To amend the Internal Revenue Code of 1986 to establish a Federal income tax credit for production of energy from geothermal energy resources, and for other purposes.

Summary: Geothermal Energy Initiative Act of 2004 - Amends the Internal Revenue Code to include geothermal energy and certain geothermal energy facilities as qualified energy resources and appurtenant facilities eligible for the renewable electricity production credit.

Directs the Secretary of Energy to: (1) review and publish annually the available assessments of geothermal energy resources available within the United States; and (2) undertake new assessments as necessary, taking into account changes in market conditions, available technologies, and other relevant factors.

Requires such report to contain a detailed inventory describing the available amount and characteristics of geothermal energy resources.

Directs the Secretary of the Interior and the Secretary of Agriculture to expedite development of geothermal energy in making revisions to certain land use plans for public lands and National Forest System lands, respectively.

Directs the Secretary of the Interior to report to Congress on recommendations for geothermal energy development on Federal land, including a list, developed in consultation with the Secretaries of Energy and of Defense, of lands under their jurisdictions, that would be suitable for development for geothermal energy, and recommended statutory and regulatory mechanisms for such development.

Instructs the Secretary of the Interior and the Secretary of Agriculture to enter into and submit to Congress a memorandum of understanding regarding leasing and permitting for geothermal development of public lands under their respective jurisdictions.

Amends the Geothermal Steam Act of 1970 to authorize the Secretary of the Interior to reimburse certain persons through royalty credits, for reasonable amounts paid for preparation of project-level analysis, documentation, or related study required under the National Environmental Policy Act of 1969 with respect to the lease.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Geothermal Energy Initiative Act of 
2004''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Federal income tax credits have been established for 
        production of energy from renewable energy resources, other 
        than geothermal energy resources, including with respect to 
        wind energy and closed-loop biomass energy.
            (2) The last national resource assessment of geothermal 
        energy resource sites in the United States was completed in 
        1978. There have been substantial changes in technology and 
        advances in geological science in the intervening 26 years.
            (3) Many Federal land management agencies, including the 
        Bureau of Land Management and the Forest Service, are not aware 
        of geothermal energy resources and fail to recognize geothermal 
        energy resources in their land use planning process. Failure to 
        recognize geothermal energy resources during the land use 
        planning process poses significant delays in geothermal 
        resource development.
            (4) The Bureau of Land Management has a backlog of 230 
        lease applications for prospecting for geothermal energy. The 
        average age of these lease applications is 9 years. The oldest 
        non-competitive application was received in 1974.
            (5) There appears to be a lack of focus and priority in the 
        Bureau of Land Management concerning geothermal energy efforts.
            (6) Development of geothermal energy resources is 
        environmentally safe and clean.

SEC. 3. CREDIT FOR ELECTRICITY PRODUCED FROM GEOTHERMAL ENERGY.

    (a) In General.--Section 45(c)(1) of the Internal Revenue Code of 
1986 (relating to qualified energy resources) is amended by striking 
``and'' at the end of subparagraph (B), by striking the period at the 
end of the subparagraph (C) and inserting ``, and'', and by adding at 
the end the following new subparagraph:
                    ``(D) geothermal energy.''.
    (b) Qualified Facility.--Section 45(c)(3) of such Code (defining 
qualified facility) is amended by inserting after subparagraph (E) the 
following new subparagraph:
                    ``(D) Geothermal energy facility.--In the case of a 
                facility using geothermal energy to produce 
                electricity, the term `qualified facility' means--
                            ``(i) any facility owned by the taxpayer 
                        which is originally placed in service after 
                        December 31, 2004, and
                            ``(ii) any facility owned by the taxpayer 
                        which is originally placed in service before 
                        January 1, 2005, but only to the extent of its 
                        incremental production.
                If such a facility is leased and the operator thereof 
                is the lessee, such lessee (and not the owner) shall be 
                treated for purposes of this section as owning such 
                facility.''.
    (c) Incremental Production.--Section 45(d) of such Code (relating 
to definitions and special rules) is amended by adding at the end the 
following new paragraph:
            ``(9) Definition and special rule with respect to 
        incremental geothermal production.--For purposes of 
        subparagraph (D) of paragraph (3)--
                    ``(A) In general.--The term `incremental 
                production' means, with respect to a facility described 
                in subsection (c)(3)(D)(ii) for any taxable year, the 
                excess of--
                            ``(i) the total kilowatt hours of 
                        electricity produced from such facility, over
                            ``(ii) the average annual kilowatt hours 
                        produced at such facility for five of the 
                        previous seven calendar years prior to the date 
                        of the enactment of this paragraph after 
                        eliminating the highest and lowest kilowatt 
                        hour production years in such seven-year 
                        period.
                    ``(B) Special rule.--A facility which was placed in 
                service seven years or longer prior to the date of the 
                enactment of this paragraph shall, commencing with the 
                year of such enactment, reduce the amount calculated 
                under subparagraph (A)(ii) each year, on a cumulative 
                basis, by the average decrease in annual kilowatt hour 
                production for the seven-year period described in 
                subparagraph (A)(ii) with such cumulative sum not to 
                exceed 30 percent.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to electricity sold after December 31, 2004.

SEC. 4. ASSESSMENT OF GEOTHERMAL ENERGY RESOURCES.

    (a) Resource Assessment.--Not later than 3 months after the date of 
the enactment of this Act, and each year thereafter, the Secretary of 
Energy shall review the available assessments of geothermal energy 
resources available within the United States and undertake new 
assessments as necessary, taking into account changes in market 
conditions, available technologies, and other relevant factors.
    (b) Contents of Reports.--Not later than 1 year after the date of 
the enactment of this Act, and each year thereafter, the Secretary 
shall publish a report based on the assessment under subsection (a). 
The report shall contain a detailed inventory describing the available 
amount and characteristics of the geothermal energy resources, 
including--
            (1) descriptions of surrounding terrain, population and 
        load centers, nearby energy infrastructure, location of energy 
        and water resources, and available estimates of the costs 
        needed to develop each resource;
            (2) an identification of any barriers to providing adequate 
        transmission for remote sources of geothermal energy resources 
        to current and emerging markets;
            (3) recommendations for removing or addressing such 
        barriers; and
            (4) ways to provide access to the grid that do not unfairly 
        disadvantage renewable or other energy producers.
    (c) Authorization of Appropriations.--To carry out this section 
there is authorized to be appropriated to the Secretary of the Interior 
$5,000,000 for fiscal years 2005, 2006, and 2007.

SEC. 5. ENHANCED ACCESS TO FEDERAL LANDS FOR GEOTHERMAL RESOURCE 
              DEVELOPMENT.

    (a) Revision of Land Use Plans.--
            (1) Public lands.--The Secretary of the Interior shall 
        expedite development of geothermal energy in making revisions 
        to land use plans under section 202 of the Federal Land Policy 
        and Management Act of 1976 (42 U.S.C. 1712) while protecting 
        other resources.
            (2) National forest system lands.--The Secretary of 
        Agriculture shall expedite development of geothermal energy in 
        making revisions of land and resource management plans under 
        section 6 of the Forest and Rangeland Renewable Resources 
        Planning Act of 1974 (16 U.S.C. 1604) while protecting other 
        resources.
            (3) Issuance of rights-of-way not affected.--Nothing in 
        this subsection shall preclude the issuance of a right-of-way 
        for the development of a geothermal energy project prior to the 
        revision of a land use plan by the appropriate land management 
        agency.
    (b) Report to Congress.--Within 24 months after the date of the 
enactment of this section, the Secretary of the Interior shall develop 
and report to the Congress recommendations on any statutory or 
regulatory changes the Secretary believes would assist in the 
development of geothermal energy on Federal land. The report shall 
include--
            (1) a 5-year plan developed by the Secretary of the 
        Interior, in cooperation with the Secretary of Agriculture, for 
        encouraging the development of geothermal energy on Federal 
        land in an environmentally sound manner;
            (2) an analysis of--
                    (A) whether the use of rights-of-ways is the best 
                means of authorizing use of Federal land for the 
                development of geothermal energy, or whether such 
                resources could be better developed through a leasing 
                system or other method;
                    (B) the desirability of grants, loans, tax credits, 
                or other provisions to promote geothermal energy 
                development on Federal land; and
                    (C) any problems, including environmental concerns, 
                that the Secretary of the Interior or the Secretary of 
                Agriculture has encountered in managing geothermal 
                energy projects on Federal land, or believe are likely 
                to arise in relation to the development of geothermal 
                energy on Federal land; and
            (3) a list, developed in consultation with the Secretaries 
        of Energy and Defense, of lands under the jurisdiction of the 
        Departments of Energy and Defense, respectively, that would be 
        suitable for development for geothermal energy, and recommended 
        statutory and regulatory mechanisms for such development.

SEC. 6. CONSULTATION REGARDING GEOTHERMAL LEASING AND PERMITTING ON 
              PUBLIC LANDS.

    (a) In General.--Not later than 6 months after the date of the 
enactment of this Act, the Secretary of the Interior and the Secretary 
of Agriculture shall enter into and submit to the Congress a memorandum 
of understanding in accordance with this section regarding leasing and 
permitting, for geothermal development, of public lands under their 
respective administrative jurisdictions.
    (b) Lease and Permit Applications.--The memorandum of understanding 
shall include provisions that--
            (1) identify known geothermal areas on public lands within 
        the National Forest System and to the extent necessary review 
        management plans to consider leasing of such lands under the 
        Geothermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) as a land 
        use;
            (2) establish an administrative procedure for processing 
        geothermal lease applications, including lines of authority, 
        steps in application processing, and timeframes for application 
        processing;
            (3) provide that the Secretary concerned shall--
                    (A) within 14 days after receiving an application 
                for a lease, determine whether the application contains 
                sufficient information to allow processing of the 
                application; and
                    (B) if the application is found not to contain 
                sufficient information to allow processing the 
                application, before the end of such 14-day period, 
                provide written notification to the lease applicant 
                that the application is being returned to the applicant 
                without processing and an itemization of the 
                deficiencies in the application that prevent 
                processing;
            (4) provide that the Secretary concerned shall within 30 
        days after receiving a lease application, provide written 
        notice to the lease applicant regarding the status of the 
        application, including an estimate of the time that will be 
        required to complete action on the application; and
            (5) establish an administrative procedure for processing 
        geothermal development permits, including lines of authority, 
        steps in permit processing, and timeframes for permit 
        processing.
    (c) Five-Year Leasing Plan.--The memorandum of understanding shall 
develop a 5-year plan for leasing under the Geothermal Steam Act of 
1970 (30 U.S.C. 1001 et seq.) of public land in the National Forest 
System. The plan for geothermal leasing shall be updated every 5 years.
    (d) Data Retrieval System.--The memorandum of understanding shall 
establish a joint data retrieval system that is capable of--
            (1) tracking lease and permit applications and requests; 
        and
            (2) providing to the applicant or requester information as 
        to their status within the Departments of the Interior and 
        Agriculture, including an estimate of the time required for 
        administrative action.

SEC. 7. REIMBURSEMENT FOR COSTS OF NEPA ANALYSES, DOCUMENTATION, AND 
              STUDIES.

    (a) In General.--The Geothermal Steam Act of 1970 (30 U.S.C. 1001 
et seq.) is amended by adding at the end the following:

``SEC. 30. REIMBURSEMENT FOR COSTS OF NEPA ANALYSES, DOCUMENTATION, AND 
              STUDIES.

    ``(a) In General.--The Secretary of the Interior may, through 
royalty credits, reimburse a person who is a lessee, operator, 
operating rights owner, or applicant for a lease under this Act for 
reasonable amounts paid by the person for preparation by the Secretary 
(or a contractor or other person selected by the Secretary) of any 
project-level analysis, documentation, or related study required under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) 
with respect to the lease.
    ``(b) Conditions.--The Secretary may provide reimbursement under 
subsection (a) only if--
            ``(1) adequate funding to enable the Secretary to timely 
        prepare the analysis, documentation, or related study is not 
        appropriated;
            ``(2) the person paid the amounts voluntarily; and
            ``(3) the person maintains records of its costs in 
        accordance with regulations prescribed by the Secretary.''.
    (b) Application.--The amendment made by this section shall apply 
with respect to any lease entered into before, on, or after the date of 
the enactment of this Act.
    (c) Deadline for Regulations.--The Secretary shall issue 
regulations implementing the amendment made by this section by not 
later than 90 days after the date of the enactment of this Act.

SEC. 8. AUTHORIZATION OF APPROPRIATIONS.

    To carry out section 5 through 7 there are authorized to be 
appropriated to the Secretary of the Interior such sums as may be 
necessary.