BILL REQ. #:  S-3499.3 

Read first time 01/16/12.   Referred to Committee on Energy, Natural Resources & Marine Waters.

     AN ACT Relating to the use of geothermal resources; amending RCW 78.60.030, 78.60.040, and 78.60.060; adding a new chapter to Title 43 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   (1) The legislature finds that because related geothermal resources may be present on contiguous private, state, and federal lands within the state, there is a need to provide greater conformity with the state's geothermal resources statutes and the federal statutes defining geothermal resources and clarify that ownership of geothermal resources resides with the surface owner unless the interest is otherwise reserved or conveyed.
     (2) The legislature finds that it is in the public interest to encourage and foster the development of geothermal resources in the state and intends to align the state statutes defining geothermal resources with current federal law with which developers are familiar, and clarify the respective regulatory roles of state agencies.

Sec. 2   RCW 78.60.030 and 1974 ex.s. c 43 s 3 are each amended to read as follows:
     ((For the purposes of this chapter, unless the text otherwise requires, the following terms shall have the following meanings:)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1)(a) "Geothermal resources" ((means only that natural heat energy of the earth from which it is technologically practical to produce electricity commercially and the medium by which such heat energy is extracted from the earth, including liquids or gases, as well as any minerals contained in any natural or injected fluids, brines and associated gas, but excluding oil, hydrocarbon gas and other hydrocarbon substances)) includes the natural heat of the earth, the energy, in whatever form, below the surface of the earth present in, resulting from, or created by, or that may be extracted from, the natural heat, and all minerals in solution or other products obtained from naturally heated fluids, brines, associated gases and steam, in whatever form, found below the surface of the earth, exclusive of helium or oil, hydrocarbon gas or other hydrocarbon substances, but including, specifically:
     (i) All products of geothermal processes, including indigenous steam, and hot water and hot brines;
     (ii) Steam and other bases, hot water and hot brines resulting from water, gas, or other fluids artificially introduced into geothermal formations;
     (iii) Heat or other associated energy found in geothermal formations; and
     (iv) Any by-product derived from them.
     (b) "Geothermal resources" does not include heat energy used in ground source heat exchange systems for ground source heat pumps.
     (2) "Waste", in addition to its ordinary meaning, shall mean "physical waste" as that term is generally understood and shall include:
     (a) The inefficient, excessive, or improper use of, or unnecessary dissipation of, reservoir energy; or the locating, spacing, drilling, equipping, operating or producing of any geothermal energy well in a manner which results, or tends to result, in reducing the quantity of geothermal energy to be recovered from any geothermal area in this state;
     (b) The inefficient above-ground transporting or storage of geothermal energy; or the locating, spacing, drilling, equipping, operating, or producing of any geothermal well in a manner causing, or tending to cause, unnecessary excessive surface loss or destruction of geothermal energy;
     (c) The escape into the open air, from a well of steam or hot water, in excess of what is reasonably necessary in the efficient development or production of a geothermal well.
     (3) "Geothermal area" means any land that is, or reasonably appears to be, underlain by geothermal resources.
     (4) "Energy transfer system" means the structures and enclosed fluids which facilitate the utilization of geothermal energy. The system includes the geothermal wells, cooling towers, reinjection wells, equipment directly involved in converting the heat energy associated with geothermal resources to mechanical or electrical energy or in transferring it to another fluid, the closed piping between such equipment, wells and towers and that portion of the earth which facilitates the transfer of a fluid from reinjection wells to geothermal wells: PROVIDED, That the system shall not include any geothermal resources which have escaped into or have been released into the nongeothermal ground or surface waters from either man-made containers or through leaks in the structure of the earth caused by or to which access was made possible by any drilling, redrilling, reworking or operating of a geothermal or reinjection well.
     (5) "Operator" means the person supervising or in control of the operation of a geothermal resource well, whether or not such person is the owner of the well.
     (6) "Owner" means the person who possesses the legal right to drill, convert or operate any well or other facility subject to the provisions of this chapter.
     (7) "Person" means any individual, corporation, company, association of individuals, joint venture, partnership, receiver, trustee, guardian, executor, administrator, personal representative, or public agency that is the subject of legal rights and duties.
     (8) "Pollution" means any damage or injury to ground or surface waters, soil or air resulting from the unauthorized loss, escape, or disposal of any substances at any well subject to the provisions of this chapter.
     (9) "Department" means the department of natural resources.
     (10) "Well" means any excavation made for the discovery or production of geothermal resources, or any special facility, converted producing facility, or reactivated or converted abandoned facility used for the reinjection of geothermal resources, or the residue thereof underground.
     (11) "Core holes" are holes drilled or excavations made expressly for the acquisition of geological or geophysical data for the purpose of finding and delineating a favorable geothermal area prior to the drilling of a well.
     (12) A "completed well" is a well that has been drilled to its total depth, has been adequately cased, and is ready to be either plugged and abandoned, shut-in, or put into production.
     (13) "Plug and abandon" means to place permanent plugs in the well in such a way and at such intervals as are necessary to prevent future leakage of fluid from the well to the surface or from one zone in the well to the other, and to remove all drilling and production equipment from the site, and to restore the surface of the site to its natural condition or contour or to such condition as may be prescribed by the department.
     (14) "Shut-in" means to adequately cap or seal a well to control the contained geothermal resources for an interim period.
     (15) "By-product" means any mineral or minerals, not including oil, hydrocarbon gas, or helium, which are found in solution or in association with geothermal steam and that have a value of less than seventy-five percent of the value of the geothermal resource or are not, because of quantity, quality, or technical difficulties in extraction and production, of sufficient value to warrant extraction and production by themselves.

Sec. 3   RCW 78.60.040 and 1979 ex.s. c 2 s 1 are each amended to read as follows:
     Notwithstanding any other provision of law, geothermal resources are found and hereby determined to be sui generis, being neither a mineral resource nor a water resource and as such are ((hereby)) declared to be the private property of the holder of the title to the surface land above the resource, unless the geothermal resources have been otherwise reserved by or conveyed to another person or entity. Nothing in this section divests the people of the state of any rights, title, or interest in geothermal resources owned by the state.

Sec. 4   RCW 78.60.060 and 2003 c 39 s 40 are each amended to read as follows:
     (1) This chapter is intended to preempt local regulation of the drilling and operation of wells for geothermal resources but shall not be construed to permit the locating of any well or drilling when such well or drilling is prohibited under state or local land use law or regulations promulgated thereunder. Geothermal resources, by-products ((and/or)), or waste products which have escaped or been released from the energy transfer system ((and/or)) or a mineral recovery process shall be subject to provisions of state law relating to the pollution of ground or surface waters (Title 90 RCW), provisions of the state fisheries law and the state game laws (Title 77 RCW), and any other state environmental pollution control laws.
     (2) Authorization for ((use of by-product water resources for all beneficial uses)) a consumptive use of water brought to the surface outside of a geothermal well, including but not limited to power production, greenhouse heating, warm water fish propagation, space heating plants, irrigation, swimming pools, and hot springs baths, shall be subject to the appropriation procedure as provided in Title 90 RCW.
     (3) Authorization for the use of water brought to the surface outside of a geothermal well is not subject to the appropriation procedure as provided in Title 90 RCW in the following circumstances: (a) Water that is removed from an aquifer or geothermal reservoir to develop and obtain geothermal resources if the water is returned to or reinjected into the same aquifer or reservoir; (b) water that is used during a temporary failure of all or part of a system that removes water from an aquifer or geothermal reservoir, transfers the heat from that water, and reinjects that water into the same aquifer or reservoir; or (c) water that is used during a test of a geothermal well; or (d) water that is removed from a geothermal well in conjunction with single or group domestic uses or for an industrial purpose in an amount not exceeding five thousand gallons a day as provided in RCW 90.44.050.
     (4) The department and the department of ecology shall cooperate to avoid duplication and to promote efficiency in issuing permits and other approvals for these uses.
     (5) If interference between an existing geothermal well and an existing water right permitted under Title 90 RCW is found by either the department or the department of ecology, the department and the department of ecology shall work cooperatively to resolve the conflict and develop a cooperative management program for the area. In determining what action should be taken, they shall consider the following goals:
     (a) Achieving the most beneficial use of the water and heat resources;
     (b) Allowing all existing users of the resources to continue to use those resources to the greatest extent possible; and
     (c) Ensuring that the public interest in efficient use of water and heat resources is protected.

NEW SECTION.  Sec. 5   The purpose of this chapter is to provide for the allocation of revenues distributed to the state under section 35 of the Mineral Lands Leasing Act of 1920, as amended (30 U.S.C. Sec. 191), with respect to activities of the United States bureau of land management undertaken pursuant to the Geothermal Steam Act of 1970 (30 U.S.C. Sec. 1001 et seq.) in order to accomplish the following general objectives:
     (1) Reduction of dependence on nonrenewable energy and stimulation of the state's economy through development of geothermal energy.
     (2) Mitigation of the social, economic, and environmental impacts of geothermal development.
     (3) Financial assistance to counties to offset the costs of providing public services and facilities necessitated by the development of geothermal resources within their jurisdictions.
     (4) Maintenance of the productivity of renewable resources through the investment of proceeds from these resources.

NEW SECTION.  Sec. 6   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "County of origin" means any county in which the United States bureau of land management has leased lands for geothermal development.
     (2) "Geothermal energy" means the natural heat of the earth and the medium by which this heat is extracted from the earth, including liquids or gases, as well as any minerals contained in any natural or injected fluids, brines, and associated gas but excluding oil, hydrocarbon gas, and other hydrocarbon substances.

NEW SECTION.  Sec. 7   (1) There is created the geothermal account in the state treasury. All expenditures from this account are subject to appropriation and chapter 43.88 RCW.
     (2) All revenues received by the state treasurer under section 35 of the Mineral Lands Leasing Act of 1920, as amended (30 U.S.C. Sec. 191), with respect to activities of the United States bureau of land management undertaken pursuant to the Geothermal Steam Act of 1970 (30 U.S.C. Sec. 1001 et seq.) shall be deposited in the geothermal account in the state treasury immediately upon receipt.
     (3) Expenditures from the account may only be used as provided in section 8 of this act.

NEW SECTION.  Sec. 8   Distribution of funds from the geothermal account created in section 7 of this act shall be subject to the following limitations:
     (1) Thirty percent to the department of natural resources for geothermal exploration and assessment;
     (2) Thirty percent to Washington State University or its statutory successor for the purpose of encouraging the development of geothermal energy; and
     (3) Forty percent to the county of origin for mitigating impacts caused by geothermal energy exploration, assessment, and development.

NEW SECTION.  Sec. 9   The state treasurer is responsible for distribution of funds to the county of origin. Each county's share of rentals and royalties from a lease including lands in more than one county shall be computed on the basis of the ratio that the acreage within each county has to the total acreage in the lease. Washington State University shall obtain the necessary information to make the distribution of funds on such a basis.

NEW SECTION.  Sec. 10   Sections 5 through 9 of this act constitute a new chapter in Title 43 RCW.