National Geothermal Policy and Regulation in the United States

Abstract

The United States has a strong tradition of private development of both publicly and privately owned resources. Geothermal energy and development followed many years of oil and gas development and the policies and regulations are very similar. The U.S. judicial system has decided that geothermal energy used for electrical generation is part of the mineral estate and ownership of the resource is part of the mineral rights for each parcel of land.

On publicly owned lands of the federal or state governments, the geothermal resource is available for lease for a specified time period. During the term of a lease the developer has exclusive rights to produce geothermal energy and sell hot water, steam or electricity. Leases may be awarded to the company offering the highest initial bonus payment or they may be obtained for only a filing fee. Royalties to be paid to the government are established prior to leasing.

On privately owned lands, geothermal developers usually obtain a lease for their operations. Only on rare occasion is the land owned by the geothermal developer. Various royalty rates are negotiated for each lease, and different royalty rates can be collected by several land owners in a single geothermal field. If the surface rights have been separated from the mineral rights for a parcel of land, it is common for the developer to pay a surface occupancy fee to the owner of the surface rights.

Developers of geothermal energy are required to follow strict regulations in drilling and abandonment of wells, plant construction and control of emissions. Many federal, state, and county government agencies control different aspects of geothermal development through requirements for permits and licenses. All geothermal developers are required to prepare a public statement of anticipated environmental impacts and a single government agency is assigned the leadership in review of thus statement. A development may be prohibited or stopped if the environmental impact is judged to be excessive.

Federal and state governments offer several incentives to promote geothermal development in the US. A complex set of tax laws and tax incentives control the profitability of geothermal development in different parts of the country. The 1992 National Energy Policy Act authorizes many new incentives. Federal funding for geothermal research is intended to lessen the financial risk of geothermal development.