Meta Description: Understand the foundational US geothermal law, including the Geothermal Steam Act and NEPA challenges. Learn about geothermal resource ownership, permitting disparities, and liability risks like induced seismicity and subsidence.
Geothermal energy—the power harnessed from the Earth’s own heat—is a reliable, sustainable, and dispatchable source of clean power. However, turning this vast subsurface potential into commercial energy involves navigating one of the most complex and ambiguous legal landscapes in modern energy policy. For developers, financiers, and landowners alike, understanding the intricate web of federal and state regulations is crucial for a successful project. This post explores the core statutes, the persistent ambiguities in resource ownership, and the major permitting hurdles that define geothermal law today.
Geothermal law operates at the intersection of property, water, and mineral law, making local jurisdiction rules critically important. Always consult with a Legal Expert familiar with the specific state and federal requirements for your project’s location.
The development of geothermal energy on federal lands, which is where the vast majority of accessible high-temperature resources in the United States are located, is primarily governed by a handful of key statutes.
This Act established the framework for leasing geothermal resources on public, withdrawn, and acquired lands administered by the Secretary of the Interior, primarily through the Bureau of Land Management (BLM). The Act defines geothermal resources broadly as “all products of geothermal processes, embracing indigenous steam, hot water and hot brines and heat or other associated energy”.
Key provisions include a system for both competitive and non-competitive leasing, granting the lessee the right to future exploration and development. Crucially, it also establishes a system of rents and royalties for the use of geothermal resources, which can be waived or reduced to encourage conservation and recovery.
The Geothermal Energy Act of 1980 focused on addressing institutional and economic barriers by establishing assistance programs, including loans for reservoir confirmation and studying an insurance program. More recently, the Energy Act of 2020 sought to streamline the permitting process by mandating the formation of centralized permitting offices under the BLM’s National Renewable Energy Coordination Office.
Unlike oil and gas, which are clearly defined as minerals, the legal classification of geothermal heat, steam, and hot water remains highly ambiguous and varies significantly across jurisdictions, creating one of the largest legal hurdles.
Many jurisdictions struggle to categorize geothermal resources, as they are neither purely a water resource nor purely a mineral resource. Some state laws have adopted a sui generis (of its own kind) classification, declaring the resource to be the private property of the holder of the title to the surface land above it, unless otherwise legally defined.
In states where the surface estate and mineral estate have been separated (a common scenario across the US), conflicts over who owns the geothermal rights are frequent. State laws must be checked, as some vest ownership in the mineral estate (e.g., California, Hawaii) while others favor the surface owner (e.g., Texas’s 2023 amendment).
For example, in Texas, a recently enacted law declares the landowner or the owner of surface rights as the holder of subsurface geothermal energy and associated resources, specifically excluding mineral, oil, or gas. Conversely, in Utah, geothermal resources are defined by a temperature threshold (above 120°C), requiring a separate lease, effectively distinguishing it from standard water rights.
Geothermal project developers face a multi-layered permitting regime at the federal, state, and local levels. The primary mechanism for environmental review on federal lands is the National Environmental Policy Act (NEPA).
Geothermal projects often require multiple, sequential NEPA reviews for each stage—leasing, exploration, drilling, and utilization—unlike the oil and gas industry, which benefits from categorical exclusions (CEs) for minor surface disturbances under the Energy Policy Act of 2005. This disparity leads to significantly longer project timelines, increasing costs, economic uncertainty, and vulnerability to legal challenges.
The complexity is often compounded by state-level environmental review processes, such as the California Environmental Quality Act (CEQA), which can run concurrently with the federal process, creating duplicative requirements and coordination challenges. These procedural hurdles are consistently cited as significant non-technical barriers to the growth of the geothermal sector.
Beyond permitting, geothermal operations—particularly those involving Enhanced Geothermal Systems (EGS) where fluid is injected to fracture hot rock—face specific legal liabilities related to subsurface activities.
| Legal Challenge | Description and Regulatory Response |
|---|---|
| Land Subsidence | The withdrawal of geothermal fluids can reduce reservoir pressure, leading to the sinking or settling of the land surface. Regulators commonly require subsidence mitigation plans that incorporate the reinjection of fluids as a condition of operating permits. |
| Induced Seismicity | EGS activities, involving hydraulic fracturing and fluid injection, can sometimes trigger minor seismic events. This risk generates environmental justice concerns and requires careful regulatory oversight and project management plans to monitor and mitigate seismicity. |
| Water Rights and Trespass | Geothermal operations, particularly in the drought-prone Western US, require water. Furthermore, fluid migration from EGS fracturing and injection into neighboring subsurface estates can lead to trespass claims, a key concern in the evolving Texas legal landscape. |
To successfully bring a geothermal project to fruition, developers must strategically navigate these critical legal areas. A comprehensive legal strategy involves more than just obtaining a lease; it requires meticulous attention to state-level property definitions and proactive management of complex federal permitting.
The key to geothermal development is mitigating legal and regulatory risk. Prioritize projects with clear resource ownership, established state regulatory history, and early-stage environmental review completion. Permitting reform at the federal level remains the single largest catalyst for sector growth.
Q: What is the Geothermal Steam Act of 1970?
A: It is the primary US federal law empowering the Secretary of the Interior to issue leases for the exploration and development of geothermal resources on public lands, establishing a regulatory system for rents and royalties.
Q: How is geothermal resource ownership determined in the US?
A: Ownership is highly variable and often unclear, as geothermal resources are generally considered sui generis (of their own kind). Some states define the resource as belonging to the mineral estate, while others, like Texas, have recently legislated it to belong to the surface estate, especially where the rights are split.
Q: Why does geothermal permitting take so long?
A: Projects on federal land must comply with the National Environmental Policy Act (NEPA). Geothermal projects often require multiple NEPA reviews for different development stages (leasing, drilling, production), and they lack the categorical exclusions for minor disturbances that the oil and gas industry receives, leading to lengthy, multi-year processes.
Q: What is land subsidence in the context of geothermal law?
A: Land subsidence is the sinking of the ground surface caused by the pressure reduction from withdrawing large volumes of geothermal fluids. It is a liability risk that is commonly managed by regulatory authorities requiring operators to implement fluid reinjection and monitoring plans.
Q: Has the US federal government attempted to streamline geothermal permitting?
A: Yes. The Energy Act of 2020 mandated the Bureau of Land Management (BLM) to establish centralized permitting offices to coordinate and streamline the process for renewable energy, including geothermal, across federal lands.
Disclaimer: This post is for informational purposes only and does not constitute legal advice. The information is AI-generated and should be verified with a qualified Legal Expert before relying on it for any specific legal action.
Geothermal law, Geothermal Steam Act 1970, geothermal leasing, NEPA review, geothermal resource ownership, surface rights, mineral rights, Enhanced Geothermal Systems (EGS), induced seismicity, land subsidence, water rights, Geothermal Energy Act 1980, clean energy regulation, federal lands, regulatory framework, royalty rates, categorical exclusion, permitting challenges, geothermal resources, Texas geothermal law
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