October 9, 2008
In Reply Refer To:
3200 (310) P
Instruction Memorandum No. 2009-022
Expires: 09/30/2010
To:                  All State Directors
From:               Assistant Director, Minerals and Realty Management
Subject:          Geothermal Leasing under the Energy Policy Act of 2005 (EPAct)
Program Area: Geothermal Program
Purpose: This Instruction Memorandum (IM) provides guidance for geothermal leasing.
Policy/Action: State Offices that received nominations or expressions of interest filed before August 8, 2005, (the “date of enactment” of the EPAct), may offer those lands, if available, for competitive leasing under the revised geothermal regulations (see 72 FR 24358, May 2, 2007). The Bureau of Land Management (BLM) may also include lands in a competitive lease sale on its own initiative.  Offices are encouraged to hold geothermal lease sales in conjunction with quarterly oil and gas lease sales.
Attachment 1 describes the process for competitive lease sales under the revised geothermal regulations, including the nomination process. Attachment 2 is the nomination form to be used for competitive leasing, Form 3203-1 (2008). Attachment 3 describes the noncompetitive leasing process. Attachment 4 is the EPAct Offer to Lease, Form 3200-42a (2007), which is also used for noncompetitive lease applications.
Time Frame: This IM is effective immediately.
Budget Impact: Implementation of the policies outlined in this IM can be accomplished under existing budget allocations.
Background: The final rulemaking for 43 CFR Parts 3200 and 3280 was published in the Federal Register on May 2, 2007, and became effective on June 1, 2007. The final rule revised the existing regulations governing Geothermal Resource Leasing and Geothermal Resources Unit Agreements to implement the EPAct’s geothermal provisions. The EPAct eliminated the previous two-tier leasing program and replaced it with a competitive leasing system similar to the oil and gas leasing system. In addition, the EPAct provides for four circumstances where noncompetitive leasing is permitted. See 43 CFR 3203.5 and attachments 3 and 4, including noncompetitive “direct use” leases in areas determined to be appropriate for exclusive direct use, without sale, for purposes other than commercial generation of electricity. 
In contrast to the previous limitation that competitive leasing occur only in Known Geothermal Leasing Areas, the EPAct requires that all lands available for geothermal leasing first be offered competitively to the highest qualified bidder, with the following exceptions:  (1) Those parcels not receiving a bid are then available noncompetitively for a period of two years following the competitive lease sale, and (2) Lands designated for (a) direct use leasing only; (b) areas for which grandfathered noncompetitive lease applications were pending on August 8, 2005; and (c) under certain circumstances, lands that are subject to mining claims are not subject to the competitive sale process.
Noncompetitive direct use leases may be issued in areas designated by the BLM as being appropriate for direct uses only (for example, if a power plant would be unsuitable in that location due to unacceptable impacts on other resource uses or users).  A noncompetitive direct use lease may also be issued after the BLM determines that there is no competitive interest. If there is competitive interest in an area otherwise deemed appropriate for exclusive direct use, the lands may be offered at the next competitive lease sale as a standard geothermal lease, but with a stipulation restricting operations to direct uses. The BLM may designate direct use areas in response to an application.
Manual/Handbook Sections Affected:  This guidance will be incorporated into the BLM Manual Handbooks in the 3200 series when next updated.
Coordination: This guidance was coordinated with the Land and Resources Project Office Project Manager, the National Lease Sale User Requirements Team, and senior field office geothermal program managers and adjudicators.
Contact: If you have questions or concerns, please contact me at 202-208-4201, or by e-mail at Mike_Nedd@blm.gov, or your staff may contact Kermit Witherbee, National Geothermal Program Manager, at 202-452-0385, or by e-mail at Kermit_Witherbee@blm.gov.
Signed by:                                                                 Authenticated by:
Michael Nedd                                                             Robert M. Williams
Assistant Director                                                      Division of IRM Governance,WO-560
Minerals and Realty Management
4 Attachments
      3 – Noncompetitive Geothermal Leasing (3 pp)