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SEC. 254. REPORT.
Not later than 3 years after the date of enactment of
this Act, the Secretary of Agriculture and the Secretary of
the Interior shall jointly submit to Congress a report that
describes the interim results of the programs carried out
under sections 232 and 233.
Subtitle F—Geothermal Energy
SEC. 261. COMPETITIVE LEASE SALE REQUIREMENTS.
Section 4 of the Geothermal Steam Act of 1970 (30
U.S.C. 1003) is amended to read as follows:
‘‘SEC. 4. LEASING PROCEDURES.
‘‘(a) NOMINATIONS.—The Secretary shall accept nomi-
nations of land to be leased at any time from qualified com-
panies and individuals under this Act.
‘‘(b) COMPETITIVE LEASE SALE REQUIRED.—
‘‘(1) IN GENERAL.—Except as otherwise specifi-
cally provided by this Act, all land to be leased that
is not subject to leasing under subsection (c) shall be
leased as provided in this subsection to the highest re-
sponsible qualified bidder, as determined by the Sec-
retary.
‘‘(2) COMPETITIVE LEASE SALES.—The Secretary
shall hold a competitive lease sale at least once every
2 years for land in a State that has nominations
pending under subsection (a) if the land is otherwise
available for leasing.
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‘‘(c) NONCOMPETITIVE LEASING.—The Secretary shall
make available for a period of 2 years for noncompetitive
leasing any tract for which a competitive lease sale is held,
but for which the Secretary does not receive any bids in
a competitive lease sale.
‘‘(d) PENDING LEASE APPLICATIONS.—
‘‘(1) IN GENERAL.—It shall be a priority for the
Secretary, and for the Secretary of Agriculture with
respect to National Forest Systems land, to ensure
timely completion of administrative actions necessary
to process applications for geothermal leasing pending
on May 19, 2005.
‘‘(2) 
ADMINISTRATION.—An 
application 
de-
scribed in paragraph (1) and any lease issued pursu-
ant to the application—
‘‘(A) except as provided in subparagraph
(B), shall be subject to this section as in effect on
the day before the date of enactment of this para-
graph; or
‘‘(B) at the election of the applicant, shall
be subject to this section as in effect on the effec-
tive date of this paragraph.’’.
SEC. 262. DIRECT USE.
(a) FEES FOR DIRECT USE.—Section 5 of the Geo-
thermal Steam Act of 1970 (30 U.S.C. 1004) is amended—
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(1) in subsection (c), by redesignating para-
graphs (1) and (2) as subparagraphs (A) and (B), re-
spectively;
(2) by redesignating subsections (a) through (d)
as paragraphs (1) through (4), respectively;
(3) by inserting ‘‘(a) IN GENERAL.—’’ after
‘‘SEC. 5.’’; and
(4) by adding at the end the following:
‘‘(d) DIRECT USE.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a)(1), the Secretary shall establish a schedule of fees,
in lieu of royalties for geothermal resources, that a
lessee or its affiliate—
‘‘(A) uses for a purpose other than the com-
mercial generation of electricity; and
‘‘(B) does not sell.
‘‘(2) SCHEDULE
OF
FEES.—The schedule of
fees—
‘‘(A) may be based on the quantity or ther-
mal content, or both, of geothermal resources
used or any other basis that the Secretary finds
appropriate under the circumstances; and
‘‘(B) shall ensure a fair return to the
United States for use of the resource.
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‘‘(3) STATE
OR
LOCAL
GOVERNMENTS.—If a
State or local government is the lessee and uses geo-
thermal resources without sale and for purposes other
than commercial generation of electricity, the Sec-
retary shall charge only a nominal fee for use of the
resource.’’.
(b) LEASING FOR DIRECT USE.—Section 4 of the Geo-
thermal Steam Act of 1970 (30 U.S.C. 1003) (as amended
by section 241) is amended adding at the end the following:
‘‘(e) LEASING FOR DIRECT USE OF GEOTHERMAL RE-
SOURCES.—Notwithstanding subsection (b), the Secretary
may identify areas in which the land to be leased under
this Act exclusively for direct use of geothermal resources
without sale for purposes other than commercial generation
of electricity may be leased to any qualified applicant that
first applies for such a lease under regulations issued by
the Secretary, if the Secretary—
‘‘(1) publishes a notice of the land proposed for
leasing not later than 120 days before the date of the
issuance of the lease;
‘‘(2) does not receive during the 120-day period
beginning on the date of the publication any nomina-
tion to include the land concerned in the next com-
petitive lease sale; and
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‘‘(3) determines there is no competitive interest
in the land to be leased.
‘‘(f) AREA SUBJECT TO LEASE FOR DIRECT USE.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), a
geothermal lease for the direct use of geothermal re-
sources shall cover not more than the quantity of
acreage determined by the Secretary to be reasonably
necessary for the proposed use.
‘‘(2) LIMITATIONS.—The quantity of acreage cov-
ered by the lease shall not exceed the limitations es-
tablished under section 7.’’.
SEC. 263. ROYALTIES.
(a) CALCULATION OF ROYALTIES.—
(1) IN GENERAL.—Not later than 1 year after
the date of enactment of this Act, the Secretary of the
Interior shall issue a final regulation that provides a
simplified methodology for calculating the royalty
under subsection (a)(1) of section 5 of the Geothermal
Steam Act of 1970 (30 U.S.C. 1004) (as amended by
section 242(a)).
(2) CONSIDERATIONS.—In issuing the final regu-
lation under paragraph (1), the Secretary shall—
(A) consider the use of a method based on
gross proceeds from the sale of electricity; and
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(B) ensure that the final regulation issued
under paragraph (1) results in the same level of
royalty revenues over a 10-year period as the
regulation in effect on the day before the date of
enactment of this Act.
(b) 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 comply with—
(A) in the case of a lease that meets the re-
quirements of subsection (b) of section 5 of the
Geothermal Steam Act of 1970 (30 U.S.C. 1004)
(as amended by section 242(a)), the schedule of
fees established under that section; and
(B) in the case of any other lease, the meth-
odology established under subsection (a).
(2) TIMING.—A request for a modification under
paragraph (1) shall be submitted to the Secretary 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
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fees established by the Secretary 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 regula-
tion issued under subsection (a).
(3) APPLICATION OF MODIFICATION.—If the les-
see requests modification of a lease under paragraph
(1)—
(A) the Secretary shall modify the lease to
comply with—
(i) in the case of a lease for direct use,
the schedule of fees established by the Sec-
retary 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
methodology established under subsection
(a); and
(B) the modification shall apply to any use
of geothermal steam and any associated geo-
thermal resources to which subsection (a) applies
that occurs after the date of the modification.
(4) CONSULTATION.—The Secretary shall consult
with the State and local governments affected by any
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proposed changes in lease royalty terms under this
subsection.
SEC. 264. GEOTHERMAL LEASING AND PERMITTING ON
FEDERAL LAND.
(a) IN GENERAL.—Not later than 180 days after the
date of enactment of this section, the Secretary of the Inte-
rior and the Secretary of Agriculture shall enter into, and
submit to Congress, a memorandum of understanding in
accordance with this section regarding leasing and permit-
ting for geothermal development of public land and Na-
tional Forest System land under the respective jurisdictions
of the Secretaries.
(b) LEASE AND PERMIT APPLICATIONS.—The memo-
randum of understanding shall—
(1) identify areas with geothermal potential on
land included in the National Forest System and, if
necessary, require review of management plans to
consider leasing under the Geothermal Steam Act of
1970 (30 U.S.C. 1001 et seq.) as a land use; and
(2) establish an administrative procedure for
processing geothermal lease applications, including
lines of authority, steps in application processing,
and time limits for application processing.
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(c) DATA RETRIEVAL SYSTEM.—The memorandum of
understanding shall establish a joint data retrieval system
that—
(1) is capable of tracking lease and permit ap-
plications; and
(2) provides to the applicant information as to
the status of an application within the Departments
of the Interior and Agriculture, including an estimate
of the time required for administrative action.
SEC. 265. ASSESSMENT OF GEOTHERMAL ENERGY POTEN-
TIAL.
Not later than 3 years after the date of enactment of
this Act and thereafter as the availability of data and devel-
opments in technology warrants, the Secretary of the Inte-
rior, acting through the Director of the United States Geo-
logical Survey and in cooperation with the States, shall—
(1) update the Assessment of Geothermal Re-
sources made during 1978; and
(2) submit to Congress the updated assessment.
SEC. 266. COOPERATIVE OR UNIT PLANS.
Section 18 of the Geothermal Steam Act of 1970 (30
U.S.C. 1017) is amended to read as follows:
‘‘SEC. 18. UNIT AND COMMUNITIZATION AGREEMENTS.
‘‘(a) ADOPTION OF UNITS BY LESSEES.—
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‘‘(1) IN
GENERAL.—For the purpose of more
properly conserving the natural resources of any geo-
thermal reservoir, field, or like area, or any part
thereof (whether or not any part of the geothermal
reservoir, field, or like area, is subject to any coopera-
tive plan of development or operation (referred to in
this section as a ‘unit agreement’)), lessees thereof and
their representatives may unite with each other, or
jointly or separately with others, in collectively adopt-
ing and operating under a unit agreement for the res-
ervoir, field, or like area, or any part thereof, includ-
ing direct use resources, if determined and certified
by the Secretary to be necessary or advisable in the
public interest.
‘‘(2) MAJORITY INTEREST OF SINGLE LEASES.—
A majority interest of owners of any single lease shall
have the authority to commit the lease to a unit
agreement.
‘‘(3) INITIATIVE OF SECRETARY.—The Secretary
may also initiate the formation of a unit agreement,
or require an existing Federal lease to commit to a
unit agreement, if in the public interest.
‘‘(4) MODIFICATION
OF
LEASE
REQUIREMENTS
BY SECRETARY.—
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‘‘(A) IN GENERAL.—The Secretary may, in
the discretion of the Secretary and with the con-
sent of the holders of leases involved, establish,
alter, change, or revoke rates of operations (in-
cluding drilling, operations, production, and
other requirements) of the leases and make condi-
tions with respect to the leases, with the consent
of the lessees, in connection with the creation and
operation of any such unit agreement as the Sec-
retary may consider necessary or advisable to se-
cure the protection of the public interest.
‘‘(B) UNLIKE
TERMS
OR
RATES.—Leases
with unlike lease terms or royalty rates shall not
be required to be modified to be in the same unit.
‘‘(b) 
REQUIREMENT
OF
PLANS
UNDER
NEW
LEASES.—The Secretary may—
‘‘(1) provide that geothermal leases issued under
this Act shall contain a provision requiring the lessee
to operate under a unit agreement; and
‘‘(2) prescribe the unit agreement under which
the lessee shall operate, which shall adequately protect
the rights of all parties in interest, including the
United States.
‘‘(c) MODIFICATION OF RATE OF PROSPECTING, DE-
VELOPMENT, AND PRODUCTION.—The Secretary may re-
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quire that any unit agreement authorized by this section
that applies to land owned by the United States contain
a provision under which authority is vested in the Sec-
retary, or any person, committee, or State or Federal officer
or agency as may be designated in the unit agreement to
alter or modify, from time to time, the rate of prospecting
and development and the quantity and rate of production
under the unit agreement.
‘‘(d) EXCLUSION FROM DETERMINATION OF HOLDING
OR CONTROL.—Any land that is subject to a unit agreement
approved or prescribed by the Secretary under this section
shall not be considered in determining holdings or control
under section 7.
‘‘(e) POOLING OF CERTAIN LAND.—If separate tracts
of land cannot be independently developed and operated to
use geothermal steam and associated geothermal resources
pursuant to any section of this Act—
‘‘(1) the land, or a portion of the land, may be
pooled with other land, whether or not owned by the
United States, for purposes of development and oper-
ation under a communitization agreement providing
for an apportionment of production or royalties
among the separate tracts of land comprising the pro-
duction unit, if the pooling is determined by the Sec-
retary to be in the public interest; and
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‘‘(2) operation or production pursuant to the
communitization agreement shall be treated as oper-
ation or production with respect to each tract of land
that is subject to the communitization agreement.
‘‘(f) UNIT AGREEMENT REVIEW.—
‘‘(1) IN GENERAL.—Not later than 5 years after
the date of approval of any unit agreement and at
least every 5 years thereafter, the Secretary shall—
‘‘(A) review each unit agreement; and
‘‘(B) after notice and opportunity for com-
ment, eliminate from inclusion in the unit agree-
ment any land that the Secretary determines is
not reasonably necessary for unit operations
under the unit agreement.
‘‘(2) BASIS FOR ELIMINATION.—The elimination
shall—
‘‘(A) be based on scientific evidence; and
‘‘(B) occur only if the elimination is deter-
mined by the Secretary to be for the purpose of
conserving and properly managing the geo-
thermal resource.
‘‘(3) EXTENSION.—Any land eliminated under
this subsection shall be eligible for an extension under
section 6(g) if the land meets the requirements for the
extension.
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‘‘(g) DRILLING OR DEVELOPMENT CONTRACTS.—
‘‘(1) IN GENERAL.—The Secretary may, on such
conditions as the Secretary may prescribe, approve
drilling or development contracts made by 1 or more
lessees of geothermal leases, with 1 or more persons,
associations, or corporations if, in the discretion of
the Secretary, the conservation of natural resources or
the public convenience or necessity may require or the
interests of the United States may be best served by
the approval.
‘‘(2) HOLDINGS OR CONTROL.—Each lease oper-
ated under an approved drilling or development con-
tract, and interest under the contract, shall be ex-
cepted in determining holdings or control under sec-
tion 7.
‘‘(h) COORDINATION WITH STATE GOVERNMENTS.—
The Secretary shall coordinate unitization and pooling ac-
tivities with appropriate State agencies.’’.
SEC. 267. ROYALTY ON BYPRODUCTS.
Section 5 of the Geothermal Steam Act of 1970 (30
U.S.C. 1004) (as amended by section 242(a)) is amended
in subsection (a) by striking paragraph (2) and inserting
the following:
‘‘(2) a royalty on any byproduct that is a min-
eral specified in the first section of the Mineral Leas-
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ing Act (30 U.S.C. 181), and that is derived from
production under the lease, at the rate of the royalty
that applies under that Act to production of the min-
eral under a lease under that Act;’’.
SEC. 268. LEASE DURATION AND WORK COMMITMENT RE-
QUIREMENTS.
Section 6(i) of the Geothermal Steam Act of 1970 (30
U.S.C. 1005(i)) is amended by striking paragraph (2) and
inserting the following:
‘‘(2) The Secretary shall, by regulation, establish pay-
ments under this subsection at levels that ensure the diligent
development of the lease.’’.
SEC. 269. ANNUAL RENTAL.
(a) ANNUAL RENTAL RATE.—Section 5 of the Geo-
thermal Steam Act of 1970 (30 U.S.C. 1004) (as amended
by section 242(a)) is amended in subsection (a) by striking
paragraph (3) and inserting the following:
‘‘(3) payment in advance of an annual rental of
not less than—
‘‘(A) for each of the first through tenth years
of the lease—
‘‘(i) in the case of a lease awarded in
a noncompetitive lease sale, $1 per acre or
fraction thereof; or
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‘‘(ii) in the case of a lease awarded in
a competitive lease sale, $2 per acre or frac-
tion thereof for the first year and $3 per
acre or fraction thereof for each of the sec-
ond through 10th years; and
‘‘(B) for each year after the 10th year of the
lease, $5 per acre or fraction thereof;’’.
(b) TERMINATION OF LEASE FOR FAILURE TO PAY
RENTAL.—Section 5 of the Geothermal Steam Act of 1970
(30 U.S.C. 1004) (as amended by section 242(a)) is amend-
ed by adding at the end the following:
‘‘(c) TERMINATION OF LEASE FOR FAILURE TO PAY
RENTAL.—
‘‘(1) IN GENERAL.—The Secretary shall termi-
nate any lease with respect to which rental is not
paid in accordance with this Act and the terms of the
lease under which the rental is required, on the expi-
ration of the 45-day period beginning on the date of
the failure to pay the rental.
‘‘(2) 
NOTIFICATION.—The 
Secretary 
shall
promptly notify a lessee that has not paid rental re-
quired under the lease that the lease will be termi-
nated at the end of the period referred to in para-
graph (1).
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‘‘(3) REINSTATEMENT.—A lease that would oth-
erwise terminate under paragraph (1) shall not ter-
minate under that paragraph if the lessee pays to the
Secretary, before the end of the period referred to in
paragraph (1), the amount of rental due plus a late
fee equal to 10 percent of the amount.’’.
SEC. 270. ADVANCED ROYALTIES REQUIRED FOR CES-
SATION OF PRODUCTION.
Section 5 of the Geothermal Steam Act of 1970 (30
U.S.C. 1004) (as amended by section 249(b)) is amended
by adding at the end the following:
‘‘(d) ADVANCED ROYALTIES REQUIRED
FOR CES-
SATION OF PRODUCTION.—
‘‘(1) IN GENERAL.—Subject to paragraphs (2)
and (3), if, at any time after commercial production
under a lease is achieved, production ceases for any
reason, the lease shall remain in full force and effect
for a period of not more than an aggregate number
of 10 years beginning on the date production ceases,
if, during the period in which production is ceased,
the lessee pays royalties in advance at the monthly
average rate at which the royalty was paid during
the period of production.
‘‘(2) REDUCTION.—The amount of any produc-
tion royalty paid for any year shall be reduced (but