[House Report 113-709]
[From the U.S. Government Publishing Office]
113th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 113-709
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GEOTHERMAL PRODUCTION EXPANSION ACT OF 2013
_______
December 22, 2014.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Hastings of Washington, from the Committee on Natural Resources,
submitted the following
R E P O R T
[To accompany S. 363]
[Including cost estimate of the Congressional Budget Office]
The Committee on Natural Resources, to whom was referred
the bill (S. 363) to expand geothermal production, and for
other purposes, having considered the same, report favorably
thereon without amendment and recommend that the bill do pass.
Purpose of the Bill
The purpose of S. 363 is to expand geothermal production.
Background and Need for Legislation
Geothermal energy can be used for electricity production,
for commercial, industrial, and residential direct heating
purposes, and for heating and cooling through geothermal heat
pumps. To develop geothermal electricity, the wells bring the
geothermal water to the surface, where its heat energy is
converted into electricity at a geothermal power plant.
Geothermal heat can also be used without involving a power
plant or heat pump for applications such as space heating and
cooling, food preparation, greenhouses, and agriculture.
The legislation expands the provisions of the Geothermal
Steam Act of 1970 to allow for non-competitive geothermal
leasing on federal land adjacent to private lands that are
identified as primary resources for geothermal energy.
While the process of non-competitive leasing of known
valuable resources is controversial, the sponsors have
attempted to draft the legislation to address concerns and
ensure a fair price for the taxpayer. However, concerns over
the fundamental need for non-competitive leasing of valuable
properties remains a fundamental question regarding this
legislation.
Committee Action
S. 363 was introduced on February 14, 2013, by Senator Ron
Wyden (D-OR). On July 9, 2014, the bill passed the Senate by
unanimous consent without amendment. The bill was then referred
to the Committee on Natural Resources, and within the Committee
to the Subcommittee on Energy and Mineral Resources. On July
29, 2014, the Subcommittee held a hearing on the House
companion bill, H.R. 2004, introduced by Congressman Michael
Simpson (R-ID). On September 18, 2014, the Natural Resources
Committee met to consider S. 363. The Subcommittee on Energy
and Mineral Resources was discharged by unanimous consent. No
amendments were offered and the bill was adopted and ordered
favorably reported to the House of Representatives by unanimous
consent.
Committee Oversight Findings and Recommendations
Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII of the Rules of the House of Representatives, the
Committee on Natural Resources' oversight findings and
recommendations are reflected in the body of this report.
Compliance With House Rule XIII
1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the
Rules of the House of Representatives requires an estimate and
a comparison by the Committee of the costs which would be
incurred in carrying out this bill. However, clause 3(d)(2)(B)
of that rule provides that this requirement does not apply when
the Committee has included in its report a timely submitted
cost estimate of the bill prepared by the Director of the
Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule
XIII of the Rules of the House of Representatives and section
403 of the Congressional Budget Act of 1974, the Committee has
received the following cost estimate for this bill from the
Director of the Congressional Budget Office:
S. 363--Geothermal Production Expansion Act of 2013
S. 363 would authorize the Bureau of Land Management (BLM)
to award leases, on a noncompetitive basis, for the development
of geothermal resources on certain federal lands. Based on
information provided by BLM, the Department of Energy (DOE),
and individuals working in the geothermal industry, CBO
estimates that implementing the legislation would have no
significant effect on the federal budget over the 2015-2024
period. Enacting S. 363 could affect direct spending;
therefore, pay-as-you-go procedures apply. However, CBO
estimates that the net effect on direct spending would not be
significant in any year. Enacting the legislation would not
affect revenues.
S. 363 would authorize BLM to offer noncompetitive leases
of up to 640 acres for lands adjacent to known geothermal
discoveries. Under the act, a company that identified a
geothermal resource that extended onto federal land adjacent to
company-controlled lands could acquire the lease for a
specified amount (bonus bid) determined by BLM to be equivalent
to the fair market value rather than an amount determined
through a competitive auction. In addition to paying fair
market value for the parcel, the act would require any company
awarded such a noncompetitive lease to make annual rental
payments equal to those required for lands that are leased
competitively. Finally, a company could receive only one
noncompetitive lease for each known geothermal discovery.
CBO estimates that awarding noncompetitive leases for lands
adjacent to known geothermal discoveries could reduce bonus
bids on those parcels. However, because the legislation would
require the companies that are awarded those leases to pay fair
market value for them, we estimate that implementing the act
would not reduce the amount of receipts deposited in the U.S.
Treasury by more than $500,000 in any year. (Under current law,
75 percent of all receipts from bonus bids, rents, and
royalties related to the development of geothermal resources on
federal lands is paid to the states and counties in which those
lands are located. The remaining 25 percent is deposited in the
U.S. Treasury.)
In addition, based on information provided by DOE and
individuals working in the geothermal industry, CBO expects
that implementing S. 363 could increase receipts from royalties
paid on geothermal energy production by reducing the amount of
time it takes to develop a known geothermal resource and by
reducing the likelihood that lands containing geothermal
resources would be acquired for speculative purposes. CBO
estimates that any increase in the amount of royalty receipts
that would be deposited in the U.S. Treasury would not exceed
$500,000 in any year. Those amounts would offset any reduction
in bonus bids from issuing noncompetitive leases under the act.
On balance, CBO estimates that implementing S. 363 would have
no significant net effect on direct spending through fiscal
year 2024.
S. 363 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
On June 27, 2013, CBO transmitted a cost estimate for S.
363, the Geothermal Production Expansion Act of 2013, as
ordered reported by the Senate Committee on Energy and Natural
Resources on May 16, 2013. The two versions of the act are
similar and the estimated costs are the same.
The CBO staff contact for this estimate is Jeff LaFave.
This estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
2. Section 308(a) of Congressional Budget Act. As required
by clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives and section 308(a) of the Congressional Budget
Act of 1974, this bill does not contain any new budget
authority, credit authority, spending authority, or an increase
or decrease in revenues or tax expenditures. Based on
information provided by the Bureau of Land Management, the
Department of Energy, and individuals working in the geothermal
industry, CBO estimates that implementing the legislation would
have no significant effect on the federal budget over the 2015-
2024 period. While enacting S. 363 could affect direct
spending, the net effect on direct spending would not be
significant in any year.
3. General Performance Goals and Objectives. As required by
clause 3(c)(4) of rule XIII, the general performance goal or
objective of this bill is to expand geothermal production.
Earmark Statement
This bill does not contain any Congressional earmarks,
limited tax benefits, or limited tariff benefits as defined
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of
the House of Representatives.
Compliance With Public Law 104-4
This bill contains no unfunded mandates.
Compliance With H. Res. 5
Directed Rule Making. The Chairman estimates that this bill
directs the Secretary of the Interior to conduct one
rulemaking.
Duplication of Existing Programs. This bill does not
establish or reauthorize a program of the federal government
known to be duplicative of another program. Such program was
not included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-139
or identified in the most recent Catalog of Federal Domestic
Assistance published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169) as relating to other programs.
Preemption of State, Local or Tribal Law
This bill is not intended to preempt any State, local or
tribal law.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
GEOTHERMAL STEAM ACT OF 1970
* * * * * * *
SEC. 4. LEASING PROCEDURES.
(a) * * *
(b) Competitive Lease Sale Required.--
(1) * * *
* * * * * * *
(4) Adjoining land.--
(A) Definitions.--In this paragraph:
(i) Fair market value per acre.--The
term ``fair market value per acre''
means a dollar amount per acre that--
(I) except as provided in
this clause, shall be equal to
the market value per acre
(taking into account the
determination under
subparagraph (B)(iii) regarding
a valid discovery on the
adjoining land) as determined
by the Secretary under
regulations issued under this
paragraph;
(II) shall be determined by
the Secretary with respect to a
lease under this paragraph, by
not later than the end of the
180-day period beginning on the
date the Secretary receives an
application for the lease; and
(III) shall be not less than
the greater of--
(aa) 4 times the
median amount paid per
acre for all land
leased under this Act
during the preceding
year; or
(bb) $50.
(ii) Industry standards.--The term
``industry standards'' means the
standards by which a qualified
geothermal professional assesses
whether downhole or flowing temperature
measurements with indications of
permeability are sufficient to produce
energy from geothermal resources, as
determined through flow or injection
testing or measurement of lost
circulation while drilling.
(iii) Qualified federal land.--The
term ``qualified Federal land'' means
land that is otherwise available for
leasing under this Act.
(iv) Qualified geothermal
professional.--The term ``qualified
geothermal professional'' means an
individual who is an engineer or
geoscientist in good professional
standing with at least 5 years of
experience in geothermal exploration,
development, or project assessment.
(v) Qualified lessee.--The term
``qualified lessee'' means a person
that may hold a geothermal lease under
this Act (including applicable
regulations).
(vi) Valid discovery.--The term
``valid discovery'' means a discovery
of a geothermal resource by a new or
existing slim hole or production well,
that exhibits downhole or flowing
temperature measurements with
indications of permeability that are
sufficient to meet industry standards.
(B) Authority.--An area of qualified Federal
land that adjoins other land for which a
qualified lessee holds a legal right to develop
geothermal resources may be available for a
noncompetitive lease under this section to the
qualified lessee at the fair market value per
acre, if--
(i) the area of qualified Federal
land--
(I) consists of not less than
1 acre and not more than 640
acres; and
(II) is not already leased
under this Act or nominated to
be leased under subsection (a);
(ii) the qualified lessee has not
previously received a noncompetitive
lease under this paragraph in
connection with the valid discovery for
which data has been submitted under
clause (iii)(I); and
(iii) sufficient geological and other
technical data prepared by a qualified
geothermal professional has been
submitted by the qualified lessee to
the applicable Federal land management
agency that would lead individuals who
are experienced in the subject matter
to believe that--
(I) there is a valid
discovery of geothermal
resources on the land for which
the qualified lessee holds the
legal right to develop
geothermal resources; and
(II) that thermal feature
extends into the adjoining
areas.
(C) Determination of fair market value.--
(i) In general.--The Secretary
shall--
(I) publish a notice of any
request to lease land under
this paragraph;
(II) determine fair market
value for purposes of this
paragraph in accordance with
procedures for making those
determinations that are
established by regulations
issued by the Secretary;
(III) provide to a qualified
lessee and publish, with an
opportunity for public comment
for a period of 30 days, any
proposed determination under
this subparagraph of the fair
market value of an area that
the qualified lessee seeks to
lease under this paragraph; and
(IV) provide to the qualified
lessee and any adversely
affected party the opportunity
to appeal the final
determination of fair market
value in an administrative
proceeding before the
applicable Federal land
management agency, in
accordance with applicable law
(including regulations).
(ii) Limitation on nomination.--After
publication of a notice of request to
lease land under this paragraph, the
Secretary may not accept under
subsection (a) any nomination of the
land for leasing unless the request has
been denied or withdrawn.
(iii) Annual rental.--For purposes of
section 5(a)(3), a lease awarded under
this paragraph shall be considered a
lease awarded in a competitive lease
sale.
(D) Regulations.--Not later than 270 days
after the date of enactment of the Geothermal
Production Expansion Act of 2013, the Secretary
shall issue regulations to carry out this
paragraph.
* * * * * * *