Geothermal Steam Act — Federal Geothermal Energy Leasing

The Geothermal Steam Act of 1970 authorizes the Bureau of Land Management to lease federal lands for geothermal energy development — the extraction of steam, hot water, and heat from the earth for electricity generation and direct-use applications. Geothermal is the only renewable energy source that provides firm, baseload power independent of weather conditions, and the western United States sits atop some of the world's most accessible geothermal resources. The Act governs roughly 2,800 megawatts of installed U.S. geothermal capacity and is the legal foundation for an expanding pipeline of next-generation Enhanced Geothermal Systems that could eventually supply hundreds of gigawatts of carbon-free power.

Current Law (2026)

Parameter	Value
Statute	Geothermal Steam Act of 1970 (as amended by Energy Policy Act of 2005)
Administering agency	Bureau of Land Management (DOI)
Primary lease term	10 years (extended if production occurs)
Royalty rate — electricity generation (years 1–10)	1.75% of gross proceeds
Royalty rate — electricity generation (after year 10)	3.5% of gross proceeds
Royalty rate — direct-use applications	10% of gross proceeds
Revenue sharing	25% to state of origin; 25% to county of origin; 50% to federal treasury (portion to reclamation fund)
Installed U.S. capacity	~2,800 MW
Exploration license term	Up to 3 years
Regulations	43 CFR Part 3200 (BLM geothermal regulations)

Legal Authority

30 U.S.C. § 1001 — Definitions and scope: establishes that geothermal steam and associated resources are subject to federal leasing on lands reserved or acquired by the United States
30 U.S.C. § 1002 — Leasing authority: grants the Secretary of the Interior authority to issue geothermal leases through competitive bidding; sets the framework for exploration licenses and development leases as separate instruments
30 U.S.C. § 1004 — Royalties and rents: prescribes the royalty rate structure for electricity generation and direct-use geothermal resources; requires minimum annual rents
30 U.S.C. § 1005 — Lease terms: primary 10-year term with extension rights if development is occurring; limits on acreage held per lease
30 U.S.C. § 1013 — Revenue distribution: formula for splitting federal geothermal royalties among states, counties, and federal accounts (including the Reclamation Fund for western water projects)
30 U.S.C. § 1024 — Environmental protection: requires BLM to consider environmental impacts and include protective stipulations in all geothermal leases

Implementing Regulations

BLM regulations implementing the Geothermal Steam Act live at 43 CFR Part 3200 — Geothermal Resource Leasing (261 sections across 41 subparts). The regulation covers the complete leasing lifecycle:

Subpart 3200 — General: § 3200.6 defines the two lease types BLM issues — (1) standard development leases for power generation, and (2) direct use leases for heating, aquaculture, and other non-electric applications; § 3201.10 identifies eligible lands (BLM and Forest Service public lands, acquired lands); § 3201.11 identifies excluded lands (National Parks, designated Wilderness, lands with incompatible uses)
Subpart 3202 — Lessee Qualifications: U.S. citizens, associations, corporations, and state/local governments may hold leases; qualification must be established before a lease is issued
Subpart 3203 — Competitive Leasing: BLM holds competitive lease sales at least annually when nominations are pending; parcel nominators pay a filing fee; BLM provides at least 45 days' notice; sealed or oral auction; winning bidder pays bonus bid plus first-year rent; unsold parcels become available for noncompetitive leasing for 2 years
Subpart 3204 — Noncompetitive Leasing: parcels unsold at competitive sale available for noncompetitive application within 2 years; first qualified applicant receives the lease; processing fee required
Subpart 3205 — Direct Use Leasing: separate lease category for non-electric geothermal applications (greenhouse heating, aquaculture, resort spas, etc.); may be issued noncompetitively; fees structured differently from power-generating leases
Subpart 3207 — Lease Terms: primary term of 10 years (competitive) or 10 years (noncompetitive); lease extension if diligent drilling/development is occurring; maximum acreage per lease is 5,120 acres (one township)
Subpart 3211 — Fees, Rent, Royalties: annual rent per acre during exploration phase; royalty of 1.75% of gross proceeds in years 1-10, 3.5% thereafter for electricity generation; direct use royalty based on heat value or gross proceeds
Subpart 3214 — Bonds: performance bonds required before operations begin; amount based on estimated surface disturbance and reclamation costs
Subpart 3216 — Transfers: lease assignments and sublease require BLM approval; transfer by operation of law (death, bankruptcy) allowed with proper notice
Subpart 3252/3261 — Operations Permitting: Notice of Intent and drilling permit required before exploration or production drilling; well design, casing, and cementing standards; environmental protection measures as lease stipulations
Subpart 3273/3275 — Site Licenses and Utilization: commercial utilization requires a site license identifying the surface facilities; utilization plan describing production well field, pipelines, power plant, and reclamation plan; utility-scale projects typically require NEPA review (EA or EIS) before BLM issues these authorizations
Subpart 3277 — Enforcement: BLM may issue notices of noncompliance, require remedial action, suspend operations, or cancel leases for failure to comply with lease terms or regulations

When multiple adjacent geothermal leases cover the same reservoir, BLM's regulations at 43 CFR Part 3280 — Geothermal Resources Unit Agreements — allow (and sometimes require) lessees to unitize their leases into a coordinated development program. Unit agreements are central to large-scale geothermal projects where the resource extends across lease boundaries and fragmented individual development would waste the resource or undermine conservation:

§ 3280.1 — Purpose: allow holders of federal and non-federal geothermal leases to unite under a BLM-approved unit agreement to explore and develop the resource in a manner "necessary or advisable in the public interest"
§ 3280.3 — BLM policy: for proper conservation of any geothermal reservoir or field, lessees may collectively adopt a unit agreement if BLM certifies it serves the public interest — including diligent development, efficient production and utilization, conservation of natural resources, and prevention of waste
§ 3280.4 — BLM authority to compel unitization: BLM may require federal lessees to commit to a unit agreement when it serves the public interest; for leases effective on or after August 8, 2005, BLM may include a mandatory unitization clause in the lease itself
Subpart 3281 — Application and approval: a prospective unit operator submits an application package to BLM covering the proposed unit area, a plan of development, and evidence of sufficient control (the portion of lease interests agreeing to unitize); BLM reviews the plan's adequacy for diligent development and public interest findings
§ 3281.10 — Sufficient control: unit agreement requires commitment from lessees holding enough of the unit area that BLM is satisfied the unit can operate effectively; uncommitted leases may still be included if BLM finds it in the public interest
Subpart 3282 — Participating area: once unit production is established, BLM designates the "participating area" — the portion of the unit area proved productive from a given reservoir horizon — and allocates production royalties among lessees within that area
Subpart 3284 — Unit operations: unit operator must conduct operations in accordance with the approved plan of development; BLM may alter rates of development or production to protect the public interest
§ 3286.1 — Model unit agreement: BLM maintains a model unit agreement form that satisfies the regulatory requirements; unit operators may propose modifications subject to BLM approval
Subpart 3285 — Unit termination: BLM may terminate a unit for failure to meet minimum initial unit obligations (completing at least one unit well within the timeframe specified in the agreement) or for failure to diligently develop the resource

Unit agreements are the mechanism that allows large geothermal power projects — where the steam field may underlie a dozen or more separate BLM leases — to be developed as a single coordinated enterprise. The Geysers complex in California and several Nevada geothermal projects operate under BLM unit agreements. For EGS projects, where the created reservoir may span a large area drilled from multiple surface locations, unitization will likely be an essential legal structure as the technology scales commercially.

How It Works

BLM issues two types of instruments under the Act: exploration licenses (shorter-term, limited surface disturbance, allowing a developer to assess the resource) and development leases (longer-term, authorizing commercial extraction). Competitive lease sales are held periodically as BLM nominates parcels for geothermal development — interested parties submit bids, and the high bidder receives the lease subject to environmental review under NEPA. Permitting for a full development project typically takes 18–24 months due to NEPA review requirements, geophysical studies, and consultation with states, tribes, and other stakeholders. BLM's 2005 regulations and subsequent improvements under the FAST-41 permitting framework allow expedited processing for certain lower-impact geothermal projects.

Most existing geothermal production is concentrated in California, Nevada, Utah, and Hawaii. The Geysers complex in northern California — the world's largest geothermal installation — produces about 700 MW from steam fields operated by Calpine. Nevada has grown substantially over the past two decades, with multiple BLM-leased projects supplying utilities under renewable portfolio standard contracts. Hawaii's Puna Geothermal Venture on the Big Island, while state-regulated rather than BLM-leased, illustrates both the energy potential and the geographic and cultural complexities of geothermal development near volcanic areas and Indigenous communities.

Enhanced Geothermal Systems (EGS) represent the technology frontier: instead of relying on naturally occurring steam fields, EGS drills into hot dry rock and creates an artificial reservoir by fracturing the rock and injecting water, which absorbs heat and returns to the surface. DOE's FORGE program (Frontier Observatory for Research in Geothermal Energy) at Milford, Utah is the flagship EGS demonstration project, with multiple wells drilled and flow testing underway. DOE's GeoVision report estimated EGS could ultimately supply more than 100 GW of firm, baseload power — enough to transform geothermal from a niche resource to a major grid asset. The Inflation Reduction Act (2022) substantially increased DOE R&D funding for both conventional geothermal and EGS, and added incentives for geothermal heat pumps for building heating and cooling.

Key Numbers / Thresholds

~2,800 MW installed U.S. geothermal generating capacity
1.75% royalty rate for electricity generation in first 10 years; 3.5% thereafter
10-year primary lease term, extendable upon production
25% of royalty revenue to the state of production; 25% to county
3–6 months for BLM exploration license; 18–24 months for full development lease NEPA review
DOE FORGE program budget: ~$220 million over program life (through 2026)
GeoVision estimate: 100+ GW potential from EGS nationwide
The Geysers (CA): ~700 MW, world's largest geothermal complex

How It Affects You

If you're an energy developer or company exploring geothermal potential on federal lands: The process starts with BLM's lease nomination system — you can nominate specific parcels for competitive geothermal lease sales, and if BLM agrees the parcel has development potential and passes NEPA review, it goes to competitive bid. Winning the bid gets you a 10-year primary lease term at a royalty rate of 1.75% of gross proceeds for electricity generation during years 1-10 (rising to 3.5% after year 10). Before committing to a development lease, you can obtain an exploration license (up to 3 years) to assess the resource with limited surface disturbance — an important risk-reduction tool given that geothermal exploration is costly and wells can miss viable reservoirs. The full development permitting timeline is typically 18-24 months due to NEPA review, geophysical studies, and tribal consultation requirements. The IRA (2022) created a 30% investment tax credit for geothermal projects, which stacks with the low royalty rate to make new conventional geothermal projects in Nevada and Utah increasingly competitive with gas-fired power at current natural gas prices. For EGS specifically, watch the FORGE program results at Milford, Utah and Fervo Energy's commercial EGS projects in Nevada — their well costs and power output per well will determine whether EGS scales commercially this decade.

If you're a state or county government collecting geothermal royalty revenue: Federal geothermal royalties are split under 30 U.S.C. § 1013: 25% to the state of origin and 25% to the county of origin, with the remaining 50% split between the federal treasury and the Reclamation Fund (for western water projects). In Nevada — the state with the most active BLM geothermal leasing — this revenue share has become a meaningful part of some rural counties' budgets. Churchill County, NV (home to multiple operational geothermal plants) receives county-level geothermal royalty payments that partially offset the limited commercial tax base typical of rural western counties. As the geothermal leasing pipeline expands and EGS projects potentially move from pilot to commercial scale, states and counties in Nevada, Utah, California, and Idaho that host the most promising resources stand to collect materially larger royalty streams. For state budget planners, geothermal royalty revenue is worth tracking separately from oil and gas royalties because its production profile is more stable — geothermal plants run at capacity factors of 85-95%, far above wind (~35%) and solar (~25%), producing a steadier royalty stream.

If you're a utility or state utility regulator in a state with a renewable portfolio standard: Geothermal is the only renewable electricity source that provides firm, baseload power — it runs at 85-95% capacity factors regardless of time of day or weather. That characteristic makes it especially valuable in states like California and Nevada that are integrating large amounts of variable solar and wind. A 100 MW geothermal plant produces about the same annual energy as a 350-400 MW solar farm but does so in a dispatchable, predictable profile that doesn't require battery storage to be useful. BOEM and BLM geothermal leases in Nevada and Utah are increasingly being paired with long-term power purchase agreements with California utilities trying to meet their RPS requirements with firm clean power. For state utility regulators, geothermal's firm-capacity value is often underpriced in renewable procurement processes that simply compare levelized costs of energy (LCOE) without adjusting for capacity value — an analytical gap that favors cheaper but less reliable resources.

If you own or ranch land near a geothermal lease area: BLM geothermal leases on federal land trigger surface use agreement negotiations when drilling and facility construction affect private surface rights. If you hold a split estate — where you own surface rights but the federal government owns the mineral rights below — a geothermal developer with a BLM lease has the right to access the subsurface, but must negotiate surface use compensation with you for roads, well pads, pipelines, and power plant facilities. Unlike oil and gas development, geothermal wells don't produce significant water or chemical waste at the surface, but they do require permanent infrastructure (power plant buildings, cooling towers, pipelines from wellhead to plant) that has lasting surface impacts. Steam and hot water from geothermal reservoirs sometimes contains dissolved minerals or hydrogen sulfide gas that requires careful handling. Tribal nations with ancestral or treaty interests in geothermal resource areas — particularly in Nevada and California where several geothermal fields are near Native American communities — have legal consultation rights under NHPA Section 106 and NEPA that BLM must satisfy before issuing leases or permits.

Recent Developments

The Inflation Reduction Act (2022) significantly boosted the federal geothermal program by increasing DOE Office of Energy Efficiency and Renewable Energy funding for EGS and conventional geothermal, creating a 30% investment tax credit for geothermal heat pump systems, and directing BLM to expedite geothermal permitting. Several first-of-kind commercial EGS projects have since begun moving from research to development phase, with Fervo Energy's projects in Nevada and Utah receiving particular attention as the first commercial EGS installations producing power to the grid.

In 2025–2026, the Trump administration's focus on domestic energy production and critical minerals extended to geothermal, with executive actions directing BLM to streamline permitting for energy projects on federal lands. BLM's geothermal leasing pipeline expanded, with new nominations in Nevada and Utah. The FORGE program at Milford, Utah continued EGS well testing despite broader DOE budget uncertainty. Several states — including Nevada and California — also passed legislation facilitating utility procurement of new geothermal capacity, signaling growing commercial interest as EGS technology matures.