GRR/Section 3 - Land Access Process Overview
From Open Energy Information
Section 3 - Land Access Process Overview
This flowchart presumes a title opinion has already been obtained and the developer has already determined the rights that must be acquired in order to harvest the geothermal resource.
To secure geothermal rights and land access or control, a developer needs to determine land ownership. Exploration activities that cause any significant surface disturbance fall outside the definition of casual use, therefore requiring permission of the owner of surface and subsurface rights (owner of the geothermal resource). Land access can be gained through land purchase, a lease, or by obtaining written or oral permission from the land owner, however, a formal, private lease is standard practice.
Pursuant to the Geothermal Steam Act of 1970, the Bureau of Land Management leases federal lands and reviews permit applications for geothermal development on those lands. The BLM’s authority encompasses about 570 million acres of BLM land, 193 million acres of National Forest System lands, other federal lands, and private lands where the Federal Government has retained mineral rights.
In most locations, BLM is responsible for the management of the federal mineral estate and issues geothermal leases for all lands owned or controlled by the federal government (such as the U.S. Forest Service and Bureau of Reclamation). Some statutory exceptions give this authority to other agencies like the United States Department of Defense, United States Department of Energy, Bureau of Indian Affairs, etc. Contact your local BLM office to see if any exceptions apply to your project location.
In split estate situations, the surface rights and subsurface rights (such as the rights to develop minerals) for a piece of land are owned by different parties. (see BLM Instruction Memorandums: IM 2003-131 Split Estate and IM 2007-021 Split Estate Leasing and Planning)
In a reverse split estate, when BLM or United States Forest Service is the surface management agency (the mineral estate was not reserved to the Federal government), a special use permit or a right-of-way (ROW) may required to occupy the surface. The drilling permit will be approved by the appropriate State agency. Contact the local BLM or USFS office for further instruction.
A ROW is a special use permit to occupy lands for specific purposes, like transmission lines, access roads, off - lease facility siting. A right-of-way is not required for on-lease activities (usually granted as a lease right), but is required for off lease activities.
Surface Management Agency: A surface management agency (SMA) is any federal agency, other than the BLM, which is responsible for managing the surface overlying federally-owned minerals. In the case of geothermal resources, the SMA is often the U.S. Forest Service (USFS). While the BLM retains primary management of geothermal development on federal lands, the SMA must consent to the issuance of leases for lands it manages.
Leasing gives a developer the exclusive right to develop and utilize geothermal resources on a given federal site. A lease is required prior to doing all later stage work, and the lease contract specifies terms for development and payment of royalties and rents to the government. Surface rights for approved activities are included in the lease. Stipulations may be placed on leases to protect other resources through mitigation or restrictions on surface use.
Energy Policy Act of 2005
Congress passed the Energy Policy Act of 2005 (EPAct) amending the Geothermal Steam Act of 1970, requiring that all public lands available for geothermal leasing be offered first by competitive leasing. Lease parcels that receive no bids are then available non-competitively for a period of two years. BLM may issue a non-competitive lease for direct-use only if there is no competitive interest. The maximum competitive lease size is 5,120 acres. The maximum acreage held by an individual/company in a state is 51,200 acres. Lease acreage held by production or committed to a unit agreement are exempt from the state-wide acreage limitation.
Competitive and Non-Competitive Leases
BLM issues competitive and non-competitive leases for geothermal exploration and development on lands owned or controlled by the federal government. Competitive lease sales must be held at least once every two years in states where nominations are pending. Both are issued for a 10-year period that can be extended for two subsequent five-year periods by completing diligence on the lease hold.
When is a lease required?
Exploration activities that cause a surface disturbance on federal land require a geothermal lease. Exploration activities that do not penetrate a geothermal reservoir (temperature gradient well, seismic, etc.) are permitted with an approved Notice to Intent Conduct (NOI) exploration and do not require a geothermal lease. The drilling of an exploration well to test a prospective reservoir requires that the applicant for a drilling permit either have a geothermal lease or operating rights.
The Geothermal-Biz website presents a brief introduction to geothermal leasing and permitting on federal and state land. The website includes details on leasing terms in western states, including the length of the lease, renewal terms, rentals, royalties and size limitations. Also note Geothermal Leasing 101: Federal, State and Private Lands, a presentation by Andrew T. Braff, Esq., at the Geothermal Resource Council's 33rd Annual Meeting, Reno, NV (October 2, 2009).
In split estate situations, the surface rights and subsurface rights (such as the rights to develop minerals) for a piece of land are owned by different parties. In these situations, mineral rights are considered the dominant estate, meaning they take precedence over other rights associated with the property, including those associated with owning the surface. This means that the mineral estate owner has the right to enter onto the surface estate to access the minerals. However, the mineral owner must show due regard for the interests of the surface estate owner and occupy only those portions of the surface that are reasonably necessary to develop the mineral estate. Federal Land Policy and Management Act of 1976 Mineral Leasing Act of 1920
The BLM's Split-Estate Policy only applies to situations where the surface rights are in private ownership and the rights to development of the mineral resources are publicly held and managed by the Federal government.
For a general review of exploration and development on split estates, see the Gold Book on Split Estate (2007).
The operator must make a good faith effort to notify the private surface owner before entering private surface to stake a well location and access road or to conduct cultural or biological surveys. Each Geothermal Drilling Permit (GDP), NOS, or Sundry Notice permitting new surface disturbing activities must contain the name, address, telephone number, and e-mail address (if available), of the private surface owner.
The BLM will invite the surface owner to participate in the onsite and final reclamation inspections and will take into consideration the needs of the surface owner when reviewing the APD and reclamation plans and when approving final abandonment and reclamation. The BLM will offer the surface owner the same level of surface protection that the BLM provides on Federal surface. The BLM will not apply standards or conditions that exceed those that would normally be applied to Federal surface, even when requested by the surface owner.
Prior to approval of the APD (or Sundry Notice to conduct new surface disturbing activities), the operator must certify as part of the complete application that a good faith effort had been made to reach a surface use agreement with the private surface owner and that an agreement was reached or that it failed.
BLM Requires that the Operator engage the Surface Owner in negotiations for the purpose of obtaining a surface use agreement:
- Surface Owner agreement for access, or
- Waiver from surface owner for access, or
- Agreement regarding compensation
Failing an agreement, the operator can “bond-on” for the benefit of the surface owner to cover compensation, such as for reasonable and foreseeable loss of crops and damages to tangible improvements. Bonding-on is a very rare occurrence. There are 2 types of Bonds:
- 3104 “Performance” Bond–Required (43 CFR 3104)
- * Ensures Performance During Drilling, Production, Plugging and Abandonment, Reclamation
- * Minimum Bond Amounts:
- * $10,000 Per Lease
- * $25,000 Statewide
- * $150,000 Nationwide
- Surface Owner Protection Bond (a.k.a. Damages Bond or 3814 Bond) (43 CFR 3184)
- * If the lessee/operator and surface owner fail to reach a Surface Use Agreement
- * Coverage(Depends on statute under which the land was patented.)
- * For example, under the Stock Raising Homestead Act : Reasonable & foreseeable damages to Crops (including grazing lands)and Tangible Improvements
- * Minimum Bond = $1,000
Once the Bond is filed with BLM, with a copy to the surface owner, the Surface owner has 30 days to object. BLM reviews the objections and:
- Rejects bond: Operator has 30 days to appeal to the Interior Board of Land Appeals (IBLA)
- Accepts bond: Surface owner has 30 days to appeal to the Interior Board of Land Appeals
Prior to approving the APD, the BLM will advise the surface owner of the right to object to the sufficiency of the bond and will review the value of the bond if the surface owner objects. The BLM will either confirm the current bond amount or establish a new amount. Once the operator has filed an adequate bond, the BLM may approve the APD. Following APD approval, the operator and the surface owner may appeal the BLM’s final decision on the bond amount.
The operator must negotiate in good faith with the surface owner. Negotiating in good faith provides a forum through which the operator and surface owner can discuss the preferences and needs of both the surface owner and the operator. In addressing those needs, the operator may be able to modify the development proposal to both minimize damage to the surface owner’s property while reducing reclamation and surface damage costs. For example, operator costs can might be minimized by placing roads and facilities in locations that meet the surface owner’s long-term development plans for the property, thereby lessening the future reclamation obligations of the operator.
The surface use agreement between the surface owner and the operator is confidential. However, the APD Surface Use Plan of Operations must contain sufficient detail about any aspects of the agreement necessary for NEPA documentation and to determine that the operations will be in compliance with laws, regulations, Onshore Orders, and agency policies. When the operator submits its Surface Use Plan of Operations to the BLM, the operator must make a good faith effort to provide a copy to the surface owner. Following APD approval, the operator must also provide a copy of the Conditions of Approval to the surface owner. In addition, the operator must make a good faith effort to provide a copy of any proposal involving new surface disturbance to the private surface owner.
BLM conducts inspections based on a priority ranking system. If a surface owner detects noncompliance, they should contact the BLM. BLM will investigate and take appropriate enforcement action.
The Bureau of Land Management makes an effort to work with the surface owner and sends formal documentation of such efforts in the form of a letter.
The United States has a unique legal and political relationship with Indian tribes and Alaska Native entities as provided by the Constitution of the United States, treaties, court decisions and Federal statutes. Within the government-to-government relationship, the Bureau of Indian Affairs (BIA) provides services directly or through contracts, grants, or compacts to 566 Federally recognized tribes with a service population of about 1.9 million American Indian and Alaska Natives. While the role of the BIA has changed significantly in the last three decades in response to a greater emphasis on Indian self-governance and self-determination, Tribes still look to the BIA for a broad spectrum of services.
The Tribal Energy and Environmental Information Clearinghouse has compiled various applicable Laws and Regulations for geothermal energy development on tribal lands specifically.
The individual state lands agency (board) is responsible for the leasing of geothermal resources.
Typically a developer acquires land or resource control before pursuing and obtaining other permits. If some of the land being explored is private, including split estate (surface ownership is severed from ownership of the underlying resource), county, or municipal land, consult public records to determine current ownership. In split estate cases, negotiations with both the surface and resource owner must be completed.