‘‘(1) the Secretary publishes a notice of the 
lands proposed for leasing at least 60 days before 
the date of the issuance of the lease; and
‘‘(2) the Secretary does not receive in the 60-
day period beginning on the date of such publication 
any nomination to include the lands concerned in the 
next competitive lease sale.’’. 
(b) LIMITATION ON LEASE AREA.—Section 7 of the 
Geothermal Steam Act of 1970 (30 U.S.C. 1006) is 
amended—
(1) in the first sentence by striking ‘‘A geo-
thermal lease’’ and inserting ‘‘(a) IN GENERAL.—
Except as provided in subsection (b), a geothermal 
lease’’; and 
(2) by adding at the end the following: 
‘‘(b) LEASING FOR DIRECT USE OF GEOTHERMAL 
RESOURCES.—A geothermal lease for qualified develop-
ment and direct utilization of geothermal resources shall 
embrace not more than the minimum amount of acreage 
determined by the Secretary to be reasonably necessary 
for such utilization.’’. 
(c) ANNUAL PAYMENT.—Section 5 of the Geothermal 
Steam Act of 1970 (30 U.S.C. 1004) is amended—
(1) in paragraph (c) by redesignating subpara-
graphs (1) and (2) as subparagraphs (A) and (B);
(2) by redesignating paragraphs (a) through (d) 
in order as paragraphs (1) through (4); 
(3) by inserting ‘‘(a) IN GENERAL.—’’ after 
‘‘SEC. 5’’; and 
(4) by adding at the end the following: 
‘‘(b) EXEMPTION FOR DIRECT USE OF GEOTHERMAL 
RESOURCES.—
‘‘(1) IN GENERAL.—In lieu of any royalty or 
rental under subsection (a), a lease for qualified de-
velopment and direct utilization of geothermal re-
sources shall provide for payment by the lessee of an 
annual fee per well of not less than $100, and not 
more than $1,000, in accordance with the schedule 
issued under paragraph (2). 
‘‘(2) SCHEDULE.—The Secretary shall issue a 
schedule of fees under this section under which a fee 
is based on the scale of development and utilization 
to which the fee applies.’’. 
(d) DEFINITIONS.—Section 2 of the Geothermal 
Steam Act of 1970 (30 U.S.C. 1001) is amended—
(1) in paragraph (f) by redesignating subpara-
graphs (1) through (4) in order as subparagraphs 
(A) through (D); 
(2) by redesignating paragraphs (a) through (f) 
in order as paragraphs (1) through (6); and
(3) by adding at the end the following: 
‘‘(7) DIRECT
USE
OF
GEOTHERMAL
RE-
SOURCES.—The term ‘direct use of geothermal re-
sources’ means utilization of the heat from a geo-
thermal resource for commercial, residential, agricul-
tural, or other energy needs, other than the commer-
cial production of electricity. 
‘‘(8) GEOTHERMAL RESOURCE.—The term ‘geo-
thermal resource’ means a subsurface reservoir of 
hot water or steam.’’. 
(e) EXISTING LEASES.—
(1) APPLICATION
TO
CONVERT.—Any lessee 
under a lease under the Geothermal Steam Act of 
1970 that was issued before the date of the enact-
ment of this Act may apply to the Secretary of the 
Interior, by not later than 18 months after the date 
of the enactment of this Act, to convert such lease 
to a lease for qualified development and direct utili-
zation of geothermal resources in accordance with 
the amendments made by this section. 
(2) CONVERSION.—The Secretary shall approve 
such an application and convert such a lease to a 
lease in accordance with the amendments by not 
later than 180 days after receipt of such application,
unless the Secretary determines that the applicant is 
not a qualified applicant with respect to the lease. 
(3) APPLICATION OF NEW LEASE TERMS.—The 
amendments made by subsection (c) shall apply with 
respect to payments under a lease converted under 
this subsection that are due and owning to the 
United States on or after July 16, 2003.
SEC. 4. ROYALTIES AND NEAR-TERM PRODUCTION INCEN-
TIVES. 
(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 geo-
thermal steam and associated geothermal resources, 
other than direct use of geothermal resources, that 
shall be—
‘‘(A) 1.75 percent of the gross proceeds 
from the sale of electricity produced from such 
resources during the first 10 years of produc-
tion under the lease; and 
‘‘(B) 3.5 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) TREATMENT OF STATE AND COUNTY SHARES 
OF ROYALTIES.—
‘‘(1) STATE
SHARE.—Notwithstanding section 
20 of this Act, section 35 of the Mineral Leasing 
Act (30 U.S.C. 191), or section 6 of the Mineral 
Leasing Act for Acquired Lands (30 U.S.C. 355), in 
the case of monies received by the United States as 
royalty under subsection (a)(1)(A) with respect to a 
electricity produced in a County in a State under a 
geothermal lease—
‘‘(A) the percentage required to be paid by 
the Secretary of the Treasury to the State shall 
be 75 percent; and 
‘‘(B) the percentage required to be paid by 
the Secretary of the Treasury to the County 
shall be 25 percent. 
‘‘(2) CREDITS
FOR
IN-KIND
PAYMENTS
OF 
ELECTRICITY.—The Secretary may provide to a les-
see a credit against royalties owed under this Act, 
in an amount equal to the value of electricity pro-
vided under contract to a State or county govern-
ment that is entitled under the provisions of other 
laws referred to in paragraph (1) to a portion of 
such royalties, if—
‘‘(A) the Secretary has approved an agree-
ment between the lessee and the State or coun-
ty government for such in-kind payments; and
‘‘(B) the agreement establishes a specific 
methodology to determine the value of such 
credits.’’. 
(b) DISPOSAL OF MONEYS FROM SALES, BONUSES, 
ROYALTIES
AND RENTALS.—Section 20 of the Geo-
thermal Steam Act of 1970 (30 U.S.C. 1019) is amended 
to read as follows: 
‘‘SEC. 20. DISPOSAL OF MONEYS FROM SALES, BONUSES, 
ROYALTIES AND RENTALS. 
‘‘(a) RENTALS.—All moneys received by the United 
States from rentals under this Act shall be disposed of 
in the same manner as such moneys received pursuant to 
section 35 of the Mineral Leasing Act (30 U.S.C. 191) 
or section 6 of the Mineral Leasing Act for Acquired 
Lands (30 U.S.C. 355), as the case may be. 
‘‘(b) SALES, BONUSES, AND ROYALTIES.—
‘‘(1) IN GENERAL.—All monies received by the 
United States from sales, bonuses, and royalties 
under this Act shall be paid into the Treasury of the 
United States. Of amounts deposited under this sub-
section, subject to the provisions of section 35 of the
Mineral Leasing Act (30 U.S.C. 191(b)) and section 
5(a)(2) of this Act—
‘‘(A) 50 percent shall be paid to the State 
within the boundaries of which the leased lands 
or geothermal resources are or were located; 
and 
‘‘(B) 25 percent shall be paid to the Coun-
ty within the boundaries of which the leased 
lands or geothermal resources are or were lo-
cated; 
except that this sentence shall not apply with respect 
to lands in Alaska.
‘‘(2) USE OF PAYMENTS.—Amounts paid to a 
State or county under paragraph (1) shall be used 
consistent with the terms of section 35 of the Min-
eral Leasing Act (30 U.S.C. 191).’’. 
(c) NEAR-TERM PRODUCTION INCENTIVE.—
(1) IN
GENERAL.—Notwithstanding section 
5(a) of the Geothermal Steam Act of 1970 the roy-
alty required to be paid on any lease issued under 
such Act before the date of enactment of this Act—
(A) with respect to commercial production 
of heat or energy from a facility that begins 
such production in the 6-year period beginning 
on the date of the enactment of this Act; or
(B) on qualified expansion geothermal en-
ergy; 
shall be 50 percent of the amount of royalty other-
wise required to be paid under that section. 
(2) STATE SHARE.—Notwithstanding section 20 
of the Geothermal Steam Act of 1970 (30 U.S.C. 
1019), section 35 of the Mineral Leasing Act (30 
U.S.C. 191), or section 6 of the Mineral Leasing Act 
for Acquired Lands (30 U.S.C. 355), in the case of 
monies received by the United States from royalty 
described in subparagraph (A) or (B) of paragraph 
(1), the percentage required to be paid by the Sec-
retary of the Treasury to a State under those sec-
tions shall be 100 percent. 
(3) 4-YEAR APPLICATION.—Paragraphs (1) and 
(2) apply only to commercial production of heat or 
energy from a facility in the first 4 years of such 
production. 
(4) NO EFFECT ON STATE PORTION.—This sub-
section shall not be construed to reduce the amount 
of royalty required to be paid to a State. 
(d) DEFINITIONS.—In this section: 
(1) QUALIFIED EXPANSION GEOTHERMAL EN-
ERGY.—The term ‘‘qualified expansion geothermal
energy’’ means geothermal energy produced from a 
generation facility for which—
(A) the production is increased by more 
than 10 percent as a result of expansion of the 
facility carried out in the 6-year period begin-
ning on the date of the enactment of this Act; 
and 
(B) 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. 
(2) 
QUALIFIED
GEOTHERMAL
ENERGY 
LEASE.—The term ‘‘qualified geothermal energy 
lease’’ means a lease under the Geothermal Steam 
Act of 1970 (30 U.S.C. 1001 et seq.)—
(A) that was executed before the end of 
the 6-year period beginning on the date of the 
enactment of this Act; and 
(B) under which no commercial production 
of any form of heat or energy occurred before 
the date of the enactment of this Act. 
(e) ROYALTY UNDER EXISTING LEASES.—
(1) IN
GENERAL.—Any lessee under a lease 
issued under the Geothermal Steam Act of 1970 be-
fore the date of the enactment of this Act may mod-
ify the terms of the lease relating to payment of roy-
alties to comply with the amendment made by sub-
section (a), by applying to the Secretary of the Inte-
rior by not later than 18 months after the date of 
the enactment of this Act. 
(2) APPLICATION
OF
MODIFICATION.—Such 
modification shall apply to any use of geothermal 
steam and associated geothermal resources to which 
the amendment applies that occurs after the date of 
that application. 
(3) CONSULTATION.—The Secretary—
(A) shall consult with the State and local 
governments affected by any proposed changes 
in lease royalty terms under this subsection; 
(B) may agree to a gross proceeds percent-
age other than the amount specified in the 
amendment made by subsection (a) only with 
the concurrence of the lessee and the State, 
SEC. 5. CONSULTATION REGARDING GEOTHERMAL LEAS-
ING AND PERMITTING ON PUBLIC LANDS. 
(a) IN GENERAL.—Not later than 6 months after the 
date of the enactment of this Act, the Secretary of the 
Interior and the Secretary of Agriculture shall enter into 
and submit to the Congress a memorandum of under-
standing in accordance with this section regarding leasing
and permitting, for geothermal development, of public 
lands under their respective administrative jurisdictions. 
(b) LEASE AND PERMIT APPLICATIONS.—The memo-
randum of understanding shall include provisions that—
(1) identify known geothermal areas on public 
lands within the National Forest System and when 
necessary review management plans to consider leas-
ing under the Geothermal Steam Act of 1970 (30 
U.S.C. 1001 et seq.) as a land use; 
(2) establish an administrative procedure for 
processing geothermal lease applications, including 
lines of authority, steps in application processing, 
and timeframes for application processing; 
(3) provide that the Secretary concerned 
shall—
(A) within 14 days after receiving an ap-
plication for a lease, determine whether the ap-
plication contains sufficient information to 
allow processing of the application; and 
(B) if the application is found not to con-
tain sufficient information to allow processing 
the application the Secretary shall, before the
end of such 14-day period, provide written noti-
fication to the lease applicant that the applica-
tion is being returned to the applicant without
processing and itemizing the deficiencies in the 
application that prevent processing; 
(4) provide that the Secretary concerned shall 
within 30 days after receiving a lease application, 
provide written notice to the lease applicant regard-
ing the status of the application, including an esti-
mation of the time that will be required to complete 
action on the application; and 
(5) establish an administrative procedure for 
processing geothermal development permits, includ-
ing lines of authority, steps in permit processing, 
and timeframes for permit processing. 
(c) FIVE-YEAR LEASING PLAN.—The memorandum 
of understanding shall develop a 5-year plan for leasing 
under the Geothermal Steam Act of 1970 (30 U.S.C. 1001 
et seq.) of public land in the National Forest System. The 
plan for geothermal leasing shall be updated every 5 years. 
(d) DATA RETRIEVAL SYSTEM.—The memorandum 
of understanding shall establish a joint data retrieval sys-
tem that is capable of tracking lease and permit applica-
tions and requests and providing to the applicant or re-
quester information as to their status within the Depart-
ments of the Interior and Agriculture, including an esti-
mate of the time required for administrative action.
SEC. 6. REVIEW AND REPORT TO CONGRESS. 
The Secretary of the Interior shall promptly review 
and report to the Congress within 3 years after the date 
of the enactment of this Act regarding the status of all 
moratoria on and withdrawals from leasing under the Geo-
thermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) of 
known geothermal resources areas (as that term is defined 
in section 2 of that Act (30 U.S.C. 1001), specifying for 
each such area whether the basis for such moratoria or 
withdrawal still applies. 
SEC. 7. REIMBURSEMENT FOR COSTS OF NEPA ANALYSES, 
DOCUMENTATION, AND STUDIES. 
(a) IN GENERAL.—The Geothermal Steam Act of 
1970 (30 U.S.C. 1001 et seq.) is amended by adding at 
the end the following: 
‘‘SEC. 30. REIMBURSEMENT FOR COSTS OF CERTAIN ANAL-
YSES, DOCUMENTATION, AND STUDIES. 
‘‘(a) IN GENERAL.—The Secretary of the Interior 
may, through royalty credits, reimburse a person who is 
a lessee, operator, operating rights owner, or applicant for 
a lease under this Act for reasonable amounts paid by the 
person for preparation by the Secretary (or a contractor 
or other person selected by the Secretary) of any project-
level analysis, documentation, or related study required 
under the National Environmental Policy Act of 1969 (42 
U.S.C. 4321 et seq.) with respect to the lease.
‘‘(b) CONDITIONS.—The Secretary may provide reim-
bursement under subsection (a) only if—
‘‘(1) adequate funding to enable the Secretary 
to timely prepare the analysis, documentation, or re-
lated study is not appropriated; 
‘‘(2) the person paid the amounts voluntarily; 
and 
‘‘(3) the person maintains records of its costs 
in accordance with regulations prescribed by the 
Secretary.’’. 
(b) APPLICATION.—The amendments made by this 
section shall apply with respect to any lease entered into 
before, on, or after the date of the enactment of this Act. 
(c) DEADLINE FOR REGULATIONS.—The Secretary 
shall issue regulations implementing the amendments 
made by this section by not later than 90 days after the 
date of the enactment of this Act. 
SEC. 8. ASSESSMENT OF GEOTHERMAL ENERGY POTEN-
TIAL. 
The Secretary of Interior, acting through the Direc-
tor of the United States Geological Survey and in coopera-
tion with the States, shall update the 1978 Assessment 
of Geothermal Resources, and submit that updated assess-
ment to the Committee on Resources of the House of Rep-
resentatives and the Committee on Energy and Natural 
Resources of the Senate—
(1) within 3 years after the date of enactment 
of this Act; and 
(2) thereafter as the availability of data and de-
velopments in technology warrant. 
SEC. 9. COOPERATIVE OR UNIT PLANS. 
(a) IN GENERAL.—Section 18 of the Geothermal 
Steam Act of 1970 (30 U.S.C. 1017) is amended to read 
as follows: 
‘‘SEC. 18. COOPERATIVE OR UNIT PLANS. 
‘‘(a) ADOPTION OF PLAN BY LESSEES.—
‘‘(1) IN GENERAL.—For the purpose of more 
properly conserving the natural resources of any 
geothermal field, or like area, or any part thereof 
(whether or not any part of the geothermal field, or 
like area, is then subject to any cooperative or unit 
plan of development or operation), lessees thereof 
and their representatives may unite with each other, 
or jointly or separately with others, in collectively 
adopting and operating under a cooperative or unit 
plan of development or operation of such field, or 
like area, or any part thereof, if determined and cer-
tified by the Secretary to be necessary or advisable 
in the public interest.
‘‘(2) MODIFICATION OF LEASE REQUIREMENTS 
BY SECRETARY.—The Secretary may, in the discre-
tion of the Secretary, and with the consent of the 
holders of leases involved, establish, alter, change, or 
revoke drilling, producing, rental, minimum royalty, 
and royalty requirements of such leases and to make 
such regulations with reference to such leases, with 
the consent of the lessees, in connection with the in-
stitution and operation of any such cooperative or 
unit plan as the Secretary may deem necessary or 
proper to secure the proper protection of the public 
interest. 
‘‘(b) REQUIREMENT
OF
PLANS
UNDER
NEW 
LEASES.—The Secretary—
‘‘(1) may provide that geothermal leases issued 
under this Act after the date of the enactment of 
this section shall contain a provision requiring the 
lessee to operate under such a reasonable coopera-
tive or unit plan; and 
‘‘(2) may prescribe such a plan under which 
such lessee shall operate, which shall adequately pro-
tect 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-
quire that any plan authorized by the this section that 
applies to lands owned by the United States contain a pro-
vision under which authority is vested in the Secretary, 
or any person, committee, or State or Federal officer or 
agency as may be designated in the plan, to alter or mod-
ify from time to time the rate of prospecting and develop-
ment and the quantity and rate of production under such 
plan. 
‘‘(d) EXCLUSION FROM DETERMINATION OF HOLD-
ING OR CONTROL.—Any lands that are subject to any plan 
approved or prescribed by the Secretary under this section 
shall not be considered in determining holdings or control 
under any provision of this Act. 
‘‘(e) POOLING
OF CERTAIN LANDS.—If separate 
tracts of lands cannot be independently developed and op-
erated to use geothermal steam and associated geothermal 
resources pursuant to this Act in conformity with an es-
tablished development program—
‘‘(1) any such lands, or a portion thereof, may 
be pooled with other lands, whether or not owned by 
the United States, for purposes of such development 
and operation under a communitization agreement 
providing for an apportionment of production or roy-
alties among the separate tracts of land comprising
the production unit, if such pooling is determined by 
the Secretary to be in the public interest; and 
‘‘(2) operation or production pursuant to such 
an agreement shall be treated as operation or pro-
duction with respect to each tract of land that is 
subject to the agreement. 
‘‘(f) PLAN REVIEW.—No more than 5 years after ap-
proval of any cooperative or unit plan of development or 
operation, and at least every 5 years thereafter, the Sec-
retary shall review each such plan and, after notice and 
opportunity for comment, eliminate from inclusion in such 
plan any lands that the Secretary determines are not rea-
sonably necessary for cooperative or unit operations under 
the plan. Such elimination shall be based on scientific evi-
dence, and shall occur only if it is determined by the Sec-
retary to be for the purpose of conserving and properly 
managing the geothermal resource. Any land so eliminated 
shall be eligible for an extension under subsection (c) or 
(g) of section 6 if it meets the requirements for such an 
extension. 
‘‘(g) APPROVAL
BY
SECRETARY.—The Secretary 
may, on such conditions as the Secretary may prescribe, 
approve operating, drilling, or development contracts made 
by one or more lessees of geothermal leases, with one or 
more persons, associations, or corporations if, in the dis-
cretion of the Secretary, the conservation of natural re-
sources or the public convenience or necessity may require 
or the interests of the United States may be best served 
thereby. All leases operated under such approved oper-
ating, drilling, or development contracts, and interests 
thereunder, shall be excepted in determining holdings or 
control under section 7 of this Act. 
‘‘(h) COORDINATION WITH STATE GOVERNMENTS.—
The Secretary—
‘‘(1) shall coordinate unitization and pooling ac-
tivities with the appropriate State agencies; and 
‘‘(2) shall ensure that State leases included in 
any unitization or pooling arrangement are treated 
equally with Federal leases.’’. 
SEC. 10. ROYALTY ON BYPRODUCTS. 
Section 5 of the Geothermal Steam Act of 1970 (30 
U.S.C. 1004) is further amended in subsection (a) by 
striking paragraph (2) and inserting the following: 
‘‘(2) a royalty on any byproduct that is a min-
eral named in the first section of the Mineral Leas-
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 such 
mineral under a lease under that Act;’’.
SEC. 11. REPEAL OF AUTHORITIES OF SECRETARY TO RE-
ADJUST TERMS, CONDITIONS, RENTALS, AND 
ROYALTIES. 
Section 8 of the Geothermal Steam Act of 1970 (30 
U.S.C. 1007) is amended by repealing subsections (a) and 
(b), and by striking ‘‘(c)’’. 
SEC. 12. CREDITING OF RENTAL TOWARD ROYALTY. 
Section 5 of the Geothermal Steam Act of 1970 (30 
U.S.C. 1004) is further amended—
(1) in subsection (a)(2) by inserting ‘‘and’’ 
after the semicolon at the end; 
(2) in subsection (a)(3) by striking ‘‘; and’’ and 
inserting a period; 
(3) by striking paragraph (4) of subsection (a); 
and 
(4) by adding at the end the following: 
‘‘(d) CREDITING OF RENTAL TOWARD ROYALTY.—
Any annual rental under this section that is paid with re-
spect to a lease before the first day of the year for which 
the annual rental is owed shall be credited to the amount 
of royalty that is required to be paid under the lease for 
that year.’’. 
SEC. 13. LEASE DURATION AND WORK COMMITMENT RE-
QUIREMENTS. 
(a) IN GENERAL.—Section 6 of the Geothermal 
Steam Act of 1970 (30 U.S.C. 1005) is amended—
(1) by striking so much as precedes subsection 
(c), and striking subsections (e), (g), (h), (i), and 
(j); 
(2) by redesignating subsections (c), (d), and 
(f) in order as subsections (g), (h), and (i); and 
(3) by inserting before subsection (g), as so re-
designated, the following: 
‘‘SEC. 6. LEASE TERM AND WORK COMMITMENT REQUIRE-
MENTS. 
‘‘(a) PRIMARY TERM.—
‘‘(1) IN GENERAL.—A geothermal lease shall be 
for a primary term of ten years. 
‘‘(2) INITIAL EXTENSION.—The Secretary shall 
extend the primary term of a geothermal lease for 
5 years if, for each year after the fifth year of the 
lease—
‘‘(A) the Secretary determined under sub-
section (c) that the lessee satisfied the work 
commitment requirements that applied to the 
lease for that year; or 
‘‘(B) the lessee paid in accordance with 
subsection (d) the value of any work that was 
not completed in accordance with those require-
ments.
‘‘(3) ADDITIONAL EXTENSION.—The Secretary 
shall extend the primary term of a geothermal lease 
(after an extension under paragraph (2)) for an ad-
ditional 5 years if, for each year after the fifteenth 
year of the lease, the Secretary determined under 
subsection (c) that the lessee satisfied the work com-
mitment requirements that applied to the lease for 
that year. 
‘‘(b) REQUIREMENT TO SATISFY ANNUAL WORK 
COMMITMENT REQUIREMENT.—
‘‘(1) IN GENERAL.—The lessee for a geothermal 
lease shall, for each year after the fifth year of the 
lease, satisfy work commitment requirements pre-
scribed by the Secretary that apply to the lease for 
that year. 
‘‘(2) PRESCRIPTION OF WORK COMMITMENT RE-
QUIREMENTS.—The Secretary shall issue regulations 
prescribing minimum equivalent dollar value work 
commitment requirements for geothermal leases, 
that—
‘‘(A) require that a lessee, in each year 
after the fifth year of the primary term of a 
geothermal lease, diligently work to achieve 
commercial production or utilization of steam 
under the lease;
‘‘(B) require that in each year to which 
work commitment requirements under the regu-
lations apply, the lessee shall significantly re-
duce the amount of work that remains to be 
done to achieve such production or utilization; 
‘‘(C) describe specific work that must be 
completed by a lessee by the end of each year 
to which the work commitment requirements 
apply; 
‘‘(D) carry forward and apply to work 
commitment requirements for a year, work 
completed in any year in the preceding 3-year 
period that was in excess of the work required 
to be performed in that preceding year; and 
‘‘(E) establish transition rules for leases 
issued before the date of the enactment of this 
subsection, including terms under which a lease 
that is near the end of its term on the date of 
enactment of this Act may be extended for up 
to two years—
‘‘(i) to allow achievement of produc-
tion under the lease; 
‘‘(ii) to allow the lease to be included 
in a producing unit; and
‘‘(F) establish an annual payment that, at 
the option of the lessee, may be exercised in lieu 
of meeting any work requirement for a limited 
number of years that the Secretary determines 
will not impair achieving diligent development 
of the geothermal resource. 
‘‘(3) TERMINATION
OF
APPLICATION
OF
RE-
QUIREMENTS.—Work commitment requirements pre-
scribed under this subsection shall not apply to a 
geothermal lease after the date on which geothermal 
steam is produced or utilized under the lease in com-
mercial quantities. 
‘‘(c) DETERMINATION OF WHETHER REQUIREMENTS 
SATISFIED.—The Secretary shall, by not later than 21 
days after the end of each year for which work commit-
ment requirements under subsection (b) apply to a geo-
thermal lease—
‘‘(1) determine whether the lessee has satisfied 
the requirements that apply for that year; 
‘‘(2) notify the lessee of that determination; and 
‘‘(3) in the case of a notification that the lessee 
did not satisfy work commitment requirements for 
the year, include in the notification—
‘‘(A) a description of the specific work that 
was not completed by the lessee in accordance 
with the requirements; and 
‘‘(B) the amount of the dollar value of 
such work that was not completed, reduced by 
the amount of expenditures made for work com-
pleted in a prior year that is carried forward 
pursuant to subsection (b)(2)(D). 
‘‘(d) PAYMENT
OF
VALUE
OF
UNCOMPLETED 
WORK.—
‘‘(1) IN GENERAL.—If the Secretary notifies a 
lessee that the lessee failed to satisfy work commit-
ment requirements under subsection (b), the lessee 
shall pay to the Secretary, by not later than the end 
of the 60-day period beginning on the date of the 
notification, the dollar value of work that was not 
completed by the lessee, in the amount stated in the 
notification (as reduced under subsection (c)(3)(B)). 
‘‘(2) 
FAILURE
TO
PAY
VALUE
OF 
UNCOMPLETED WORK.—If a lessee fails to pay such 
amount to the Secretary before the end of that pe-
riod, the lease shall terminate upon the expiration of 
the period. 
‘‘(e) CONTINUATION AFTER COMMERCIAL PRODUC-
TION OR UTILIZATION.—If geothermal steam is produced
or utilized in commercial quantities within the primary 
term of the lease under subsection (a) (including any ex-
tension of the lease under subsection (a)), such lease shall 
continue until the date on which geothermal steam is no 
longer produced or utilized in commercial quantities. 
‘‘(f) CONVERSION OF GEOTHERMAL LEASE TO MIN-
ERAL LEASE.—The lessee under a lease that has produced 
geothermal steam for electrical generation, has been deter-
mined by the Secretary to be incapable of any further com-
mercial production or utilization of geothermal steam, and 
that is producing any valuable byproduct in payable quan-
tities may, within 6 months after such determination—
‘‘(1) convert the lease to a mineral lease under 
the Mineral Leasing Act (30 U.S.C. 181 et seq.) or 
under the Mineral Leasing Act for Acquired Lands 
(30 U.S.C. 351 et seq.), if the lands that are subject 
to the lease can be leased under that Act for the 
production of such byproduct; or 
‘‘(2) convert the lease to a mining claim under 
the general mining laws, if the byproduct is a 
locatable mineral.’’. 
(b) CONFORMING AMENDMENT.—
(1) Section 18 of the Geothermal Steam Act of 
1970 (30 U.S.C. 1017) is amended by striking ‘‘sub-
section (c) or (g)’’ and inserting ‘‘subsection (g)’’.
(2) Section 20 of the Geothermal Steam Act of 
1970 (30 U.S.C. 1019) is amended by striking ‘‘, in-
cluding the payments referred to in section 6(i),’’. 
SEC. 14. ADVANCED ROYALTIES REQUIRED FOR SUSPEN-
SION OF PRODUCTION. 
Section 5 of the Geothermal Steam Act of 1970 (30 
U.S.C. 1004) is further amended by adding at the end 
the following: 
‘‘(e) ADVANCED ROYALTIES REQUIRED FOR SUSPEN-
SION OF PRODUCTION.—
‘‘(1) CONTINUATION
OF
LEASE
FOLLOWING 
CESSATION OF PRODUCTION.—If, at any time after 
commercial production under a lease is achieved, 
production ceases for any cause the lease shall re-
main in full force and effect—
‘‘(A) during the one-year period beginning 
on the date production ceases; and 
‘‘(B) after such period if, and so long as, 
the lessee commences and continues diligently 
and in good faith until such production is re-
sumed the steps, operations, or procedures nec-
essary to cause a resumption of such produc-
tion. 
‘‘(2) If production of heat or energy under a geo-
thermal lease is suspended after the date of any such pro-
duction for which royalty is required under subsection (a) 
and the terms of paragraph (1) are not met, the Secretary 
shall require the lessee, until the end of such suspension, 
to pay royalty in advance at the monthly pro-rata rate of 
the average annual rate at which such royalty was paid 
each year in the 5-year-period preceding the date of sus-
pension. 
‘‘(3) Paragraph (2) shall not apply if the suspension 
is required or otherwise caused by the Secretary, the Sec-
retary of a military department, a State or local govern-
ment, or a force majeur.’’. 
SEC. 15. ANNUAL RENTAL. 
(a) ANNUAL RENTAL RATE.—Section 5 of the Geo-
thermal Steam Act of 1970 (30 U.S.C. 1004) is further 
amended in subsection (a) in paragraph (3) by striking 
‘‘$1 per acre or fraction thereof for each year of the lease’’ 
and all that follows through the end of the paragraph and 
inserting ‘‘$1 per acre or fraction thereof for each year 
of the lease in the case of a lease awarded in a noncompeti-
tive lease sale; or $2 per acre or fraction thereof for the 
first year, $3 per acre or fraction thereof for each of the 
second through tenth years, and $5 per acre or fraction 
thereof for each year after the 10th year thereof, in the 
case of a lease awarded in a competitive lease sale; and’’.