The federal government is proposing changes that it hopes will increase production of geothermal energy on public lands — and make it more lucrative for the local counties where it occurs by giving them half of current federal royalties.

Utah is one of six Western states where the federal government figures it is possible to develop geothermal sources, such as steam and hot water, on public lands to generate electricity or directly heat buildings. The other states are California, Idaho, New Mexico, Nevada and Oregon.

"These draft regulations would add another tool in our efforts to encourage environmentally responsible development of renewable energy resources while ensuring a fair return to the United States," Interior Secretary Dirk Kempthorne said Friday.

Among proposals is an incentive giving developers of new projects a 50 percent reduction in royalties they otherwise would have paid for four years, which Congress authorized last year. That incentive would be available only for new projects that go into commercial production by Aug. 8, 2011.

Also, the government is proposing what it says is a simplified fee schedule, in lieu of royalties, that will reduce administrative costs for energy producers.

The proposed rules would also require competitive bidding for the leasing of geothermal resources, with leases going to the highest qualified bidder. If no bids are received, then resources would be offered noncompetitively for two-year periods.

Also, changes would give more money to local counties.

Currently, half of geothermal royalties go to states and half go the federal government. Proposed changes would still give half to states, but only 25 percent would go to the federal government and 25 percent would go to local counties where geothermal development occurs.

Proposed changes were printed in the Federal Register on Friday, and the Minerals Management Service and Bureau of Land Management will accept comments on them for 60 days.

Geothermal leasing is permitted on federal lands that are designated specifically for such use, but not on restricted lands such as national parks, wilderness areas and other protected lands.

The BLM says it currently has about 350 geothermal leases in the West, including in Utah. It said 55 are actually producing geothermal energy, including for 34 power plants.

The BLM says it recently has been expediting the application process for geothermal leases, issuing more than 200 since 2001 — compared to only 25 leases issued from 1996 to 2001.

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