Geothermal Law Changes Approved by Legislature

On April 24, 2013, the Washington State Legislature passed a bill modifying the state’s geothermal law. The bill (SSB 5369) was sponsored by Senator Adam Kline of Seattle and passed the legislature with the support of the two state agencies principally charged with overseeing geothermal development, as well private sector stakeholders including AltaRock Energy and Weyerhaeuser.  Kathleen Callison, a natural resources attorney and chief drafter of the bill said, “The Legislature’s passage of this bill is a major step forward in supporting development of Washington’s abundant, renewable geothermal resources.”

Highlights of the Law

The law as passed by the Legislature updates the definition of geothermal resources and makes it consistent with federal law and the laws of other states. Under Washington’s current law (RCW 78.60), “geothermal resources” means “only that natural heat energy of the earth from which it is technologically practical to produce electricity commercially… .” In addition to being inconsistent with the definition in federal law and other states’ laws, Washington’s definition is essentially a “moving target,” since advancements in technology now make it possible to produce power at much lower temperatures than when the original law was passed in the 1970s.  Research has shown that inconsistent definitions of geothermal resources are an important barrier to geothermal development. This bill adopts a definition based on federal law and California law, making it more familiar and easier for developers to work with.

The law provides for enhanced coordination between agencies relating to use of water. An important challenge in geothermal development is the lack of clarity with respect the regulation of the medium for heat transfer – water. This bill clarifies the circumstances in which the state’s water code will apply to use of water in geothermal projects, and includes explicit provisions relating to coordination between the two agencies charged with overseeing geothermal projects – the Department of Natural Resources and the Department of Ecology. The intent is to avoid duplication of agency efforts and permitting, while ensuring that agency concerns are fully considered and addressed. Additional provisions in the bill make clear that senior water rights may not be detrimentally impacted by geothermal development.

The law allows for flexibility in ownership. Washington’s current law provides that the surface landowner owns underlying geothermal resources. The new law will provide greater certainty for developers by allowing interests in geothermal resources to be severed from the land surface.  This change will also help avoid conflicts, for example, where rights to geothermal resources have previously been reserved or conveyed by the federal government; and will allow the state to retain control of geothermal resources and related income following conveyance of state lands.