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 deter-
mined 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 pur-
poses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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 estab-
lished for production of energy from renewable en-
ergy resources, other than geothermal energy re-
sources, 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 sub-
stantial changes in technology and advances in geo-
logical 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 re-
sources 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 pri-
ority in the Bureau of Land Management concerning 
geothermal energy efforts. 
(6) Development of geothermal energy re-
sources is environmentally safe and clean. 
SEC. 3. CREDIT FOR ELECTRICITY PRODUCED FROM GEO-
THERMAL ENERGY. 
(a) IN GENERAL.—Section 45(c)(1) of the Internal 
Revenue Code of 1986 (relating to qualified energy re-
sources) is amended by striking ‘‘and’’ at the end of sub-
paragraph (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 en-
ergy to produce electricity, the term ‘qualified 
facility’ means— 
‘‘(i) any facility owned by the tax-
payer which is originally placed in service 
after December 31, 2004, and
‘‘(ii) any facility owned by the tax-
payer which is originally placed in service 
before January 1, 2005, but only to the ex-
tent 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 sec-
tion 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 para-
graph: 
‘‘(9) DEFINITION AND SPECIAL RULE WITH RE-
SPECT
TO
INCREMENTAL
GEOTHERMAL
PRODUC-
TION.—For purposes of subparagraph (D) of para-
graph (3)— 
‘‘(A) IN GENERAL.—The term ‘incremental 
production’ means, with respect to a facility de-
scribed in subsection (c)(3)(D)(ii) for any tax-
able year, the excess of— 
‘‘(i) the total kilowatt hours of elec-
tricity 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 para-
graph 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 enact-
ment, reduce the amount calculated under sub-
paragraph (A)(ii) each year, on a cumulative 
basis, by the average decrease in annual kilo-
watt hour production for the seven-year period 
described in subparagraph (A)(ii) with such cu-
mulative 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 
RE-
SOURCES. 
(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 as-
sessments as necessary, taking into account changes in
market conditions, available technologies, and other rel-
evant 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 con-
tain a detailed inventory describing the available amount 
and characteristics of the geothermal energy resources, in-
cluding— 
(1) descriptions of surrounding terrain, popu-
lation and load centers, nearby energy infrastruc-
ture, location of energy and water resources, and 
available estimates of the costs needed to develop 
each resource; 
(2) an identification of any barriers to pro-
viding adequate transmission for remote sources of 
geothermal energy resources to current and emerg-
ing markets; 
(3) recommendations for removing or address-
ing 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 GEO-
THERMAL RESOURCE DEVELOPMENT. 
(a) REVISION OF LAND USE PLANS.— 
(1) PUBLIC LANDS.—The Secretary of the Inte-
rior 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 pro-
tecting other resources. 
(3) ISSUANCE
OF
RIGHTS-OF-WAY
NOT
AF-
FECTED.—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 in-
clude— 
(1) a 5-year plan developed by the Secretary of 
the Interior, in cooperation with the Secretary of 
Agriculture, for encouraging the development of geo-
thermal energy on Federal land in an environ-
mentally 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 devel-
oped through a leasing system or other method; 
(B) the desirability of grants, loans, tax 
credits, or other provisions to promote geo-
thermal 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 Fed-
eral land, or believe are likely to arise in rela-
tion 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 de-
velopment for geothermal energy, and recommended 
statutory and regulatory mechanisms for such devel-
opment. 
SEC. 6. CONSULTATION REGARDING GEOTHERMAL LEAS-
ING 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 under-
standing 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 memo-
randum 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 con-
sider 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 ap-
plication for a lease, determine whether the ap-
plication contains sufficient information to 
allow processing of the application; and 
(B) if the application is found not to con-
tain 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 regard-
ing the status of the application, including an esti-