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[Senate Report 112-145]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 314
112th Congress                                                   Report
                                 SENATE
 2d Session                                                     112-145

======================================================================

 
               GEOTHERMAL EXPLORATION AND TECHNOLOGY ACT

                                _______
                                

                February 7, 2012.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1142]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1142) to promote the mapping and 
development of United States geothermal resources by 
establishing a direct loan program for high risk geothermal 
exploration wells, to amend the Energy Independence and 
Security Act of 2007 to improve geothermal energy technology 
and demonstrate the use of geothermal energy in large sclae 
thermal applications, and for other purposes, having considered 
the same, reports favorably thereon with amendments and 
recommends that the bill, as amended, do pass.
    The amendment are as follows:
    On page 3, lines 11 through 13, strike ``previously 
unexplored, underexplored, or unproven geothermal resources in 
a variety of geologic and geographic settings'' and insert 
``projects likely to lead to successful new geothermal 
development leading to electricity production''.
    On page 5, strike lines 20 through 22 and insert the 
following:
          (2) Transfers to fund.--The Fund shall consist of--
                  (A) such amounts as are appropriated to the 
                Fund under subsection (j); and
                  (B) amounts repaid on loans under subsection 
                (g)(3).
    On page 7, line 1, strike ``Not later'' and insert the 
following:
          (1) In general.--Not later
    On page 7, line 2, strike ``develop'' and insert ``issue''.
    On page 7, between lines 3 and 4, insert the following:
          (2) Administration.--The guidelines shall--
                  (A) specify--
                          (i) the terms and conditions that 
                        would require a higher or lower level 
                        of cost sharing under this section;
                          (ii) the conditions under which the 
                        Secretary will allow loan modifications 
                        or forgiveness in cases in which a well 
                        cannot be used for production or 
                        injection; and
                          (iii) the information necessary to 
                        provide a loan applicant with certainty 
                        about application of subsection (f), 
                        including the level of cost and risk 
                        that the applicant and the Secretary 
                        will assume; and
                  (B) require that--
                          (i) loans be provided under this 
                        section only after the developer has 
                        committed the share of the developer 
                        for expenditures for drilling costs; 
                        and
                          (ii) loans for successful wells shall 
                        to be repaid by the developer within a 
                        10-year period.
    On page 9, line 12, strike ``via'' and insert ``by way 
of''.
    On page 9, line 20, insert ``with a name-plate capacity, 
expected resource, or rating of 10 or more megawatts'' after 
``large entities''.
    On page 10, line 19, strike ``and''.
    On page 10, between lines 21 and 22, insert the following:
                          ``(iii) improvements in design 
                        methodology and energy analysis 
                        procedures; and
                          ``(iv) improved methods for 
                        determination of ground thermal 
                        properties and ground temperatures;''.

                                Purpose

    The purpose of S. 1142 is to promote the mapping and 
development of United States geothermal resources by 
establishing a direct loan program for high risk geothermal 
exploration wells, to amend the Energy Independence and 
Security Act of 2007 to improve geothermal energy technology 
and demonstrate the use of geothermal energy in large-scale 
thermal applications, and to amend the Geothermal Steam Act of 
1970 to facilitate coproduction of geothermal energy on 
existing oil and gas leases.

                          Background and Need

    Geothermal energy is an enormous source of clean, reliable, 
and domestic energy, which can be used to drive turbines to 
generate electricity or as a direct source of heat in both 
industrial and residential applications. Despite its 
advantages, geothermal energy's potential is just beginning to 
be tapped. It currently produces only 0.4 percent of the 
nation's electricity, and its growth lags behind solar and wind 
energy.
    Congress first statutorily recognized geothermal energy's 
potential with the enactment of the Geothermal Steam Act of 
1970, which authorized the Secretary of the Interior to issue 
leases for the development of geothermal resources on public 
lands. The Geothermal Energy Research, Development, and 
Demonstration Act of 1974 and the Geothermal Energy Act of 1980 
sought to encourage development of geothermal energy through 
research and demonstration projects, loan guarantees, and 
loans, though the Secretary's authority to provide loan 
guarantees and loans under these laws has long since expired. 
In addition, the Advanced Geothermal Energy Research and 
Development Act of 2007 authorized the Department of Energy to 
undertake further research and development to expand the use of 
geothermal energy, and the American Recovery and Reinvestment 
Act of 2009 enabled the Department to fund additional 
geothermal projects.
    Despite these authorities, significant barriers to 
geothermal energy production remain. The Department of Energy 
has testified that most of the identified hydrothermal 
resources have already been developed and the high cost and 
risk of exploring for new resources pose significant hurdles, 
and that ``removing these obstacles to exploratory drilling is 
vitally important to increasing our geothermal power generation 
capacity.'' In addition, the Department has testified that 
geothermal heat pumps for building applications face barriers 
in the form of high initial costs associated with installation, 
lack of consumer knowledge, and limitations in design and 
infrastructure. It has also identified delays in the siting and 
permitting process, which increase overall project costs, as 
significant obstacles to geothermal energy.
    Additional legislation is needed to address these 
obstacles. S. 1142 supplements the Department's existing 
authorities by authorizing the Secretary of Energy to make 
loans for high risk geothermal exploration wells, establishing 
a new, focused program of research, development, demonstration, 
and commercial application for geothermal heat pumps and direct 
use of geothermal energy, and by amending the Geothermal Steam 
Act of 1970 to facilitate coproduction of geothermal energy on 
existing oil and gas leases.

                          Legislative History

    S. 1142 was introduced by Senator Tester on May 26, 2011. 
Senators Begich, Murkowski, and Reid are cosponsors. The 
Committee on Energy and Natural Resources held a hearing on the 
bill on July 12, 2011. The Committee on Energy and Natural 
Resources considered the bill ordered it favorably reported 
without amendment on December 15, 2011.

            Committee Recommendation and Tabulation of Votes

    The Committee on Energy and Natural Resources, in an open 
business session on December 15, 2011, by a roll call vote of a 
quorum present, recommends that the Senate pass S. 1142, if 
amended as described herein.
    The rollcall vote on reporting the measure was 13 yeas, 8 
nays, as follows:
        YEAS                          NAYS
Mr. Bingaman                        Mr. Barrasso*
Mr. Wyden*                          Mr. Risch*
Mr. Johnson                         Mr. Lee*
Ms. Landrieu*                       Mr. Paul*
Ms. Cantwell                        Mr. Coats
Mr. Sanders                         Mr. Portman*
Ms. Stabenow                        Mr. Hoeven*
Mr. Udall                           Mr. Corker*
Mrs. Shaheen
Mr. Frankin
Mr. Manchin
Mr. Coons
Ms. Murkowski
*Indicates vote by proxy.

                          Committee Amendments

    During its consideration of S. 1142, the Committee adopted 
nine amendments. The first amendment directs the Secretary of 
Energy, in selecting applicants for loans under section 2, to 
provide a preference for projects likely to lead to successful 
new geothermal development leading to electricity production. 
The second amendment provides that the Geothermal Investment 
Fund established under section 2(h) shall consist of amounts 
repaid on loans under section 2(g)(3), as well as amounts 
appropriated to the Fund under section 2(j). The third 
amendment redesignates section 2(i) as paragraph (1) under 
section 2(i) and provides a heading for the paragraph. The 
fourth amendment makes it clear that the Secretary must not 
only develop, but also issue, guidelines for implementation of 
the program within 180 days after the date of enactment. The 
fifth amendment adds a new paragraph (2) under section 2(i) 
specifying the contents of the guidelines. The sixth amendment 
clarifies the definition of a closed loop geothermal heat pump. 
The seventh amendment clarifies the definition of the term 
``large-scale application.'' The eighth amendment is technical. 
The ninth amendment adds two additional means of reducing costs 
for geothermal ground loop installations.

                      Section-by-Section Analysis

    Section 1 designates the short title.
    Section 2 establishes a direct loan program for high risk 
geothermal exploration wells. Subsection (a) defines key terms 
used in the section. Subsection (b) establishes the program. 
Subsection (c) authorizes the Secretary to prescribe the form 
and content of loan applications. Subsection (d)(1) establishes 
project criteria. Subsection (d)(2) establishes a preference 
for projects likely to lead to successful new geothermal 
development leading to electricity production. Subsection (e) 
requires data from all exploratory wells drilled under the 
program to be provided to both the Secretary of Energy and the 
Secretary of the Interior for use in mapping national 
geothermal resources and other uses, including the National 
Geothermal Data System. Subsection (f)(1)(A) authorizes the 
Secretary of Energy to determine the cost share for loans made 
under section 2. Subsection (f)(1)(B) allows the Secretary to 
base the cost share on risk, with higher risk receiving more 
financial support. Subsection (f)(2) allows the Secretary to 
determine the number of wells for each project for which a loan 
may be made. Subsection (f)(3) allows the Secretary to delay or 
dispense with the repayment obligation for unproductive 
projects. Subsection (g)(1) provides that the repayment process 
will commence 4 years after the loan is provided or when the 
project is put into service, whichever is sooner. Subsection 
(g)(2) permits the Secretary to extend the payback date for an 
additional 4 years. Subsection (g)(3) provides that amounts 
repaid on loans shall be deposited in the Geothermal Investment 
Fund. Subsection (h)(1) establishes the Geothermal Investment 
Fund. Subsection (h)(2) provides that the Fund shall consist of 
amounts appropriated to the Fund and amounts repaid on loans. 
Subsection (h)(3) prohibits use of the Fund for any other 
purpose. Subsection (h)(4) calls for annual reports on the 
financial status of the Fund. Subsection (i) requires the 
Secretary to issue project qualification guidelines within 180 
days after the date of enactment. Subsection (j) authorizes 
appropriations for the program through fiscal year 2021.
    Section 3 amends title VI of the Energy Independence and 
Security Act of 2007 to add a new section 616A establishing a 
Large-Scale Geothermal Energy program to spur investment in 
enhanced geothermal systems. Subsections (a), (b), and (c) of 
the new section 616A makes findings, states the purposes of the 
section, and defines key terms used in the new section, 
respectively. Section 616A(d) directs the Secretary to 
establish a program to improve geothermal heat pump 
technologies and increase the direct usage of geothermal energy 
technologies, specifically in large scale applications. Section 
616A(d)(2) lists 15 potential areas of focus, spanning from 
research through commercialization. Section 616A(e)(1) directs 
the Secretary to make grants to state and local governments, 
institutions of higher education, nonprofit entities, 
utilities, and for-profit companies to promote the development 
of geothermal heat pumps and the direct use of geothermal 
energy. Section 616A(e)(2) directs the Secretary to give 
priority to proposals that apply to large buildings, commercial 
districts, and residential communities. Section 616A(e)(3) 
directs the Secretary to issue a solicitation for grants within 
180 days after the date of enactment. Section 616A(f) calls for 
progress reports on implementation of the program. Subsection 
616A(g) authorizes appropriation of such sums as may be 
necessary to carry out the program for each of fiscal years 
2012 through 2016.
    Section 4 amends section 4 of the Geothermal Steam Act of 
1970 by adding a new paragraph (4) to allow for co-leasing of 
geothermal production with an approved application for a permit 
to drill (APD) for an oil and gas well, as long as it is in the 
public interest.

                   Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

S. 1142--Geothermal Exploration and Technology Act of 2011

    Summary: S. 1142 would authorize the Secretary of Energy to 
provide loans and grants to support certain activities related 
to the production and consumption of geothermal energy. 
Assuming appropriation of the necessary amounts, CBO estimates 
that implementing S. 1142 would cost $67 million over the 2012-
2017 period. Pay-as-you-go procedures do not apply to this 
legislation because it would not affect direct spending or 
revenues.
    S. 1142 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the federal government: The estimated 
budgetary impact of S. 1142 is shown in the following table. 
The costs of this legislation fall within budget function 270 
(energy).

----------------------------------------------------------------------------------------------------------------
                                                             By fiscal year, in millions of dollars--
                                                ----------------------------------------------------------------
                                                   2012     2013     2014     2015     2016     2017   2012-2017
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level..................       15       15       15       15       15       15        90
Estimated Outlays..............................        4        8       11       14       15       15        67
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: S. 1142 would authorize the 
appropriation of amounts necessary--for fiscal years 2012 
through 2021--for the Department of Energy (DOE) to provide 
direct loans and grants to promote the development and use of 
technologies that generate energy from geothermal resources. 
The bill would authorize the Secretary of Energy to make direct 
loans to defray the costs of high-risk geothermal exploration 
wells. In contrast to the budgetary treatment for federal 
credit programs required under the Federal Credit Reform Act, 
S. 1142 would credit repayments of such loans to a separate 
fund that would be available, without further Congressional 
action, to support new loans under the bill--thereby increasing 
the estimated subsidy cost of loans to 100 percent of their 
aggregate face value. S. 1142 also would authorize DOE to make 
grants to state and local governments, institutions of higher 
education, and certain other entities to promote the 
development of geothermal heat pumps and direct use of 
geothermal energy, particularly on a large scale.
    Based on information from DOE and industry sources, CBO 
estimates that making appreciable progress toward objectives 
set forth in S. 1142 would require appropriations totaling $15 
million annually. (By comparison, CBO estimates that federal 
funding for geothermal technologies and related activities in 
2012 totals about $50 million.) That estimate is based in part 
on the cost of geothermal programs carried out under the 
American Recovery and Reinvestment Act, which provided funds 
for DOE to undertake activities similar to those authorized by 
S. 1142. Under S. 1142, CB0 anticipates that DOE would provide 
a small number of new loans for exploration wells each year and 
increase the number of projects to demonstrate large-scale use 
of geothermal technology. Assuming appropriation of the 
necessary amounts, CB0 estimates that implementing the bill 
would cost $67 million over the 2012-2017 period, with 
additional spending occurring in later years.
    Pay-As-You-Go considerations: None.
    Intergovernmental and private-sector impact: S. 1142 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would authorize grants to state and 
local governments, institutions of higher education, and other 
entities to promote the development of geothermal technologies. 
Any costs to those entities would be incurred voluntarily as 
conditions of federal assistance.
    Estimate prepared by: Federal costs: Megan Carroll; Impact 
on state, local, and tribal governments: Ryan Miller; Impact on 
the private sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact that would be incurred in 
carrying out S. 1142.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 1142, as ordered reported.

                   Congressionally Directed Spending

    S. 1142, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        Executive Communications

    The testimony provided by the Department of Energy at the 
July 12, 2011 Full Committee hearing on S. 1142 follows:

Statement of Steven G. Chalk, Deputy Assistant Secretary for Renewable 
Energy, Office of Energy Efficiency and Renewable Energy, Department of 
                                 Energy

    Chairman Bingaman, Ranking Member Murkowski and Members of 
the Committee, thank you for the opportunity to discuss the 
Department of Energy's (DOE's) solar and geothermal energy 
programs. Today, I am pleased to discuss the Department's 
perspective and answer questions related to the Department of 
Energy Administrative Improvement Act (S. 1160), the 10 Million 
Solar Roofs Act of 2011 (S. 1108) and the Geothermal 
Exploration and Technology Act of 2011 (S. 1142). However, the 
Administration is still reviewing these bills and we do not 
have a position on any of them at this time.

                            solar technology

    We thank the committee and the sponsors of this legislation 
for your strong leadership on solar technologies over the 
years. The Department has set an ambitious goal for solar 
energy with the SunShot Initiative (SunShot)--to reduce the 
total costs of solar energy systems by about 75 percent so that 
they are cost competitive with other forms of energy without 
subsidies before the end of the decade. In 2012, under SunShot, 
the Department will support solar research across the 
development pipeline, from basic photovoltaic (PV) cell 
technologies to manufacturing scale-up to total system 
development.
    Reducing the total installed cost for utility-scale solar 
electricity to roughly 6 cents per kilowatt hour without 
subsidies will result in rapid, large-scale adoption of solar 
electricity across the United States. Reaching this goal will 
help re-establish American technological leadership, improve 
the nation's energy security, and strengthen U.S. economic 
competitiveness in the global clean energy race.
    SunShot takes a unique approach to developing solar energy. 
Historically, solar investments focused on achieving 
incremental efficiency improvements to solar cells and arrays. 
SunShot focuses on reducing the installed cost of the system as 
a whole, including non-technical barriers. In addition to 
investing in improvements in cell technologies and 
manufacturing, the SunShot Initiative also focuses on steps to 
reduce installation and permitting costs, which account for 40 
percent of the total installed system price of solar 
electricity.\1\ This includes efforts to streamline and 
digitize local permitting processes and to develop codes and 
standards that ensure high performance over the approximately 
20-year lifetime of residential solar products. Decreasing the 
installed cost of solar is one of the key goals of SunShot.
---------------------------------------------------------------------------
    \1\http://www.eere.energy.gov/solar/sunshot/pdfs/
dpw_white_paper.pdf.
---------------------------------------------------------------------------
    As the United States is the world's largest consumer of 
electricity and, at the same time, has the largest solar 
resource of any industrialized country, SunShot is well-
positioned to help the Nation realize the significant benefits 
from the wide-scale use of solar energy. Sunshot underscores 
solar energy's benefits to the United States and will have 
multiple positive impacts for the country, including:
       Achieving solar energy cost parity with baseload 
energy rates. Attaining a total installed system cost of 
utility solar equivalent to the wholesale cost of electricity 
from fossil fuels ($0.06 per kWh) would likely result in rapid 
and large-scale adoption of solar electricity across the United 
States.
       Increasing solar photovoltaic market share. As 
recently as 1995, the United States manufactured 43 percent of 
the world's PV materials, whereas today our manufacturers are 
only responsible for 6 percent.\2\ Expanding the use of solar 
will help boost the U.S. solar manufacturing industry while 
driving innovation and providing long lasting, domestic jobs to 
support global PV demand that will represent a multibillion 
dollar industry.
---------------------------------------------------------------------------
    \2\PV News (2/1993, 3/2001, 3/2006) and Navigant Consulting (2/
2011).
---------------------------------------------------------------------------
       Reducing greenhouse gas emissions--Solar 
technologies have the potential to significantly reduce the 
amount of conventional fossil-based electricity generation 
necessary, which in turn would reduce the amount of greenhouse 
gases emitted into the atmosphere.
    Recently, as part of ongoing Market Transformation 
activities, DOE announced a Funding Opportunity Announcement 
(FDA) which we are calling the ``Race to the Rooftop'' to help 
standardize, streamline and digitize the permitting process, 
while improving interconnection and net metering standards, 
increasing access to financing, and updating planning and 
zoning codes. This national competition engaging teams of local 
and state governments along with utilities, installers, and 
nongovernment organizations, will help standardize processes, 
cut upfront fees and paperwork, and reduce the overall costs 
associated with permitting and installation, making it easier 
and cheaper for homeowners, businesses, and their local 
communities to deploy solar energy. The standardization and 
uniformity of local permitting efforts under the ``Race to the 
Rooftop'' are similar to the challenge grant provision in the 
10 Million Solar Roofs Act, which calls for applicants to 
develop best practices for solar permitting.
    The proposed legislation, S. 1108, employs a bottom-up 
approach so that local teams can identify approaches best-
suited for them. A bottom-up approach, coupled with a 
preference for applicants that have partnered with states, 
public utility commissions, or other stakeholders, could allow 
for local and regional variability while still increasing the 
speed and scale of installation across large geographic areas. 
This approach could also allow states to expand existing state 
programs that have been effective in promoting rooftop solar 
installations.

                         geothermal technology

    The Department is committed to developing and deploying a 
portfolio of innovative technologies for clean, domestic 
geothermal power generation. Geothermal energy is a baseload 
energy resource with a small environmental footprint and emits 
little to no greenhouse gases.
    Despite geothermal's enormous potential, in 2010, only 15 
MW of new geothermal power generation was added to the grid in 
the United States. There are two principal barriers facing the 
geothermal industry: the high cost and risk of exploration and 
most of the identified hydrothermal resources have already been 
developed.
    Drilling costs represent approximately 42 percent of 
geothermal project development costs, and financing costs are 
significantly higher for exploratory drilling than for plant 
construction.\3\ Removing the obstacles to exploratory drilling 
is vitally important to increasing our geothermal power 
generation capacity. In many cases, geothermal resources have 
no surface expression, leaving our nation's hydrothermal 
potential--estimated at 30 GWe by the U.S. Geological Survey--
untapped and inaccessible. Exploratory drilling could also 
identify resources for enhanced geothermal systems (EGS), which 
have the potential to produce 16,000 GWe of power in a wide 
range of geographic areas throughout the U.S.\4\
---------------------------------------------------------------------------
    \3\http://www.nrel.gov/applying_technologies/pdfs/46022.pdf.
    \4\Augustine, Young, and Anderson, Updated US. Geothermal Supply 
Curve, National Renewable Energy Laboratory and US Department of 
Energy, February, 2010, http://www.nrel.gov/docs/fy10osti/47458.pdf.
---------------------------------------------------------------------------
    Under the American Recovery and Reinvestment Act of 2009 
(Recovery Act), DOE invested $97.3 million in 24 hydrothermal 
exploration projects, at which 34 exploration wells are 
planned. It is expected that from these wells, 400 MW of new 
resources will be confirmed by 2014.
    DOE is also funding seven EGS demonstrations. At Desert 
Peak, Nevada, the initial stages of reservoir stimulation were 
successfully completed--a critical milestone in creating an 
enhanced geothermal reservoir.
    DOE supports projects in low temperature geothermal 
resources as well. For example, DOE is working with industry to 
develop and field test a variable phase turbine which has the 
potential to generate 30 percent more power from low 
temperature geothermal resources than current power conversion 
technologies, at a lower cost.
    DOE's National Geothermal Data System (NGDS) effort is a 
distributed information system for data sharing in its second 
year of development, which will enable the availability of 
comprehensive and accurate data to facilitate geothermal 
development. The NGDS is scheduled to be fully operational in 
August 2014, at which time it will make geothermal data from 
major geothermal centers, DOE-funded geothermal projects and 
state geological surveys or universities publicly available.\5\
---------------------------------------------------------------------------
    \5\NGDS data sources include: DOE Geothermal Data Repository (Boise 
State University); Energy & Geoscience Institute (University of Utah); 
Geo-Heat Center (Oregon Institute of Technology); Stanford Geothermal 
Program (Stanford University); Great Basin Science Sample and Records 
Library y (University of Nevada, Reno); SMU Geothermal Laboratory 
(Southern Methodist University); and state geological surveys 
represented by Arizona Geological Survey and the American Association 
of State Geologists (AASG).
---------------------------------------------------------------------------
    Geothermal heat pumps (GHPs) for building applications also 
face barriers impeding greater marketplace adoption: high 
initial cost associated with the installation of the ground 
loop heat-exchanger, lack of consumer knowledge in GHP 
benefits, and limitations in GHP design and business planning 
infrastructure. DOE is developing a roadmap that will serve to 
strategically direct activities in geothermal heat pumps.
    Through the Recovery Act, DOE currently funds 26 projects 
deploying geothermal heat pumps. $24M of the $58M Recovery Act 
funds allocated to GHPs have been spent in 15 states in both 
new and retrofit applications. Two projects are completed and 
several more are already providing data for performance 
analysis. The Recovery Act projects incorporate innovative 
business and financial strategies and/or GHP technologies and 
applications designed to overcome the initial cost premium that 
has prevented GHPs from being directly cost-competitive with 
other HVAC technologies, and from gaining wider marketplace 
acceptance.
    DOE currently has projects in many of the areas identified 
for further RD&D and commercial application in S. 1142, 
including district heating and cooling at large institutions, 
use of hot water in shaft mines, combined GHP-solar PV and 
desiccant projects, and use of carbon dioxide as a refrigerant 
fluid for heat exchange.
    The Department is also addressing other obstacles to 
geothermal development such as delays in the siting and 
permitting process which increase overall project costs and 
could further strain economics. Currently, it takes 
approximately seven years for a new geothermal project to move 
from exploration to power generation.
    While the Administration is still reviewing the bill, there 
are serious technical concerns that would need to be addressed. 
Any new program should be consistent with applicable laws, and 
structured to mitigate risks and costs to the taxpayer.

      s. 1160--department of energy administrative improvement act

    S. 1160 proposes a variety of changes intended to improve 
the administration of the Department of Energy. The Department 
is still reviewing this bill and does not have a position on it 
at this time. However, I will address Sections 4, 6, and 7 as 
they relate to the Department's current authority.
Section 4
    Section 4 of S. 1160 concerns the administration of the 
Department's ``Other Transactions'' (OT) Authority. Section 4 
is similar in many respects to DOE's current OT Authority, 
which is codified at Section 646(g) of the DOE Organization Act 
(42 U.S.C. 7256(g)). However, there are some important 
differences.
    Currently, the Department has two kinds of OT Authority: 
Research OT Authority and Prototype OT Authority. Research OT 
Authority is used to carry out a public purpose of support or 
stimulation (e.g., RD&D projects). By contrast, Prototype OT 
Authority is used for the pre-acquisition development of 
technology prototypes. Such prototypes are used to evaluate the 
technical or manufacturing feasibility or utility to DOE's 
mission of a particular technology, process, concept, end item, 
or system.
    Section 4 provides DOE with permanent and independent OT 
Authority similar to the authority Congress provided the 
Defense Department in 1991. However, the precise scope of DOE's 
OT Authority is left undefined in S. 1160.
    Additionally, Section 4 of S. 1160 requires the Secretary 
to determine that ``the use of a standard contract, grant, or 
cooperative agreement for the project is not feasible or 
appropriate'' before the Department's OT Authority can be used. 
Section 4 restricts the delegation of this authority to 
officials ``appointed by the President and confirmed by the 
Senate.''
Section 6 and 7
    Section 6 of S. 1160 provides the Secretary with direct 
hire authority for ``highly qualified scientists, engineers, or 
critical technical personnel'' for two years following the 
enactment of the Act. Similarly, Section 7 provides the 
Secretary with special hiring and pay authority for persons 
with ``expertise in an extremely high level in a scientific or 
technical field.'' The Secretary's authority under Section 7 is 
permanent, but not more than 40 persons may be hired under this 
authority at any time.
    Sections 6 and 7 are analogous to Sections 621(b) and (d) 
of the DOE Organization Act (42 U.S.C. Sec. 7231(b)-(d)). 
Section 621(b), which expired after four years, allowed the 
Secretary to appoint 311 scientific, engineering, and 
administrative personnel without regard to civil service laws 
and to fix their compensation at ``super grades'' (formerly GS-
18, now Executive Level IV). Section 621(d), which is still in 
effect, authorizes the Secretary to appoint 200 scientific, 
engineering, professional, and administrative staff without 
regard to civil service laws, but subject to a GS-18 pay cap 
(now Executive Level IV).
    Additionally, Congress granted the Department's ARPA-E 
program special hiring authority. The Director of ARPA-E has 
the authority to make appointments of scientific, engineering, 
and professional personnel ``without regard to the civil 
service laws,'' ``fix the basic pay of such personnel'' up to 
Level II of the Executive Schedule, and provide ``additional 
payments'' up to a certain cap.

                               conclusion

    In conclusion, I would like to again thank this Committee 
for its leadership in supporting both solar and geothermal 
energy technologies.
    It is important to tap valuable assets like solar and 
geothermal energy to continue growing our economy to expand the 
Nation's clean energy portfolio and energy security.
    I would be pleased to address any questions the Committee 
might have.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 1142, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

              ENERGY INDEPENDENCE AND SECURITY ACT OF 2007

                    (Public Law 110-140, as amended)

AN ACT To move the United States toward greater energy independence and 
   security, to increase the production of clean renewable fuels, to 
 protect consumers, to increase the efficiency of products, buildings, 
and vehicles, to promote research on and deploy greenhouse gas capture 
   and storage options, and to improve the energy performance of the 
Federal Government, and for other purposes.

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TITLE VI--ACCELERATED RESEARCH AND DEVELOPMENT

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Subtitle B--Geothermal Energy

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SEC. 616. GEOTHERMAL ENERGY PRODUCTION FROM OIL AND GAS FIELDS AND 
                    RECOVERY AND PRODUCTION OF GEOPRESSURED GAS 
                    RESOURCES.

    (a) In General.--The Secretary shall establish a program of 
research, development, demonstration, and commercial 
application to support development of geothermal energy 
production from oil and gas fields and production and recovery 
of energy, including electricity, from geopressured resources. 
In addition, the Secretary shall conduct such supporting 
activities including research, resource characterization, and 
technology development as necessary.

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    (e) Competitive Grant Selection.--Not less than 90 days 
after the date of the enactment of this Act, the Secretary 
shall conduct a national solicitation for applications for 
grants under the programs outlined in subsections (b) and (d). 
Grant recipients shall be selected on a competitive basis based 
on criteria in the respective subsection.
    (f) Well Drilling.--No funds may be used under this section 
for the purpose of drilling new wells.

SEC. 616A. LARGE-SCALE GEOTHERMAL ENERGY.

    (a) Findings.--Congress finds that--
          (1) the Geothermal Technologies Program of the Office 
        of Energy Efficiency and Renewable Energy of the 
        Department has included a focus on direct use of 
        geothermal energy in the low-temperature geothermal 
        energy subprogram (including in the development of a 
        research and development plan for the program);
          (2) the Building Technologies Program of the Office 
        of Energy Efficiency and Renewable Energy of the 
        Department--
                  (A) is focused on the energy demand and 
                energy efficiency of buildings; and
                  (B) includes geothermal heat pumps as a 
                component technology in the residential and 
                commercial deployment activities of the 
                program; and
          (3) geothermal heat pumps and direct use of 
        geothermal energy, especially in large-scale 
        applications, can make a significant contribution to 
        the use of renewable energy but are underrepresented in 
        research, development, demonstration, and 
        commercialization.
    (b) Purposes.--The purposes of this section are--
          (1) to improve the components, processes, and systems 
        used for geothermal heat pumps and the direct use of 
        geothermal energy; and
          (2) to increase the energy efficiency, lower the 
        cost, increase the use, and improve and demonstrate the 
        applicability of geothermal heat pumps to, and the 
        direct use of geothermal energy in, large buildings, 
        commercial districts, residential communities, and 
        large municipal, agricultural, or industrial projects.
    (c) Definitions.--In this section:
          (1) Direct use of geothermal energy.--The term 
        ``direct use of geothermal energy'' means systems that 
        use water that is at a temperature between 
        approximately 38 degrees Celsius and 149 degrees 
        Celsius directly or through a heat exchanger to 
        provide--
                  (A) heating to buildings; or
                  (B) heat required for industrial processes, 
                agriculture, aquaculture, and other facilities.
          (2) Geothermal heat pump.--The term ``geothermal heat 
        pump'' means a system that provides heating and cooling 
        by exchanging heat from shallow ground or surface water 
        using--
                  (A) a closed loop system, which transfers 
                heat via buried or immersed pipes that contain 
                a mix of water and antifreeze; or
                  (B) an open loop system, which circulates 
                ground or surface water directly into the 
                building and returns the water to the same 
                aquifer or surface water source.
          (3) Large-scale application.--The term ``large-scale 
        application'' means an application for space or process 
        heating or cooling for large entities, such as a large 
        building, commercial district, residential community, 
        or a large municipal, agricultural, or industrial 
        project.
          (4) Secretary.--The term ``Secretary'' means 
        Secretary of Energy, acting through the Assistant 
        Secretary for Energy Efficiency and Renewable Energy.
    (d) Program.--
          (1) In general.--The Secretary shall establish a 
        program of research, development, demonstration, and 
        commercial application for geothermal heat pumps and 
        the direct use of geothermal energy.
          (2) Areas.--The program may include research, 
        development, demonstration, and commercial application 
        of--
                  (A) geothermal ground loop efficiency 
                improvements through more efficient heat 
                transfer fluids;
                  (B) geothermal ground loop efficiency 
                improvements through more efficient thermal 
                grouts for wells and trenches;
                  (C) geothermal ground loop installation cost 
                reduction through?
                          (i) improved drilling methods; and
                          (ii) improvements in drilling 
                        equipment;
                  (D) installing geothermal ground loops near 
                the foundation walls of new construction to 
                take advantage of existing structures;
                  (E) using gray or black wastewater as a 
                method of heat exchange;
                  (F) improving geothermal heat pump system 
                economics through integration of geothermal 
                systems with other building systems, including 
                providing hot and cold water and rejecting or 
                circulating industrial process heat through 
                refrigeration heat rejection and waste heat 
                recovery;
                  (G) advanced geothermal systems using 
                variable pumping rates to increase efficiency;
                  (H) geothermal heat pump efficiency 
                improvements;
                  (I) use of hot water found in mines and mine 
                shafts and other surface waters as the heat 
                exchange medium;
                  (J) heating of districts, neighborhoods, 
                communities, large commercial or public 
                buildings (including office, retail, 
                educational, government, and institutional 
                buildings and multifamily residential buildings 
                and campuses), and industrial and manufacturing 
                facilities;
                  (K) geothermal system integration with solar 
                thermal water heating or cool roofs and solar-
                regenerated desiccants to balance loads and use 
                building hot water to store geothermal energy;
                  (L) use of hot water coproduced from oil and 
                gas recovery;
                  (M) use of water sources at a temperature of 
                less than 150 degrees Celsius for direct use;
                  (N) system integration of direct use with 
                geothermal electricity production; and
                  (O) coproduction of heat and power, including 
                on-site use.
          (3) Environmental impacts.--In carrying out the 
        program, the Secretary shall identify and mitigate 
        potential environmental impacts in accordance with 
        section 614(c).
    (e) Grants.--
          (1) In general.--The Secretary shall make grants 
        available to State and local governments, institutions 
        of higher education, nonprofit entities, utilities,and 
        for-profit companies (including manufacturers of heat-
        pump and direct-use components and systems) to promote 
        the development of geothermal heat pumps and the direct 
        use of geothermal energy.
          (2) Priority.--In making grants under this 
        subsection, the Secretary shall give priority to 
        proposals that apply to large buildings (including 
        office, retail, educational, government, institutional, 
        and multifamily residential buildings and campuses and 
        industrial and manufacturing facilities), commercial 
        districts, and residential communities.
          (3) National solicitation.--Not later than 180 days 
        after the date of enactment of this section, the 
        Secretary shall conduct a national solicitation for 
        applications for grants under this section.
    (f) Reports.--
          (1) In general.--Not later than 2 years after the 
        date of enactment of this section and annually 
        thereafter, the Secretary shall submit to the Committee 
        on Energy and Natural Resources of the Senate and the 
        Committee on Science and Technology of the House of 
        Representatives a report on progress made and results 
        obtained under this section to develop geothermal heat 
        pumps and direct use of geothermal energy.
          (2) Areas.--Each of the reports required under this 
        subsection shall include--
                (A) an analysis of progress made in each of the 
                areas described in subsection (d)(2); and
                  (B)(i) a description of any relevant 
                recommendations made during a review of the 
                program; and
                  (ii) any plans to address the recommendations 
                under clause (i).
    (g) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary to carry out this section 
such sums as are necessary for each of fiscal years 2012 
through 2016.

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                      GEOTHERMAL STEAM ACT OF 1970

 AN ACT To authorize the Secretary of the Interior to make disposition 
of geothermal steam and associated geothermal resources, and for other 
                               purposes.

[As Amended Through P.L. 109-58, Enacted August 8, 2005]

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SEC. 4. LEASING PROCEDURES.

    (a) Nominations.--The Secretary shall accept nominations of 
land to be leased at any time from qualified companies and 
individuals under this Act.
    (b) Competitive Lease Sale Required.--
          (1) In general.--Except as otherwise specifically 
        provided by this Act, all land to be leased that is not 
        subject to leasing under subsection (c) shall be leased 
        as provided in this subsection to the highest 
        responsible qualified bidder, as determined by the 
        Secretary.
          (2) Competitive lease sales.--The Secretary shall 
        hold a competitive lease sale at least once every 2 
        years for land in a State that has nominations pending 
        under subsection (a) if the land is otherwise available 
        for leasing.
          (3) Lands subject to mining claims.--Lands that are 
        subject to a mining claim for which a plan of 
        operations has been approved by the relevant Federal 
        land management agency may be available for 
        noncompetitive leasing under this section to the mining 
        claim holder.
          (4) Land subject to oil and gas lease.--Land under an 
        oil and gas lease issued pursuant to the Mineral 
        Leasing Act (30 U.S.C. 181 et seq.) or the Mineral 
        Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.) 
        that is subject to an approved application for permit 
        to drill and from which oil and gas production is 
        occurring may be available for leasing under subsection 
        (c) by the holder of the oil and gas lease--
                  (A) on a determination that--
                          (i) geothermal energy will be 
                        produced from a well producing or 
                        capable of producing oil and gas; and
                          (ii) the public interest will be 
                        served by the issuance of such a lease; 
                        and
                  (B) in order to provide for the coproduction 
                of geothermal energy with oil and gas.

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