This is a much more reasonable operating temperature. To minimize the amount of power wasted (and thus heat generated), keep the supply voltage as low as possible to maintain the desired output. e.g., if driving a LED array with a forward voltage of 5.2V @ 160mA, taking into account the maximum dropout voltage of the regulator (2.5V), the ideal input voltage is 9V which will only require 0.61W be dissipated. If the same circuit was powered off a 15V source, over 1.57W of power would be wasted as heat in the regulation process.
Warning! The metal tab of the LM317 is connected to the output pin so when power is applied to the circuit, the heatsink may become ‘live’ if directly attached to the regulator. Special insulating kits are available, consisting of nylon screws, nuts and washers, and non-conductive silicon-rubber or mica insulating pads to electrically isolate the regulator from the heatsink. Remember to factor in the thermal resistance of the insulating kit into your heatsink calculations!