I 

108TH CONGRESS 

2D SESSION H. R. 4094 

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. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 31, 2004 

Ms. MILLENDER-MCDONALD introduced the following bill; which was referred 

to the Committee on Resources, and in addition to the Committees on 

Ways and Means and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Geothermal Energy 

5 Initiative Act of 2004’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 
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1 (1) Federal income tax credits have been estab2 lished for production of energy from renewable en3 ergy resources, other than geothermal energy re4 sources, including with respect to wind energy and 

5 closed-loop biomass energy. 

6 (2) The last national resource assessment of 

7 geothermal energy resource sites in the United 

8 States was completed in 1978. There have been sub9 stantial changes in technology and advances in geo10 logical science in the intervening 26 years. 

11 (3) Many Federal land management agencies, 

12 including the Bureau of Land Management and the 

13 Forest Service, are not aware of geothermal energy 

14 resources and fail to recognize geothermal energy re15 sources in their land use planning process. Failure 

16 to recognize geothermal energy resources during the 

17 land use planning process poses significant delays in 

18 geothermal resource development. 

19 (4) The Bureau of Land Management has a 

20 backlog of 230 lease applications for prospecting for 

21 geothermal energy. The average age of these lease 

22 applications is 9 years. The oldest non-competitive 

23 application was received in 1974. 
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1 (5) There appears to be a lack of focus and pri2 ority in the Bureau of Land Management concerning 

3 geothermal energy efforts. 

4 (6) Development of geothermal energy re5 sources is environmentally safe and clean. 

6 SEC. 3. CREDIT FOR ELECTRICITY PRODUCED FROM GEO7 THERMAL ENERGY. 

8 (a) IN GENERAL.—Section 45(c)(1) of the Internal 

9 Revenue Code of 1986 (relating to qualified energy re10 sources) is amended by striking ‘‘and’’ at the end of sub11 paragraph (B), by striking the period at the end of the 

12 subparagraph (C) and inserting ‘‘, and’’, and by adding 

13 at the end the following new subparagraph: 

14 ‘‘(D) geothermal energy.’’. 

15 (b) QUALIFIED FACILITY.—Section 45(c)(3) of such 

16 Code (defining qualified facility) is amended by inserting 

17 after subparagraph (E) the following new subparagraph: 

18 ‘‘(D) GEOTHERMAL ENERGY FACILITY.— 

19 In the case of a facility using geothermal en20 ergy to produce electricity, the term ‘qualified 

21 facility’ means— 

22 ‘‘(i) any facility owned by the tax23 payer which is originally placed in service 

24 after December 31, 2004, and 
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1 ‘‘(ii) any facility owned by the tax2 payer which is originally placed in service 

3 before January 1, 2005, but only to the ex4 tent of its incremental production. 

5 If such a facility is leased and the operator 

6 thereof is the lessee, such lessee (and not the 

7 owner) shall be treated for purposes of this sec8 tion as owning such facility.’’. 

9 (c) INCREMENTAL PRODUCTION.—Section 45(d) of 

10 such Code (relating to definitions and special rules) is 

11 amended by adding at the end the following new para12 graph: 

13 ‘‘(9) DEFINITION AND SPECIAL RULE WITH RE14 SPECT TO INCREMENTAL GEOTHERMAL PRODUC15 TION.—For purposes of subparagraph (D) of para16 graph (3)— 

17 ‘‘(A) IN GENERAL.—The term ‘incremental 

18 production’ means, with respect to a facility de19 scribed in subsection (c)(3)(D)(ii) for any tax20 able year, the excess of— 

21 ‘‘(i) the total kilowatt hours of elec22 tricity produced from such facility, over 

23 ‘‘(ii) the average annual kilowatt 

24 hours produced at such facility for five of 

25 the previous seven calendar years prior to 
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1 the date of the enactment of this para2 graph after eliminating the highest and 

3 lowest kilowatt hour production years in 

4 such seven-year period. 

5 ‘‘(B) SPECIAL RULE.—A facility which was 

6 placed in service seven years or longer prior to 

7 the date of the enactment of this paragraph 

8 shall, commencing with the year of such enact9 ment, reduce the amount calculated under sub10 paragraph (A)(ii) each year, on a cumulative 

11 basis, by the average decrease in annual kilo12 watt hour production for the seven-year period 

13 described in subparagraph (A)(ii) with such cu14 mulative sum not to exceed 30 percent.’’. 

15 (d) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to electricity sold after December 

17 31, 2004. 

18 SEC. 4. ASSESSMENT OF GEOTHERMAL ENERGY RE19 SOURCES. 

20 (a) RESOURCE ASSESSMENT.—Not later than 3 

21 months after the date of the enactment of this Act, and 

22 each year thereafter, the Secretary of Energy shall review 

23 the available assessments of geothermal energy resources 

24 available within the United States and undertake new as25 sessments as necessary, taking into account changes in 
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1 market conditions, available technologies, and other rel2 evant factors. 

3 (b) CONTENTS OF REPORTS.—Not later than 1 year 

4 after the date of the enactment of this Act, and each year 

5 thereafter, the Secretary shall publish a report based on 

6 the assessment under subsection (a). The report shall con7 tain a detailed inventory describing the available amount 

8 and characteristics of the geothermal energy resources, in9 cluding— 

10 (1) descriptions of surrounding terrain, popu11 lation and load centers, nearby energy infrastruc12 ture, location of energy and water resources, and 

13 available estimates of the costs needed to develop 

14 each resource; 

15 (2) an identification of any barriers to pro16 viding adequate transmission for remote sources of 

17 geothermal energy resources to current and emerg18 ing markets; 

19 (3) recommendations for removing or address20 ing such barriers; and 

21 (4) ways to provide access to the grid that do 

22 not unfairly disadvantage renewable or other energy 

23 producers. 

24 (c) AUTHORIZATION OF APPROPRIATIONS.—To carry 

25 out this section there is authorized to be appropriated to 
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1 the Secretary of the Interior $5,000,000 for fiscal years 

2 2005, 2006, and 2007. 

3 SEC. 5. ENHANCED ACCESS TO FEDERAL LANDS FOR GEO4 THERMAL RESOURCE DEVELOPMENT. 

5 (a) REVISION OF LAND USE PLANS.— 

6 (1) PUBLIC LANDS.—The Secretary of the Inte7 rior shall expedite development of geothermal energy 

8 in making revisions to land use plans under section 

9 202 of the Federal Land Policy and Management 

10 Act of 1976 (42 U.S.C. 1712) while protecting other 

11 resources. 

12 (2) NATIONAL FOREST SYSTEM LANDS.—The 

13 Secretary of Agriculture shall expedite development 

14 of geothermal energy in making revisions of land 

15 and resource management plans under section 6 of 

16 the Forest and Rangeland Renewable Resources 

17 Planning Act of 1974 (16 U.S.C. 1604) while pro18 tecting other resources. 

19 (3) ISSUANCE OF RIGHTS-OF-WAY NOT AF20 FECTED.—Nothing in this subsection shall preclude 

21 the issuance of a right-of-way for the development of 

22 a geothermal energy project prior to the revision of 

23 a land use plan by the appropriate land management 

24 agency. 
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1 (b) REPORT TO CONGRESS.—Within 24 months after 

2 the date of the enactment of this section, the Secretary 

3 of the Interior shall develop and report to the Congress 

4 recommendations on any statutory or regulatory changes 

5 the Secretary believes would assist in the development of 

6 geothermal energy on Federal land. The report shall in7 clude— 

8 (1) a 5-year plan developed by the Secretary of 

9 the Interior, in cooperation with the Secretary of 

10 Agriculture, for encouraging the development of geo11 thermal energy on Federal land in an environ12 mentally sound manner; 

13 (2) an analysis of— 

14 (A) whether the use of rights-of-ways is 

15 the best means of authorizing use of Federal 

16 land for the development of geothermal energy, 

17 or whether such resources could be better devel18 oped through a leasing system or other method; 

19 (B) the desirability of grants, loans, tax 

20 credits, or other provisions to promote geo21 thermal energy development on Federal land; 

22 and 

23 (C) any problems, including environmental 

24 concerns, that the Secretary of the Interior or 

25 the Secretary of Agriculture has encountered in 
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1 managing geothermal energy projects on Fed2 eral land, or believe are likely to arise in rela3 tion to the development of geothermal energy 

4 on Federal land; and 

5 (3) a list, developed in consultation with the 

6 Secretaries of Energy and Defense, of lands under 

7 the jurisdiction of the Departments of Energy and 

8 Defense, respectively, that would be suitable for de9 velopment for geothermal energy, and recommended 

10 statutory and regulatory mechanisms for such devel11 opment. 

12 SEC. 6. CONSULTATION REGARDING GEOTHERMAL LEAS13 ING AND PERMITTING ON PUBLIC LANDS. 

14 (a) IN GENERAL.—Not later than 6 months after the 

15 date of the enactment of this Act, the Secretary of the 

16 Interior and the Secretary of Agriculture shall enter into 

17 and submit to the Congress a memorandum of under18 standing in accordance with this section regarding leasing 

19 and permitting, for geothermal development, of public 

20 lands under their respective administrative jurisdictions. 

21 (b) LEASE AND PERMIT APPLICATIONS.—The memo22 randum of understanding shall include provisions that— 

23 (1) identify known geothermal areas on public 

24 lands within the National Forest System and to the 

25 extent necessary review management plans to con-
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1 sider leasing of such lands under the Geothermal 

2 Steam Act of 1970 (30 U.S.C. 1001 et seq.) as a 

3 land use; 

4 (2) establish an administrative procedure for 

5 processing geothermal lease applications, including 

6 lines of authority, steps in application processing, 

7 and timeframes for application processing; 

8 (3) provide that the Secretary concerned 

9 shall— 

10 (A) within 14 days after receiving an ap11 plication for a lease, determine whether the ap12 plication contains sufficient information to 

13 allow processing of the application; and 

14 (B) if the application is found not to con15 tain sufficient information to allow processing 

16 the application, before the end of such 14-day 

17 period, provide written notification to the lease 

18 applicant that the application is being returned 

19 to the applicant without processing and an 

20 itemization of the deficiencies in the application 

21 that prevent processing; 

22 (4) provide that the Secretary concerned shall 

23 within 30 days after receiving a lease application, 

24 provide written notice to the lease applicant regard25 ing the status of the application, including an esti-
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1 mate of the time that will be required to complete 

2 action on the application; and 

3 (5) establish an administrative procedure for 

4 processing geothermal development permits, includ5 ing lines of authority, steps in permit processing, 

6 and timeframes for permit processing. 

7 (c) FIVE-YEAR LEASING PLAN.—The memorandum 

8 of understanding shall develop a 5-year plan for leasing 

9 under the Geothermal Steam Act of 1970 (30 U.S.C. 1001 

10 et seq.) of public land in the National Forest System. The 

11 plan for geothermal leasing shall be updated every 5 years. 

12 (d) DATA RETRIEVAL SYSTEM.—The memorandum 

13 of understanding shall establish a joint data retrieval sys14 tem that is capable of— 

15 (1) tracking lease and permit applications and 

16 requests; and 

17 (2) providing to the applicant or requester in18 formation as to their status within the Departments 

19 of the Interior and Agriculture, including an esti20 mate of the time required for administrative action. 

21 SEC. 7. REIMBURSEMENT FOR COSTS OF NEPA ANALYSES, 

22 DOCUMENTATION, AND STUDIES. 

23 (a) IN GENERAL.—The Geothermal Steam Act of 

24 1970 (30 U.S.C. 1001 et seq.) is amended by adding at 

25 the end the following: 
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1 ‘‘SEC. 30. REIMBURSEMENT FOR COSTS OF NEPA ANAL2 YSES, DOCUMENTATION, AND STUDIES. 

3 ‘‘(a) IN GENERAL.—The Secretary of the Interior 

4 may, through royalty credits, reimburse a person who is 

5 a lessee, operator, operating rights owner, or applicant for 

6 a lease under this Act for reasonable amounts paid by the 

7 person for preparation by the Secretary (or a contractor 

8 or other person selected by the Secretary) of any project9 level analysis, documentation, or related study required 

10 under the National Environmental Policy Act of 1969 (42 

11 U.S.C. 4321 et seq.) with respect to the lease. 

12 ‘‘(b) CONDITIONS.—The Secretary may provide reim13 bursement under subsection (a) only if— 

14 ‘‘(1) adequate funding to enable the Secretary 

15 to timely prepare the analysis, documentation, or re16 lated study is not appropriated; 

17 ‘‘(2) the person paid the amounts voluntarily; 

18 and 

19 ‘‘(3) the person maintains records of its costs 

20 in accordance with regulations prescribed by the 

21 Secretary.’’. 

22 (b) APPLICATION.—The amendment made by this 

23 section shall apply with respect to any lease entered into 

24 before, on, or after the date of the enactment of this Act. 

25 (c) DEADLINE FOR REGULATIONS.—The Secretary 

26 shall issue regulations implementing the amendment made 
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1 by this section by not later than 90 days after the date 

2 of the enactment of this Act. 

3 SEC. 8. AUTHORIZATION OF APPROPRIATIONS. 

4 To carry out section 5 through 7 there are authorized 

5 to be appropriated to the Secretary of the Interior such 

6 sums as may be necessary. 

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