Geothermal Power – A need for legal streamlining on the local, state, and federal level.

Geothermal energy has been utilized by humanity for the past 10,000 years[1]; however, this clean and renewable energy resource is highly underutilized in our society.[2] Languishing in the shadows of better-known energy sources like wind, solar, and fossil fuels, geothermal energy provides less than one percent of total U.S. electricity.[3] Still, this source of power is abundant and environmentally-friendly[4] —one that has many advantages over its non-renewable competitors, especially fossil fuels, an energy source that impacts the environment throughout each stage of its lifecycle.[5] Due to its small carbon footprint and high potential for heating and electricity production[6], geothermal energy demands more attention, but the numerous federal, state, and local laws ranging from environmental protection statutes to zoning regulations make capitalizing on geothermal energy too daunting.

Geothermal energy is derived from the natural heat emitted by magma existing close to the earth’s surface.[7] First, high-temperature molten rock found deep within the earth heats groundwater, converting it into steam.[8] The steam is then harnessed to spin turbines, leading to the generation of electricity.[9] The Italians were the first contemporary culture to take advantage of geothermal energy with the 1904 construction of an electric generator that employed the power of natural steam, producing enough electricity to light four light bulbs in Larderello, Italy.[10] Countries with unusually active volcanic surfaces, like Iceland, are employing the use of geothermal energy to power their cities with great success. Currently, Iceland uses geothermal energy to supply 25% of the country’s electricity needs, serving as a remarkable example of a country that has transitioned well into the “green energy” sector -- for not long ago, coal and various other fossil fuels were the primary agents of Iceland’s electricity production.[11] Deriving energy from subterranean heat is no longer limited to volcanic regions of the earth. In particular, the western U.S. possesses vast geothermal development potential.[12] Energy companies attempting to build new geothermal generation facilities are continuously confronted with complex legal red tape, inhibiting the expansion of the industry. Federal, state, private, and Indian nations are the four major types of land where geothermal energy projects may be developed – each with varying regulations and laws regarding how the treat geothermal resources.[13]

Approximately 90 percent of geothermal resources in the U.S. are located on federal lands[14] and therefore, understanding federal leasing and permitting is important for the successful development of geothermal resources. The Geothermal Steam Act of 1970 dictates the authority of Federal government agencies with respect to geothermal power and leasing.[15] The Geothermal Steam Act gives the Secretary of Interior the authority to lease government geothermal holdings for energy production purposes.[16] The Secretary of Interior has delegated this geothermal leasing authority to the Bureau of Land Management (BLM).[17] The BLM is thus in charge of issuing geothermal leases as well as administering geothermal development on land, whether that land is ultimately managed by the Department of the Interior (e.g. BLM) or the Department of Agriculture (e.g. U.S. Forest Service). The BLM’s authority encompasses approximately 570 million acres of BLM land, 193 million acres of National Forest System lands, other federal lands, and private lands where the Federal Government has retained mineral rights.[18] The BLM grants access to this resource primarily through a competitive leasing process established by the Geothermal Steam Act.[19] In addition to undertaking the Geothermal Steam Act’s leasing process, the BLM is required to review the environmental consequences of granting leases and permits necessary for geothermal development under the National Environmental Policy Act.[20] The level of federal environmental review of a geothermal lease depends on the degree of surface disturbance that will accompany geothermal development. The BLM has to issue either an ‘Environmental Assessment’ to support a ‘finding of no significant impact’ on the environment, or an ‘Environmental Impact Statement’ detailing all the alternatives to permit issuance and their associated impacts on the environment.[21] Still, even if the BLM authorizes a geothermal lease, this does not grant a developer an exclusive right to develop a parcel of land. For example, the Geothermal Steam Act expressly disclaims any preemption of state water law, so if water is to be evaporated or consumed as part of the geothermal plant’s use, a lessee may need to obtain water rights under the law of the state where a lease is sought.[22]

The legal maze described is only the tip of the iceberg regarding the complexity associated with geothermal development. The system of laws and regulatory bodies is interwoven and diverse, leading to the reduction of incentives for private developers to pursue geothermal energy projects. The streamlining of the regulatory regime is necessary to achieve useful outcomes for geothermal energy development.[23] Expediting the regulatory process for geothermal power plants will lower the cost of these projects, making them more competitive in relation to more traditional forms of energy production. Fortunately, some incentives have been created by government entities to promote the use of geothermal energy. For example, in California the Geothermal Grant and Loan Program has been implemented “to promote the development of new and existing geothermal resources and technologies.”[24] On a federal level, the government has created tax incentives, allowing geothermal power projects to apply for either the Federal Investment Tax Credit or the Production Tax Credit. In addition, federal law concerning geothermal leasing was significantly modified in 2005 by the John Rishel Geothermal Leasing Amendments passed as part of the Energy Policy Act of 2005.[25] Leasing provisions are amended and recodified in Title 30, Chapter 23, Section 1001-10028 of the U.S. Code to direct the Secretaries of Interior and Agriculture to reduce the backlog of pending geothermal lease applications, prioritize timely completion of administrative actions relating to geothermal development, and consider geothermal leasing and development in future forest and resource management plans for areas with high geothermal energy potential.[26] Still, more incentives are needed for developing geothermal energy to its economical capacity. The goal must be to curb the demand for less environmentally friendly forms of energy that currently dominate the energy portfolio of the U.S.

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[1] Centuries ago, the Romans and other ancient civilizations were using naturally occurring geothermal energy in the form of naturally heated underground springs for bathing and other purposes. Tex. Comptroller of Pub. Accounts, The Energy Report 281 (2008) [hereinafter Texas Energy Report], available at http:// www.window.state.tx.us/specialrpt/energy/pdf/96-1266EnergyReport.pdf

[2] See Texas Energy Report

[3] Geothermal Energy Association, Power Plants -2008 National Summary, http://www.geo-energy.org/plants.aspx (According to the U.S. Energy Information Administration, a federal agency, “geothermal energy in 2005 generated approximately 16,010 Gigawatt hours of electric generation or about 0.36% of U.S. annual electricity generation.”)

[4] See, e.g., Geothermal Energy Facts, RenewableEnergyResource.net, available at http://renewableenergyresource.net/renewable-energy-sources/geothermal-energy/geothermal-renewable-energy-facts

[5] See Key Findings, U.S. Global Change Res. Program, available at http:// www.globalchange.gov/publications/reports/scientific-assessments/us-impacts/key-findings (Arguing that emissions produced by the use of fossil fuels are enhancing climate change).

[6] Low temperature hydrothermal heat can be used to heat homes and public buildings, while high temperature hydrothermal heat is primarily employed through taking advantage of heated water vapor produced underground – leading to the production of electricity through the use of mechanical energy. University of Colorado Boulder, What is Geothermal Energy?,[hereinafter University of Colorado Boulder] available at http://lsa.colorado.edu/essence/texts/geothermal.html.

[7] Mass. Inst. of Tech., The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems (EGS) on the United States in the 21st Century (2006) [hereinafter MIT Report], available at http:// geothermal.inel.gov/publications/future_of_geothermal-energy.pdf

[8] University of Colorado Boulder, supra note 6.

[9] Id.

[10] John W. Lund, 100 Years of Geothermal Power Production, GHC Bull. (Sept. 2004), at 11-12, available at http:// geoheat.oit.edu/bulletin/bull25-3/art2.pdf; see also, National Geographic, Geothermal Energy; Tapping the Earth’s Heat, available at http://environment.nationalgeographic.com/environment/global-warming/geothermal-profile/

[11] Askja Energy - Icelandic Energy Portal, The Energy Sector, available at http://askjaenergy.org/iceland-introduction/iceland-energy-sector/

[12] Geothermal Energy Association, Power Plants -2008 National Summary, http://www.geo-energy.org/plants.aspx (“The United States continues to be the world leader in online capacity of geothermal energy and the generation of electric power from geothermal energy.”)

[13] E.g., Goethermal Steam Act, 30 U.S.C. §§ 1001-1027 (2006); Ariz. Rev. Stat. Ann., §§ 27-651 to 27-677 (2011); Colorado Geothermal Resources Act, Colo. Rev. Stat. Ann. §§ 37-90.5-101 to 37-90.5-108 (2011); Idaho Geothermal Resources Act, Idaho Code Ann. §§ 42-4001 to 42-4015 (2011); Geothermal Resources Act, Wash. Rev. Code Ann. §§ 78.60.010 - 78.60.900 (2011)

[14] Mark D. Detsky, Getting into Hot Water: The Law of Geothermal Resources in Colorado, 39 Colo. Law. 65 (2010) (citing U.S. Bureau of Land Management (“BLM”), Comprehensive Strategic Plan for Geothermal Management 7 (2005))

[15] Geothermal Steam Act, 30 U.S.C. §§ 1001-1027 (2006); see also, Liz Battocletti, Bob Lawrence, and Associates, Inc., An Introduction to Geothermal Permitting, available at http://www.geothermal-biz.com/Docs/Intro_to_geo_permitting.pdf

[16] 30 U.S.C. § 1002.

[17] 30 U.S.C. § 1003(b).

[18] Liz Battocletti, Bob Lawrence, and Associates, Inc., supra note 15.

[19] 30 U.S.C. § 1003(b).

[20] Liz Battocletti, Bob Lawrence, and Associates, Inc., supra note 15.

[21] BLM, “Record of Decision for Geothermal Leasing in the Western United States” (Dec. 12, 2008)

[22] 30 U.S.C. § 1008; BLM PEIS (2008), “Programmatic EIS for Geothermal Leasing in the Western U.S."Presentation given by the BLM and Forest Service, http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy/geothermal_eis.Par.10283.File.dat/0708pmtgpres.pdf

[23] U.S. Department of Energy, Energy Department Develops Regulatory Roadmap to Spur Geothermal Energy Development, available at http://www1.eere.energy.gov/geothermal/news_detail.html?news_id=19350

[24] California Energy Commission, Geothermal Grant and Loan Program, available at http://www.energy.ca.gov/geothermal/grda.html.

[25] 72 Fed. Reg. 84 at 24358 (May 2, 2007).

[26] 30 U.S.C. §§ 1121 & 1141

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