Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Environment Committee

SSB 5369

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Background:

State Management of Geothermal Resources.

The Department of Natural Resources (DNR) is responsible for administering and enforcing state laws related to the drilling, operation, maintenance, abandonment, and restoration of geothermal resources. The term "geothermal resources" means the natural heat energy of the Earth from which electricity can be produced and the mediums used to extract the heat energy. The term does not include oil, gas, or other hydrocarbon substances. Geothermal resources are the private property of the person who owns the associated land's surface rights.

A permit must be issued by the DNR before any person may drill a new well, or recommission an abandoned well, that is to be used for geothermal resource extraction. The fee for a geothermal resources well permit is $200. This fee revenue is deposited into the General Fund. Permits are only approved by the DNR if the well is found to be in the best interest of the state and if the well will not unreasonably decrease groundwater available to senior water right holders.

Federal Management of Geothermal Resources.

The federal Geothermal Steam Act of 1970 is managed and administered by the Bureau of Land Management (BLM). The BLM is responsible for authorizing the exploration, development, production, and closeout of geothermal resources on federal lands. Fifty percent of the royalties from geothermal resource exploration managed by the BLM are distributed to the state where the resource was found. The remaining 50 percent is evenly split between the federal government and the county government where the resource was found.

Historic State Geothermal Statutes.

In 1981, the Legislature created a statutory framework for distributing revenue received from the BLM for geothermal resource development in Washington. That initial framework was set to terminate after 20 years. In 2001, the initial termination date was extended for an additional decade. This framework, although still codified, officially terminated in 2011.

The centerpiece of the now-terminated statutes was an account to receive any funds owned to the state by the BLM. Funds in this account were split three ways: 30 percent to the DNR, 30 percent to Washington State University (WSU), and 40 percent to the county where the geothermal resource was extracted.

Groundwater Regulations.

All groundwater withdrawals require an application and permit from the Department of Ecology (DOE). Exemptions from this permit include any withdrawal of public groundwater for stock-watering purposes, or for watering a lawn or a noncommercial garden less than one-half acre. Single or group domestic uses or industrial purposes in an amount not exceeding 5,000 gallons a day are also exempt, as is providing water for industrial purposes, including irrigation, in an amount not exceeding 5,000 gallons per day.

Summary of Bill:

A new chapter is created in state law with the intent to provide for the allocation of revenues related to geothermal exploration. A new appropriated account, the Geothermal Account, is created to receive all revenues related to geothermal activities of the BLM under the Geothermal Steam Act of 1970. Seventy percent of all revenues in the Geothermal Account must be distributed to the DNR with the remaining balance distributed to WSU. The DNR's portion of the funding must be used for geothermal exploration and assessments. The portion dedicated to WSU must be used for the purpose of encouraging the development of geothermal energy.

The definition of "geothermal resources" is changed to expressly include within its scope all products of geothermal processes, fluids and steam artificially introduced into geothermal formations, heat found in geothermal formations, and any by-product derived from geothermal formations. The definition clarification also expressly excludes heat energy used in ground source heat exchange systems and helium.

Exemptions are provided to the general statement that all water use related to geothermal resources is subject to the general water law appropriation procedure. These exemptions are for water reasonably lost during well testing or a temporary failure of geothermal extraction infrastructure and for water that is removed from an aquifer in the geothermal extraction process but later returned or reinjected into the same aquifer. The DNR and the DOE must cooperate to avoid permitting duplication related to geothermal activities that affect water.

An express acknowledgment is made that the holder of title to a land's surface rights may convey the rights to the underlying geothermal resources to another party. However, that acknowledgment does not divest the state of Washington with its interest in state-owned geothermal resources.