Geothermal

Geothermal resources are defined as all products of geothermal processes, embracing indigenous steam, hot water and hot brines and heat or other associated energy found in geothermal formations[i].  However, geothermal energy is not a strictly renewable energy source like wind energy or hydro energy.

The Geothermal Steam Act of 1970 (“Act”) empowers the Secretary of the Interior (“Secretary”) to issue leases for the development and utilization of geothermal resources in lands administered by the Secretary.  It includes public, withdrawn, and acquired lands, in any national forest or other lands administered by the department of agriculture and in lands that were conveyed by the U.S. subject to a reservation of the geothermal resources there[ii].

Geothermal steam is used to produce electricity by turning generators, and affords the promise of a relatively pollution free source of energy.  However, the Act is not limited to only geothermal products that generate electricity[iii].  It is to be noted that the Act establishes a system of rents and royalties for the use of geothermal resources[iv].

The Act grants the Secretary authority to lease geothermal resources owned or reserved by the U.S[v].  Pursuant to the Act, the Secretary accepts nominations of land to be leased at any time from qualified companies and individuals[vi].  Generally, land is leased to the highest qualified bidder determined by the Secretary.  The Secretary of Interior must hold a competitive lease sale at least once every two years for land in a state that has nominations pending, if the land is otherwise available for leasing[vii].  Likewise, the Secretary must also hold non competitive leasing regarding any tract for which a competitive lease sale has been held for two years and for which the Secretary does not receive any bids in a competitive lease sale[viii].

Generally, the Secretary may identify areas on the land to be leased exclusively for direct use of geothermal resources, without sale for purposes other than commercial generation of electricity.  Such land may be leased to any qualified applicant that first applies for lease under regulations issued by the Secretary[ix].

Pursuant to the Act, generally, geothermal leases must provide for a royalty on electricity produced using geothermal resources, other than direct use of geothermal resources[x].  The Secretary must also establish a schedule of fees, in lieu of royalties for geothermal resources.  However, the Secretary terminates any lease with respect to which rental is not paid and the terms of the lease under which the rental is required[xi].

The Secretary may waive, suspend, or reduce the rental or royalty for any lease in the interests of conservation and to encourage the greatest ultimate recovery of geothermal resources.  These actions occur if s/he determines that it is necessary to promote development or that the lease cannot be successfully operated under the lease terms[xii].

It is to be noted that geothermal energy is cost effective, reliable, sustainable, and environmentally friendly.  The option of using geothermal energy or geothermal energy resources is considered fully in any new federal building, facility, or installation which is located in a geothermal resource area as designated by the Secretary of Energy[xiii].  Pursuant to the Geothermal Energy Research, Development, and Demonstration Act of 19741, the Federal Government must encourage and assist private industries through federal assistance in the development and demonstration of practicable means to produce useful energy from geothermal resources with environmentally acceptable processes[xiv].

[i] Rosette, Inc. v. United States DOI, 142 N.M. 717 (N.M. Ct. App. 2007).

[ii] 30 USCS § 1002.

[iii] Rosette, Inc. v. United States, 64 F. Supp. 2d 1116 (D.N.M. 1999).

[iv] Rosette, Inc. v. United States DOI, 142 N.M. 717 (N.M. Ct. App. 2007).

[v] Id.

[vi] 30 USCS § 1003.

[vii] Id.

[viii] 30 USCS § 1003.

[ix] Id.

[x] 30 USCS § 1004.

[xi] Id.

[xii] 30 USCS § 1012.

[xiii] 30 USCS § 1541.

[xiv] 30 USCS § 1101.


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