Geothermal Rules Encourage Alternative
Energy Development on Federal Lands
Provide $4 Million in Revenue for County Governments
WASHINGTON – To encourage geothermal
energy development on federal lands, Interior Secretary Dirk Kempthorne
today announced proposed rules that would require more competitive leasing,
offer simplified royalty calculations and share $4 million in current
royalties with counties where production occurs.
“Developing alternative energy sources, such as geothermal, wind,
and solar, helps to increase and diversify our Nation’s energy
supply,” Kempthorne said. “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. We welcome public comment.”
The proposed rules are published in today’s Federal Register by
the Interior Department’s Bureau of Land Management and Minerals
Management Service. This Notice of Proposed Rulemaking opens a 60-day
public comment period.
Geothermal resources, such as steam and hot water, are used directly
to heat buildings and in greenhouses and aquaculture; and indirectly
to generate electric power. This energy accounts for 17 percent of the
electricity generated from renewable sources in the United States. Half
of the Nation’s geothermal energy production occurs on Federal
land, much of it in California and Nevada. Other states with geothermal
activity include Oregon, Utah, Idaho, and New Mexico.
The Bureau of Land Management’s proposed rule would require competitive
leasing for geothermal resources on nearly all federal lands designated
for this type of development. If no bids are received, then these resources
would be offered non-competitively for two-year periods.
The proposed Minerals Management Service’s regulations establish
a fee schedule (in lieu of royalties) for the direct use of geothermal
resourcesthat provides incentives to encourage the development and expansion
of this alternative energy source. The MMS rule also would simplify
the royalty calculations for electrical generation by basing them on
a percentage of gross proceeds from the sale of electricity. This rule
would reduce industry’s administrative costs to comply.
The draft rules also mandate that 25 percent of the royalties be paid
to the counties where the production occurs, increasing those local governments’ revenues
initially by more than $4 million a year.
The two sets of proposed rules were written in response to the Energy
Policy Act of 2005, which mandated comprehensive changes to leasing and
royalty policies to encourage geothermal energy use without imposing
additional administrative burdens on industry or government agencies.
Previously, geothermal royalties were divided equally between federal
and state governments. Under the new rules, the royalties would be divided
as follows: county governments would receive 25 percent, state governments
50 percent and the federal government 25 percent. The new regulations
place no additional burdens on local governments.
Geothermal leasing is permitted on Interior and other federal lands
that are designated for this type of development but not on restricted
public lands, such as national parks, wilderness areas, national recreation
areas and other protected lands. The BLM currently administers about
350 geothermal leases; 55 of those are producing geothermal energy, including
34 power plants. The BLM has been expediting the
application process for geothermal leases, issuing more than 200 leases
since 2001, compared to 25 leases from 1996-2001.
Written comments on the BLM rules may be submitted by any of the following
methods: regular mail to Director (630), Bureau of Land Management, Administrative
Record, Room 401 LS, Eastern States Office, 7450 Boston Boulevard, Springfield,
Virginia 22153; personal or messenger delivery to Room 401, 1620 L Street,
NW, Washington, DC 20036; e-mail to Federal eRulemaking Portal at www.regulations.gov;
or e-mail to comments_washington
@blm.gov (include “Attn: RIN 1004-AD87”). More
on the BLM’s efforts to implement the Energy Policy Act are at www.blm.gov/nhp/spotlight/epa2005/ or
call Kermit Witherbee at (202) 452-0385.
Comments on the MMS rule may be submitted via regular U.S. Mail to: Minerals
Management Service, Minerals Revenue Management, P.O. Box 25165, MS 302B2,
Denver, Colorado 80225; or via e-mail at: email@example.com. Please
include “Attn: RIN 1010-AD32” and include your name
and address. Persons seeking additional information on the MMS
rule may contact Sharron Gebhardt, Lead Regulatory Specialist, MMS,
P.O. Box 25165, MS302B2, Denver, Colorado 80225; via e-mail at firstname.lastname@example.org;
telephone at (303) 231-3211; or fax at (303) 231-3781. All public comments
received will be reviewed and considered before the draft rules are finalized.
The comment period for both rules ends Sept. 19, 2006.