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U.S. Code as of:
01/19/04
Section 1005. Duration of leases
(a) Primary and continuation terms
Geothermal leases shall be for a primary term of ten years. If
geothermal steam is produced or utilized in commercial quantities
within this term, such lease shall continue for so long thereafter
as geothermal steam is produced or utilized in commercial
quantities, but such continuation shall not exceed an additional
forty years.
(b) Renewal
If, at the end of such forty years, steam is produced or utilized
in commercial quantities and the lands are not needed for other
purposes, the lessee shall have a preferential right to a renewal
of such lease for a second forty-year term in accordance with such
terms and conditions as the Secretary deems appropriate.
(c) Cooperative or unit plan for drilling operations; extension of
term; renewal
Any lease for land on which, or for which under an approved
cooperative or unit plan of development or operation, actual
drilling operations were commenced prior to the end of its primary
term and are being diligently prosecuted at that time shall be
extended for five years and so long thereafter, but not more than
thirty-five years, as geothermal steam is produced or utilized in
commercial quantities. If, at the end of such extended term, steam
is being produced or utilized in commercial quantities and the
lands are not needed for other purposes, the lessee shall have a
preferential right to a renewal of such lease for a second term in
accordance with such terms and conditions as the Secretary deems
appropriate.
(d) "Produced or utilized in commercial quantities" defined
Except as otherwise provided for in this section, for purposes of
this section the term "produced or utilized in commercial
quantities" means the completion of a well producing geothermal
steam in commercial quantities. Such term shall also include the
completion of a well capable of producing geothermal steam in
commercial quantities so long as the Secretary determines that
diligent efforts are being made toward the utilization of the
geothermal steam.
(e) Extension of term for byproduct production; conversion of
geothermal lease to mineral lease: application, time for
completion of location of mineral claims, and Federal agency
terms and conditions when conversion affects lands withdrawn or
acquired for Federal agency
Leases which have extended by reasons of production, or which
have produced geothermal steam, and have been determined by the
Secretary to be incapable of further commercial production and
utilization of geothermal steam may be further extended for a
period of not more than five years from the date of such
determination but only for so long as one or more valuable
byproducts are produced in commercial quantities. If such
byproducts are leasable under the Mineral Leasing Act of February
25, 1920, as amended (30 U.S.C. 181, et seq.), or under the Mineral
Leasing Act for Acquired Lands (30 U.S.C. 351-358), and the
leasehold is primarily valuable for the production thereof, the
lessee shall be entitled to convert his geothermal lease to a
mineral lease under, and subject to all the terms and conditions
of, such appropriate Act upon application at any time before
expiration of the lease extension by reason of byproduct
production. The lessee shall be entitled to locate under the mining
laws all minerals which are not leasable and which would constitute
a byproduct if commercial production or utilization of geothermal
steam continued. The lessee in order to acquire the rights herein
granted him shall complete the location of mineral claims within
ninety days after the termination of the lease for geothermal
steam. Any such converted lease or the surface of any mining claim
located for geothermal byproducts mineral affecting lands withdrawn
or acquired in aid of a function of a Federal department or agency,
including the Department of the Interior, shall be subject to such
additional terms and conditions as may be prescribed by such
department or agency with respect to the additional operations or
effects resulting from such conversion upon adequate utilization of
the lands for the purpose for which they are administered.
(f) Principles for location of minerals under mining laws when
minerals are not associated with geothermal resources
Minerals locatable under the mining laws of the United States in
lands subject to a geothermal lease issued under the provisions of
this chapter which are not associated with the geothermal steam and
associated geothermal resources of such lands as defined in section
1001(c) of this title shall be locatable under said mining laws in
accordance with the principles of the Multiple Mineral Development
Act (68 Stat. 708; found in 30 U.S.C. 521 et seq.).
(g) Five-year extensions; conditions
(1) Any geothermal lease issued pursuant to this chapter for land
on which, or for which under an approved cooperative or unit plan
of development or operation, geothermal steam has not been produced
or utilized in commercial quantities by the end of its primary
term, or by the end of any extension provided by subsection (c) of
this section, may be extended for successive 5-year periods, but
totaling not more than 10 years, if the Secretary determines that
the lessee has met the bona fide effort requirement of subsection
(h) of this section, and either of the following:
(A) the (!1) payment in lieu of commercial quantities
production requirement of subsection (i) of this section.
(B) The significant expenditure requirement of subsection (j)
of this section.
(2) A lease extended pursuant to paragraph (1) shall continue so
long thereafter as geothermal steam is produced or utilized in
commercial quantities, but such continuation shall not exceed an
additional 25 years, for a total of 50 years, if such lease was
also the subject of an extension under subsection (c) of this
section or an additional 30 years, for a total of 50 years, if such
lease is only extended pursuant to paragraph (1).
(3) If, at the end of either 50-year term referred to in
paragraph (2), geothermal steam is being produced or utilized in
commercial quantities and the lands are not needed for other
purposes, the lessee shall have a preferential right to a renewal
of such lease for a second term in accordance with such terms and
conditions as the Secretary deems appropriate. For purposes of this
paragraph only, the term "produced or utilized in commercial
quantities" means a bona fide sale or the use of geothermal steam
by the lessee to generate electricity in marketable quantities.
(h) Bona fide effort
To meet the bona fide effort requirement referred to in
subsection (g)(1) of this section the lessee must submit a report
to the Secretary demonstrating bona fide efforts (as determined by
the Secretary) to produce or utilize geothermal steam in commercial
quantities for such lease, given the then current economic
conditions.
(i) Payments in lieu of commercial quantities production
(1) To meet the payments in lieu of commercial quantities
production requirement referred to in subsection (g)(1)(A) of this
section the lessee must agree to the modification of the terms and
conditions of the lease to require annual payments to the Secretary
in accordance with this subsection.
(2) Payments under this subsection shall commence with the first
year of the extension. Payments shall be equal to the following:
(A) In each of the first through the fifth payment years, at
least $3.00 per acre or fraction thereof, of lands under lease.
(B) In each of the sixth through the tenth payment years, at
least $6.00 per acre or fraction thereof, of lands under lease.
(3) Failure to make the payments required by this subsection
shall subject the lease to cancellation.
(4) No payments made pursuant to this subsection shall be
required after the earlier of the following:
(A) The date of termination of the lease.
(B) The date of relinquishment of the lease.
(C) The date geothermal steam is produced or utilized in
commercial quantities from the lease.
(5) No payments made pursuant to this subsection shall be used to
reduce rentals or future production royalties.
(j) Significant expenditure
(1) To meet the significant expenditure requirement referred to
in subsection (g)(1)(B) of this section the lessee must demonstrate
to the Secretary on an annual basis during an extension that a
significant expenditure of funds is being made on the lease.
(2) The following expenditures made by the lessee shall qualify
as meeting the requirement of this subsection:
(A) Expenditures to conduct actual drilling operations on the
lease, such as for exploratory or development wells, or
geochemical or geophysical surveys for exploratory or development
wells.
(B) Expenditures for road or generating facilities construction
on the lease.
(C) Architectural or engineering services procured for the
design of generating facilities to be located on the lease.
(D) Environmental studies required by State or Federal law.
(3) Expenditures shall be equal to the following:
(A) In each of the first through the fifth years, at least
$15.00 per acre or fraction thereof, of lands under lease.
(B) In each of the sixth through the tenth years, at least
$18.00 per acre or fraction thereof, of lands under lease.
(4) Failure to make the expenditures required by this subsection
shall subject the lease to cancellation.
(5) No expenditures made pursuant to this subsection shall be
required after the date geothermal steam is produced or utilized in
commercial quantities from the lease.
(6) Expenditures made pursuant to this subsection shall be in
lieu of any minimum per acre diligent exploration expenditure
requirement in effect for the lease at the end of its primary term,
or at the end of any extension provided by subsection (c) of this
section, as the case may be.
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