30 U.S.C. § 1004 — Rents and royalties

Page 214 TITLE 30—MINERAL LANDS AND MINING § 1004 1 So in original. The semicolon probably should be a period. ulations issued by the Secretary, if the Sec- retary— (1) publishes a notice of the land proposed for leasing not later than 90 days before the date of the issuance of the lease; (2) does not receive during the 90-day period beginning on the date of the publication any nomination to include the land concerned in the next competitive lease sale; and (3) determines there is no competitive inter- est in the geothermal resources in the land to be leased. (g) Area subject to lease for direct use (1) In general Subject to paragraph (2), a geothermal lease for the direct use of geothermal resources 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 covered by the lease shall not exceed the limitations established under section 1006 of this title. (Pub. L. 91–581, § 4, Dec. 24, 1970, 84 Stat. 1566; Pub. L. 109–58, title II, §§ 222, 223(b), Aug. 8, 2005, 119 Stat. 660, 662; Pub. L. 116–260, div. Z, title III, § 3105, Dec. 27, 2020, 134 Stat. 2516.) Editorial Notes REFERENCES IN TEXT The Mineral Leasing Act, referred to in subsec. (b)(4), is act Feb. 25, 1920, ch. 85, 41 Stat. 437, which is classi- fied generally to chapter 3A (§ 181 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 181 of this title and Tables. The Mineral Leasing Act for Acquired Lands, referred to in subsec. (b)(4), is act Aug. 7, 1947, ch. 513, 61 Stat. 913, which is classified generally to chapter 7 (§ 351 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 351 of this title and Tables. CODIFICATION August 8, 2005, referred to in subsec. (d)(1), was in the original ‘‘the date of enactment of this subsection’’ which was translated as meaning the date of enactment of Pub. L. 109–58, which amended this section generally, to reflect the probable intent of Congress. AMENDMENTS 2020—Subsec. (b)(4). Pub. L. 116–260 added par. (4). 2005—Pub. L. 109–58, § 222, inserted section catchline and amended text generally. Prior to amendment, text related to competitive bidding requirements, conver- sion of prior leases to geothermal leases, conflicting land interests, conversion of prior applications, acreage limitation, regulations, and time for payment. Subsecs. (f), (g). Pub. L. 109–58, § 223(b), added subsecs. (f) and (g). § 1004. Rents and royalties (a) In general Geothermal leases shall provide for— (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 re- sources during the first 10 years of produc- tion 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; (2) a royalty on any byproduct that is a min- eral specified in the first section of the Min- eral Leasing Act (30 U.S.C. 181), and that is de- rived from production under the lease, at the rate of the royalty that applies under that Act [30 U.S.C. 181 et seq.] to production of the min- eral under a lease under that Act; and (3) payment in advance of an annual rental of not less than— (A) for each of the 1st through 10th years of the lease— (i) in the case of a lease awarded in a noncompetitive lease sale, $1 per acre or fraction thereof; or (ii) in the case of a lease awarded in a competitive lease sale, $2 per acre or frac- tion thereof for the 1st year and $3 per acre or fraction thereof for each of the 2nd through 10th years; and (B) for each year after the 10th year of the lease, $5 per acre or fraction thereof; 1 (b) Direct use (1) In general Notwithstanding subsection (a)(1), the Sec- retary 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 re- sources used; (B) shall ensure a fair return to the United States for use of the resource; and (C) shall encourage development of the re- source. (3) State, tribal, or local governments If a State, tribal, or local government is the lessee and uses geothermal resources without sale and for public purposes other than com- mercial generation of electricity, the Sec- retary shall charge only a nominal fee for use of the resource. (4) Final regulation In issuing any final regulation establishing a schedule of fees under this subsection, the Sec- retary shall seek— (A) to provide lessees with a simplified ad- ministrative system; (B) to facilitate development of direct use of geothermal resources; and (C) to contribute to sustainable economic development opportunities in the area. (c) Final regulation establishing royalty rates In issuing any final regulation establishing royalty rates under this section, the Secretary shall seek— Page 215 TITLE 30—MINERAL LANDS AND MINING § 1004 (1) to provide lessees a simplified adminis- trative system; (2) to encourage new development; and (3) to achieve the same level of royalty reve- nues over a 10-year period as the regulation in effect on August 8, 2005. (d) Credits for in-kind payments of electricity The Secretary may provide to a lessee a credit against royalties owed under this chapter, in an amount equal to the value of electricity pro- vided under contract to a State or county gov- ernment that is entitled to a portion of such royalties under section 1019 of this title, section 35 of the Mineral Leasing Act (30 U.S.C. 191), ex- cept as otherwise provided by this section, or section 355 of this title, if— (1) the Secretary has approved in advance the contract between the lessee and the State or county government for such in-kind pay- ments; (2) the contract establishes a specific meth- odology to determine the value of such cred- its; 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 elec- tricity received will serve as the royalty pay- ment from the Federal Government to that entity. (e) Crediting of rental toward royalty Any annual rental under this section that is paid with respect 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. (f) Advanced royalties required for cessation 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 aggre- gate 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 production royalty paid for any year shall be reduced (but not below 0) by the amount of any advanced royalties paid under the lease to the extent that the advance royalties have not been used to reduce produc- tion royalties for a prior year. (3) Exceptions Paragraph (1) shall not apply if the cessation in production is required or otherwise caused by— (A) the Secretary; (B) the Secretary of the Air Force; (C) the Secretary of the Army; (D) the Secretary of the Navy; (E) a State or a political subdivision of a State; or (F) a force majeure. (g) Termination of lease for failure to pay rental (1) In general The Secretary shall terminate any lease with respect to which rental is not paid in ac- cordance with this chapter and the terms of the lease under which the rental is required, on the expiration of the 45-day period begin- ning on the date of the failure to pay the rent- al. (2) Notification The Secretary shall promptly notify a lessee that has not paid rental required under the lease that the lease will be terminated at the end of the period referred to in paragraph (1). (3) Reinstatement A lease that would otherwise terminate under paragraph (1) shall not terminate under that paragraph if the lessee pays to the Sec- retary, 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. (Pub. L. 91–581, § 5, Dec. 24, 1970, 84 Stat. 1567; Pub. L. 109–58, title II, §§ 223(a), 224(a), 228, 230, 232, 233, 236(7), Aug. 8, 2005, 119 Stat. 661, 662, 667–670, 672.) Editorial Notes REFERENCES IN TEXT The Mineral Leasing Act, referred to in subsec. (a)(2), is act Feb. 25, 1920, ch. 85, 41 Stat. 437, which is classi- fied generally to chapter 3A (§ 181 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 181 of this title and Tables. AMENDMENTS 2005—Pub. L. 109–58, §§ 223(a)(1)–(3), 224(a)(1), 228, 230(1)–(3), 233(a), 236(7), inserted section catchline, des- ignated existing provisions as subsec. (a) and inserted heading, redesignated subpars. (1) and (2) of par. (c) as subpars. (A) and (B), respectively, redesignated pars. (a) to (d) as pars. (1) to (4), respectively, of subsec. (a), added new pars. (1) to (3) of subsec. (a) and struck out former pars. (1) to (4) of subsec. (a) which related to royalties for amount or value of steam or other form of heat energy, royalty for value of byproducts, payment of annual rental, and royalties in lieu of rentals. Subsec. (b). Pub. L. 109–58, § 223(a)(4), added subsec. (b). Subsecs. (c), (d). Pub. L. 109–58, § 224(a)(2), added sub- secs. (c) and (d). Subsec. (e). Pub. L. 109–58, § 230(4), added subsec. (e). Subsec. (f). Pub. L. 109–58, § 232, added subsec. (f). Subsec. (g). Pub. L. 109–58, § 233(b), added subsec. (g). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Pub. L. 109–58, title II, § 223(c), Aug. 8, 2005, 119 Stat. 662, provided that: ‘‘The schedule of fees established under the amendment made by subsection (a)(4) [amending this section] shall apply with respect to pay- ments under a lease converted under this subsection that are due and owing, and have been paid, on or after July 16, 2003. This subsection shall not require the re- fund of royalties paid to a State under section 20 of the Geothermal Steam Act of 1970 (30 U.S.C. 1019) prior to the date of enactment of this Act [Aug. 8, 2005].’’ INCENTIVES AND ROYALTIES FOR EXISTING LEASES Pub. L. 109–58, title II, § 224(c)–(e), Aug. 8, 2005, 119 Stat. 663, 664, provided that: Page 216 TITLE 30—MINERAL LANDS AND MINING § 1005 ‘‘(c) NEAR-TERM PRODUCTION INCENTIVE FOR EXISTING LEASES.— ‘‘(1) IN GENERAL.—Notwithstanding section 5(a) of the Geothermal Steam Act of 1970 [30 U.S.C. 1004(a)], 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 [Aug. 8, 2005] that does not convert to new royalty terms under subsection (e)— ‘‘(A) with respect to commercial production of en- ergy from a facility that begins such production in the 6-year period beginning on the date of enact- ment 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 [amending this section and section 1019 of this title and enacting provisions set out as a note under this section], the term ‘qualified expan- sion geothermal energy’ means geothermal energy pro- duced 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 en- actment of this Act [Aug. 8, 2005]; and ‘‘(2) such production increase is greater than 10 per- cent of the average production by the facility during the 5-year period preceding the expansion of the facil- ity (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 [Aug. 8, 2005] 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 require- ments of subsection (b) of section 5 of the Geo- thermal 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 equiva- lent to payments that would have been received for comparable production under the royalty rate in ef- fect 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) [amending this section]. ‘‘(3) APPLICATION OF MODIFICATION.—If the lessee re- quests modification of a lease under paragraph (1)— ‘‘(A) the Secretary of the Interior shall, within 180 days after the receipt of the request for modi- fication, 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) [amending this section] 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.’’ § 1005. Lease term and work commitment re- quirements (a) In general (1) Primary term A geothermal lease shall be for a primary term of 10 years. (2) Initial extension The Secretary shall extend the primary term of a geothermal lease for 5 years if, for each year after the 10th year of the lease— (A) the Secretary determined under sub- section (b) that the lessee satisfied the work commitment requirements that applied to the lease for that year; or (B) the lessee paid in annual payments ac- cordance with subsection (c). (3) Additional extension The Secretary shall extend the primary term of a geothermal lease (after an initial ex- tension under paragraph (2)) for an additional 5 years if, for each year of the initial exten- sion under paragraph (2), the Secretary deter- mined under subsection (b) that the lessee sat- isfied the minimum work requirements that applied to the lease for that year. (b) Requirement to satisfy annual minimum work requirement (1) In general The lessee for a geothermal lease shall, for each year after the 10th year of the lease, sat- isfy minimum work requirements prescribed by the Secretary that apply to the lease for that year. (2) Prescription of minimum work require- ments The Secretary shall issue regulations pre- scribing minimum work requirements for geo- thermal leases, that— (A) establish a geothermal potential; and (B) if a geothermal potential has been es- tablished, confirm the existence of produc- ible geothermal resources. (c) Payments in lieu of minimum work require- ments In lieu of the minimum work requirements set forth in subsection (b)(2), the Secretary shall by regulation establish minimum annual payments which may be made by the lessee for a limited number of years that the Secretary determines will not impair achieving diligent development of the geothermal resource, but in no event shall the number of years exceed the duration of the extension period provided in subsection (a). (d) Transition rules for leases issued prior to Au- gust 8, 2005 The Secretary shall by regulation establish transition rules for leases issued before August 8, 2005, including terms under which a lease that is near the end of its term on August 8, 2005, may be extended for up to 2 years— (1) to allow achievement of production under the lease; or