[House Report 113-709]
[From the U.S. Government Publishing Office]


113th Congress  }                                            {  Report
                        HOUSE OF REPRESENTATIVES
 2d Session     }                                            { 113-709

======================================================================



 
              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

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SEC. 4. LEASING PROCEDURES.

  (a) * * *
  (b) Competitive Lease Sale Required.--
          (1) * * *

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          (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.

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