any other lease, that royalties be computed on a percentage of the gross proceeds from the sale of electricity, at a royalty rate that is expected to yield total royalty payments equivalent to payments that would have been received for comparable production under the royalty rate in effect for the lease before the date of enactment of this subsection. ####
(2)Timing A request for a modification under paragraph
(1)shall be submitted to the Secretary of the Interior by the date that is not later than— #####
(A)in the case of a lease for direct use, 18 months after the effective date of the schedule of fees established by the Secretary of the Interior under section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 1004); or #####
(B)in the case of any other lease, 18 months after the effective date of the final regulation issued under subsection (a). ####
(3)Application of modification If the lessee requests modification of a lease under paragraph (1)— #####
(A)the Secretary of the Interior shall, within 180 days after the receipt of the request for modification, modify the lease to comply with— ######
(i)in the case of a lease for direct use, the schedule of fees established by the Secretary under section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 1004); or ######
(ii)in the case of any other lease, the royalty for the lease established under paragraph (1)(B); and #####
(B)the modification shall apply to any use of geothermal resources to which subsection
(a)applies that occurs after the date of the modification. ####
(4)Consultation The Secretary of the Interior shall consult with the State and local governments affected by any proposed changes in lease royalty terms under this subsection.
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Sec. 224
ROYALTIES AND NEAR-TERM PRODUCTION INCENTIVES
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