USC - Rents and royalties

View all text of Chapter 23 [§ 1001 - § 1028]

§ 1004. Rents and royalties

(a) In generalGeothermal 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 resources during the first 10 years of production 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 mineral specified in the first section of the Mineral Leasing 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 [30 U.S.C. 181 et seq.] to production of the mineral 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 fraction 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

1 So in original. The semicolon probably should be a period.

(b) Direct use

(1) In generalNotwithstanding 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 commercial generation of electricity; and

(B) does not sell.

(2) Schedule of feesThe schedule of fees—

(A) may be based on the quantity or thermal span, or both, of geothermal resources used;

(B) shall ensure a fair return to the United States for use of the resource; and

(3) State, tribal, or local governments

(4) Final regulationIn issuing any final regulation establishing a schedule of fees under this subsection, the Secretary shall seek—

(A) to provide lessees with a simplified administrative system;

(B) to facilitate development of direct use of geothermal resources; and

(c) Final regulation establishing royalty ratesIn issuing any final regulation establishing royalty rates under this section, the Secretary shall seek—

(1) to provide lessees a simplified administrative system;

(2) to encourage new development; and

(3) to achieve the same level of royalty revenues over a 10-year period as the regulation in effect on August 8, 2005.

(d) Credits for in-kind payments of electricityThe Secretary may provide to a lessee a credit against royalties owed under this chapter, in an amount equal to the value of electricity provided under contract to a State or county government 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), except 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 payments;

(2) the contract establishes a specific methodology to determine the value of such credits; 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 electricity received will serve as the royalty payment from the Federal Government to that entity.

(e) Crediting of rental toward royalty

(f) Advanced royalties required for cessation of production

(1) In general

(2) Reduction

(3) ExceptionsParagraph (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;

(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

(2) Notification

(3) Reinstatement

(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.)