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State
Oregon Regulations
CHAP 141 DIVISION 75 GEOTHERMAL LEASE REGULATIONS



The Oregon Administrative Rules contain OARs filed through July 14, 2006

DEPARTMENT OF STATE LANDS


DIVISION 75
GEOTHERMAL LEASE REGULATIONS



141-075-0010

Purpose

The purpose of these regulations is to prescribe uniform procedures for obtaining permits and leases for exploration and development of state-owned geothermal resources under the jurisdiction of the Division of State Lands as provided for by Chapter 51, Oregon Laws 1974 (Special Session).

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0015

Authority

These rules are adopted pursuant to Section 2(2) of Chapter 51, Oregon Laws 1974 (Special Session).

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 19-1974, f. & cert. ef. 9-18-74



141-075-0020

Definitions

(1) "Geothermal Resource Rights". Rights to the geothermal resources in or under real property as listed in the Registry of Geothermal Resources Rights or otherwise placed under the jurisdiction of the Division of State Lands.

(2) "Surface Rights". Rights in and over the surface of real property, including the statutory jurisdiction of other state agencies as well as possessory rights of persons holding leases and easements.

(3) "Person". All citizens of the United States; associations of such citizens, including partnerships; corporations qualified to do business in Oregon and authorized to do business in real property; and governmental units.

(4) "Geothermal Resources". The natural heat of the earth, the energy, in whatever form, below the surface of the earth present in, resulting from, or created by or which may be extracted from, the natural heat, and all minerals in solution or other products obtained from naturally heated fluids, brines, associated gases, and steam, in whatever form, found below the surface of the earth, exclusive of helium or of oil, hydrocarbon gas, or other hydrocarbon substances, but including specifically:

(a) All products of geothermal processes, embracing indigenous steam, hot water, and hot brines;

(b) Steam and other gases, hot water and hot brines resulting from water, gas, or other fluids artificially introduced into geothermal formations;

(c) Heat or other associated energy found in geothermal formations; and

(d) Any by-product derived from them.

(5) "By-Products". All commercially valuable products other than heat energy obtained in conjunction with the development of geothermal resources excluding oil, hydrocarbon gas, and other hydrocarbon substances.

(6) "Registry". The inventory of geothermal resource rights established by the Division of State Lands pursuant to Chapter 51, Oregon Laws 1974 (Special Session) listing lands owned by all state agencies, in which geothermal rights were transferred to the Division for leasing.

(7) "Geothermal Production" -- "Commercial Production". The sale, exchange, lease, or other disposition or use of geothermal resources for commercial purposes.

(8) "Geothermal Exploration". The drilling of shallow, temperature-gradient wells, core drilling, seismic surveys, electrical and electronic surveys, gravimetric surveys, and others of like nature.

(9) "Geothermal Development". Well drilling to develop commercial geothermal resources.

(10) "Design Review". Review of the design of all the physical components to be constructed or installed for the commercial utilization of geothermal resources or by-products, applications of available technology, feasibility, utility consideration, electricity transmission, serviceability, esthetics, and social consideration.

(11) "Division". The Division of State Lands.

(12) "Director". The Director of the Division of State Lands.

(13) "Qualified Applicant". Any person except a member of the State Land Board, an employee of the Division of State Lands, or a member of the family of such member and employee.

(14) "Testing Program". The planned series of flow tests, stratigraphic tests, structure tests, and step-out wells that will enable a determination of commercial feasibility after a discovery.

(15) "Development Plan". The lessee's predicted series of step-out wells and development wells necessary to bring a geothermal field into full production, together with such piping, reinjection wells, and controls as may be required to achieve production status.

(16) "Profitable Production". Production in quantities sufficient to yield a return in excess of operation costs.

(17) "Operating Plan". The lessee's predicted maintenance, redrilling, flow cycle, and closure requirements to achieve optimum benefits from geothermal resource. Also must include utilization of by-products.

(18) "Cooperative or Unit Plan (agreement)". A plan for joint operation of all or some portion of a producing reservoir. May or may not include allocation of production. The plan usually will be reduced to an agreement between the parties.

(19) "Well-spacing or well-development". The planned location of wells to achieve optimum production.

(20) "Evaporation Pans". Flat shallow ponds used to hold water until evaporated for recovery of chemical in the waters.

(21) "Archaeologic Survey". A factual report written by professional archaeologist delineating sites of minor and major historic and/or archaeologic significance.

(22) "Subsidence". The enhanced settling or lowering of land due to release of pressures after removal of fluids or other materials from the subsurface.

(23) "Commingling". Intermixing of geothermal resources from geothermal resource rights owned by different parties.

(24) "Designate Geothermal Resources Area". An area containing state-owned geothermal resource rights in which the geologic conditions or a nearby discovery proves that a high probability of geothermal development and production exists.

(25) "Geothermal Discovery". Drilling of an initial well to a formation capable of producing geothermal resources.

(26) "Lessee". The person named in a lease of geothermal resource rights.

(27) "Proprietary Information". "Trade secrets" as used in ORS 192.500(1)(b).

(28) "Bonus". The cash consideration paid by a lessee for an upon the execution of a lease.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74; LB 28-1975, f. 8-29-75, cert. ef. 9-25-75



Policy


141-075-0030

State Land Board Policy

The geothermal policy adopted by the State Land Board States: "It is the policy of the State Land Board to encourage the use of this state-owned resource for production of additional electrical energy by management programs consistent with the state's environmental policy and the Land Board's trusteeship of the Common School Fund".

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0035

Environmental Protection

(1) The Division must consider alternative actions that will minimize adverse impacts and both the long and short range implications to man, his physical and social surroundings, and to nature, in order to avoid or minimize to the fullest practicable extent all undesirable consequences for the environment. Environmental impact assessment parallels and is concurrent with the process by which alternative means are developed to meet objectives based on expressed needs.

(2) Therefore, the Division will require an environmental impact assessment which documents the factors considered by the applicant in his formulation of the geothermal project for which a state lease is required. Lease terms subsequently submitted to the applicant will include the specific environmental protections deemed necessary by the Division in concurrence with the state agency holding jurisdiction over surface rights.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



General Obligations and Records


141-075-0040

Service Charges

The Division shall collect nonrefundable service charges to cover the expense of processing the following matters:

(1) Original Applications -- $50 for each lease or exploration permit application;

(2) Assignments -- $50 for each assignment;

(3) Plan Amendments -- $50 for approval;

(4) Unitization -- $75 for each lease;

(5) Exploration Permit Issuance -- $100.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74; LB 3-1981, f. & ef. 6-19-81



141-075-0045

Bond Types

Applicants for permits or geothermal resource leases shall furnish corporate surety bonds in amounts and with sureties acceptable to the Division. Bonds will be conditioned on compliance with all the terms of the permit or lease and on indemnification for damages to persons or property as a result of operations on state-owned land.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0050

Statewide Bonds

In lieu of any bonds required for two or more specific permits or leases, the lessee or permittee may furnish a statewide bond applicable to Oregon. The amount will be determined by the cumulative liability of permittee or lessee to the Division reduced by 25 percent.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0055

Refund

If an application for a geothermal resources lease is rejected, all money tendered by applicant, except the filing fee, will be returned. If part of an application is rejected, money tendered for rental of such part will be refunded.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 19-1974, f. & cert. ef. 9-18-74

141-075-0060

Property Information

Whenever the reports, methods, tests, or data required to be submitted under these rules are deemed proprietary information by the applicant or lessee, the Division shall hold such information exempt from disclosure under ORS 192.410 through 192.500 and otherwise act so as to maintain the confidentiality of the information during the primary term of the lease.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 19-1974, f. & cert. ef. 9-18-74



141-075-0080

Domestic Use -- Noncompetitive Lease

A nonexclusive lease of state-owned geothermal resource rights may be granted for domestic use when the surface is not owned by the State. "Domestic Use" means geothermal resources used for heating, cooling and electrical generation for the lessees dwelling, associated outbuildings and for other noncommercial purposes:

(1) Total depth of well may not exceed 2,000 feet and the geothermal fluids produced must be less than 250 degrees Fahrenheit bottom hole temperature.

(2) Application for a domestic use geothermal resource lease shall be on forms provided by the Division. Each application shall include:

(a) A $50 application fee;

(b) A location map showing the well location and where the resource will be used.

(3) The Division may refuse to grant a domestic use lease for any reason considered necessary to protect the public interest.

(4) The terms of a domestic use lease shall be:

(a) Annual rental of no less than $150;

(b) Primary term of five years -- Renewable for five-year periods providing lessee conforms to all provisions of the lease agreement.

(5) Lessee shall provide evidence of insurance and performance bond as provided in the lease agreement.

(6) Lessee shall be responsible for compliance with all regulatory requirements of other state, county and city agencies.

(7) The Division may cancel the lease agreement if lessee fails to adhere to the terms and conditions of the lease agreement or if there is resource waste, environmental degradation, adverse aquifer disturbance, or if continued use for other reasons would be detrimental to the public interest.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 7-1982, f. & ef. 8-25-82



Geothermal Exploration Permit


141-075-0110

Availability

Geothermal resource rights should be considered available unless otherwise noted:

(1) State-owned lands in which both surface rights and mineral rights are vested in the state if listed on the Geothermal Registry are available for geothermal exploration.

(2) State-owned deed reservations of geothermal rights are available for geothermal exploration.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0130

Exploration Permit Required

No person shall explore by any means whatever on, in, or under land owned by the State of Oregon and under the jurisdiction of the Division of State Lands to detect or assess geothermal resources without a permit or lease issued pursuant to these regulations and under authority of ORS 273.551.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0140

Application for Exploration Permit

Any person wishing to obtain an original, amended, or renewal geothermal resource exploration permit from the Division shall submit at least three copies of a geothermal application on a form provided by the Division.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0145

Application Requirements

All application forms must be completed in full, signed by the applicant or his authorized representative with proof of authorization, and shall be accompanied by three copies of all necessary exhibits. Maps shall be in reproducible form.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0150

Compliance Requirement

Any applicant may be required to show that all applicable state laws and regulations have been complied with up to the date of application.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0155

Permit Application Exhibits

The applicant shall submit, as exhibits to the application form:

(1) Evidence of insurance as follows:

(a) Public liability and property damage in amounts according to the number of acres covered by the application. For areas less than or exactly 640 acres -- $20,000, $40,000, $20,000, and for areas greater than 640 acres -- $50,000, $100,000, $50,000; and

(b) Contractual liability covering the permittee's duty of indemnification of the state -- $200,000.

(2) A corporate surety bond of not less than $1,000 conditioned upon compliance with all the terms of the exploration permit.

(3) A description of the applicant's exploration plan including, but not limited to, exploration methods, dates of exploration, types of equipment to be used, and crew size.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74; ; LB 28-1975, f. 8-29-75, cert. ef. 9-25-75



141-075-0160

Limitations

There are no limitations upon number of acres of state land which may be applied for.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0165

Application Approval

(1) Upon receipt of an exploration permit application, the Division shall cause copies of the application to be sent to the surface rights holder and affected state agencies, including the Department of Environmental Quality, Department of Geology and Mineral Industries, State Engineer, Public Utility Commissioner, State Wildlife Commission, Fish Commission of Oregon, Nuclear and Thermal Energy Council, and Land Conservation and Development Commission and to such other agencies or persons as the Division deems appropriate.

(2) Each agency shall be requested to respond within 30 days by making a recommendation as to whether the permit should be granted. Agencies may recommend conditions to be contained in the exploration permit to satisfy requirements within their respective statutory jurisdictions. Applicants will be advised of conditions recommended by state agencies and, where advisable, a conference between agencies and applicants will be held.

(3) The Division shall make such investigation as it considers necessary.

(4) The Division or state agency holding the surface rights may refuse to grant a permit for exploration of geothermal rights under the jurisdiction of the Division of State Lands if it has reason to believe that a geothermal lease could not be issued because of considerations of environmental quality or other public interest.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0170

Exploration Permit Terms

Except for additions and modifications required to protect natural resources and environmental quality, the Division of State Lands Geothermal Exploration Permit form as adopted June 1, 1975, will be issued upon approval of an exploration permit application.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0175

Permit Period

Exploration permits shall expire one year from date of issuance. A new permit may be issued to replace an expiring permit.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 19-1974, f. & cert. ef. 9-18-74

141-075-0180

Non-Exclusive Permits

Geothermal exploration permits allow only non-exclusive access to land for geothermal exploration.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 19-1974, f. & cert. ef. 9-18-74



141-075-0190

Investigation

The Division may conduct scheduled and unscheduled inspections of operations conducted under exploration permits. Upon receipt of a complaint concerning operations covered by an exploration permit, the Division or any governmental employee appointed to the task may make an investigation and collect facts and opinions.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0195

Suspension of Permit

The Director may issue an order immediately suspending operations under a geothermal exploration permit if:

(1) The permittee remains in violation of the regulatory requirements of the Oregon State Department of Geology and Mineral Industries, the Oregon Department of Environmental Quality, The Oregon Division of Employment, Health, Oregon Bureau of Labor, Oregon Workmen's Compensation Department, State Engineer, Department of Revenue, or other legally constituted authority, in excess of 30 days after notice in writing from the appropriate agency.

(2) The permittee is in violation of any exploration permit terms or conditions which, in the judgment of the Director, jeopardizes the public health, welfare, and safety.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0200

Cancellation

The Division may cancel a geothermal exploration permit if it finds, after notice to the permittee and allowance of an opportunity for hearing, that:

(1) Permit requirements are not being observed after notification to the permittee.

(2) False information was submitted in the application or other required reports.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



Geothermal Resources Leases


141-075-0205

Geothermal Resources Lease Required

No person shall drill for, mine, operate, prospect for, extract, remove, or dispose of any geothermal resources from any geothermal resources rights without a lease issued under these rules.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0210

Geothermal Resource Rights Available for Leasing

All geothermal resource rights shall be considered available for leasing except:

(1) Geothermal resource rights in lands designated as "natural areas" pursuant to ORS 273 .582.

(2) Geothermal resource rights in or under lands within the bed of a stream of lake unless:

(a) The stream or lake has been judicially determined to have been navigable at the time of Statehood or in the reasonable judgment of the Division, was navigable at that time; or

(b) The issuance of a geothermal resources lease to an applicant would serve to protect the applicant as to the abutting riparian uplands.

(c) Ownership is established in federal and state records by virtue of riparian rights in a non-navigable lakebed or non-navigable stream.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74; LB 1-1979(Temp), f. & ef. 7-10-79; LB 2-1979, f. & ef. 10-29-79



141-075-0215

Withdrawal From Leasing

The Division may withdraw any geothermal resource rights from availability for leasing or declare any geothermal resource rights to be within a designated geothermal resources area pursuant to OAR 141-075-0520 through 141-075-0575 at any time prior to the approval of a lease of such geothermal resource rights.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0220

Minimum Size of Leasable Tracts

Except for good cause shown, no geothermal resources lease will be issued covering tracts of land less than a quarter-quarter section (40 acres) or surveyed government lot, except where the geothermal resource rights in any quarter-quarter section or surveyed government lot are in or under less than the whole thereof.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0225

Application for Geothermal Resources Lease

Any qualified applicant wishing to obtain an original, amended, or renewal lease for geothermal resource rights shall submit at least three copies of a written application on forms provided by the Division.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0230

Lease Application Filing Requirements

All application forms must be completed in full, signed by the applicant or his authorized representative with proof of authorization, and be accompanied by the filing fee specified in OAR 141-075-0040.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0235

Advance Rental

The application for a geothermal resources lease shall be accompanied by an advance rental of one dollar per acre, multiplied by the number of acres sough to be leased.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0240

Receipt of Application

Applications for geothermal resources leases will be received for filing in the office of the Division during office hours. Except as hereinafter expressly provided, all such applications received, whether by U.S. Mail or by personal delivery over the counter, shall be immediately stamped with the exact date and time of receipt. The date indicated on the time stamp shall be deemed the date of filing unless the Division shall determine that the application is deficient in any particular or particulars. If an application is determined to be deficient in minor respects, it shall be returned to the applicant with instructions for its amendment or completion. If the application is resubmitted in satisfactory form within 15 days from the date of the instructions, it shall retain its original filing date. If the application is resubmitted at any later time, it shall be deemed filed at the time of resubmission.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0245

Incomplete Application

Applications which are incomplete as to identity of applicant, legal description, or signature of applicant, or do not include the established filing fee shall be rejected and the applicant shall be notified in writing of the deficiency(s).

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0250

Priority Among Applicants

Except where state lands have been withdrawn from leasing and except as otherwise provided by law or regulations, the Division shall grant a lease to a qualified applicant whose application is first filed in the offices of the Division of State Lands in Salem, Oregon. The Division expressly reserves the right to issue a lease to a person, association, or corporation other than a first applicant when it appears to the Division that said person, association, or corporation, by virtue of ownership of the right to explore and develop geothermal resources in lands adjacent to state lands, is unusually likely to explore and develop the geothermal resources in the state lands.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0255

Application Supplements

The application priority afforded an applicant by OAR 141-075-0250 shall be maintained provided that, within 120 calendar days following receipt of the application form, the applicant submits the following supplemental information to the Division:

(1) A geologist's preliminary survey report indicating land formation, faulting, geothermal heat flows, ground water and surface water flows and an opinion related to the likelihood of subsidence resulting from geothermal resource development.

(2) A proposed program for monitoring and surveillance of the geothermal resource and of groundwater quality and quantity.

(3) An environmental impact report following the form adopted by the Division.

(4) A copy of the State Department of Geology and Mineral Industries geothermal permit issued to the applicant for the lease site, and a copy of each other application or lease pertaining to geothermal resources held by the applicant in the immediate vicinity of the geothermal resource rights it seeks to lease.

(5) Geothermal resources lease applications may include, or if not submitted at the time of application, applicants will be required to provide prior to issuance of a lease, evidence of insurance as follows:

(a) Public liability and property damage in form and with insurers acceptable to the Division with limitations of $100,00, $200,000, $100,000; and

(b) Contractual liability insurance covering the lessee's duty of indemnification of the State -- $500,000.

(6) Such other information as the Division advises the applicant to be necessary.

(7) Geothermal resources lease applications may include, or if not submitted at the time of application will be required prior to issuance of a lease, a corporate surety bond of not less than $10,000 conditioned upon compliance with all the terms of the lease.

(8) The Division may require additional amounts of insurance and/or bonding prior to issuance of a geothermal resources lease if, in its judgment, the above listed minimum amounts are insufficient to protect the public health, safety, and welfare and insure restoration of the state-owned land covered by the lease application.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74; LB 21(Temp), f. & ef. 11-15-74 thru 1-28-75; ; LB 28-1975, f. 8-29-75, cert. ef. 9-25-75



141-075-0260

Application Rejection

If application supplements are not received by the Division within the time limit specified in OAR 141-075-0255, or if such application supplements are not complete, the entire application shall be rejected and returned to the applicant with an explanation of the reasons for rejection. The next application received from a different applicant may be given priority over a reapplication of the rejected applicant.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0265

Consideration of Lease Applications

(1) Upon receipt of a lease application, the Division shall cause notice of the application to be sent to affected state agencies, including the agency having jurisdiction over the surface rights, the Department of Environmental Quality, Department of Geology, and Mineral Industries, State Engineer, State Wildlife Commission, Fish Commission of Oregon, Land Conservation and Development Commission, Nuclear and Thermal Energy Council, and such other agencies or persons as the Division deems appropriate.

(2) Upon receipt of the environmental impact report, the Division shall send copies to the same affected state agencies.

(3) Each agency shall be requested to respond within 60 days of its receipt of the environmental impact report making a recommendation as to whether the lease should be granted to the applicant. Agencies may also recommend conditions to be contained in the lease to satisfy requirements within their respective statutory jurisdictions. Applicants will be advised of conditions recommended by state agencies and, where advisable, a conference between agencies and applicants will be held.

(4) The Division shall make such investigations as it considers necessary and shall notify the public of its opportunity to request a hearing or hearings upon the granting of the application, together with the timetable and procedures to be followed. The Division shall hold the hearing before the Director in the manner prescribed by ORS Chapter 183. Prior to the hearing, the Division shall give public notice in the manner prescribed by the Division's rules for hearing.

(5) The Division shall render its decision within 60 days following the hearing, and shall cause notice of its decision to be given to the applicant by certified mail. If the application is refused, all payments tendered by the applicant, except its filing fee, shall be returned and the Division shall include in its notice the necessary information for the taking of an appeal of its decision.

(6) If the Division approves the application, and the state agency controlling the surface rights concurs, the application will be placed before the State Land Board for its final approval. Upon approval by the State Land Board, the Division shall promptly forward to the applicant a geothermal resources lease incorporating all conditions which are deemed necessary by the Director, taking into consideration the recommendations of other affected agencies, to protect the state's environment, natural resources, public health and safety.

(7) The Division may refuse to grant a lease for state-owned geothermal resource rights because of considerations of environmental quality or other public interest.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0270

Withdrawal of Application

An applicant may withdraw its application by written request. If the request is received prior to the time the Division approves the application, all payments tendered by the applicant, except its filing fee, shall be returned. If the withdrawal request is received after the Division has approved the application an the applicant does not accept the offered lease, all payments tendered by the applicant shall be retained by the Division, unless otherwise ordered by the Director for good cause shown.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0275

Geothermal Resources Lease Terms

Generally, the Division of State Lands' geothermal lease form as adopted June 1, 1974, will be issued upon approval of a lease application. Modifications and additions of lease terms once deemed necessary by the Division shall thereafter be included in each lease issued for the same parcel.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0280

Specific Actions to Reduce Environmental Impacts

In addition to the conditions contained in the geothermal resources lease, a lessee shall comply with the following specific requirements to minimize environmental damage:

(1) Intake structures for cooling water must be screened in the manner approved by the Oregon Wildlife and Fish Commissions.

(2) All use of surface waters for cooling, including discharge of heat effluent or radiator systems, must comply with the Department of Environmental Quality regulations.

(3) All changes in ground water supplies, including changes in ground water table levels and chemical contamination, shall be approved by the appropriate state agency.

(4) All surface lands disturbed in geothermal resource development shall be revegetated with tolerant plant species.

(5) Air or water discharges which might create fog shall avoid proximity to established transportation routes.

(6) Discharges into the atmosphere of heat or any chemical contaminants shall comply with the Department of Environmental Quality regulations.

(7) If evaporation pans are used to recover by-products, the land upon which evaporation pans are established shall be restored to its optimum contour slope and shall be revegetated with tolerant plant species, and restored to optimum condition if subjected to leaks during the operation of evaporation pans.

(8) If subsidence occurs as a result of geothermal resource development or production, operation shall be suspended. The Director may order such suspension released if no serious damage will result from continued operation.

(9) The Lessee shall comply with Department of Environmental Quality noise and solid waste regulations. An archaeologic survey to standards established by the Director shall be submitted to the Division prior to any excavation or fill of the leased premises.

(10) No wells other than shallow prospect wells shall be drilled within 100 feet of the outer boundary of the leased premises or within 100 feet of a public road or highway in existence prior to the commencement of drilling.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0285

Term of Geothermal Resources Lease; Renewal

(1) Geothermal resource leases shall have a primary term of ten years, commencing with the date of execution.

(2) If royalties during any year of the primary term equal or exceed the annual rental due under the lease, the lessee may renew for a subsequent ten year period.

(3) Leases requiring renewal prior to achieving commercial production may be renewed for a maximum additional term of five years if a geothermal discovery has been made or is deemed by the Director to be imminent. The Director may require the lessee to submit and implement a development plan and timetable as an added condition of the extended lease.

(4) If royalties during any year of each subsequent ten year renewal period equal or exceed the annual rental due under the lease, the lessee may renew for successive ten year periods up to a maximum of 50 years.

(5) In no event shall a lease continue beyond the period of 50 years from the date of execution, except that the lessee shall have a right of first refusal in the event that the Division decides to continue leasing the premises.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0290

Rental Rates

Rental rates will be charged as follows:

(1) Geothermal Lease -- Annual rental:

(a) 1st year -- $1/acre;

(b) 2nd year -- $1/acre;

(c) 3rd year -- $1/acre;

(d) 4th year -- $3/acre;

(e) 5th year -- $5/acre;

(f) 6th-10th year -- $5/acre.

(2) Renewal Geothermal Lease -- Annual rental: $5/acre.

(3) Rentals paid each year will be deducted from royalties due accruing during the rental year.

(4) If the lessee makes a discovery of geothermal resources on the lease promises, the Division and the lessee may negotiate a rental of less than $5 per year, commencing with the annual rental payment following the discovery and continuing until commercial production of the discovered geothermal resource is achieved. Such reduced rental shall not be less than $1 per acre per year.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0295

Requirements After Discovery

Upon making an initial geothermal discovery, the lessee shall:

(1) Submit a proposed testing program to the Division of State Lands. The Director may require amendments to the testing program by written notice to the lessee within 30 days following receipt of the submission.

(2) Proceed to obtain legal confirmation of the well's primary purpose, i.e. geothermal production.

(3) The lessee shall provide certified copies of all tests and measurements made in conjunction with the testing program. If the Director finds the tests, as performed, or the data therefrom are not adequate to evaluate the geothermal resource, he may require other tests to be made, consistent with the usual operating practices of the geothermal industry.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74

141-075-0300

Design Review

No geothermal production shall be allowed under a geothermal resources lease until the lessee has submitted a Design Review report detailing the design alternatives considered in planning the development of leased geothermal resources. Thereafter, for a period of 60 days, the Director may order amendments of the proposed development and operating plans to reduce environmental impact. Appeals of such orders may be taken in the manner provided in ORS Chapter 183.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0305

Royalties on Geothermal Resource Production

During the term of the lease, or any renewal thereof, a royalty at the rate of 10 percent shall be paid upon the production value of the geothermal resources produced under the lease each month and sold or utilized by the lessee.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0310

Production Value

The value of geothermal production shall be determined by the gross sale price paid by plant or other legal purchaser for value. In the event that geothermal production hereunder is not sold but is furnished to a plant owned or controlled by lessee, the gross purchase price of such geothermal production shall reasonably equal the price being paid to other geothermal wells (or producers) for geothermal production of like quality and quantity. Should the Division believe that any charges imposed and deducted are excessive or that the price received by lessee is unreasonable, lessee shall, upon 30 days written notice, produce evidence that the charges, or price, or both, comply with the above requirements.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0315

Production Measurement

The lessee shall accurately measure or gauge the quantity and quality of all production in accordance with the standard practices, procedures, and specifications used in the industry. All measuring equipment shall record cumulative amounts or continuously record in reproducible form. All measuring equipment shall be tested periodically by the lessee and, if found defective, the Division will determine the quantity and quality of production from the best evidence available.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0320

Royalties on By-Products

Upon the sale, exchange or other disposition for value of by-products produced in conjunction with the production of geothermal resources under a lease, the lessee shall pay royalties as follows:

(1) Demineralized water -- One percent of the gross sale price of demineralized water sold, exchanged, or otherwise disposed of for value in any calendar month.

(2) Heavy metals, nonhydrocarbon gases, and miscellaneous precipitates -- A royalty of five percent of the gross sale price of all heavy metals, miscellaneous precipitates, and nonhydrocarbon gases sold, exchanged, or otherwise disposed of for value in any calendar month.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0325

Assignment of Geothermal Resources Leases

(1) A geothermal resource lease shall not be assigned, in total or in part, without written approval of the Director.

(2) Each request for total or partial assignment of lease must be accompanied by the following:

(a) A completed "Assignment of Lease" form (available from the Division);

(b) A fee in the amount of $50 payable by check;

(c) If a corporation, written verification that the assignee is registered to conduct business in Oregon. Registration must be through the Corporation Division, Secretary of State's Office, Salem, OR 97310.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74; LB 3-1981, f. & ef. 6-19-81



141-075-0330

Relinquishment of Geothermal Resource Lease

(1) A geothermal resources lease, or any portion of the geothermal resource rights covered by such lease, may be relinquished by the lessee by filing a written statement with the Division which:

(a) Describes the geothermal resource rights to be relinquished;

(b) States that the lands above the geothermal resource rights have not been disturbed, drilled, or otherwise affected, or if disturbed, drilled, or otherwise affected, describing the manner in which such lands were restored to their original condition;

(c) States that all monies due and payable to workmen employed by the lessee on the leased premises have been paid;

(d) Be accompanied by a release from the State Department of Geology and Mineral Industries of permits for any wells drilled on the leased premises.

(2) A relinquishment shall take effect upon approval of the Division, subject to the continuing obligation of the lessee and the lessee's surety to pay all accrued rentals, royalties, and taxes, if any, and to comply with all conditions of the lease and of these rules related to the restoration of the leased premises.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0335

Investigation of Leased Premises

The Division may conduct scheduled and unscheduled inspections of operations conducted by the lessee under a geothermal resources lease. Upon receipt of a complaint related to the conduct of the lessee of its geothermal resource exploration, development, or production, the Division or any governmental official appointed to the task by it may make an investigation and collect facts and opinions.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0340

Suspension of Operations

Upon the occurrence of any of the following events, the Director may issue an order suspending operations under a geothermal resource lease executed by the Division:

(1) Violation of the regulatory requirements of the Oregon State Department of Geology and Mineral Industries, the Oregon Department of Environmental Quality, the Division of Employment, Bureau of Labor, Workmen's Compensation Department, Public Utility Commissioner, Department of Revenue, or other authority having jurisdiction, in excess of 30 days after notice in writing from any such agency, except that requirements undergoing further consideration, reconsideration by such agency, or appeal to the Courts of such agency's decision, shall allow continued operation of the leased premises.

(2) Any violation of the terms and conditions of a geothermal resources lease which, in the judgment of the Director, jeopardizes the environment, public health, welfare, or safety of the State of Oregon.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0345

Cancellation of Geothermal Resources Lease

The Division may commence proceedings to cancel a geothermal resources lease if:

(1) A lessee is in continued violation of terms and conditions of the lease including but not limited to the requirement thereof to exercise due diligence in exploring, developing, and operating under the geothermal resource lease, beyond 30 days after receipt of notice in writing of such violation from the Division.

(2) The lessee submitted false information in its application or in any other document required to be submitted to the Division; or

(3) The lessee has changed its method of exploring, developing, or producing geothermal resources under the lease without first securing the approval of the Division.

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



Leasing by Simultaneous Application


141-075-0400

When Applicable

From time-to-time, when geothermal resource rights become available for leasing by the Division, either because they are added or returned to the Geothermal Registry after August 1, 1974, or upon the cancellation, relinquishment, surrender, or other termination of an outstanding geothermal resources lease or upon an order of the Director, the Division shall offer such geothermal resource rights for leasing by public drawing. Additionally, applications received for the same geothermal resource rights in any single mail delivery shall be awarded priority by following OAR 141-075-0405(4) and (5).

Stat. Auth.: ORS 273
Stats. Implemented: ORS 273 .045, ORS 273 .551 & ORS 273 .780
Hist.: LB 17-1974(Temp), f. 5-31-74, cert. ef. 6-1-74; LB 19-1974, f. & cert. ef. 9-18-74



141-075-0405

Procedures

The following procedures shall be employed in leasing geothermal resource rights by public drawing:

(1) A notice of the geothermal resource rights available for leasing by public drawing shall be posted in the offices of the Division and distributed toall persons who have informed the Division in writing of their desire to receive such notice. The notice shall describe the geothermal resource rights available for leasing, and state the last date, which shall be at least 30 days after the date the notice is posted, on which applications will be received. (continued)