Geothermal operators get stacked royalty discounts on federal lands
H.R. 5638 — Geothermal Royalty Reform Act · Filed by Mike Kennedy (R-UT) · 1 cosponsor · Introduced Sep 30, 2025 · Reported out
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What it does
This bill amends the Geothermal Steam Act of 1970 to change how the federal government calculates royalties on geothermal energy production. Instead of calculating royalties based on total production from a lease, royalties will now be calculated separately for each individual electric generating facility on that lease, with the 10-year royalty-discount period tied to when each facility begins operating rather than when the lease starts. This allows operators with multiple facilities on a single lease to receive separate, staggered royalty discounts.
Why we flagged it
The bill's operative mechanism is a royalty reduction for geothermal operators by restructuring how federal royalties are calculated and discounted. It is functionally a tax/royalty carve-out benefiting a specific energy sector.
What the text implies
- Operators can now stack multiple 10-year discount periods on a single lease by building new facilities sequentially, potentially reducing royalty obligations for decades rather than the original 10-year window.
- The bill does not specify how 'sharing a turbine' is defined or measured, creating potential ambiguity in whether facilities are treated as separate or combined for royalty purposes.
The full analysis lists 3 implications of this text.
Who stands to gain
geothermal energy operators and developers; companies operating multiple geothermal facilities on federal leases