Summary: After studying the manner in which Federal lands are leased for geothermal development, GAO concluded that economic and technical constraints are the major impediments to geothermal development. Because leasing rates of Federal lands under Forest Service jurisdiction are a potential matter of concern for future geothermal development, GAO believes the Secretary of Agriculture needs to set a higher priority for leasing of promising Forest Service geothermal lands. Two bills being introduced propose recommendations and revisions to existing legislation to remove unnecessary barriers to the development of geothermal resources. Significant changes in the proposed legislation are the provisions for increasing Federal acreage limits, setting time limits for leasing and permitting decisions, and authorizing phased leasing procedures. Both bills propose increases in the lessee acreage limitation per state, with a combined oil, gas, and geothermal lease acreage per state. GAO believes that the present limitation is unduly restrictive and that an increase is needed. An increase limited to an overall 51,200 acres as stated in one of the bills would be appropriate. One bill allows 1 year for all action to be completed on a geothermal lease application; the other bill allows up to 3 years. GAO believes that time limits in the energy regulatory process may increasingly be needed as part of the regulatory reform process, and suggested that the committee carefully consider the clauses addressing the outcome of delays occurring beyond the set time limits. GAO agrees that the concept of phased leasing could speed up environmental review. The provisions calling for alternative bidding systems in 10 percent of the lease sales and possible competitive leasing of unknown geothermal resource areas would add additional time to the leasing process and are not needed at this time. Before further financial incentives are enacted, Congress should be apprised of the impact each incentive would have on all phases of geothermal development and the estimated annual costs of each incentive.
