BILL ANALYSIS                                                                                                                                                                                                    





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          |                                                                 |
          |         SENATE COMMITTEE ON NATURAL RESOURCES AND WATER         |
          |                   Senator Fran Pavley, Chair                    |
          |                    2009-2010 Regular Session                    |
          |                                                                 |
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          BILL NO: SB 571                    HEARING DATE: April 14, 2009   

          AUTHOR: Maldonado                  URGENCY: No  
          VERSION: As Introduced             CONSULTANT: Estella Cisneros   

          DUAL REFERRAL: No                  FISCAL: Yes  
          SUBJECT: Geothermal Resources 
          
          BACKGROUND AND EXISTING LAW
          Geothermal energy is natural heat generated deep inside the  
          earth. Generally, this heat is only usable when it occurs near  
          the earth's surface and heats underground water. Geothermal  
          resources are generally found in two forms:  dry steam and hot  
          water. Dry steam is rare and valuable, due to the relatively few  
          mineral impurities it contains. Geothermal wells are drilled  
          into the more permeable, steam-bearing fracture zones to tap the  
          resource. Hot water geothermal resources are more common but  
          also more difficult to develop because they require dealing with  
          the highly mineralized geothermal water and the disposal of  
          spent geothermal water. Geothermal wells bring hot water to the  
          surface at high pressure and convert the water into steam. 

          Existing law authorizes the State Oil and Gas Supervisor to deny  
          approval of an operator's proposed gas and oil well operations  
          if the operator fails to remedy a violation, fails to pay a  
          civil penalty, or fails to pay assessed charges. The approval  
          denial is in effect until the operator remedies the violation to  
          the satisfaction of the supervisor, pays the civil penalty, or  
          pays the assessed charges.

          PROPOSED LAW
          This bill would extend the State Oil and Gas Supervisor's  
          authority to deny approval of an operator's new or expanded  
          geothermal well operations if the operator fails to pay a civil  
          penalty, fails to remedy a violation, or fails to pay the  
          required well fee. It would extend current authority to include  
          geothermal well operations.
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          ARGUMENTS IN SUPPORT
          According to the author, "The State Oil and Gas Supervisor does  
          not have authority to deny approval of geothermal well  
          operations proposed by an operator who has failed to comply with  
          an order, pay civil penalties or well fees, or remedy other  
          violations. Thus, an out-of-compliance operator may currently  
          expand operations, and, therefore, increase opportunities for  
          noncompliance while continuing to ignore their legal obligations  
          associated with current operations." 

          The necessity for the bill rests on the high costs to the state  
          to remediate a geothermal well, which is currently about  
          $250,000. Stopping a bad actor from developing new or existing  
          well operations means the State will have to assume  
          responsibility to remediate fewer geothermal wells. 


          ARGUMENTS IN OPPOSITION
          None received

          COMMENTS 
           Argument in Opposition, as cited in Fact Sheet
           The author generously noted in his fact sheet that one argument  
          in opposition to the bill is that denying proposed well  
          operations could limit the resources available to correct  
          outstanding well violations or pay penalties and well fees.  
          Although the Committee recognizes that possibility, the ability  
          of the State to stop non-compliant operators from expanding well  
          operations outweighs any potential lost revenue from allowing  
          non-compliant operators to expand or develop new well  
          operations. 
               
          SUPPORT
          None Received

          OPPOSITION
          None Received









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