[Federal Register Volume 68, Number 51 (Monday, March 17, 2003)]
[Proposed Rules]
[Pages 12643-12644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6254]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR 206

RIN 1010-AC59


Geothermal Resources: Proposal To Convene Discussions To Develop 
Consensus on Royalty Valuation Approaches

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Request for comments, solicitation of interest.

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SUMMARY: In conjunction with the President's National Energy Policy on 
renewable energy resources, MMS proposes to convene discussions with 
geothermal producers and other stakeholders to explore the possibility 
of developing a consensus on geothermal royalty valuation approaches. 
The discussions will be in the form of public workshops and written 
comments and will be open for both electrical generation and direct-use 
valuation. MMS wishes to gauge the extent to which geothermal producers 
and other stakeholders desire new or modified royalty valuation 
approaches. Accordingly, MMS at this time requests the following 
information: Comments on the need for new or modified valuation 
procedures; an expression of interest in holding workshops to discuss 
alternative valuation procedures, with the goal of developing a 
consensus on new or modified approaches; and suggestions for 
alternatives or modifications to the existing procedures, with the 
objective of maintaining royalty neutrality.

DATES: You must submit comments on or before April 16, 2003.

ADDRESSES: Address your comments and suggestions regarding this 
proposal to Paul Knueven, Manager, Records and Information Management 
Team.
    By regular U.S. mail: Center for Excellence, Minerals Revenue 
Management, Minerals Management Service, P.O. Box 25165, MS 320B2, 
Denver, Colorado 80225-0165; or
    By overnight mail or courier: Center for Excellence, Minerals 
Revenue Management, Minerals Management Service, Building 85, Room 
F421, Denver Federal Center, Denver, Colorado 80225-0165; or
    By email: [email protected]. Please submit Internet comments as 
an ASCII file and avoid the use of special characters and any form of 
encryption. Also, please include ``Attn: Geothermal Proposal 2003'' and 
your name and return address in your Internet message. If you do not 
receive a confirmation that we have received your Internet message, 
call the contact person listed below.

FOR FURTHER INFORMATION CONTACT: Sharron L. Gebhardt at telephone (303) 
231-3211, fax (303) 231-3781, email [email protected], or PO Box 
25165, MS 320B2, Denver Federal Center, Denver, Colorado 80225-0165.

SUPPLEMENTARY INFORMATION: 
    I. Background: The current geothermal valuation rules (30 CFR 
206.350 et seq.) have been in effect since January 1, 1992. One of the 
primary reasons for promulgating the current rules was to establish 
procedures to value the increasing volume of geothermal production used 
by lessees in their own power plants or direct-use facilities; that is, 
production not subject to sales transactions, or the so-called ``no-
sales'' resources. After considering all the comments, MMS adopted the 
netback procedure for valuing the no-sales electrical generation 
resources and the alternative fuel method for valuing the no-sales 
direct-use resources (56 FR 57256, November 8, 1991). These two 
procedures have now become the predominant methods of valuing 
geothermal production from Federal leases for royalty purposes.
    In response to concerns raised by stakeholders over declining 
royalties in 1999, MMS reopened the geothermal valuation rules to 
public comment to consider alternatives to both the netback procedure 
and the alternative fuel method (Advance Notice of Proposed Rulemaking, 
64 FR 45213, August 19, 1999). However, owing to successful resolution 
of the concerns that prompted this action, as well as no clear 
consensus from industry to alter the existing rules, MMS withdrew the 
proposed rulemaking (65 FR 49957, August 16, 2000).
    On May 17, 2001, the President released his National Energy Policy 
(NEP) that emphasized the importance of renewable energy in 
contributing to the nation's electricity supply. In response to 
recommendations in the NEP, the Departments of the Interior and Energy 
co-sponsored a national conference in Washington, DC, on November 28, 
2001, to hear testimony on opportunities to expand renewable energy 
production from public lands. A follow-up conference was held in Palm 
Springs, California, on February 27, 2002, for more in-depth 
discussions of the issues raised in November. Few industry 
representatives at either conference commented on the current Federal 
geothermal valuation methods. However, those representatives who did 
speak raised concerns about the effects of royalty valuation on project 
costs.
    II. Proposal and Request: In response to the comments made at the 
conferences, and to further the NEP's goal of increasing production of 
renewable energy on public lands, MMS proposes to convene informal 
discussions among geothermal producers and other stakeholders to 
explore the possibility of developing a consensus on geothermal royalty 
valuation approaches for the no-sales resources. The discussions will 
be in the form of public workshops and written comments. Additionally, 
valuation of both electrical generation and direct-use resources will 
be open to discussion.
    MMS wishes to gauge the extent to which geothermal producers and 
other stakeholders desire new or modified royalty valuation approaches. 
In this regard we request responses to the following questions:
    1. Is there a need for new or modified geothermal royalty valuation 
approaches, especially for the no-sales resources? Why or why not.
    2. Are you interested and would you participate in public workshops 
to discuss alternative valuation procedures, with the goal of 
developing a consensus on new or modified approaches?
    3. What alternatives or modifications to the existing valuation 
procedures do you propose? (See further discussion under ``Goals of 
Valuation Alternatives'' below.)
    Depending on the responses to questions 1 and 2, MMS will schedule 
public workshops in the spring or summer of 2003. MMS proposes two 
workshops, one in Denver, Colorado, and the other in either Sacramento, 
California, or Reno, Nevada. Please indicate your preference. We will 
consider other locations if there is enough interest.
    III. Goals of Valuation Alternatives: The goals of any proposed 
alternatives to the current valuation procedures, particularly with 
respect to the no-sales resources, should be threefold. First, the 
proposed method should derive a value of the resource that reflects its 
market value. Second, the proposed method should be easy to apply and 
readily verifiable. Third, the proposed method should not cause a 
significant royalty reduction for both present and future

[[Page 12644]]

production; that is, it should be relatively revenue neutral.
    If you propose an alternative valuation method, please describe it 
in sufficient detail to provide an understanding of its workings and 
effects. Please use examples where possible.

    Dated: February 13, 2003.
Lucy Querques Denett,
Associate Director for Minerals Revenue Management.
[FR Doc. 03-6254 Filed 3-14-03; 8:45 am]
BILLING CODE 4310-MR-P