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Regulatory and Permitting Information Desktop Toolkit

Montana Geothermal Permitting Process (MT)

The steps of the Montana geothermal permitting process are summarized in the chart below. Roll over each section for a summary of the regulations and permits it covers. Click a section to learn more about the required permits and regulations related to that topic.

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Project Development Timeline

Geothermal Development in Montana

In Montana, geothermal resources are considered “sui generis” being neither a mineral resource nor a water resource, but they are closely related to and possibly affecting and affected by water resources in many instances. MCA 77-4-104. As such, developers must secure a water right before diverting/appropriating geothermal resources, unless an exception applies. Generally, the relevant exception exempts the nonconsumptive use of water for purposes of geothermal development from the normal appropriation process, so long as the project is not within a controlled groundwater area and conforms to the maximum appropriation amount in. MCA 85-2-306(2). Similar to many western states, water rights in Montana are based on the Doctrine of Prior Appropriation. Water Law Basics in Montana. Within the Montana Department of Natural Resources & Conservation, the Montana Water Rights Bureau administers permits related to water rights pursuant to MCA 85-2.

Initially, geothermal developers in Montana need to ensure that the applicable local Land Use Plan (LUP) allows for geothermal exploration and development projects. Land use planning in Montana is delegated to local governments pursuant to the |Local Planning Enabling Act (M.C.A. secs. 71-1-01 to 71-1-606).

To extract geothermal resources in Montana, developers must obtain a lease and, any required easements to access state lands, including any necessary permits to encroach on existing state highway Rights-of-Way (ROWs). The Montana Department of Natural Resources & Conservation (MDNRC) has administrative authority for issuing geothermal leases on state land and may choose whether to open bidding to the public upon receipt of a lease application. If the project only requires a short-term use of school trust lands, the developer may apply for a Land Use License. In addition to obtaining a geothermal lease, the developer must secure a water right before diverting/appropriating geothermal resources from the Montana Water Rights Bureau, unless the exception in MCA 85-2-306(3) applies. For ancillary activities related to development and not covered under a geothermal lease, developers may need to obtain a right-of-way or easement from the Montana State Land Board (MSLB), within the MDNRC.

To conduct certain exploration activities, developers need to file a Geothermal Exploration Plan with the Montana Department of Environmental Quality (MDEQ). For exploration activities not amounting to drilling, developers must file a Notice of Intent (NOI) with the county clerk and recorder of the applicable county prior to conducting the exploration.

For geothermal development drilling operations, Montana does not currently have an established process for obtaining a permit to drill for geothermal resources required for exploration drilling activities. Interested developers should contact the MDNRC for information and requirements. Unless an exception applies, geothermal exploration wells are regulated under laws pertaining to water wells and require hiring a licensed water well contractor. In almost all cases, drilling and associated construction will require review under the Montana Environmental Policy Act (MEPA).

For geothermal operations that include the injection and removal of fluids, developers must obtain an Underground Injection Control Permit from the Environmental Protection Agency. The EPA regulates Class V injection wells on federal lands, many tribal lands, and in some states, including Montana.

To produce the geothermal resources and convert the resource to marketable electricity, construction of a power plant may include the Major Facility Siting Process. Montana Major Facility Siting Act governs the siting of energy facilities in Montana. A “facility” includes generating facilities designed for or capable of producing geothermally derived power equivalent to 50 megawatts or more. Developers seeking a siting certificate must file an application with the Montana Department of Environmental Quality. The developer must initiate construction of a geothermal facility within 6 years of certification.

Where the geothermal facility requires a consumptive use of water or for ancillary water uses involved in geothermal development projects (cooling water, dust suppression, etc.), developers will likely need to obtain water by negotiating a transfer from an existing water right holder, or applying for a permit to appropriate water.

Prior to commencing geothermal well plugging and abandonment procedures, developers must obtain written approval from the Montana Board of Water Well Contractors.

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Federal Regulations and Permits for Geothermal Development

Initially, geothermal developers need to ensure that the applicable Land Use Plan (i.e., Resource Management Plan (RMP)) allows for geothermal exploration and development projects. In order to conduct certain exploration activities, developers need permission from the Bureau of Land Management (BLM) or United States Forest Service (USFS). Exploration activities may require review under the National Environmental Policy Act (NEPA). Whether nominated by the BLM or by a developer, eventually developers need to obtain a Lease for Geothermal Resources (Form 3200-024a) overlying the land for any activities beyond geothermal exploration covered under a Notice of Intent to Conduct Geothermal Resource Exploration Operations (Form 3200-009) (NOI).

For ancillary activities related to development and not covered under a geothermal lease, developers may need to obtain a right-of-way (ROW) over federal land from the applicable surface land management agency. Geothermal development operations, including drilling, require an approved Geothermal Drilling Permit (Form 3260-002) (GDP) and typically an approved Plan of Operations (POO) from the BLM, which will also require NEPA review. In order to produce the geothermal resources and convert the resource to marketable electricity, developers need an approved Plan of Utilization (POU) for the construction of a power plant and related activities. Finally, the developer must plug and abandon geothermal wells that are no longer in use or demonstrated to be potentially useful, if directed to do so by the BLM.

Land Use Planning

Geothermal projects on federal land must be consistent with the applicable Land Use Plan (LUP). Most projects on federal land will be subject to the administration of either the BLM or the USFS. In 2008, the BLM and USFS, in cooperation with the United States Department of Energy (DOE), issued a Record of Decision (ROD) to amend RMPs for geothermal leasing in the western United States. The ROD amended 114 BLM land use plans in the 11 western states and Alaska by using a Programmatic Geothermal Environmental Impact Statement (PGEIS). Geothermal projects sited within the RMP areas affected by the PGEIS will not require a revision or an amendment. Geothermal projects sited outside of the RMP areas affected by the PGEIS may require an amendment to the applicable LUP/RMP.

Exploration

Generally, developers will obtain a Notice of Intent to Conduct Geothermal Resource Exploration Operations (Form 3200-009) (NOI) on federal lands from the BLM. Exploration activities that “ordinarily lead to no significant disturbance of federal lands, resources, or improvements” 43 CFR 3200.1 qualify as “Casual Use” activities and do not technically require a permit. CU geothermal exploration activities generally include the use of all-terrain vehicles, two-meter probe surveys, magnetotelluric surveys, gravity surveys, geochemical surveys, archaeological surveys, and water sampling. In practice however, developers typically submit an NOI even for CU exploration activities. If the lands are managed by the USFS and not covered under a geothermal lease, developers must obtain an Exploration Permit directly from the USFS. If managed by the USFS but already subject to a geothermal lease, developers will go through the NOI process with the BLM. An approved NOI is tantamount to a permit to explore. In addition to CU exploration activities, an NOI can also allow for seismic surveys, electromagnetic surveys, and the drilling of temperature gradient wells. 43 CFR 3200.1. The aforementioned more invasive exploration activities can still bypass an otherwise more lengthy NEPA review by way of a Categorical Exclusion (CX). 43 CFR 3250. A CX is only applicable to drilling temperature gradient wells so long as there is no new associated well pad or access road construction. Any additional drilling beyond a temperature gradient well required to confirm the existence of geothermal resources will require an approved Geothermal Drilling Permit (Form 3260-002) (GDP). GDPs are not eligible for CX classification for purposes of NEPA review, likely requiring either an Environmental Assessment (EA) or Determination of NEPA Adequacy (DNA). Generally, a DNA will only suffice for subsequent GDP applications, where the original EA contemplated more wells than the amount proposed. Upon completion of exploration operations, if the BLM approved a NOI, the developer must send the BLM a complete and signed Notice of Completion of Geothermal Resource Exploration Operations (Form 3200-010). 43 CFR 3253.11.

Land Access

Geothermal Lease

In order to obtain federal geothermal mineral rights, developers must obtain a Geothermal Lease from the BLM. A Geothermal Lease conveys the exclusive right to drill for, extract, produce, remove, utilize, sell, and dispose of all geothermal resources in the lands subject to the lease. Lease for Geothermal Resources (Form 3200-024a).

Geothermal resources include:

  1. All products of geothermal processes, including indigenous steam, hot water, and hot brines;
  2. Steam and other gases, hot water, and hot brines resulting from water, gas, or other fluids artificially introduced into geothermal formations;
  3. Heat or other associated energy found in geothermal formations; and
  4. Any byproducts.

43 CFR 3200.1.

Given the rights conveyed and the applicable definition of “geothermal resources,” developers do not need to obtain a state water right related to the extraction of hot water and brines that are part of the geothermal resource/formation. The right to extract water, brines, and fluids for the purposes of geothermal development is inherent in the rights conveyed under a federal geothermal lease. If the project lands are available for lease, the BLM will hold an oral competitive auction and the lands will be offered to the highest qualified bidder. If no one bids on the leases in the competitive auction, developers may obtain a lease through a non-competitive process.

If the project is located on tribal lands, developers will negotiate with the appropriate tribe for a lease, which must be approved by the Bureau of Indian Affairs (BIA).

Issuing a Geothermal Lease constitutes a “major federal action” that triggers NEPA review. However, the previously discussed PGEIS allows for the issuance of geothermal leases without additional NEPA review by way of a Determination of NEPA Adequacy (DNA) tiered to the environmental review conducted for the amended RMP. For lands not within the 114 RMPs covered by the PGEIS, the BLM must conduct a NEPA review prior to issuing or making lands available for geothermal leasing.

Rights of Way

If federal land is required for ancillary activities related to development and is not covered by the geothermal lease, developers must obtain ROW access from the BLM or other federal agency. Ancillary activities may include transmission lines, roads, and other access. If the aforementioned activities are on USFS managed surface land, developers must obtain a special use authorization from the USFS. Similarly, for ancillary activities on Bureau of Reclamation (BOR) managed land, developers must obtain a Use Authorization from the BOR.

Well Field Development

In order to conduct drilling operations on federal land, developers must obtain an approved Geothermal Drilling Permit (Form 3260-002) (GDP) and POO from the BLM. Title 43 CFR 3261 Drilling Operations: Getting a Permit. If another federal agency manages the surface of the lease, that agency will be involved in the application review process. GDPs require NEPA review, either in the form of a DNA, EA, or Environmental Impact Statement (EIS). Generally, a DNA will only suffice for subsequent GDP applications, where the original EA or EIS contemplated more wells than the amount proposed.

Power Plant

In order to produce the geothermal resources and convert them to marketable electricity, developers need an approved POU for the construction of a power plant and related activities. A POU involves a Utilization Plan, Facility Construction Permit 43 CFR 3272, Site License 43 CFR 3273, and Commercial Use Permit 43 CFR 3274. Developers must participate in an application coordination meeting, which may be combined with the required on-site visit. Developers must complete the environmental review process under NEPA before the Site License and Facility Construction Permit will be approved by the BLM. After construction of the power plant, developers must obtain the Commercial Use Permit prior to commencing commercial operations under a federal lease, a federal unit, or a utilization facility. 43 CFR 3274.10.

Developers may choose to seek status as a Qualifying Facility (QF) under the Public Utilities Regulatory Act (PURPA). QF status provides certain benefits under the law. For example, QFs have the right to sell energy or capacity to a utility, the right to purchase certain services from utilities, and relief from certain regulatory burdens.

Developers may qualify as Exempt Wholesale Generators if they are independent power producers that exclusively sell energy to wholesale customers and complete the self-certification process overseen by the Federal Energy Regulatory Commission (FERC). Obtaining EWG status can exempt the generator from certain reporting and accounting regulations under the Energy Policy Act of 2005 and allows the generator to sell power at market-based rates.

Well Abandonment

A geothermal lessee/operator is required to promptly plug and abandon geothermal wells that are no longer in use or demonstrated to be potentially useful. Title 43 CFR 3263 Well Abandonment. The BLM may verbally order the operator to abandon a well or the operator may request verbal approval from the BLM to plug a well. In either case, the operator must submit a well plugging or abandonment report upon completion. 43 CFR § 3263.11

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