U.S. DEPARTMENT OF THE INTERIORBUREAU OF LAND MANAGEMENT
California

News.bytes News.bytes Extra, issue 218

ISSUE UPDATE: TELEPHONE FLAT GEOTHERMAL PROJECT
(GLASS MOUNTAIN KGRA, MEDICINE LAKE, CA)

INTRODUCTION:

Calpine Corporation has proposed the development of a 49 megawatt geothermal powerplant on leases at Telephone Flat, within the Glass Mountain known geothermal resource area (KGRA) in the Medicine Lake area of Siskiyou County, California. The project was approved on November 26, 2002 by both the DOI's assistant secretary - lands and minerals management and the Department of Agriculture's chief of the U.S. Forest Service. The company is ready to begin work, when weather permits, on site development.

ISSUES:

Current Status: On August 5, 2005, Calpine submitted an activity plan to begin the development phase on the 20 acre powerplant site and the construction of up to 4 new wellpads, in anticipation of commencing drilling operations in the summer of 2006. As required in the 2002 ROD, the Telephone Flat Geothermal Public Oversight Group has met twice to discuss the Calpine mitigation plans and BLM/FS is consulting with the affected tribes.

The Telephone Flat area is within the Glass Mountain known geothermal resource area (KGRA), established under provisions of the 1970 Geothermal Steam Act. The KGRA encompasses 134,254 acres including Medicine Lake, which lies within a volcanic caldera in Siskiyou County, California. Environmental assessments addressing geothermal leasing were completed in 1981 and 1984. Forty-three federal leases were issued covering 47,800 acres at competitive lease sales in 1982, 1983, and 1988, and geothermal exploration by several companies followed.

The Telephone Flat project was proposed in 1997 by California Energy General Corp. (CalEnergy) to develop a 49 megawatt geothermal power plant on leases issued by BLM on surface lands administered by the Modoc National Forest. The project includes the construction and operation of the powerplant, drill pads and wells, pipelines, and a 12 mile 230-kV transmission line. Public scoping meetings were held in five locations in the summer of 1997. The agencies received and evaluated 660 public comments. The draft EIS/EIR was released in May 1998 followed by public meetings in four locations. The agencies received and evaluated 1,700 comments. The final EIS/EIR was released in March 1999.

On May 31, 2000, the Bureau of Land Management's Alturas field office and the Modoc National Forest issued jointly, their final record of decisions (RODs) denying the Telephone Flat proposal, while approving a nearby proposal called Fourmile Hill (see separate brief) proposed by Calpine Corp. outside the caldera to the northwest.

In October 2000, CalEnergy filed a complaint with the U. S. Court of Federal Claims alleging $50 million in damages for breach of contract (later increased to $100 million) and compensation for a takings of its lease interests. On Oct. 20, 2001, Calpine Corp. acquired CalEnergy, as well as the legal complaint. Through this acquisition, Calpine is now the sole federal lessee and operator.

On April 4, 2002, CalEnergy and the Department of Justice (representing BLM and the Forest Service) reached a settlement agreement which required the agencies to reconsider the ROD, denying the project. The two agencies agreed to review the existing ROD and determine whether to issue a new ROD approving the project by November 2002.

BLM, as the lead for the Section 106 process, completed consultation with the four affected Native American tribes that strongly supported the earlier denial. Unable to develop an memorandum of agreement with the tribes due to strong opposition from the Pit River tribe, BLM's director notified the Advisory Council on Historic Preservation (ACHP) on August 16, that it was necessary to terminate consultation. The ACHP toured the site on September 16, 2005, and held a public hearing on the same day in Mount Shasta, California. On September 27, 2002, the ACHP responded to the secretaries of Interior and Agriculture stating that while it acknowledges the "merit" of renewable energy, "the proposed site of the...project is wrong; the costs to the historic resources of Native Americans and our nation are too high" and recommended reaffirmation of the earlier denial.

On November 26, 2002, a decision to approve the project was issued by the Department of the Interior and the U.S. Forest Service. The approval included additional mitigation measures, including realignment of the powerline to reduce visual and environmental impacts. A determination of NEPA adequacy (DNA) and a biological opinion (no jeopardy) accompanied the decision. A letter to the ACHP was also issued explaining the rationale for the decision. The Interior decision was not subject to appeal, but the Forest Service decision was subject to a 45-day appeal period. The Save Medicine Lake Coalition, et al, as well as Earthjustice filed appeals. The U.S. Department of Agriculture denied the appeals on March 20, 2003, and April 11, 2003, respectively. Subsequently, both Earthjustice and the Save Medicine Lake Coalition, et. al., filed lawsuits in mid-March 2004 with the U.S. District Court for the Eastern District of California. The Court, on January 7, 2005, denied Earthjustice's request for a stay. A decision from the Court is pending.

The Interior assistant secretary for lands and minerals signed a facility construction permit, a site license, seven sundry notices, and five geothermal drilling permits for the project on April 30, 2003. In a similar fashion, the Modoc National Forest issued a special use permit on April 29, 2003 authorizing the construction and operation of the 12 mile 230-kV overhead transmission line. Altogether, these documents authorize Calpine to build the Telephone Flat geothermal power plant and attendant facilities on the federally managed public land site. There was little activity at the project site during 2003 or 2004.

In response to a letter from Calpine notifying BLM and the FS that Calpine was ready to initiate activities to implement the Telephone Flat project ROD, State Director Mike Pool and Regional Forester Bernie Weingardt sent a letter on October 28 to Calpine Corporation's CEO, laying out a mutually agreeable process to implement the overall terms and conditions in the ROD while providing Calpine with timely authorizations to complete necessary project activities.

SUMMARY:

The department supports the development and utilization of geothermal resources in an environmental acceptable manner. It also takes its trust responsibilities in behalf of Native Americans very seriously and carefully considers tribal views in decision-making.

2/14/06

News.bytes. Issue 218