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California State Geothermal Lease (3-CA-a)

California defines geothermal resources to “mean 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 which may be extracted from, such 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, but excluding oil, hydrocarbon gas or other hydrocarbon substances.” Cal. Pub. Res. Code 6901-6925.2 (6903). The California State Lands Commission has a Mineral Resources Management Division (in Long Beach) is responsible for the management and administration of geothermal resources contained in state lands. The Commission has a multiple use management policy and manages the resources of its lands for the benefit of all people in the State.


State Geothermal Lease Process

3-CA-a.1 - Application Form for Resource Lease, Permit or Other Entitlement for Use

Note: a pre-application meeting is recommended to determine any steps necessary before the leasing process begins and to inform any parties and agencies which may become involved in the project of the proposed leasing actions. The developer must determine whether the lands are suitable for development. If they are not, exploration can be done to determine the extent of geothermal resources available in the area before beginning the leasing process.

Applications for a geothermal resource lease are made to the California State Lands Commission, Mineral Resources Management Division. The application requires the payment of a filing fee and an approximate expense deposit (AED) for the documents being requested. The filing fee is a non-refundable $25 fee. Generally, application for geothermal leasing will require a $5,000 AED. The fee and AED apply to routine or uncomplicated applications and includes services such as: initial title determination, preparing and circulating environmental documents, coordination with appropriate public agencies, field inspections, preparing the document requested and land description, and office technical review. Any unused portion of the AED will be refunded and any additional expense will be billed. A reimbursement agreement will be used to formalize this transaction.

An application is not transferable; therefore, an agent should not submit an application without disclosing his agency status and the principal's identity by completing the appropriate Designation of Agent Form.

The application will be deemed complete if all parts of the Application Form are adequately filled out and returned with the following:

  1. Filing fee, approximate expense deposit and executed reimbursement agreement;
  2. Material sufficient to permit staff to locate and describe the nature and extent of the State land or resource to be utilized in the project;
  3. Material sufficient to permit staff to determine the level and scope of the environmental review required under CEQA and the State CEQA Guidelines;
  4. Material sufficient to permit staff to determine the fair market value (rental, royalty and/or other consideration) to be paid by the applicant for the use of the State land or resource;
  5. Material sufficient to permit staff to determine if the application is:
    • consistent with Commission policies, practices and procedures;
    • conducive to public access;
    • consistent with environmental safeguards and policies of the State; and
    • in the best interest of the State.

CGC § 65943 requires the California State Lands Commission to determine in writing if the application is complete. If a written determination is not made within thirty calendar days after receiving the application, the application is deemed complete.

3-CA-a.2 - Are Lands Suited for Competitive Leasing or Negotiated Leasing?

The California State Lands Commission will determine if the lands will be disposed of through a competitive leasing process or through a negotiated leasing process.

3-CA-a.3 - Nominate or Designate Lands for Competitive Lease Process

The California State Lands Commission may designate State lands for lease by competitive bidding to the highest responsible qualified bidder. 2 CCR 2249. Nomination may be made by the holder of an exploration permit or any other party qualified to hold a lease for any state lands.

Upon nomination, the Commission may designate State lands for lease by competitive bidding to the highest responsible qualified bidder. Such nominations may be made by holders of exploration permits or any other party qualified to hold a lease, pursuant to Public Resources Code Section 6801. Any State lands may be nominated and designated for competitive lease sale; provided that lands included within a valid and effective prospecting permit may be nominated and designated but may not be leased prior to the termination of that permit. 2 CCR 2249.

3-CA-a.4 - Environmental Review, See Flowchart 9

Pursuant to its regulations, the Commission may not issue a lease for use of "Significant Lands" if such proposed use is detrimental to the identified values in California Environmental Quality Act (CEQA). Most leases or other entitlements for use of State lands may require approvals from other federal, State or local agencies. On many proposed projects the Commission is the Lead Agency under the CEQA (the public agency with the principal responsibility for carrying out or approving a project) and is therefore responsible for preparing the environmental documentation appropriate to each project.

Note: The environmental review process must be done before both competitive leases and negotiated leases are issued by the SLC.

3-CA-a.5 - Adjudicate Competitive Lease Process

The California State Lands Commission conducts the competitive lease process, generally, as follows:

  • The Commission issues a notice of intent to receive bids, published at least once in a newspaper of general circulation in the county in which the lands, interest or project is located specifying the lands or interest for bid, the time and place for receipt and opening of bids, and the availability of appropriate approved bid packages and forms at the office of the Commission.
  • The Commission awards the highest or lowest responsible bidder, as appropriate, unless not in the best interest of the State (the Commission may reject all existing bids and call for new ones or terminate bidding)
  • Except as otherwise provided in the bid instructions, each bid shall be a firm bid, irrevocable for a period not to exceed ninety days from the date of bid opening.
  • Bidders will bear all reasonable expenses incurred by the Commission for the bid processing and award including costs of approval, advertising and environmental review, in accordance with the terms set forth in the approved bid package.

2 CCR 1909

3-CA-a.6 - Does the Surface Owner Exercise Right to Match High Bid?

When a competitive bid has been held for lands, and the Commission has determined the highest qualified bid, the Commission shall notify the surface owner of such bid. The notice shall be deemed to be effective when received by the surface owner or five days after being sent, whichever occurs first. 2 CCR 2250.

In the event of a competitive lease process, upon determining the highest competitive bid, the owner of the surface of the lands may, within thirty days, submit a bid identical to the highest acceptable bid and the Commission will issue a lease to the owner. If the owner fails to file a bid within that time, the Commission may proceed with the award of the bid highest bidder. CPRC § 6912.

3-CA-a.7 - Lease Issued to Developer or Surface Owner

The following are some of the circumstances that may cause the Commission to deny a project:

  1. Failure of an applicant to furnish requested additional information;
  2. Environmental considerations;
  3. Failure to meet any statutory requirements;
  4. Failure to submit requested additional fees;
  5. Failure to conclude negotiations or to execute document;
  6. Inability of applicant to meet financial qualifications;
  7. Misrepresentation by the applicant or agent; or
  8. The Commission on its own motion may not desire to grant a lease, permit or other entitlement for use of the State lands or resources at the time of application.

3-CA-a.8 to 3-CA-a.9 - Is Application Complete?

Lands included in a valid prospecting permit may be nominated but not leased until the termination of the prospecting permit. In addition, once an application is submitted, CPRC §6921 provides priority for the surface owner of the lands.

3-CA-a.10 - Does Surface Owner Exercise Right to Submit Application

The surface owner of the lands may, within four months of the date of service of the application, file an application for a lease. If the owner is a qualified person and the Commission determines that leasing the lands is in the best interest of the state, the owner’s application shall be granted. If the owner fails to exercise these rights, they will terminate and the applicant will proceed with their application.

3-CA-a.11 - Negotiate Lease Terms

The California State Lands Commission and the leasing party will privately negotiate all terms of the lease to be signed by the Commission and the leasing party after concluding the negotiation.

3-CA-a.12 - Environmental Review, See Flowchart 9

Pursuant to its regulations, the Commission may not issue a lease for use of "Significant Lands" if such proposed use is detrimental to the identified values in California Environmental Quality Act (CEQA). Most leases or other entitlements for use of State lands may require approvals from other federal, State or local agencies. On many proposed projects the Commission is the Lead Agency under the CEQA (the public agency with the principal responsibility for carrying out or approving a project) and is therefore responsible for preparing the environmental documentation appropriate to each project. In addition, any lands within the coastal zone are subject to a coastal zone consistency finding before a sale or lease can be finalized. More information about the coastal zone review can be found at the California Coastal Commission webpage.

Note: The environmental review process must be done before both competitive leases and negotiated leases are issued by the SLC.

Environmental Overview: 9

3-CA-a.13 - Negotiated Lease Issued to Developer or Surface Owner

The terms of each individually negotiated lease will determine the extent and scope of rights granted to the lessee.

3-CA-a.14 - Approval of Lease Assignment (If Necessary)

If necessary, the state agency has authority to review and approve any necessary lease assignments requested by the lessee.




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Edit California State Lands Commission
Lead Geothermal Negotiator

gregabbazabbapelka@slcabbazabbacaabbazabbagov


Edit California State Lands Commission
Lead Attorney for Geothermal Leasing and Geotechnical Permitting
916-574-0398
joeabbazabbafabel@slcabbazabbacaabbazabbagov