Officials in Lake County – which received the largest amount of geothermal lease funding of any county nationwide – got tipped off to the changes and are leading the charge to get the funds restored.
The Energy Policy Act of 2005 called for 50 percent of the sales, bonuses, rentals and royalties from geothermal leases to be paid to the state where the proceeds came from and 25 percent paid to the county within whose boundaries the geothermal resources are located. Another 25 percent went to the Bureau of Land Management to run the geothermal program.
That was a change from the 1970 Geothermal Steam Act, which had 50 percent going to counties, 40 percent to the reclamation fund in the general treasury and another 10 percent going into the general treasury itself, the Department of the Interior reported.
A December 2008 report by the Geothermal Energy Association explained that the 2005 legislation also simplified how revenues were calculated. The report noted that industry-nominated federal land took on a system of competitive leasing; three geothermal lease sales held in four states – California, Idaho, Nevada and Utah – in 2007 and 2008 generated $56 million in new income.
“Combined, royalties and bonus bids have produced substantial new federal revenue,” the report, authored by research associate Timothée Néron-Bancel, stated, "In just two years, 2007 and 2008, $82 million in new revenue has been generated by geothermal activities.”
Since fiscal year 2006, the geothermal fund created by the 2005 bill has paid out more than $40 million to 31 counties in California, Idaho, Nevada, Oregon, New Mexico and Utah, the Department of the Interior told Lake County News.
Funds were first collected in 2006, the Department of the Interior reported. The first payments to counties totaled just over $13 million in 2007 and $27.3 million in 2008.
Beginning in 2007, President George W. Bush's budget included proposals to repeal some of the provisions in the 2005 energy act, including those geothermal royalties payments to counties and states, according to an Interior official who spoke with Lake County News but asked not to be identified.
The attempts to take the funds from counties has continued every year since, and was picked up in President Barack Obama's budget, the official said.
That change was enacted in the recently approved fiscal year 2010 Department of the Interior Appropriations Bill, HR 2996, and, based on that change, there will be no geothermal revenues for counties in the 2010 budget year, according to the Interior official.
Lake County Administrative Officer Kelly Cox said county staff was notified about the changes earlier this month at about the same time as President Obama was signing it into law, which occurred Oct. 30.
Cox said he didn't believe Congress intentionally deleted this funding for counties.
“After reading the legislation that was passed, there is no way any member of Congress could have understood that this was a consequence of that legislation,” he said.
Cox said he thinks the person who drafted the language in the Interior budget legislation had to have known exactly what they were doing, and that it likely came from within Interior. He said it was “basically hidden deep inside a very large piece of legislation.”
“There's no question in my mind that whomever drafted the language in that section of the legislation, knew very well what it would do,” he added.
Cox said when he read the legislation he knew exactly what it meant and how much money was at stake for the county.
“Absolutely no prior notice was given that this was under consideration,” he said.
If Cox seems overly concerned, it's because the county's share of the revenues has been impressive, thanks to the amount of geothermal production in its borders, including The Geysers steamfield.
In 2007, the county received $845,759.45 and in 2008 took in $2,780,976.80 for a grand total of $3,626,736.25.
That amount accounted for nearly half of all revenues taken in by the seven California counties that received funds. It's also more than twice the amount taken in by the states of Utah, Oregon, Idaho and New Mexico, combined.
And while it might seem a minuscule amount compared to the overall county budget – just under $200 million this year – the funds have supported some meaningful projects in Lake County.
The $2.7 million the county took in last year came principally from a Bureau of Land Management (BLM) lease sale held in Reno on Aug. 14, 2007.
The BLM reported that the auction brought in bids totaling more than $8 million for 2,700 acres in The Geysers steamfield.
That included a bid for a 470-acre parcel on Cobb Mountain made by Binkley Geo Resources LLC. That lease was the highest in US history, at $14,000 per acre, totaling $6.5 million, BLM reported.
Cox told the Board of Supervisors earlier this year that the proceeds from those auctions provided a one-time windfall that assisted the county in purchasing more than 1,500 acres on Mt. Konocti.
When he realized the money was in jeopardy, Cox quickly got busy contacting local, state and federal officials, including touching base with officials in other states.
He also spoke with Congressman Mike Thompson's office, and noted that Thompson “has been very helpful and has expressed a strong commitment to resolve this problem in our favor.”
Cox contacted the Ukiah BLM office, where Rich Burns, the office's field manager, said they also hadn't been apprised of the changes.
“It really caught us totally by surprise,” said Burns, adding that BLM's Washington office also was caught off guard.
The Department of the Interior's Minerals Management Service plays a big role in administering the geothermal program, said Burns. BLM monitors the geothermal resources at The Geysers and implements the Geothermal Steam Act, he added.
The Geysers is one of the world's largest geothermal production areas. “It's really pretty unique” in terms of geothermal development in the United States, Burns said.
In reaction to the loss of the funds, US Sen. Harry Reid of Nevada and Sen. Dianne Feinstein of California, joined by Thompson in the House, have introduced legislation, S 2607, to give the funding back to the counties.
"Geothermal energy is an important source of renewable energy for our country," Congressman Thompson told Lake County News. "The funding that geothermal royalties creates for Lake County is incredibly important. It's outrageous that this was stripped from the Interior Appropriations bill, and along with Senators Feinstein and Reid I've introduced legislation to fix it."
Cox said he thinks the matter will be resolved in the county's favor. However, he added, “I'm not going to take it for granted that it will be resolved in our favor, and neither should any other county — it is important for all counties to continue pushing hard for immediate legislation to restore these funds.”
A detailed breakdown of the funds distributed in fiscal years 2007 and 2008 follows.
COUNTIES RECEIVING REVENUE, LISTED BY STATE AND AMOUNTS
CALIFORNIA
For the state's 50-percent allocation it received $4,652,848.44 in 2007 and $9,888,239 in 2008 for a total of $14,541,087.44.
County allocations (from largest to smallest):
Lake – 2007, $845,759.45; 2008, $2,780,976.80; total, $3,626,736.25
Sonoma – 2007, $1,087,790.28; 2008, $1,749,735.98; total, $2,837,526.26
Inyo – 2007, $301,819.36; 2008, $246,745.75; total, $548,564.81
Imperial – 2007, $31,708.12; 2008, $113,260.31; total, $144,968.43
Mono – 2007, $31,478.73; 2008, $54,175.82; total, $85,654.55
Lassen – 2007, $14,014.89; 2008, $16,944.66; total, $30,959.55
Siskiyou – 2007, $14,980.75; 2008, $24,602.51; total, $39,583.26
Total paid directly to California counties: $7,313,993.11
NEVADA
For the state's 50-percent allocation it received $1,526,366.30 in 2007 and $11,351,161.05 in 2008 for a total of $12,877,527.35.
County allocations (from largest to smallest):
Churchill – 2007, $635,410.97; 2008, $1,391,112.41; total, $2,026,523.38
Lander – 2007, $43,343.44; 2008, $1,027,340.70; total, $1,070,684.14
Nye – 2007, $2,138.75; 2008, $589,313.21; total, $591,451.96
Mineral – 2007, $0; 2008, $379,806.14; total, $379,806.14
Pershing – 2007, $22,567.08; 2008, $235,558.04; total, $258,125.12
Washoe – 2007, $15,829.50, 2008, $64,703.56; total, $80,533.06
Humboldt – 2007, $6,322; 2008, $62,697.09; total, $69,019.09
Esmeralda – 2007, $13,789.69; 2008, $18,952.14; total, $32,741.83
Elko – 2007, $6,487.50, 2008, $16,486; total, $22,973.50
Eureka – 2007, $5,559.97; 2008, $5,410.63; total, $10,970.60
Lyon – 2007, $3,491.04; 2008, $3,259.79; total, $6,750.83
White Pine – 2007, $1,091.25; 2008, $1,248; total, $2,339.25
Total paid directly to Nevada counties: $4,551,918.90
IDAHO
For the state's 50-percent allocation it received $2,355,587 in 2007 and $517,001.30 in 2008 for a total of $2,872,588.30.
County allocations (from largest to smallest):
Cassia – 2007, $817,901.50; 2008, $257,325; total, $1,075,226.50
Washington – 2007, $359,745; 2008, $870; total, $360,615
Caribou – 2007, $0; 2008, $324.83; total, $324.83
Bonneville – 2007, $46.77; 2008, $40.09; total, $86.86
Bingham – 2007, $26.73; 2008, $33.41, total, $60.14
Total paid directly to Idaho counties: $1,436,313.33
UTAH
For the state's 50-percent allocation it received $127,268.31 in 2007 and $220,268.55 in 2008 for a total of $347,536.86.
County allocations (from largest to smallest):
Beaver – 2007, $63,133.09; 2008, $70,130.01; total, $133,263.10
Millard – 2007, $302.21; 2008, $3,976.54; total, $4,278.75
Iron – 2007, $57.25; 2008, $0; total, $57.25
Total paid directly to Utah counties: $137,599.10
OREGON
For the state's 50-percent allocation it received $63,107.62 in 2007 and $109,203.25 in 2008 for a total of $172,310.87.
County allocations (from largest to smallest):
Deschutes – 2007, $30,926.31; 2008, $35,985.75; total, $66,912.06
Lake – 2007, $627.50; 2008, 627.50; total, $1,255
Total paid directly to Oregon counties: $68,167.06
NEW MEXICO
For the state's 50-percent allocation it received $7,039.50 in 2007 and $6,842.48 in 2008 for a total of $13,881.98.
County allocations (from largest to smallest):
Dona Ana – 2007, $2,269.25; 2008, 987.30; total, $3,256.75
Hildago – 2007, $1,250.50; 2008, $1,321.50; total, $2,572
Total paid directly to New Mexico counties: $5,828.75
E-mail Elizabeth Larson at
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