Geothermal Royalty Reform Act

H.R. 5638: Geothermal Royalty Reform Act

Overview

The Geothermal Royalty Reform Act is a bill introduced in the U.S. House of Representatives on September 30, 2025. The bill aims to update the federal regulations governing the royalty payments for geothermal energy production on public lands.

Key Provisions

The main provisions of the Geothermal Royalty Reform Act include:

1. Royalty Rate Adjustment: The bill would direct the Secretary of the Interior to adjust the federal royalty rate for geothermal energy production from the current 1.75% to a new rate of 2.5% of the gross proceeds.

2. Revenue Sharing: The legislation would change the revenue sharing formula for geothermal royalties. Currently, 50% of the royalties go to the states where the production occurs, 40% to the federal government, and 10% to a special fund. The bill would increase the state share to 60% and reduce the federal government's share to 30%.

3. Geothermal Lease Extensions: The bill would extend the standard geothermal lease term from 10 years to 20 years, with the possibility of further 10-year renewals.

4. Rental Fee Adjustments: The legislation would adjust the annual rental fees for geothermal leases, increasing the fee from $1 per acre to $3 per acre in the first 10 years, and $5 per acre for any subsequent renewal periods.

Potential Impact

The Geothermal Royalty Reform Act is intended to provide the following benefits:

• Increased Revenue for States: By increasing the state share of geothermal royalties, this bill would provide more funding for state-level initiatives and programs related to geothermal energy development.

• Longer-Term Lease Stability: The extended lease terms and renewal options are expected to encourage greater investment and development of geothermal resources on public lands.

• Modernized Royalty Rates: Adjusting the federal royalty rate from 1.75% to 2.5% aims to ensure a fairer return to taxpayers for the use of publicly-owned geothermal resources.

Overall, the Geothermal Royalty Reform Act is designed to promote the growth and utilization of geothermal energy on federal lands by updating the regulatory and financial framework governing this renewable energy source.