Interior Department Proposes New Rules to Advance Geothermal Energy

July 26, 2006

Photo of a turbine and generator, with complex industrial equipment in the background, including a tall stack that is emitting steam.

The Interior Department's proposed rules aim to encourage the development of new geothermal power plants.
Credit: Warren Gretz

In response to the Energy Policy Act of 2005, the U.S. Department of Interior proposed new rules on July 21st to encourage geothermal energy development on public lands. The proposed rules would offer simplified royalty calculations, share royalties with counties where production occurs, and require more competitive leasing. The proposed regulations establish a fee schedule rather than royalty payments when the geothermal energy is used directly to heat buildings or for aquaculture or greenhouses. When the energy is used to produce power, the royalty payments will be based on a percentage of the gross proceeds from selling the electricity. And while royalties are currently divided evenly between the state and federal governments, the new rules will give half of the royalties to the state and split the remaining half between the county and federal governments.

The rules would also require competitive leasing on nearly all federal lands that are designated for geothermal development. If no bids are received, then the lots will be offered non-competitively for two-year periods. The Bureau of Land Management (BLM) currently administers about 350 geothermal leases; 55 of those are producing geothermal energy, of which 34 are power plants. The BLM has been expediting the application process for geothermal leases, issuing more than 200 leases since 2001, compared to 25 leases in the previous five years. See the Department of Interior press release.

The BLM and the Minerals Management Service (MMS), both of which are part of the Interior Department, published two separate sets of rules in the July 21st Federal Register. The proposed rules will be open for public comment until September 19th. See the proposed rules from the BLM and the MMS.