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Reproduced by permission. © 2010 Colorado Bar Association, 39 The Colorado Lawyer 65 (September 2010). All rights reserved. NATURAL RESOURCE AND ENVIRONMENTAL LAW— WATER LAW Getting Into Hot Water: The Law of Geothermal Resources in Colorado by Mark D. Detsky Development of energy projects using renewable geothermal resources involves questions of federal, state, and local law. This article provides an overview of the Colorado law as it relates to geothermal resource develop- ment. Wind and solar energy resources have been featured in Colorado’s new energy economy, but another renew- able energy resource boiling beneath the surface has the potential to add fuel to Colorado’s diversified portfolio of new energy technologies and companies. That resource is geothermal power.1 Geothermal technologies use heat from the earth’s interior to generate electricity.2 Sources of geothermal heat for power plants include hot water and steam at depth.3 There are three primary methods to convert geothermal heat into energy: dry steam, flash steam, and binary cycle.4 The Colorado Governor’s Energy Office (GEO) has identified binary cycle plants, or those that require less physical heat from areas of geothermal activity to create power, as most likely to achieve commercial operation in Colorado.5 Binary cycle plants use geothermal resources—that is, water—to transfer heat to another “working fluid” with a lower boiling point, such as a refrigerant. The working fluid then is converted to vapor, and this physical change provides the force to turn a turbine, after which process the hot water from the earth is reinjected.6 Colorado ranks fourth among Western states in the number of potential sites for geothermal power generation, according to a 2006 Western Governors Association report.7 Due to a variety of legal, policy, and economic factors, geothermal energy-fired elec- tric power facility development in Colorado likely will see in- creased funding and project development opportunities in 2010–11. These opportunities include a mineral leasing program to be offered by the U.S. Bureau of Land Management (BLM), grants from the U.S. Department of Energy, and support from the current administration stemming from the American Recovery and Reinvestment Act administered by the GEO.8 This article ex- plores the state of the law of geothermal energy development in Colorado. A Confluence of Doctrines Geothermal energy is found below the earth’s surface and thus is considered under federal law to be part of the mineral estate.9 All of the elements of geothermal energy systems—magma, porous rock strata, and even water—may be classified as “minerals.” 10 Un- der federal law, geothermal resources are governed by the Geother- mal Steam Act of 1970, as amended by the Energy Policy Act of 2005.11 Under Colorado law, geothermal resources are considered water resources and are governed by the Geothermal Resources Act.12 The Geothermal Resources Act was substantially amended in 2010 by Senate Bill (S.B.) 10-174. In Colorado, geothermal power development sits at the overlap of water law, energy law, and land use regulation. Federal Jurisdiction Over the Resource Approximately 90 percent of geothermal resources in the West- ern United States are located on federal lands.13 Ownership of ac- tual geothermal resources beneath federal lands is retained in the federal mineral estate. Geothermal leases may be made where the United States no longer holds title to the surface estate, but has re- tained its interest in the mineral estate.14 Leasing of geothermal resources on federal lands is controlled by the authority of the U.S. Secretary of the Interior under the Geothermal Steam Act, codi- fied at 30 U.S.C. §§ 1001 et seq., as amended. About the Author Mark D. Detsky is an associate at Dietze and Davis, P.C.— (303) 447-1375, mdetsky@dietzedavis.com. His practice areas include water rights and related transaction and real estate matters; energy, including renewable/alternative energy; and corporate governance. He thanks Star Waring, Kevin Kinnear, Richard Mignogna, Kevin Rein, and Matt Sares for their contributions to this article. Coordinating Editors Melanie Granberg (Environmental), Denver, Gablehouse Calkins & Granberg, LLC—(303) 572-0050, mgranberg @gcgllc.com; Kevin Kinnear (Water), Boulder, Porzak Browning & Bushong LLP—(303) 443-6800, kkinnear@ pbblaw.com; Joel Benson (Natural Resources and Energy), Denver, Davis Graham & Stubbs LLP— (303) 892-7470, joel.benson@dgslaw.com Natural Resource and Environmental Law articles are sponsored by the CBA Environmental Law, Water Law, and Natural Resources and Energy Law Sections. The Sections publish articles of interest on local and international topics. The Colorado Lawyer | September 2010 | Vol. 39, No. 9 65PDF Image | Getting Into Hot Water: The Law of Geothermal Resources in Colorado
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