00-20815. Valuation of Federal Geothermal Resources

AGENCY:

Minerals Management Service (MMS), Interior.

ACTION:

Withdrawal of advance notice of proposed rulemaking.

SUMMARY:

MMS withdraws its August 19, 1999, Advance Notice of Proposed Rulemaking (Advance Notice) regarding the valuation of Federal geothermal resources. After further analysis, we conclude that the concerns that prompted the Advance Notice can be satisfactorily addressed using alternative valuation methods available in existing regulations. This notice terminates the geothermal rulemaking process initiated by the Advance Notice.

DATES:

The advance notice of proposed rulemaking is withdrawn as of August 16, 2000.

ADDRESSES:

See FOR FURTHER INFORMATION CONTACT section below.

FOR FURTHER INFORMATION CONTACT:

Charles Brook, Royalty Valuation Division, MMS; telephone, [phone]; E-mail, [e-mail]; mailing address, Minerals Management Service, Royalty Valuation Division, P.O. Box 25165, MS 3153, Denver, Colorado 80225-0165.

SUPPLEMENTARY INFORMATION:

MMS published an Advance Notice of Proposed Rulemaking in the Federal Register on August 19, 1999 (64 FR 45213), requesting public comments on new methods of valuing, for royalty purposes, Federal geothermal resources that are not subject to a sales transaction (the “no-sales” resources). MMS took this action in response to concerns raised by several California congressional representatives and their constituent county governments over declining royalties. The concerns centered around the use of the netback procedure to value no-sales electrical generation resources. MMS also solicited comments on valuation standards for direct-use resources.

The comment period on the Advance Notice closed on October 18, 1999. MMS also held a public workshop on October 7, 1999 (64 FR 50026), and met with several industry representatives on December 7, 1999.

MMS received written comments from 20 respondents, including representatives of States, county governments, and industry; members of a municipal utility; and a Member of Congress. All of the comments focused on the valuation of electrical generation resources. Fourteen of the 20 respondents—all of the industry representatives, the members of the municipal utility, a Member of Congress, and a State representative—commented on the existing netback valuation procedure. The remaining 6 respondents commented on other geothermal valuation procedures. MMS received no comments on the valuation of direct-use resources.

The comments did not reveal a preferred valuation method for no-sales resources. In general, advocates of one valuation method found fault with, or were fundamentally opposed to, other methods. Some respondents also questioned the merits of the rulemaking, stating that MMS had not fully presented its reasons for the new valuation rules.

Based on the comments received, both written and verbal, the impact of declining royalties appears to affect only a few county governments and geothermal lessees operating within those counties. Both MMS and the lessees involved have taken steps to mitigate this impact by exploring alternative valuation methods within the existing regulatory structure. These efforts are proving successful and are satisfying the concerns of the affected county governments and Members of Congress. Accordingly, MMS believes it is no longer necessary to pursue a rulemaking for geothermal valuation and withdraws its August 19, 1999, Advance Notice.

Dated: August 10, 2000.

Lucy Querques Denett,

Associate Director for Royalty Management.