[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                   H.R. 6482, H.R. 7370, H.R. 7375,
                  H.R. 7377, H.R. 7409, AND H.R. 7422

=======================================================================

                          LEGISLATIVE HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 OF THE

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                        Wednesday, March 6, 2024

                               __________

                           Serial No. 118-99

                               __________

       Printed for the use of the Committee on Natural Resources
       
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]       


        Available via the World Wide Web: http://www.govinfo.gov
                                   or
          Committee address: http://naturalresources.house.gov
          
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
55-060 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------             
      

                     COMMITTEE ON NATURAL RESOURCES

                     BRUCE WESTERMAN, AR, Chairman
                    DOUG LAMBORN, CO, Vice Chairman
                  RAUL M. GRIJALVA, AZ, Ranking Member

Doug Lamborn, CO			Grace F. Napolitano, CA
Robert J. Wittman, VA			Gregorio Kilili Camacho Sablan, 	
Tom McClintock, CA			    CNMI
Paul Gosar, AZ				Jared Huffman, CA
Garret Graves, LA			Ruben Gallego, AZ
Aumua Amata C. Radewagen, AS		Joe Neguse, CO
Doug LaMalfa, CA			Mike Levin, CA
Daniel Webster, FL			Katie Porter, CA
Jenniffer Gonzalez-Colon, PR		Teresa Leger Fernandez, NM
Russ Fulcher, ID			Melanie A. Stansbury, NM
Pete Stauber, MN			Mary Sattler Peltola, AK
John R. Curtis, UT			Alexandria Ocasio-Cortez, NY
Tom Tiffany, WI				Kevin Mullin, CA
Jerry Carl, AL				Val T. Hoyle, OR
Matt Rosendale, MT			Sydney Kamlager-Dove, CA
Lauren Boebert, CO			Seth Magaziner, RI
Cliff Bentz, OR				Nydia M. Velazquez, NY
Jen Kiggans, VA				Ed Case, HI
Jim Moylan, GU				Debbie Dingell, MI
Wesley P. Hunt, TX			Susie Lee, NV
Mike Collins, GA
Anna Paulina Luna, FL
John Duarte, CA
Harriet M. Hageman, WY

                    Vivian Moeglein, Staff Director
                      Tom Connally, Chief Counsel
                 Lora Snyder, Democratic Staff Director
                   http://naturalresources.house.gov
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                       PETE STAUBER, MN, Chairman
                     WESLEY P. HUNT, TX, Vice Chair
              ALEXANDRIA OCASIO-CORTEZ, NY, Ranking Member

Doug Lamborn, CO                     Jared Huffman, CA
Robert J. Wittman, VA                Kevin Mullin, CA
Paul Gosar, AZ                       Sydney Kamlager-Dove, CA
Garret Graves, LA                    Seth Magaziner, RI
Daniel Webster, FL                   Nydia M. Velazquez, NY
Russ Fulcher, ID                     Debbie Dingell, MI
John R. Curtis, UT                   Raul M. Grijalva, AZ
Tom Tiffany, WI                      Grace F. Napolitano, CA
Matt Rosendale, MT                   Susie Lee, NV
Lauren Boebert, CO                   Vacancy
Wesley P. Hunt, TX                   Vacancy
Mike Collins, GA
John Duarte, CA
Bruce Westerman, AR, ex officio

                               ---------
                               
                               CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, March 6, 2024.........................     1

Statement of Members:

    Stauber, Hon. Pete, a Representative in Congress from the 
      State of Minnesota.........................................     2
    Ocasio-Cortez, Hon. Alexandria, a Representative in Congress 
      from the State of New York.................................     3

    Panel I:

    Hageman, Hon. Harriet M., a Representative in Congress from 
      the State of Wyoming.......................................     5
    Fulcher, Hon. Russ, a Representative in Congress from the 
      State of Idaho.............................................     6
    Hunt, Hon. Wesley P., a Representative in Congress from the 
      State of Texas.............................................     7
    Kim, Hon. Young, a Representative in Congress from the State 
      of California, Prepared statement of.......................     8
    Curtis, Hon. John R., a Representative in Congress from the 
      State of Utah..............................................     8

Statement of Witnesses:

    Panel II:

    Gruber, Benjamin E., Deputy Assistant Director, Energy, 
      Minerals, and Realty, Bureau of Land Management, 
      Washington, DC.............................................     9
        Prepared statement of....................................    11
        Questions submitted for the record.......................    14

    Jones, Bryant, Executive Director, Geothermal Rising, Boise, 
      Idaho......................................................    14
        Prepared statement of....................................    16
        Questions submitted for the record.......................    18
    Dudgeon, Steve, Principal, Severance Tax/Royalty, Ryan LLC, 
      Houston, Texas.............................................    19
        Prepared statement of....................................    20
    Uehlein, Joseph, Founder and President, Labor Network for 
      Sustainability, Takoma Park, Maryland......................    23
        Prepared statement of....................................    25
        Questions submitted for the record.......................    26
    Naatz, Dan, Chief Operating Officer, Independent Petroleum 
      Association of America, Washington, DC.....................    27
        Prepared statement of....................................    28

Additional Materials Submitted for the Record:

    Submissions for the Record by Representative Stauber

        American Exploration & Production Council, Letter in 
          Support of H.R. 7375 and H.R. 7377.....................    41
          
          
 

LEGISLATIVE HEARING ON H.R. 6482, TO AMEND THE GEOTHERMAL STEAM 
   ACT OF 1970 TO PROMOTE TIMELY EXPLORATION FOR GEOTHERMAL 
  RESOURCES UNDER GEOTHERMAL LEASES, AND FOR OTHER PURPOSES, 
``ENHANCING GEOTHERMAL PRODUCTION ON FEDERAL LANDS ACT''; H.R. 
7370, TO AMEND THE GEOTHERMAL STEAM ACT OF 1970 TO ESTABLISH A 
  DEADLINE FOR PROCESSING APPLICATIONS RELATED TO GEOTHERMAL 
  LEASING, ``GEOTHERMAL ENERGY OPPORTUNITY (GEO) ACT''; H.R. 
     7375, TO AMEND THE MINERAL LEASING ACT TO IMPROVE THE 
   ASSESSMENT OF EXPRESSION OF INTEREST FEES, AND FOR OTHER 
 PURPOSES; H.R. 7377, TO AMEND THE FEDERAL OIL AND GAS ROYALTY 
 MANAGEMENT ACT OF 1982 TO IMPROVE THE MANAGEMENT OF ROYALTIES 
  FROM OIL AND GAS LEASES, AND FOR OTHER PURPOSES, ``ROYALTY 
RESILIENCY ACT''; H.R. 7409, TO AMEND THE GEOTHERMAL STEAM ACT 
OF 1970 TO WAIVE THE REQUIREMENT FOR A FEDERAL DRILLING PERMIT 
 FOR CERTAIN ACTIVITIES, TO EXEMPT CERTAIN ACTIVITIES FROM THE 
REQUIREMENTS OF THE NATIONAL ENVIRONMENTAL POLICY ACT OF 1969, 
AND FOR OTHER PURPOSES, ``HARNESSING ENERGY AT THERMAL SOURCES 
(HEATS) ACT''; AND H.R. 7422, TO AMEND THE GEOTHERMAL STEAM ACT 
 OF 1970 TO PROVIDE COST-RECOVERY AUTHORITY FOR THE DEPARTMENT 
 OF THE INTERIOR, ``GEOTHERMAL COST-RECOVERY AUTHORITY ACT OF 
                             2024''

                              ----------                              


                        Wednesday, March 6, 2024

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 2:06 p.m., in 
Room 1324, Longworth House Office Building, Hon. Pete Stauber 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Stauber, Fulcher, Curtis, Tiffany, 
Rosendale, Hunt, Duarte, Westerman; Ocasio-Cortez, Huffman, and 
Kamlager-Dove.
    Also present: Representatives Hageman and Kim.

    Mr. Stauber. The Subcommittee on Energy and Mineral 
Resources will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the Subcommittee at any time.
    Under Committee Rule 4(f), any oral opening statements at 
hearings are limited to the Chairman and the Ranking Minority 
Member.
    I ask unanimous consent that the gentlewoman from 
California, Mrs. Kim, and the gentlewoman from Wyoming, Ms. 
Hageman, be allowed to participate in today's hearing.
    Without objection, so ordered.
    I now recognize myself for an opening statement.

    STATEMENT OF THE HON. PETE STAUBER, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MINNESOTA

    Mr. Stauber. Thank you all for being here today to discuss 
these important pieces of legislation.
    Earlier this Congress, Republicans established our 
commitment to an all-of-the-above approach to domestic energy 
policy by passing H.R. 1. This approach involves producing oil, 
natural gas, coal, renewables, along with the minerals that are 
needed to produce them here in the United States. Not Russia, 
not China, not Venezuela or Iran, but here in the United 
States. We must pursue an all-of-the-above energy approach, and 
then let the best rise to the top. Failing to do so, just like 
the Biden administration is doing, will only force the American 
people to rely on adversarial nations that are hostile towards 
us and our allies, and have weak environmental and labor 
standards.
    This flawed, renewable-energy-only approach also 
jeopardizes vital revenue to states and the Federal Government. 
For example, in calendar year 2022, oil and gas production on 
Federal lands generated roughly $8.5 billion in revenue. For 
comparison, solar and wind generation on Federal lands combined 
generated roughly $8 million in revenue.
    The Republican bills we have before us today would continue 
building on our commitment to an all-of-the-above energy 
approach, and would put America back on a path of strength.
    H.R. 6482, the Enhancing Geothermal Production on Federal 
Lands Act, introduced by my friend, Representative Fulcher from 
Idaho, would streamline the permitting process for geothermal 
exploration wells that have a footprint of less than 5 acres.
    The bill would also require the Department of the Interior 
to designate geothermal leasing priority areas on Federal lands 
that are economically viable for geothermal energy production.
    Geothermal energy has serious potential for growth in this 
country, but the best reservoirs are located in the West, on 
Federal lands, where the BLM is notorious for holding up the 
permitting process. We must do all we can to ensure that the 
bureaucratic red tape does not hamper this resource moving 
forward. I appreciate the gentleman's bill, and I look forward 
to hearing from our witnesses today.
    H.R. 7370, the Geothermal Energy Opportunity Act, 
introduced by Representative Curtis from Utah, simply requires 
the BLM to do their job by continuing to process geothermal 
permits and authorizations unless a Federal court says 
otherwise.
    This Administration has stopped processing permits and 
authorizations for geothermal and oil and gas projects based 
solely on the threat of litigation. Oftentimes, this delay 
tactic is meant to appease radical special interest groups who 
wish to stop all energy development on Federal lands and whose 
former employees have infiltrated the Department.
    Agencies should continue to move projects forward until 
they are directed otherwise by a court, and agencies should 
defend their work in court instead of settling with this 
radical Minority.
    H.R. 7409, the Harnessing Energy at Thermal Sources Act, or 
the HEATS Act, introduced by Representative Kim from 
California, is a common-sense bill that would alleviate the BLM 
from having to permit geothermal wells on state and private 
lands, where the Federal Government holds an ownership interest 
of less than 50 percent of the geothermal estate. Under this 
bill, these projects, which have already gone through a 
rigorous state permitting process, would not be bogged down by 
the duplicative and burdensome Federal process.
    H.R. 7375, introduced by my friend, Representative Hageman 
from Wyoming, would amend how the BLM charges expression of 
interest fees for oil and gas development on Federal lands by 
mandating that the fee be paid by the winning bidder following 
the lease sale. This change would establish a true winner-pays 
system, and would hopefully incentivize BLM to offer acreage 
that producers are actually interested in developing. The BLM 
would be disincentivized from offering unproductive acreage 
that would not be bid on as a means to stifle actual energy 
development.
    H.R. 7377, the Royalty Resiliency Act, introduced by 
Representative Hunt from Texas, would fill a gap in existing 
law with respect to how oil and gas royalties are paid to the 
Federal Government. This bill would not reduce the obligation 
owed by companies, but would prevent overpayments that 
unnecessarily lock up capital and create a bureaucratic mess 
for the Department of the Interior.
    Lastly, I would like to thank the Ranking Member for 
introducing H.R. 7422, the Geothermal Cost Recovery Authority 
Act of 2024, which would allow the BLM to levy fees on 
geothermal operators to offset permitting costs.
    I look forward to hearing from our witnesses on these 
bills, and I will now yield to the Ranking Member for her 
opening statements.

       STATEMENT OF THE HON. ALEXANDRIA OCASIO-CORTEZ, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

    Ms. Ocasio-Cortez. Thank you, Chairman Stauber. Good 
afternoon, everyone, and thank you to all of our witnesses who 
are here today.
    We are here to discuss six bills, four on geothermal energy 
development, including my bill, the Geothermal Cost Recovery 
Act of 2024, and two on oil and gas. I must say I am encouraged 
by and grateful for the Majority's openness to geothermal 
development, and am eager to continue working together on this 
important and urgent topic.
    As we know, the climate crisis is here. In 2023, across the 
country Americans experienced severe and extreme cold snaps, 
heat waves, and wildfires from Hawaii to Louisiana. We saw 100-
year floods from California to the East Coast. We have seen 
strengthening hurricanes, tropical cyclones, and tornadoes, 
among other ever more frequent disasters. Now, more than ever, 
it is abundantly clear that this climate crisis demands urgent 
action.
    An essential part of that action is rapidly and responsibly 
scaling up renewable energy. Last Congress, Democrats put 
billions of dollars towards clean energy development, which 
over the next 10 years will create hundreds of thousands of 
new, green jobs. Geothermal energy is a critical part of that 
mix.
    Since the 1960s, geothermal energy has been used as a 
sustainable and reliable source of electricity. But even though 
it has grown significantly since then, it still only makes up 
less than half of 1 percent of our energy generation mix.
    Fortunately, new breakthroughs in technology are massively 
expanding where geothermal energy can be developed. The 
Department of Energy estimates that because of these 
breakthroughs, geothermal energy could grow to 60 gigawatts of 
capacity by 2050, or around 9 percent of our electricity 
generation nationwide. This is particularly exciting because of 
some of the unique benefits of geothermal energy for the clean 
energy transition.
    Geothermal provides consistent baseload power, which is 
available 24/7 with minimal emissions. This complements the mix 
of solar, wind, and storage to build a clean grid, and is 
crucial for maintaining stability in our energy systems and 
replacing dirty energy like coal.
    And many of the skills needed for geothermal development 
are also directly transferable from industries like oil and 
gas. As geothermal technologies advance, we will be able to 
site these power plants at places like retired coal plants, 
where fossil fuel workers can find new jobs. Better yet, many 
of these fossil trades are already organized and unionized. 
Everyone from pipe fitters to workers in power plant control 
rooms, steamfitters, and operating engineers can find work in 
geothermal. Geothermal shows a truly exciting promise to help 
union workers transition to a clean energy economy.
    As all this growth occurs, the Federal Government will also 
have an important role to play. The Department of Energy is 
supporting pilot projects and advancements in technology, and 
within this Committee's jurisdiction the Department of the 
Interior is often in charge of permitting. In fact, geothermal 
energy was the first renewable energy project sited on U.S. 
public lands back in 1978, and right now nearly 70 percent of 
geothermal energy capacity is on federally managed Bureau of 
Land Management lands.
    With the technological advancements we are seeing now, the 
BLM needs to be ready to scale up the development of this clean 
energy while remaining diligent about permitting responsibly, 
considering public input, and respecting Indigenous knowledge 
and tribal consultation.
    We have heard from geothermal developers that there can be 
challenges when it comes to permitting new geothermal plants, 
and much of that stems from capacity constraints, the need for 
more expertise, or more staff in the right locations. My bill, 
the Geothermal Cost Recovery Act of 2024, will allow the BLM 
the flexibility to charge companies cost recovery for things 
like inspections and monitoring, and it will enable BLM to hire 
third-party experts to help review permit applications. This 
flexibility will improve permitting capacity and timelines 
without sacrificing any of the important steps for 
environmental review and community input.
    Overall, I am excited for the hearing today, and look 
forward to hearing from today's witnesses about how we can 
advance renewable, union-friendly geothermal energy on Federal 
land. Thank you.

    Mr. Stauber. Thank you very much. Now I will begin our 
Member panel, who will speak on their respective legislation.
    I now recognize Ms. Hageman from Wyoming's at-large 
Congressional District for her testimony on her bill.

 STATEMENT OF THE HON. HARRIET M. HAGEMAN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF WYOMING

    Ms. Hageman. Thank you, Mr. Chairman, and thank you for the 
opportunity to be here.
    I also would like to thank each of the witnesses for being 
here today and providing us with your expertise and insight.
    My bill, H.R. 7375, would ensure that expressions of 
interest, or EOI fees, are paid only by those companies who win 
the corresponding acreage in a lease sale. This will prevent 
multiple people and operators from having to pay funds to the 
BLM to submit the same acreage, and will incentivize the agency 
to actually offer acreage included in submitted EOIs.
    The misnamed Inflation Reduction Act created many 
structural flaws regarding energy production and permitting, 
resulting in impracticalities and confusion on how to implement 
EOIs and other fees. A few months ago, Ms. Kathleen Sgamma from 
the Western Energy Alliance testified about some of the 
impracticalities. For example, she explained that companies are 
paying for services that they aren't receiving. She also 
pointed out the fact that the Administration's policies have 
confused the market in many ways, and are furthering 
unaffordable and unreliable energy pursuits.
    We have seen this Administration attempt to force a 
transition away from affordable and reliable energy by taking 
actions such as canceling pipeline projects, increasing 
burdening burdensome regulations, and refusing to issue leases. 
On top of that, they have attempted to disrupt the multiple use 
framework outlined in FLPMA, and initiated burdensome resource 
management plans that hurt local communities.
    The last thing that we need from this Administration is 
another excuse to avoid the issuance of leases. According to 
Ms. Sgamma's testimony, the BLM is playing games with how it 
counts EOIs and acreage offered, suggesting that they intend to 
avoid meeting both the letter and spirit of the IRA provisions 
that are intended to prevent the Department from completely 
crowding out reliable energy resources.
    I think that we all agree that it is wrong to pay fees to 
an agency for services not provided. That is what is happening 
under the IRA with oil and gas Expression of Interest fees. 
Companies pay $5 per acre every 3 years to express interest in 
an oil and gas lease. But as we all know, it has then been the 
policy of this Administration to neglect actually issuing those 
leases.
    I initially introduced a bill that would allow entities 
with inactive leases to be reimbursed, and to allow the term 
for which the EOI applies to be extended from 3 years to 5 
years. This initial proposal would have simply allowed 
producers to get what they pay for, and to be reimbursed when 
leases are not issued. After further consultation with energy 
companies, and particularly after our hearing with Ms. Sgamma 
from Western Energy Alliance, it was clear to me that we could 
take a better approach that addressed the problem of leases not 
being offered, as well as the problem of entities filing for 
random acreage that would never be bid upon.
    If EOI fee language remains unchanged, BLM would require 
companies to pay a fee of $5 per acre for the acreage they 
express interest in, even if that acreage is never offered or 
sold. Essentially, the BLM is positioning itself to charge for 
providing nothing in return, and based on the fact that they 
don't offer lease sales. My bill resolves this problem by 
saying that BLM may not collect a fee for EOIs until the 
acreage is actually offered at a sale.
    My bill also addresses the problem of parcels being offered 
at an auction that don't receive any bids. Whether sold or not, 
my bill requires the EOI fee to be paid for simply being 
offered at an auction. This would allow BLM to cover its lease 
processing costs, and it would eliminate any incentive for a 
company to express interest in lands that nobody is interested 
in.
    It is imperative that we implement a new strategy to ensure 
that leases are being offered. I urge my colleagues to support 
this legislation. I appreciate the opportunity to be here, and 
I yield back.

    Mr. Stauber. I thank the gentlewoman for her testimony. I 
now recognize Mr. Fulcher from Idaho's 1st Congressional 
District for his testimony on his bill.

    STATEMENT OF THE HON. RUSS FULCHER, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF IDAHO

    Mr. Fulcher. Thank you, Mr. Chairman.
    Mr. Jones, good to see you again. I look forward to your 
testimony. I appreciate your advocacy here.
    Mr. Chairman, I also appreciate the opportunity to talk 
about H.R. 6482, the Enhancing Geothermal on Federal Lands Act.
    I strongly advocate for the utilization of geothermal 
energy. I have been a witness to the successes of geothermal in 
my home state of Idaho. The Idaho Capitol building is the only 
capitol building in the country that is powered by geothermal. 
In fact, in the City of Boise since 1983, that might be 1883, I 
think it is a typo on my notes here, it is 1883, it is the 
largest municipally-owned operating system in the country. It 
heats over 90 buildings throughout downtown Boise, over 300 
homes.
    So, the energy is innovative, renewable, sustainable, and 
this bill, the Enhancing Geothermal and Federal Lands Act, 
exempts geothermal exploration wells from NEPA review under 
certain permitting criteria to promote timely exploration under 
geothermal leasing. And I want to just underscore why it is so 
important on Federal lands.
    In our state, as in my colleague from Utah here, we have 
approximately 33 million acres in Idaho, another 33 million in 
Utah, that is federally controlled. So, the access there is 
critically important. And this helps with the NEPA process on 
those lands.
    So, geothermal is somewhat insulated from fuel price 
fluctuations, which offers long-term stability in energy costs, 
creates jobs, stimulates local economies, and enhances energy 
independence. Geothermal draws on heat from the Earth, is 
readily available, and produces consistent, grid-resilient 
power, which is renewable. And I look forward to working with 
my colleagues to advance this bill through law.
    Once again, Mr. Chairman, thank you for that, and I yield 
my time back.

    Mr. Stauber. I thank you very much. I now recognize Mr. 
Hunt from Texas' 38th Congressional District for his testimony 
on his bill.

   STATEMENT OF THE HON. WESLEY P. HUNT, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Hunt. Thank you, Mr. Chairman.
    During a hearing last year, I asked BLM's Deputy Director 
for Operations, Michael Nedd, a question pertaining to 
communization agreements. That question spurred conversation 
with Committee staff, industry partners, and, of course, my 
office. From those conversations, the Royalty Resiliency Act 
was born, and currently BLM is required by law to approve CAs 
within 120 days of receipt.
    There has been a lengthy backlog. And despite their best 
efforts, BLM is simply not meeting those deadlines that are 
necessary. As a result, and because of an Office of Natural 
Resources Revenue (ONRR) policy, operators are being charged a 
100 percent royalty rate on the Federal share, even if the 
Federal Government doesn't own 100 percent of the land. And 
therein lies the issue: Operators are being charged millions of 
dollars up front in an industry that is already extremely 
capital intensive.
    [Slide.]
    Mr. Hunt. Behind me is a sample CA. The black line 
represents a horizontal well that crosses multiple stakeholder 
lands, as you can see here. In this example, the breakdown of 
landownership is 50 percent for the state, 25 percent for the 
private citizen, and 25 percent for the Federal Government. In 
this example, the state owns the largest share of the land, and 
should be receiving the largest share of royalties from 
production. However, ONRR is changing operators at a 100 
percent rate so that the operator is actually paying a 175 
percent royalty rate. And that is not going to work.
    This is an egregious policy that is locking up millions of 
dollars for operators. And as we will hear later from many of 
our witnesses, a change in this policy will be beneficial to 
both states and the Federal Government. My bill simply fixes 
this policy by mandating that the operator only pays the shares 
of royalties that are apportioned by the CA. This common-sense 
fix will spur future growth by allowing operators to have the 
ability to invest in their own energy projects. More capital, 
in turn, will create more American jobs that we now need today, 
as we all know, and more royalties for Federal and state 
governments, and it will also bring in fairness.
    And lastly, I will note the Department of the Interior is 
supportive of my bill. With that said, Mr. Chairman, I yield 
back my time.

    Mr. Stauber. Thank you very much.
    Before we go to Representative Curtis, I ask unanimous 
consent to enter into the record the statement of Mrs. Kim from 
California's 40th District on her piece of legislation.
    Without objection, so ordered.

    [The prepared statement of Mrs. Kim follows:]
Prepared Statement of the Hon. Young Kim, a Representative in Congress 
                      from the State of California
       on H.R. 7409, ``Harnessing Energy At Thermal Sources Act''

    Thank you, Chairman Stauber and Ranking Member Ocasio-Cortez, for 
holding this hearing.
    I am proud to see H.R. 7409, the ``Harnessing Energy At Thermal 
Sources Act'' or the ``HEATS Act'' considered in today's hearing.
    California is a top geothermal energy producer and is home to two 
of the largest geothermal reservoirs in the country. Despite the vast 
energy resources lying under our feet, the current permitting process 
has impeded progress in innovative geothermal projects that offer clean 
energy 24/7.
    California has some of the most stringent permitting regulations in 
the United States. This means that operators often wait years to 
receive permits and approval to explore and develop geothermal 
projects.
    The HEATS Act would expedite geothermal energy production by 
clarifying that geothermal operators do not need a federal drilling 
permit for wells that are on state and private lands where the 
subsurface geothermal estate is less than 50% federal. Operators would 
be exempt from federal permitting regulations like the National 
Environmental Policy Act or NEPA and Section 106 of the National 
Historic Preservation Act, but they would still be subject to state 
permitting regulations. This lessens the burden on operators who 
currently need to meet both State and Federal permitting regulations.
    There are also several important exceptions in place. The bill 
would not apply to Indian lands, has no effect on geothermal royalty 
payments to the federal government, and does not waive Section 106 of 
the National Historic Preservation Act if the state in which the 
geothermal activity is taking place does not have laws in place to 
protect historic properties and sites.
    H.R. 7409 is common sense, expands our energy portfolio, reduces 
emissions, lowers costs for Americans, and promotes U.S. energy 
independence. Accelerating renewable geothermal energy production and 
deployment is a win for our economy, national security, and 
environment.
    I thank the Committee for considering H.R. 7409 and Representative 
Duarte for co-leading this bill with me.

    Thank you, and I yield back.

                                 ______
                                 

    Mr. Stauber. Now, our last individual, Representative 
Curtis from Utah's 3rd District.
    You are recognized to speak about your legislation.

   STATEMENT OF THE HON. JOHN R. CURTIS, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. Curtis. Thank you, Mr. Chair, Madam Ranking Member. It 
is a delight to be here with you. This is a great topic, and I 
am pleased to be here.
    I am proud to sponsor the GEO Act, which simply requires 
the Department of the Interior to issue all applications and 
authorizations, as long as the underlying lease is intact. 
Geothermal is an affordable, reliable, clean source of energy, 
and that is hard to find. So, I am pleased to advance this.
    After a company has spent substantial time and resources 
getting a project permitted, Interior is still withholding 
notices to proceed drilling permits and other authorizations 
because of litigation threats, and I underline threats, against 
a project.
    To be clear, these are situations where there is no 
evidence of wrongdoing by Interior or operators. These are just 
simply threats made by so-called groups.
    The Department of Energy has projected that enhanced 
geothermal systems could contribute up to 60 gigawatts of 
electricity by 2050, that is a big deal, which would account 
for 8.5 percent of our overall capacity. This will never happen 
if we let bad actors stop clean energy projects.
    Utah is a case study for geothermal. I was proud to support 
Utah Forge being located in southern Utah, a dedicated 
underground field laboratory sponsored by the Department of 
Energy for developing, testing, and accelerating geothermal 
breakthroughs. Utah is leading in this space, but that won't 
happen if the current regulation environment created by DOE 
isn't improved.
    Thank you for the time, and I yield back.

    Mr. Stauber. I thank you very much. We will now introduce 
our second panel of witnesses.
    Let me remind the witnesses that under Committee Rules, 
they must limit their oral statements to 5 minutes, but their 
entire statement will appear in the hearing record.
    To begin your testimony, please press the ``talk'' button 
on the microphone.
    We use timing lights. When you begin, the light will turn 
green. When you have 1 minute remaining, the light will turn 
yellow. And at the end of the 5 minutes, the light will turn 
red, and I will ask you to please complete your statement.
    I will also allow all witnesses to testify before Member 
questioning.
    Our first witness is Mr. Benjamin Gruber, the Deputy 
Assistant Director for Energy, Minerals, and Realty at the 
Bureau of Land Management within the Department of the 
Interior, stationed right here in Washington, DC.
    Mr. Gruber, you are now recognized for 5 minutes.

  STATEMENT OF BENJAMIN E. GRUBER, DEPUTY ASSISTANT DIRECTOR, 
   ENERGY, MINERALS, AND REALTY, BUREAU OF LAND MANAGEMENT, 
                         WASHINGTON, DC

    Mr. Gruber. Thank you, Chairman Stauber, Ranking Member 
Ocasio-Cortez, and members of the Subcommittee. I appreciate 
the opportunity to provide testimony on the six bills on 
today's agenda. I am Benjamin Gruber, the Bureau of Land 
Management's Deputy Assistant Director for Energy, Minerals, 
and Realty Management.
    The BLM manages approximately 245 million surface acres, 
located primarily in 12 western states, and approximately 700 
million acres of subsurface mineral estate, in accordance with 
the Federal Land Policy and Management Act, or FLPMA. The BLM 
is committed to its core mission of multiple use and sustained 
yield. This important mission enables the agency to contribute 
tremendously to economic growth, job creation, and domestic 
energy production, while generating revenues for Federal and 
state treasuries and local economies, as well as protecting the 
health and productivity of our public lands.
    The BLM administers the Federal onshore oil and gas and 
geothermal programs with the goals of facilitating safe and 
responsible energy development while protecting land health and 
providing a fair return for the American taxpayer.
    Four of the bills on today's hearing agenda aim to promote 
the development of geothermal energy from our nation's public 
lands, an objective shared by the Administration. Effective 
deployment of renewable energy on Federal land is crucial to 
achieving the Administration's goal to decarbonize the power 
sector by 2035, as well as Congress' direction in the Energy 
Act of 2020 to permit 25 gigawatts of solar, wind, and 
geothermal energy on public lands by 2025.
    To meet these important objectives, the BLM is engaging 
with tribal partners, industry, stakeholders, and the states to 
increase opportunities for renewable energy development on 
public lands. Nationwide, the BLM manages over 500 geothermal 
leases encompassing more than 1 million acres, including 51 
geothermal power plants. In the past 3 years, the BLM has held 
a total of six competitive geothermal lease sales in four 
states: Nevada, New Mexico, Utah, and Oregon. We are planning a 
sale in Nevada later this year, and we are working on 
subsequent sales in New Mexico, Utah, and California.
    Regarding the specific legislation before the Subcommittee 
today, the BLM supports the goals of H.R. 6482 to enhance and 
expedite geothermal energy exploration, and we look forward to 
working with the sponsor to address our concerns about 
provisions that could reduce important input from local 
communities, tribes, and the public, as well as concerns that 
the bill's designation of priority leasing areas may not work 
as intended.
    H.R. 7422, meanwhile, would authorize the BLM to require 
applicants and lessees to reimburse the United States for 
certain administrative costs associated with geothermal leasing 
and permitting. The BLM supports the goal of the bill, which 
would help ensure that industry pays for the services that the 
agency offers for geothermal energy.
    H.R. 7370, the GEO Act, would require the BLM to process 
geothermal drilling permits and other authorizations within 30 
days after finalizing NEPA reviews. While the BLM supports the 
sponsor's goal of ensuring an efficient permitting process, we 
are concerned that the time frame outlined in the bill is 
insufficient to meet our obligations under important Federal 
laws.
    H.R. 7409, the HEATS Act, eliminates the requirement for a 
Federal geothermal drilling permit where there is non-Federal 
surface estate, and where Federal subsurface geothermal estate 
amounts to less than 50 percent. The BLM opposes the changes 
outlined in H.R. 7409, because they would remove the 
Secretary's ability to ensure operational safety, environmental 
compliance, and consistency with FLPMA.
    Finally, regarding the two oil and gas bills on the agenda, 
the Department recognizes the importance of timely approval of 
oil and gas units and communitization agreements. We support 
the reforms proposed in H.R. 7377, and we would like to work 
with the sponsor on some clarifications.
    The BLM, however, opposes H.R. 7375, which would roll back 
one of the Inflation Reduction Act's key oil and gas leasing 
reforms. That is incentivizing those who submit expressions of 
interest to carefully review the availability of lands for 
leasing prior to nomination.
    Thank you again for the opportunity to testify today, and I 
look forward to your questions.

    [The prepared statement of Mr. Gruber follows:]
Prepared Statement of Statement of Benjamin E. Gruber, Deputy Assistant 
           Director, Energy, Minerals, and Realty Management,
       Bureau of Land Management, U.S. Department of the Interior
           on H.R. 6482, H.R. 7370, H.R. 7409, and H.R. 7422

Introduction
    Thank you for the opportunity to provide testimony on H.R. 6482, 
the Enhancing Geothermal Production on Federal Lands; H.R. 7370, the 
Geothermal Energy Opportunity (GEO) Act; H.R. 7409, Harnessing Energy 
At Thermal Sources (HEATS) Act; and H.R. 7422, the Geothermal Cost-
Recovery-Authority Act.
Background

    The Bureau of Land Management (BLM) manages approximately 245 
million surface acres, located primarily in 12 western states, and 
approximately 700 million acres of subsurface mineral estate. The 
Federal Land Policy and Management Act (FLPMA) sets forth the BLM's 
multiple-use mission, directing public lands be managed for a variety 
of uses, such as renewable and conventional energy development; 
livestock grazing; conservation; mining; watershed protection; hunting, 
fishing, and other forms of recreation. FLPMA also requires the BLM to 
manage public land resources on a sustained-yield basis for the benefit 
of current and future generations. This multiple-use, sustained yield 
mission enables the BLM to contribute tremendously to economic growth, 
job creation, and domestic energy production, while generating revenues 
for Federal and State treasuries and local economies and allowing for a 
thoughtful, science-based approach to management of our public lands 
and waters.
    Replenished by heat sources deep within the Earth, geothermal 
energy is an important energy resource that generates baseload 
electricity with minimal carbon emissions. In addition, geothermal 
energy is used to heat buildings, operate greenhouses, and support 
aquaculture operations. It is an abundant resource, especially in the 
western United States. Under the Geothermal Steam Act of 1970 (30 
U.S.C. 1001), the BLM issues leases for the development and utilization 
of geothermal resources on lands managed by the Department of the 
Interior (Department) and the U.S. Forest Service. Geothermal energy 
projects are authorized as leases rather than rights-of-way; as such, 
they differ from most solar and wind renewable energy projects on 
public lands.
    Efficient deployment of renewable energy on our nation's public 
lands is crucial in achieving the Biden-Harris Administration's goal of 
a carbon pollution-free power sector by 2035, as well as Congress' 
direction in the Energy Act of 2020 to permit 25 gigawatts of solar, 
wind, and geothermal energy on public lands by 2025. To meet these 
important objectives, the BLM is engaging with Tribal partners, 
industry, stakeholders, and the states to increase opportunities for 
renewable energy development on public lands.
    Nationwide, the BLM manages 539 geothermal leases encompassing 
approximately 1,121,000 acres. Currently, there are 51 geothermal 
electrical generation facilities (e.g., power plants) operating on 84 
leases in Nevada, California, Utah, and New Mexico. Together these 
power plants have a gross installed capacity of approximately 2,600 MW. 
In the past three years, the BLM has held a total of six competitive 
geothermal lease sales. These sales were held in Nevada, New Mexico, 
Utah, and Oregon. Additionally, we are planning a sale in Nevada later 
this year and working on subsequent sales in New Mexico, Utah, and 
California. In FY 2023, the BLM's geothermal program generated $25.3 
million dollars in revenue from rents, bonus bids, and royalties. In FY 
2022, the Department estimates that this program contributed 13,000 
jobs and $4.6 billion in total economic contributions to the U.S. 
economy.
H.R. 6482, Enhancing Geothermal Production on Federal Lands Act

    H.R. 6482 would amend the Geothermal Steam Act by creating a new 
category for ``geothermal exploration projects'' on existing Federal 
geothermal leases. These projects are defined in the bill as the 
drilling of wells with a diameter of less than 13 inches that would 
have less than 5 acres of surface disturbance, be completed in less 
than 120 days, and be restored within 3 years to approximately the 
condition that existed at the time the project began. Under the bill, 
lessees would be required to provide notice to the Secretary of the 
Interior (Secretary) at least 30 days before the start of drilling 
exploration projects.
    H.R. 6482 also includes language stating that these geothermal 
exploration projects--as well as certain other activities related to 
the exploration, development, or production (including direct use) of 
geothermal resources--shall not be considered major Federal actions 
under the National Environmental Policy Act (NEPA). This language would 
exempt these projects and activities from the environmental analysis 
and public review requirements of NEPA.
    The bill would also require the Secretary to designate new 
geothermal leasing priority areas on public lands. Within five years of 
the bill's enactment, the Secretary would be required to designate 
these areas on public lands that are determined to be economically 
viable for geothermal production and have access to energy transmission 
infrastructure. The Secretary would then be required to complete a 
programmatic environmental impact statement to cover all leasing 
activity within these priority areas within a year after they are 
designated.
Analysis
    The BLM supports the goals of H.R. 6482 to enhance and expedite 
permitting for geothermal energy exploration. While the BLM is working 
to develop categorical exclusions to streamline the review of some 
geothermal exploration projects, we are concerned that the bill's 
exemption of certain projects and activities, including geothermal 
energy development and production, from NEPA is overly broad and would 
reduce input from communities, Tribes, and members of the public. Such 
involvement is critically important to project success.
    Further, the BLM appreciates the Sponsor's efforts aimed at 
expediting geothermal leasing by creating ``geothermal leasing priority 
areas'' as outlined in section 3 of the bill. For geothermal leasing, 
challenges exist in determining what areas to prioritize, and, 
therefore, designating priority areas may not result in the intended 
goal of expediting geothermal development on public lands. The BLM 
notes that, as required by the Energy Policy Act of 2005, and in 
accordance with the 2008 Programmatic Environmental Impact Statement 
for geothermal leasing, the BLM and U.S. Forest Service are continuing 
to analyze geothermal resources as land use plans are amended by the 
agencies. The BLM recognizes that as technology advances within the 
geothermal industry, new opportunities to identify focused development 
areas may occur in the future, and we look forward to working with the 
Sponsors and the Subcommittee on opportunities to maximize agency 
resources to provide efficiencies in geothermal development.
H.R. 7370, Geothermal Energy Opportunity (GEO) Act

    H.R. 7370 would require the BLM to complete the processing of a 
geothermal drilling permit, sundry notice, notice to proceed, right-of-
way, or other authorization or approval within 30 days after finalizing 
all associated NEPA reviews unless a Federal court vacates the 
underlying lease as part of litigation.
Analysis
    While the BLM supports the Sponsor's goal of ensuring efficient and 
timely processing of authorizations associated with geothermal leasing, 
we cannot support H.R. 7370. In addition to meeting its obligations 
under NEPA when authorizing such activities, the BLM is required to 
comply with other important Federal laws, including the Endangered 
Species Act (ESA) and National Historic Preservation Act (NHPA). While 
the BLM generally conducts ESA and NHPA consultation at the same time 
as it is analyzing potential environmental impacts pursuant to NEPA, it 
may not be possible to complete these distinct processes--which are 
required by law--during the timeframe provided by the bill.
H.R. 7409, Harnessing Energy At Thermal Sources (HEATS) Act

    H.R. 7409 eliminates the requirement that a geothermal operator 
submit to the BLM a Federal Geothermal Drilling Permit (GDP) in 
instances where there is non-Federal surface estate and where the 
subsurface geothermal estate is less than 50 percent Federal. Under the 
bill, an operator would be required to provide the Secretary a copy of 
a state-approved drilling permit and may commence activities 30 days 
after submission. Without a Federal permit, the NEPA, NHPA, and ESA 
requirements for the exploration, development, or production of 
geothermal resources would no longer apply. H.R. 7409 also states that 
nothing in the bill alters the amount of royalties due to the United 
States from production of Federal geothermal resources and allows the 
Secretary to conduct onsite reviews and inspections to ensure payment 
of royalties. The bill would not apply to lands held in Trust by the 
United States for the benefit of various Tribes.
Analysis
    The BLM opposes the modifications to the geothermal permitting 
process outlined in H.R. 7409 because they would remove the Secretary's 
ability to ensure that geothermal operations are conducted safely, are 
following all applicable environmental laws, and are consistent with 
the BLM's multiple use and sustained yield mandate under FLPMA. 
Essentially, the bill would transfer Federal decision-making authority 
to the States. By requiring the operator to merely notify the Secretary 
of the state's approval of a GDP, H.R. 7409 would eliminate the 
Secretary's existing discretion with respect to these approvals, which 
would undermine the BLM's core responsibility to ensure that permitted 
and regulated activities occurring on Federal lands are in compliance 
with Federal requirements designed specifically to protect the 
environment, nearby communities, other landowner interests, and 
taxpayers. This provision would not allow the Secretary to withhold 
approval, where appropriate, nor does it contain any requirement for 
the proponent's request to be fully complete prior to submission.
    H.R. 7409 fails to address several key oversight roles that the BLM 
plays in ensuring that Federal geothermal resources--and that lands 
that are used to access them--are protected as those resources are 
developed. Any shortcomings resulting from a state's permitting process 
would inappropriately leave Federal taxpayers responsible for 
obligations created by the state. During the review of the GDP and its 
associated operations plan, for example, the BLM is required to 
complete a site-specific environmental analysis of the permitting 
action, which does not occur in the BLM's land use planning process or 
in the leasing analysis. As part of this review, the public has their 
final opportunity to engage in the decision-making process, which helps 
the BLM identify public health and safety concerns and other potential 
resource conflicts related to a proposed drilling action on resources 
owned by all Americans. H.R. 7409 would take away important opportunity 
for public involvement, where Federal, state, Tribal, and local 
entities participate in the environmental review process.
    Finally, the BLM notes that there are units where individual wells 
could be more than 50 percent Federal interest within a unit, and these 
wells would also not require a Federal GDP. As a result, the bill could 
potentially apply to significantly more GDPs than the Sponsor intends.
H.R. 7422, Geothermal Cost-Recovery-Authority Act

    H.R. 7422 would authorize the Secretary to require an applicant 
for, or holder of, a geothermal lease to reimburse the United States 
for certain administrative costs. These costs may be associated with 
the BLM's processing of the lease application; processing other 
applications associated with a geothermal lease; inspections and 
monitoring for geophysical exploration activities; the drilling, 
plugging, and abandonment of geothermal wells; and the construction, 
operation, termination, and reclamation of any well site or facility 
for the use of geothermal resources. The bill further states that the 
Secretary must consider whether there is a cooperative cost share 
agreement between the United States and the geothermal lessee when 
determining whether to require reimbursement of these costs.
Analysis
    The BLM supports the goals of the bill, which would help ensure a 
fair return to taxpayers by having industry pay for the services that 
the agency offers in facilitating geothermal energy development. FLPMA, 
under Sec. 304(b), provides the BLM with the authority to establish 
fees with respect to transactions involving public lands to recover the 
reasonable processing cost of services that provide a special benefit 
not shared by the general public to an identifiable recipient. The BLM 
has used this authority to establish fees for certain activities 
associated with geothermal leasing, including site licenses. However, 
the BLM does not currently have a Geothermal Drilling Permit fee, nor a 
mechanism to charge a fee for inspections. The BLM appreciates the 
Sponsor's work on this issue, and we would welcome the opportunity to 
work with the Sponsor and the Subcommittee on this issue.
Conclusion

    The BLM is committed to managing the geothermal program in a manner 
that promotes the highest industry, environmental, and public 
engagement standards, including those related to environmental justice 
and Tribal engagement, while securing a fair return for the American 
taxpayer. Thank you for the opportunity to provide testimony on these 
bills, and I look forward to your questions.

                                 ______
                                 

Questions Submitted for the Record to Benjamin Gruber, Deputy Assistant 
   Director, Energy, Minerals, and Realty, Bureau of Land Management

Mr. Gruber did not submit responses to the Committee by the appropriate 
deadline for inclusion in the printed record.

            Questions Submitted by Representative Westerman

    Question 1. Following up on my question regarding geothermal lease 
sales, I would like to request that the Department provide all pending 
nominations in each state along with the corresponding acreage and when 
they were submitted.

    Question 2. To date, the Biden administration has held 19 onshore 
oil and gas lease sales totaling roughly 245 thousand acres. At this 
point in the Trump administration the Department had held 84 lease 
sales totaling roughly 3.8 million acres.

    2a) Please provide the amount of production and royalties generated 
on the 245,000 acres leased by this administration as well as the 
amount of production and royalties on the 3.8 million acres leased by 
the last administration.

            Questions Submitted by Representative Susie Lee

    Question 1. Mr. Gruber, in a statement for the record dated 
December 12, 2023 and submitted by the Bureau of Land Management (BLM) 
to this subcommittee, BLM indicated that it ``is working on 
administratively establishing CXs [categorical exclusions] specifically 
for geothermal development.'' Could you please provide an update on the 
status of those CXs, inclusive of an estimated timeline for completion, 
and further detail how BLM expects that each will benefit geothermal 
permitting?

             Questions Submitted by Representative Fulcher

    Question 1. Mr. Gruber, in your written testimony, you said that 
BLM is working to develop categorical exclusions to streamline the 
review of some geothermal exploration projects. Could you expand on the 
latest actions by BLM on that development?

                                 ______
                                 

    Mr. Stauber. Thank you very much for your testimony. Our 
next witness is Dr. Bryant Jones, the Executive Director for 
Geothermal Rising, stationed in Boise, Idaho.
    Mr. Jones, you are now recognized for 5 minutes.

   STATEMENT OF BRYANT JONES, EXECUTIVE DIRECTOR, GEOTHERMAL 
                      RISING, BOISE, IDAHO

    Dr. Jones. Good afternoon, Representative Stauber, 
Representative Ocasio-Cortez, and members of the House Natural 
Resources Committee and the Subcommittee on Energy and Mineral 
Resources. Thank you for the opportunity to testify at today's 
hearing to discuss the potential and opportunity of geothermal 
energy in our nation's energy mix.
    My name is Bryant Jones, the Executive Director of 
Geothermal Rising, the world's largest and oldest geothermal 
association, serving as the main professional and educational 
organization for the geothermal community in the United States. 
Our members harness the heat beneath the Earth's surface for 
direct use, geothermal heat pumps, and to generate 24/7 carbon-
free electricity critical to achieving reliable, affordable, 
and fully decarbonized buildings, industry, and power grids. As 
a 501(c)(3), Geothermal Rising's membership includes project 
developers, service and equipment providers, universities and 
research groups, government agencies, public utilities, and 
other stakeholders.
    The first geothermal power plant in the United States 
started up more than 60 years ago in California, and thermal 
utilization began in 1892 in Idaho, all based on a now mature 
suite of technologies. Today's newer geothermal technologies 
leverage the experience and expertise of North America's oil 
and gas sector, and are poised to unleash even more of the U.S. 
geothermal energy potential.
    Other advantages of geothermal include the domestic co-
production of critical minerals, reduction of geopolitical 
risks on existing global supply chains, and high-paying jobs 
that directly transfer from the fossil fuel energy sector.
    Last, the United States is well poised to be the hub of 
technological development and deployment of geothermal energy 
that can be implemented at home and exported around the world.
    Frankly, geothermal is an energy source that we can't 
afford not to invest in. However, critical to the success of 
the geothermal industry and to the broader clean energy goals 
of our nation, there are legislative changes needed to support 
the nuanced characteristics of geothermal energy development.
    Today, Geothermal Rising is pleased to endorse a number of 
geothermal-specific bills which, broadly speaking, would 
provide precise, yet comprehensive definitions and 
clarifications to match the diverse activities, technologies, 
and ongoing innovations of the geothermal industry; direct more 
resources and attention to areas with high geothermal 
potential; streamline the processing of geothermal drilling 
permit applications while ensuring environmental and climate 
obligations are met; and ensure BLM has the resources to meet 
the high demand for geothermal permit applications processing.
    Furthermore, Geothermal Rising supports the release of 
guidance on permitting by the Department of the Interior, and 
suggests that the Congress encourage BLM to address industry 
concerns over geothermal leasing delays, requirements that 
geothermal permitting review workforce live in remote field 
offices, and the lack of geothermal technical knowledge in BLM 
field offices.
    It is probably no surprise that we at Geothermal Rising 
endorse geothermal proposals that reduce risk and increase 
certainty for our members and stakeholders. And although we are 
inclined to support language and concepts such as streamlining 
and exemptions, I wish to remind this Committee that our 
members are in this industry because we care deeply about the 
environment, drawing down the climate crisis, and empowering a 
just and equitable clean energy transition.
    Frankly put, more geothermal development directly equates 
to emissions reductions, environmental protection, public lands 
conservation, energy diversification, energy freedom, reduced 
geopolitical risk, improved national security, local jobs, 
stability, and prosperity for Americans.
    We are excited to see policy momentum supporting geothermal 
development on Capitol Hill, and look forward to working with 
all of those in our national agencies and Congress to provide a 
framework to responsibly increase pathways to establish 
streamlined permitting practices for this unique and vast 
energy resource, all while providing adequate safeguards, 
transparency, and community engagement.
    The world is watching the United States for how it designs 
its portfolio in the energy transformation. Geothermal energy 
must be leveraged if we are to rapidly develop nationwide 
robust power, thermal, and cooling systems, and a clean, 
sustainable fuel mix, all while creating stable jobs and 
bolstering innovative economic and industrial outputs.
    With the value of responsible resource development at the 
forefront, the United States can lead the way in clean, 
renewable geothermal energy while safeguarding our ecological 
and biological ecosystems and our communities.
    Thank you again for this opportunity, and I am happy to 
answer any questions you may have to the best of my knowledge.

    [The prepared statement of Dr. Jones follows:]
      Prepared Statement of Dr. Bryant Jones, Executive Director,
                           Geothermal Rising
           on H.R. 6482, H.R. 7370, H.R. 7409, and H.R. 7422

    Good morning Representative Stauber, Representative Ocasio-Cortez, 
and Members of the House Natural Resources Committee and Subcommittee 
on Energy and Mineral Resources, thank you for the opportunity to 
testify at today's hearing and discuss the potential and opportunity of 
geothermal energy in our nation's energy mix.
    My name is Bryant Jones, and I am the Executive Director of 
Geothermal Rising, the world's oldest geothermal association, serving 
as the main professional and educational organization for the 
geothermal community in the United States. Our members harness the heat 
beneath the Earth's surface for direct-use, geothermal heat pumps, and 
to generate 24/7 carbon-free electricity, critical to achieving 
reliable, affordable, fully decarbonized buildings, industries, and 
power grids. As a 501(c)(3), Geothermal Rising (GR) membership includes 
project developers, service and equipment providers, universities and 
research groups, government agencies, public utilities, and other 
stakeholders.
    GR's mission is to ``use the earth to save the earth'' by tapping 
into the extraordinary potential of our abundant, stable, and clean 
geothermal resources. GR's policy work supports this mission by 
advancing a comprehensive agenda of geothermal technology-agnostic 
federal and state-level policies, regulatory work, and general 
initiatives to accelerate the deployment of all forms of geothermal 
energy.
    Inexhaustible geothermal energy offers a solution to some of our 
most pressing challenges such as energy reliability and emissions 
reductions. It is a resource that can generate 24/7 clean electricity, 
provide heating and cooling for homes and industries, and much more. 
Frankly, it is an energy source we can't afford not to invest in. Our 
work at Geothermal Rising centers on decreasing energy costs, 
increasing efficiency, promoting a strong geothermal workforce, and 
contributing to a sustainable planet and energy independent nation.
    Currently, in the United States, geothermal power plants have an 
installed capacity of 3,692 MW, however, this represents only 0.4% of 
total U.S. utility-scale electricity generation and accounted for 1.9% 
of electricity generation from renewable sources,\1\ underscoring the 
substantial opportunity we have to scale up geothermal energy as we 
enter this new generation of geothermal technologies and innovation. 
Geothermal energy provides heating and cooling to less than 1% of the 
market, again a small market share of a valuable renewable energy 
source.
---------------------------------------------------------------------------
    \1\ https://www.eia.gov/energyexplained/electricity/electricity-in-
the-us.php
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    The first geothermal power plant in the United States started up 
more than 60 years ago based on a now mature suite of technologies. 
Today's newer geothermal technologies leverage the expertise and 
experience of the North American oil and gas sector and are poised to 
unleash even more of the United States' geothermal energy potential. 
Other advantages of geothermal include the domestic coproduction of 
critical minerals, reduction of geopolitical risks on existing global 
supply chains, and high paying jobs that directly transfer from the 
fossil fuel energy sector. Lastly, the United States is well poised to 
be the hub of technological development and deployment of geothermal 
energy that can be implemented at home and exported around the world. 
However, critical to the success of our industry and the broader energy 
goals of our nation, are legislative innovations to support the nuanced 
needs of geothermal energy development.
    Today, GR is pleased to endorse a number of pro-geothermal bills, 
the first of which being H.R. 6482, ``Enhancing Geothermal Production 
on Federal Lands Act.'' H.R. 6482 necessarily provides precise yet 
comprehensive definitions and clarification to match the diverse 
activities, technologies, and ongoing innovations in our industry. 
Furthermore, the bill reinforces the justifiable and reasonable 
proposition that geothermal exploration projects and covered activities 
shall not be considered major actions under the National Environmental 
Policy Act of 1969 (NEPA). The bill also mandates the designation of 
certain federal lands as priority areas for geothermal leasing, 
directing more resources and attention to areas with high geothermal 
potential.
    The second bill we wish to endorse is H.R. 7370, the ``Geothermal 
Energy Opportunity Act'' or the ``GEO Act.'' The GEO Act would amend 
the Geothermal Steam Act of 1970 with provisions to streamline the 
processing of geothermal drilling permit applications, while ensuring 
all environmental documents required under NEPA for authorization 
approval are met. Geothermal has the lowest life cycle carbon footprint 
of all renewable energy technologies and the smallest environmental 
footprint of all energy technologies. Yet, geothermal developers face 
the strictest permitting processes. While GR appreciates the BLM is 
working on an administrative categorical exclusion specific for 
geothermal, we believe it is vital for congressional action to ensure 
geothermal developers receive the nuanced permitting exclusions under 
NEPA that are needed to develop and scale the cleanest and most stable 
energy resource available to us as we continue to transition into a 
clean energy economy.
    Third, H.R. 7409, the ``Harnessing Energy At Thermal Sources Act'' 
or the ``HEATS Act,'' would further amend the Geothermal Steam Act of 
1970 by enabling reasonable exemptions from Federal permits and 
allowing geothermal activities to commence and receive a state permit 
in a practical timeframe.
    Last, regarding H.R. 7422, the ``Geothermal Cost-Recovery Authority 
Act of 2024,'' we accept the provisions therein as a reasonable 
compromise. Although requirements to ``reimburse'' the government for 
administrative costs in connection with geothermal permitting may be 
counterintuitive on the surface to accelerating the development of a 
renewable resource that already faces a relatively high degree of 
capital risk and regulatory uncertainty, we acknowledge that 
reinjecting reimbursed funds into BLM to maintain efficient application 
processing is a necessity. Therefore, we support the bill based on the 
understanding that recovered administrative costs will be recycled into 
BLM to specifically cover administrative costs in connection with 
geothermal permit application processing.
    It is probably no surprise that America's geothermal industry 
association endorses propositions that reduce risk and increase 
certainty for our members and stakeholders. Although we are inclined to 
support terms and concepts such as ``streamlining'' and ``exemptions,'' 
I wish to remind the Committee that our members are in this industry 
because we care deeply about the environment. Frankly put, more 
geothermal development directly equates to emissions reduction, energy 
diversification, national security, jobs, stability, and prosperity.
    As we continue to advocate for the responsible development of 
geothermal resources and compatible reductions of regulatory red tape, 
GR acknowledges the importance of environmental assessments and 
compliance with the National Environmental Policy Act (NEPA). While new 
legislation creating exemptions and streamlined processing of 
applications for geothermal activities would accelerate clean energy 
development, it must be approached with caution and responsibility, 
ensuring adequate safeguards and transparency. We believe the bills 
before this Committee today balance environmental conservation, 
successfully address concerns around carbon production, and empower the 
cleanest renewable energy industry humanity has access to, the energy 
of the earth, geothermal.
    In representing the geothermal community, GR strives to be a 
consensus organization, recognizing that our members may have diverse 
viewpoints on certain issues. Therefore, while we support the general 
direction of proposed regulations and legislative efforts to streamline 
permitting and the development of the geothermal industry, it's 
important to note that our members may have slightly deviating 
priorities and interests.
    Again, while we advocate for permitting reform in a broad sense, we 
also emphasize the need for a balanced approach, namely, environmental 
responsibility and public participation. With the values of responsible 
resource development at the forefront, the United States can lead the 
way in clean, renewable geothermal energy while safeguarding our 
ecosystems and communities.
    We are excited to see policy movement supporting geothermal 
development on Capitol Hill and look forward to working with all of 
those in our national agencies and Congress to provide a framework to 
responsibly increase pathways to establish streamlined permitting 
practices for this unique and vast energy resource, while also 
providing adequate safeguards and transparency.
    The world is watching the United States for how it designs its 
portfolio in the energy transformation. Geothermal energy must be 
leveraged if we are to rapidly develop nation-wide robust power and 
thermal systems and a clean sustainable fuel mix, all while creating 
jobs and bolstering innovative economic and industrial outputs.
    Thank you again for this opportunity, and I am happy to answer any 
questions you may have to the best of my knowledge.

                                 ______
                                 

   Questions Submitted for the Record to Dr. Bryant Jones, Executive 
                      Director, Geothermal Rising

             Questions Submitted by Representative Fulcher

    Question 1. From your geothermal research and expertise, do you 
foresee the streamlining process contributing to the growth of the 
geothermal industry? Could you expand on the importance?

    Answer. Absolutely. In an industry that already faces a relative 
degree of risk and uncertainty, it is critical that we remove 
unnecessary regulatory and bureaucratic red tape. Streamlining 
regulatory and permitting procedures would significantly reduce project 
timelines and costs. Additionally, streamlining processes can enhance 
the industry's attractiveness to investors. Relative to other 
subsurface industries, it especially doesn't make sense to impose the 
same restrictions and review processes on the geothermal industry given 
that it is emission-free and poses little-to-no negative sub-surface 
and above-surface risks. Geothermal energy is commonly known as the 
``invisible'' energy source--and its utilization is quiet, clean, and 
discreet to both civil communities and natural ecosystems.

    Question 2. Shifting to energy security, you mentioned in your 
written testimony, that the United States is well-positions to be a hub 
for technological development and deployment of geothermal energy. 
Could you provide more insights unto how the U.S. can leverage its 
capabilities to become a global leader in geothermal technology?

    Answer. The U.S. is already a world leader in geothermal technology 
and is on the cusp of further groundbreaking innovations in this space. 
American companies such as Fervo, Eavor, Quaise Energy and others have 
already engineered never-before-seen solutions and are continuously 
refining their technologies. The U.S. is the ideal place to perfect 
these technologies for geothermal energy production at home due to our 
vast resources in geothermal and in entrepreneurial spirit. We can also 
export these innovations abroad due to global demand for renewable 
baseload energy, in addition to creating high-paying jobs at home and 
securing domestic supply chains.

    A growing number of countries are expanding or initiating 
geothermal energy resources for reasons such as national security, 
domestic job creation, stable grids, and clean energy, which will 
require world class technologies. Taiwan aims to grow its geothermal 
power generation from 7 megawatts today to 250 megawatts by 2030 and 6 
gigawatts by 2050. Countries across Europe from Germany to Croatia to 
the United Kingdom are expanding heating, cooling, and power generation 
projects using geothermal resources. Japan and Indonesia see geothermal 
as a solution to challenges being island nations. We can get to the 
next level as global leader in geothermal energy, particularly in 
Enhanced Geothermal and Closed-loop Systems, which have the potential 
to unlock vast energy basically anywhere, with the support of public 
investment, partnerships, and reductions in regulatory red tape.

                                 ______
                                 

    Mr. Stauber. Thank you very much. Our next witness is Mr. 
Steve Dudgeon, the principal of Severance Tax and Royalty for 
Ryan LLC, stationed in Houston, Texas.
    Mr. Dudgeon, you are now recognized for 5 minutes.

 STATEMENT OF STEVE DUDGEON, PRINCIPAL, SEVERANCE TAX/ROYALTY, 
                    RYAN LLC, HOUSTON, TEXAS

    Mr. Dudgeon. Good afternoon. Thank you, Chairman Stauber, 
Ranking Member Ocasio-Cortez, and members of the Committee. I 
appreciate the opportunity to testify in support of House Bill 
7377, the Royalty Resiliency Act. This is a win-win bill that 
helps not only industry, but also the government. As mentioned, 
my name is Steve Dudgeon, and I am a principal at Ryan.
    Ryan is the largest firm in the world dedicated to tax and 
royalty consulting services. We collaborate with taxing 
authorities to obtain fair answers faster, advise on good tax 
policy, and assist taxpayers with calculating and paying every 
dollar they owe and not a penny more. I have worked in Ryan's 
oil and gas group for the past 16 years, representing companies 
throughout this nation and abroad, with a focus on accurately 
reporting and calculating taxes and royalties owed. I have 
directly assisted clients with addressing the problems this Act 
will correct, specifically how to effectively report royalties 
while communization agreements are pending with the Bureau of 
Land Management.
    A little bit of a historical context. In the early days of 
oil and gas, the rule of capture controlled. If you produced 
oil and gas from a well on your land, it was presumed all of 
that oil and gas was yours. When oil was discovered, a race to 
drill wells commenced. Wells were packed together, high impact 
to the environment, dangerous operating conditions, and 
inefficient production. In the 1930s, courts recognized that 
this was a figurative pool of resources and that, in fact, when 
you drilled a single well, the production came from the 
surrounding areas, not just where you drilled.
    Because of this, communitization agreements were born, or 
called CAs. They were created specifically to help conserve our 
natural resources, prevent waste, and, importantly, ensure that 
the various mineral owners receive their share. Unfortunately, 
the current process of approving the agreements is simply not 
working. I have personally seen instances where some CAs have 
been pending for more than 7 years, and I know of wells as of 
today, 500, that have CAs that have been pending for over 12 
months, and this backlog continues to grow.
    To explain the issue a little bit further, I have brought a 
couple of visuals. Let's see if I can get those. Perfect.
    One more slide. Thank you, sir.
    [Slide.]
    Mr. Dudgeon. The first example, in blue, we have fee land. 
Fee land is land owned by private citizens. The Federal 
Government owns the salmon-colored section. Ten percent of the 
land is Federal land, and ninety percent is fee. The circle is 
the surface hole. That is where the well was drilled. And then 
the horizontal leg passes through Federal land into fee land.
    In this scenario, the royalty rates are the same, $12.50 
for both. And under the current requirements, the operator will 
pay $11.25 per $100 to the fee owners, but then they will also 
pay the full $12.50 to the Federal Government while the CA is 
pending. So, in total, they are paying 23.75 percent of all 
their production while they await the conclusion of the CA 
review process. The actual royalties owed, once it gets 
approved, is the $12.50.
    Could you go to the next example? Thank you so much.
    [Slide.]
    Mr. Dudgeon. Example 2, in this instance the Federal 
Government owns 50 percent, fee land is 50 percent. If the well 
is drilled on fee land and never intersects with the Federal 
minerals, no royalties are owed. So, in this example, the oil 
and gas company will pay 6.25 percent to the fee owners, and 
nothing will be paid to the Federal Government until the CA is 
approved, when in reality, actually owed is $6.25 to both 
parties.
    This harms not only the Federal Government in this example, 
but it also harms the states and the operator. States receive 
48 percent of all royalty collections from Federal lands 
onshore, so these states are not getting the money they are 
owed. And for the operators, they are being subjected to 
numerous audits and reviews because of the forced, inaccurate 
reporting. These disputes can lead to costly litigation that 
ultimately ends up being needless once the CA is approved.
    The Royalty Resiliency Act addresses these problems by 
allowing proposed CAs to dictate the payments until final 
approval by the BLM. Payments will be timely received and much 
more accurate than the current all-or-nothing approach.
    In my experience, I have found that producers' proposed 
allocations are correct most, if not all, of the time, and any 
discrepancies tend to be very minimal. As such, this bill is a 
win-win for all parties involved, and I urge you to support it.
    Thank you for offering the opportunity to provide testimony 
today, and I look forward to your questions.

    [The prepared statement of Mr. Dudgeon follows:]
            Prepared Statement of Steve Dudgeon, Principal,
                    Severance Tax/Royalty, Ryan, LLC
                              on H.R. 7377

Introduction

    Chairman Stauber, Ranking Member Ocasio-Cortez, and members of the 
subcommittee:
    Thank you for the opportunity to testify in support of H.R. 7377, 
the Royalty Resiliency Act, which is a positive piece of legislation 
that benefits industry, the government, and tribes. I commend the 
Committee on Natural Resources for taking up this important piece of 
legislation and hope that it will move forward.
    My name is Steve Dudgeon, and I am a principal at Ryan, LLC. Ryan 
is the largest firm in the world focused on providing tax consulting 
services. With headquarters in Dallas, Texas, we perform tax services 
in every state and in nearly 70 countries. From the calculation of 
property taxes at the local level to assisting taxpayers obtain 
historic tax credits, Ryan provides a wide array of tax services and 
interacts with various taxing authorities daily. We seek to provide 
fair answers faster to both the taxpayer and the taxing authority to 
ensure payments to the government are accurate.
    As for me, I am in the severance tax and royalty practice, which is 
based in Houston. Our practice solely focuses on the calculation of 
taxes or royalties owed to government for the production of oil and 
gas. From the Bakken to the deepest waters of the gulf--we have a wide 
array of clientele--indeed, we estimate Ryan's oil and gas clients 
account for the majority of production throughout the United States. 
This provides us with a unique perspective on the state of the industry 
and on identifying the best practices for the collection of taxes and 
royalties. It has also provided us firsthand experience with the issues 
this Act will resolve.
    It is with this perspective that I approach my testimony on the 
Royalty Resiliency Act. I want to thank Representative Hunt for 
introducing this legislation, which will address a decades-old issue 
and result in a win-win for the government and the royalty payors.
Communitization Agreements and Current Law

    Under the Mineral Leasing Act, the Secretary of the Department of 
Interior (``Department'') is authorized to approve communitization 
agreements (``CAs''). CAs allow operators, with the agreement of the 
owners of the resources, to pool together Federal, Indian, State, or 
private oil and gas resources that could not otherwise be independently 
developed or would have required multiple wells to be drilled. This 
permits the acreage to be developed in conformity with established 
well-spacing and development programs in an efficient manner. CAs 
define both how the oil and gas production will be allocated among the 
operators and how revenue will be shared between the operators and the 
various mineral owners. Once a CA is approved, the Office of Natural 
Resources Revenue (``ONRR'') will use the production allocation 
information from the Bureau of Land Management (``BLM'') to distribute 
royalties to the parties of the CA, including the Federal government, 
tribal nations and individual Indian oil and gas resource owners.\1\ 
Without an approved CA, however, ONRR is unable to distribute 
royalties.\2\
---------------------------------------------------------------------------
    \1\ Updated BLM Policy for Communitization Agreements Will Aid 
Timely Distribution of Oil and Gas Royalties/Bureau of Land Management, 
Bureau of Land Management, Press Release (August 19, 2015), https://
www.blm.gov/press-release/updated-blm-policy-communitization-
agreements-will-aid-timely-distribution-oil-and-gas.
    \2\ H. Rept. 104-667, at 20.

---------------------------------------------------------------------------
    In order to approve a CA, the BLM needs the following information:

  a.  The location of the separate tracts comprising the drilling or 
            spacing unit;

  b.  How [the operators] will prorate production or royalties to each 
            separate tract based on total acres involved;

  c.  The name of each tract operator; and

  d.  Provisions for protecting the interests of all parties, including 
            the United States.\3\
---------------------------------------------------------------------------
    \3\ 43 C.F.R. Sec. 3105.2.

    This information is easily discernable by the submitting parties of 
the CA; however, approval of CAs has proven to be a struggle for the 
Department with instances of these CAs taking well over seven (7) years 
to be approved. There are currently hundreds of CAs that are pending 
approval by the BLM.
    In 1996, Congress passed the Royalty Simplification and Fairness 
Act (``RSFA''). One of the goals of that legislation was to address the 
pending ``approval of allocation schedules for participating areas and 
communitization agreements'' as the delayed ``approval of [such] 
request[s] delay[ed] determination of royalty value and result[ed] in 
costly retroactive adjustments.'' \4\ Accordingly, RSFA required the 
Secretary to ``approve such requests expeditiously''; failure to do so 
required the Secretary to ``waive interest on the obligation from the 
date the request was received until the request is approved.'' \5\ 
Specifically, RSFA imposed a 120-day time frame for the Secretary to 
approve CAs.
---------------------------------------------------------------------------
    \4\ H. Rept. 104-667, at 20.
    \5\ Id.
---------------------------------------------------------------------------
    Despite the intent and direction of RSFA, expeditious approval of 
CAs has remained elusive. Indeed, in 2014, the U.S. Government 
Accountability Office (``GAO'') found that the Bureau of Land 
Management's (``BLM'') management and oversight of federal and Indian 
oil and gas resources was hindered, in part, by ``BLM delays reviewing 
communitization agreements.'' \6\ In reviewing data for 61 Indian and 
federal wells, the GAO noted that the average approval time was 229 
days for Indian CAs and 126 days for federal CAs.\7\ The GAO continued: 
``the delay to process communitization agreements . . . resulted in a 
delay of royalty payments. This is a concern because . . . individual 
Indian oil and gas resource owners may rely on revenue from oil and gas 
development to pay for daily expenses such as food, shelter, health, 
and education.'' \8\ Moreover, these findings echoed a ``2006 Royalty 
Policy Committee report that recommended BLM review annually the status 
of communitization agreements awaiting field office approval and 
communitization agreement approval timelines to identify any 
prioritization, resource allocation, and/or training needs.'' \9\ In 
response to the GAO report, the BLM issued a ``re-engineered 
communitization agreement approval process'' that sought to establish a 
streamlined process for adjudication and approval of CAs.\10\ 
Unfortunately, even with the re-engineered process, the delays in 
approving CAs have persisted.
---------------------------------------------------------------------------
    \6\ U.S. Gov't Accountability Off., GAO-14-238, Oversight of 
Federal and Indian Resources 27 (2014).
    \7\ Id. at 36.
    \8\ Id. at 37.
    \9\ Id. at 37 n. 68.
    \10\ Re-engineered Communitization Agreement Approval Process, 
Bureau of Land Management, IM 2015-14 (July 17, 2015), https://
www.blm.gov/policy/im-2015-124.
---------------------------------------------------------------------------
Current Payment Procedures While a CA is Pending

    As the GAO, BLM and ONRR have all recognized, the inability of the 
BLM to timely process CAs results in untimely royalty distributions to 
the federal government, tribes, and individual Indian owners; but there 
is another element: the failure to expeditiously approve CAs results in 
overpayments and underpayments in certain circumstances by the 
operators. In other words, the current system of delays does not 
benefit anyone.

    Functionally though and under existing law, what are operators 
required to pay? Through Ryan's communications with the BLM on behalf 
of our clients, we were told to apply the following general rule:

        For a well that is producing federal or Indian minerals (i.e., 
        a federal application for permit to drill was required for the 
        well), 100 percent of the royalty will need to be paid to the 
        first federal or Indian lease penetrated, until such time as 
        the pending CA or participating area (PA) has been approved by 
        an authorized officer.

        For a well drilled through all fee or state minerals (i.e. no 
        federal application for permit to drill was submitted to the 
        BLM), then 0 percent of the royalty will be paid to the Federal 
        government until such time as the pending CA or PA has been 
        approved by an authorized officer.\11\
---------------------------------------------------------------------------
    \11\ Email on file.

    In other words, the only determining factor is whether the wellbore 
physically passes through federal or Indian minerals even though it may 
or may not be producing federal or Indian minerals. Even if the well is 
producing 1% federal minerals, the operator of a wellbore that 
intersects federal minerals must pay royalties to the federal 
government as if the communitized area was producing 100% federal 
minerals until the CA is approved; however, if the communitized area is 
99% federal ownership, but the wellbore does not intersect with federal 
minerals, the operator would pay no royalties to the federal government 
until the CA is approved.
    Upon approval of the CA, the operator has until the month following 
the BLM approval date and confirmation in the ONRR's system to submit 
all necessary amended royalty returns in order to avoid being assessed 
interest. This means that if a CA was pending for several years and 
whether the CA is approved on January 1st or January 31st, they must 
resubmit all royalty returns by February 28th. This results in a rushed 
process that frequently requires the assistance from outside 
consultants and 3rd parties.
    Because of this structure--and the delay--companies are paying tens 
of millions more to the federal government than would otherwise be owed 
and then awaiting months or years for the ability to accurately report. 
Meanwhile, the federal government is under-collecting for months or 
years in other areas where the wellbore does not intersect federal or 
Indian lands. Moreover, these under- and over-payments are all interest 
free, meaning when it is corrected months or years later, the 
government, tribes, and companies do not get compensated.
    Accordingly, the current law (and its associated delays) benefits 
no one and instead ties up capital, results in frequent administrative 
issues, and results in the government not receiving the funds owed for 
years.
The Effect of the Royalty Resiliency Act

    Given the belabored history of CAs, this legislation allows for up-
front payments. No longer will the needless over- and underpayment 
collections occur.

    Specifically, what does this legislation do?

    It allows operators who submit a CA to the BLM to pay in accordance 
with that CA until approved or modified. If the CA is approved as 
submitted to the BLM, no changes to payments will be needed. But if 
modified, the royalty payors will adjust accordingly, using a similar 
adjustment process to what they do on all CAs under current law.
    In other words, this legislation removes the all-or-nothing 
approach that currently exists, ensuring that operators are--at the 
very least--paying closer to what they owe, while the government 
actually collects something.
    Importantly, existing law will prohibit abuse of this legislation. 
Current law provides that any person who knowingly or willfully submits 
inaccurate information will be subject to a penalty of up to $25,000 
per violation for each day such violation occurs.\12\ Furthermore, 
severe abuse may be punished with imprisonment and additional 
fines.\13\
---------------------------------------------------------------------------
    \12\ 30 U.S.C. Sec. 1719.
    \13\ 30 U.S.C. Sec. 1720.
---------------------------------------------------------------------------
    At Ryan, we have found that producers want to make accurate and 
timely payments to the government. The Royalty Resiliency Act, coupled 
with existing safeguards, achieves this.
Conclusion

    The Royalty Resiliency Act addresses a decades' long problem that 
has plagued the Department, and provides certainty of payment to the 
government, while limiting over payments by the producer.

    Ryan commends the introduction of this legislation and supports its 
full passage.

                                 ______
                                 

    Mr. Stauber. Thank you very much. Our next witness is Mr. 
Joe Uehlein, the Founding President of the Labor Network for 
Sustainability, based in Takoma Park, Maryland.
    Mr. Uehlein, you are now recognized for 5 minutes.

   STATEMENT OF JOSEPH UEHLEIN, FOUNDER AND PRESIDENT, LABOR 
       NETWORK FOR SUSTAINABILITY, TAKOMA PARK, MARYLAND

    Mr. Uehlein. Good afternoon, Chair Stauber, Ranking Member 
Ocasio-Cortez, and members of the Committee. My name is Joseph 
Uehlein, and I am the Founder and Board President of the Labor 
Network for Sustainability.
    We are dedicated to making a living on a living planet. We 
believe that sustainability starts at the kitchen table, where 
working people every day worry about how they will secure 
health care, send their children to college, save for a family 
vacation, and maybe save for a pension.
    I worked building the Texas Eastern Pipeline as it wound 
its way through the rolling hills of central Pennsylvania. I 
worked on the construction of the Three Mile Island nuclear 
facility near Harrisburg, and I worked in an aluminum mill in 
Mechanicsburg. As Secretary-Treasurer of the AFL-CIO's 
Industrial Division and Secretary to the North American 
Coordinating Committee of the International Chemical, Energy, 
and Mine Workers Federation, I have represented fossil fuel and 
manufacturing workers throughout my career.
    In 1988, I began attending meetings of the United Nations 
first Global Warming Commission. At that time, 2 C of warming 
was a level we never wanted to reach. Now it is a goal, and we 
are ushering in a world of hurt for a large number of people. 
This has to stop, and it has to be reversed.
    I spent my life working on labor and environmental issues 
with climate change at the core. My experience tells me that 
climate change is the real job killer. Climate is as much an 
economic issue as it is an environmental issue. The impacts of 
unchecked global warming and climate change will decimate our 
economy and ecology. Whether you work on the ports, in 
agricultural fields, in a warehouse, transportation, 
manufacturing, health care, public employees will all suffer 
job loss due to unchecked global warming and climate change.
    Climate change is a budget killer, and it is also a dagger 
pointed at our jobs. The fossil fuel industry and its allies 
love to spin the jobs versus environment frame. We not only 
can, but we must provide good jobs for our people and protect 
the only planet we know of that supports life.
    Renewable energy is a big part of the solution for the 
climate and for working people. Geothermal energy is an 
essential part of the overall renewable energy mix, and 
provides clean, reliable, baseload power with minimal carbon 
emissions. This will help reduce our reliance on climate-
destroying fossil fuels. And the beauty of geothermal is that 
job skills are readily transferable. Pipe fitters in an oil 
refinery or nuclear power plant, or pipe fitters that build 
pipelines like I did can do geothermal work. But it is more 
than pipe fitters. To do this work, we need operating 
engineers, truck drivers, laborers, carpenters, drillers, 
excavators, electricians, landscapers, depending on how deep 
the hole is, like for the fracking process of enhanced 
geothermal, which allows for more efficient extraction.
    But we need to make sure that the Federal Government has 
the capacity to permit geothermal and other renewables 
responsibly as the industry grows. Rather than cutting 
environmental review and public input, we need to fund and 
staff our agencies appropriately.
    Note that I say, ``our agencies.'' If you believe in 
government of, by, and for the people, as I do, you have a 
responsibility to see to it that public input is sought and 
valued, and that environmental review is a sacred requirement. 
Public input from impacted communities and rigorous 
environmental review are the things we should want and value, 
not oppose and undermine.
    Representative Ocasio-Cortez's Geothermal Cost Recovery 
Authority Act of 2024 will allow the BLM more flexibility to 
hire third-party environmental reviewers and specialists, 
charge for inspections, monitoring of geothermal, and otherwise 
charge cost recovery fees. This will help BLM's geothermal 
program without constraining the agency's limited budget.
    Climate change is a job killer and a budget killer. You 
have heard it said, and I don't mind repeating it. This is the 
only planet we have, and the voices of the future are calling 
back to us and asking that we might see beyond our own time.
    Thank you, and I look forward to your questions.

    [The prepared statement of Mr. Uehlein follows:]
  Prepared Statement of Joseph Uehlein, Founder and Board President, 
                    Labor Network for Sustainability
                              on H.R. 7422

    Good afternoon Chair Stauber, Ranking Member Ocasio-Cortez, and 
Members of the Committee.
    My name is Joseph Uehlein. I'm the founder and Board President of 
the Labor Network for Sustainability (LNS). We are dedicated to making 
a living on a living planet. We believe that sustainability starts at 
the kitchen table, where working people every day worry about how they 
will secure health care, send their children to college, save for a 
family vacation, and maybe save for a pension. Advanced industrial 
societies around the world provide many of these things to their 
people. We do not.
    I worked building the Texas-Eastern Pipeline as it wound its way 
through the rolling hills of Central Pennsylvania. I worked on the 
construction of the Three Mile Island nuclear facility near Harrisburg. 
I worked in an aluminum mill in Mechanicsburg, PA. As secretary 
Treasurer of the AFL-CIO's Industrial Division, and Secretary to the 
North American Coordinating Committee of the International Chemical, 
Energy, and Mine Workers Federation, I have represented fossil fuel and 
manufacturing workers throughout my career.
    In 1988 I began attending meetings of the United Nations first 
global warming commission. At that time 2c of warming was a level we 
never wanted to reach. Now it's a goal, and we are ushering in a world 
of hurt for a lot of people. This has to stop, and be reversed. I have 
spent my life working on labor and environmental issues, with climate 
change at the core of my endeavors.
    My experience tells me that climate change is the real job killer, 
not the answers to climate change. Climate is as much an economic issue 
as it is an environmental issue. The impacts of unchecked global 
warming and climate change will decimate our economy and ecology. 
Whether you work on the ports, or in the agricultural fields, or in a 
warehouse, or in transportation, manufacturing, health care--even 
nurses and public employees will all suffer job loss due to unchecked 
global warming and climate change.
    Before 2010 we would have one, maybe two, one-billion dollar 
weather events a year. Then we had a dozen such events in one year. The 
earth was waging its own public relations campaign. The costs of 
dealing with forest fires has increased dramatically over the past 
decade, and that's just fire. Hurricane Katrina destroyed 40% of the 
New Orleans economy. Over time, much of that has come back, but not all 
of it. Massive storms, massive fires, melting polar ice caps, melting 
glaciers, famine, water shortages, and more are ravaging the planet and 
the people on it are suffering and fleeing to find a more stable places 
to live. You think we have an immigration problem now? You ain't seen 
nothing yet. We will see mass migration of starving angry people. What 
do we do then? Wage war on humanity?
    Climate change is a budget-killer, and is also a dagger pointed at 
our jobs. The fossil fuel industry and its allies love to spin the jobs 
v environment frame. We not only can, but we must, provide good jobs 
for our people, and protect the only planet we know of that can support 
life. The costs of fighting wild fires in the west has grown 
astronomically in the past 20 years. And this is just the tip of the 
proverbial iceberg.
    Renewable energy is a big part of the solution, for the climate and 
for working people. Geothermal energy is an essential part of the 
overall renewable energy mix, and provides clean, reliable, baseload 
power, with minimal carbon emissions. This will help reduce our 
reliance on polluting and climate destroying fossil fuels. And the 
beauty of geothermal is that the job skills are readily transferable. 
Pipefitters in an oil refinery or nuclear power plant, or pipefitters 
that build big pipelines like I did, can do geothermal work. But it's 
more than pipefitters. To do this work we need operating engineers, 
truck drivers, laborers, and carpenters, depending on how the deep the 
hole is, like for the fracking process of enhanced geothermal, which 
allows for more efficient extraction of geothermal heat found deep in 
the ground. Conventional geothermal taps heat sources closer to the 
earth's surface. For both methods, the skills needed are all 
transferable.
    But we need to make sure that the federal government has the 
capacity to permit geothermal, (and other renewables), responsibly as 
the industry grows. Rather than cutting environmental review and public 
input, we need to fund and staff our agencies appropriately. Note that 
I say ``our'' agencies. If you believe in government of, by and for the 
people, as I do, you have a responsibility to see to it that public 
input is sought and valued, and that environmental review is a sacred 
requirement. Public input from impacted communities, and rigorous 
environmental review, are things we should want and value, not oppose 
and undermine.
    Rep. Ocasio-Cortez's Geothermal Cost-Recovery Authority Act of 2024 
will allow the Bureau of Land Management to have more flexibility to 
hire third-party environmental reviewers and specialists, charge for 
inspections and monitoring of geothermal, and otherwise charge cost-
recovery fees. This will help enhance BLM's geothermal program without 
constraining the agency's limited budget.
    Climate change is a job killer, and a budget killer. You've heard 
it said, and I don't mind repeating it, that this is the only planet we 
have, and the voices of the future are calling back to us and asking 
that we see beyond our own time.

                                 ______
                                 

Questions Submitted for the Record to Joe Uehlein, Founding President, 
                    Labor Network for Sustainability

             Questions Submitted by Representative Huffman

    Question 1. While it is critical that the U.S. ramps down fossil 
fuel production and reliance and scales up clean energy deployment, we 
must still do so responsibly. Over the last year, the National 
Environmental Policy Act, NEPA, has been consistently under threat. 
That is something we cannot support, even when it's for renewable 
energy. Why is it important to you and the Labor Network for 
Sustainability more broadly that we maintain justice and equity in all 
our transition policies?

    Answer. Given the planetary boundaries we've already crossed, and 
those we will soon cross, it is critical that environmental review be 
strengthened so that further harm to the natural world can be reduced 
and eliminated. This will benefit the natural world, and our working 
families. We need more robust transition policies that protect working 
people and the planet we inhabit. We cannot allow this to be an either/
or proposition. No worker, and no community, should be the roadkill on 
the path to a better world.
    The Labor Network for Sustainability is dedicated to ``Making a 
Living On a Living Planet.'' We view these goals as equal to one 
another; one is not more important than the other. We can have an 
ecologically sustainable and economically just future. If we fail at 
either, we fail working families. Workers have always cared about their 
communities, and about the environment. The first Earth Day would not 
have happened without the active support and financial assistance from 
the UAW (auto workers), and AFSCME (state, county and municipal 
employees). The link between workplace rights and environmental justice 
is clear. What good is an extra week vacation we negotiate, if the lake 
we take our kids to is polluted and they can't swim in it? More 
broadly, there are no jobs on a dead planet. The fossil fuel industrial 
complex has worked hard to spin false tales and false solutions 
designed to divide workers from the environment, and the environment 
from workers. At the Labor Network for Sustainability we reject such 
false divisions. We believe that an injury to one is an injury to all, 
and we believe that we are linked organically to this planet, so an 
injury to the natural world is an injury to working people.
    As the environment around us deteriorates, so does the economy. 
Environmental degradation, and global warming, represent the biggest 
threat to our economy. The economic impacts of environmental 
degradation will be far worse than the Great Depression. Justice and 
equity goals in all transition policies must be strengthened. The 
transition ahead of us offers the opportunity to right the wrongs of 
the past, to save our natural world, and to provide good jobs for 
everyone. Moving forward with renewable energy absent the protections 
of the National Environmental Policy Act places not only our natural 
world but also our working families at risk. We can have both a healthy 
environment and good jobs for our people.

                                 ______
                                 

    Mr. Stauber. Thank you very much. Our final witness is Mr. 
Dan Naatz, the Executive Vice President and Chief Operating 
Officer of the Independent Petroleum Association of America, 
based here in Washington, DC.
    Mr. Naatz, you are now recognized for 5 minutes.

  STATEMENT OF DAN NAATZ, CHIEF OPERATING OFFICER, INDEPENDENT 
        PETROLEUM ASSOCIATION OF AMERICA, WASHINGTON, DC

    Mr. Naatz. Good afternoon, Chairman Stauber, Ranking Member 
Ocasio-Cortez, and members of the Subcommittee. My name is Dan 
Naatz, and I am the Chief Operating Officer of the Independent 
Petroleum Association of America (IPAA). I am here today to 
testify in support of H.R. 7375, sponsored by Representative 
Hageman; and H.R. 7377, the Royalty Resiliency Act, sponsored 
by Representative Hunt.
    IPAA is a national trade association representing thousands 
of American independent oil and natural gas producers. Our 
members, who operate in 33 states, as well as offshore, are the 
primary producer of the nation's oil and natural gas, and 
account for 83 percent of America's oil production and 90 
percent of its natural gas output. These independent producers 
are a driving force in our economy, and support roughly 4.5 
million jobs in the United States.
    Furthermore, our average member company employs 20 people. 
These small businesses are unique, and are best served by 
having a cooperative Federal regulatory system with input from 
the states and the Federal Government, rather than a one-size-
fits-all structure coming from Washington, DC.
    H.R. 7375, offered by Congresswoman Hageman, amends a 
provision of the Mineral Leasing Act that was changed as part 
of the Inflation Reduction Act of 2022. The IRA included a new 
provision to assess an additional fee on companies for 
nominating parcels to be included in upcoming lease sales. 
Currently, every nominating company must pay the non-refundable 
Expression of Interest fee, regardless of the outcome of the 
lease sale. In effect, companies who do not have the highest 
bid and thus do not win the lease are still beholden to pay the 
Expression of Interest fee.
    While IPAA maintains that a pay-to-play Expression of 
Interest fee in general is a bad idea, we strongly oppose 
assessing a non-refundable fee on a company who is not even 
successful in their bid to lease a particular parcel.
    In addition, multiple operators can end up paying a fee for 
submitting the same acreage. From a policy perspective, IPAA 
believes the new language included in the IRA will negatively 
change the competitive bidding process on Federal lands.
    Furthermore, this fee only applies to oil and natural gas 
development. There is no similar equivalent for the expression 
of interest for wind or solar leases.
    IPAA also supports language in the bill that designates a 
5-year term for the Expression of Interest fee to remain 
active, unless the land covered by the fee is included in a 
lease sale.
    Rather than placing additional fees and burdens on American 
oil and natural gas explorers and producers operating on 
multiple use Federal lands, Congress should look for ways to 
enhance production to provide the nation with much-needed 
energy resources.
    IPAA also supports H.R. 7377, the Royalty Resiliency Act 
offered by Congressman Hunt. The legislation requires the 
Department of the Interior to make a timely determination 
regarding the amount of production operators pay royalties on 
to the Federal Government, so that producers aren't paying 
excess royalties while they wait for a BLM communitization 
agreement approval.
    Current law states that the Secretary shall issue a 
determination for allocation of production for unit and 
communitization agreements within 120 days. However, it also 
gives the Secretary flexibility to exceed the 120-day deadline 
by waiving interest due on obligations until a determination is 
made. H.R. 7377 closes that exemption loophole.
    The legislation also assumes that the pending plan for 
communitization is correct, rather than the other way around. 
This change will save companies from overpaying royalties that 
ONRR collects interest on while the agency determines approval.
    It is worth noting that the Federal Government does not 
live by these same rules. Interest is not repaid the company 
when communitization plans are finally issued.
    Furthermore, current law states that ONRR gets to collect 
100 percent of the royalty rate on production, even if the 
Federal Government does not own 100 percent of the land used 
during the operation. The patchwork nature of landownership in 
the West makes this a complicated issue. It is common for 
Federal land to mingle with private or state-owned land on 
parcels in the West. However, the Treasury should only get the 
percentage of royalty that is rightfully owned by the Federal 
Government. H.R. 7377 corrects these flaws, and provides a more 
equitable system, where Federal royalties are only collected on 
land owned by the Federal Government.
    IPAA member companies are committed to finding creative 
solutions to problems that exist within the scope of oil and 
natural gas production on Federal lands. We commend the House 
Natural Resources Committee for seeking innovative solutions to 
these issues that will enhance the ability of America to 
continue to have a robust onshore oil and natural gas program.
    Thank you for the opportunity to join you today.

    [The prepared statement of Mr. Naatz follows:]
  Prepared Statement of Daniel T. Naatz, Chief Operating Officer and 
                       Executive Vice President,
              Independent Petroleum Association of America
                       on H.R. 7375 and H.R. 7377

    Good afternoon, Chairman Stauber, Ranking Member Ocasio-Cortez, and 
members of the Subcommittee on Energy and Mineral Resources. My name is 
Dan Naatz. I am the Chief Operating Officer of the Independent 
Petroleum Association of America (IPAA), and I am here today to testify 
in support of H.R. 7375 sponsored by Representative Hageman, and H.R. 
7377, the ``Royalty Resiliency Act'' sponsored by Representative Hunt.
    IPAA is a national trade association representing thousands of 
American independent oil and natural gas producers. Our members, who 
operate in thirty-three states as well as offshore, are the primary 
producers of the nation's oil and natural gas and account for 83 
percent of America's oil production and 90 percent of its natural gas 
output. These independent producers are a driving force in our economy 
and support roughly 4.5 million jobs in the United States. IPAA member 
companies are innovative leaders that broke the code to usher in the 
shale oil and natural gas revolution in the United States. Furthermore, 
our average member company employees 20 people. These small businesses 
are unique and are best served by having a cooperative federal 
regulatory system with input from the states and the federal government 
rather than a one-size-fits-all structure coming from Washington.
    I want to thank the Chairman for holding this hearing today on two 
commonsense legislative proposals that will positively impact IPAA 
members who operate on federal lands. H.R. 7375 and H.R. 7377 bring 
much-needed changes and clarifications to the leasing and royalty 
gathering process for oil and natural gas exploration and development 
activities on federal lands, providing greater equitability to the 
lessees.
    H.R. 7375, offered by Congresswoman Hageman, amends a provision of 
the Mineral Leasing Act that was changed as part of the Inflation 
Reduction Act of 2022 (IRA). The IRA included a new provision to assess 
an additional fee on companies for nominating parcels to be included in 
upcoming lease sales. Currently, every nominating company must pay the 
nonrefundable expression of interest fee regardless of the outcome of 
the lease sale. In effect, companies who do not have the highest bid 
and thus do not win the lease are still beholden to pay the expression 
of interest fee. While IPAA maintains that a ``pay to play'' expression 
of interest fee in general is a bad idea; we strongly oppose assessing 
a nonrefundable fee on a company who was not even successful in their 
bid to lease a particular parcel.
    From a policy perspective, IPAA believes the new language included 
in the IRA will negatively change the competitive bidding process on 
federal lands. Furthermore, this fee only applies to oil and natural 
gas development. There is no similar equivalent for the expression of 
interest for wind or solar leases.
    IPAA also supports language in the bill that designates a 5-year 
term for the expression of interest fee to remain active unless the 
land covered by the fee is included in a lease sale. Rather than 
placing additional fees and burdens on American oil and natural gas 
explorers and producers operating on multiple use federal lands, 
Congress should look for ways to enhance production to provide the 
nation with much needed energy resources.
    IPAA also supports H.R. 7377, the ``Royalty Resiliency Act'' 
offered by Congressman Hunt. The Office of Natural Resources Revenue 
(ONRR) is a little-known agency with a bureaucratic regulatory 
structure that is largely unchecked and has little oversight. While 
IPAA believes a complete overhaul of the ONRR is desperately needed, 
the legislation before us today aims to fix a reporting issue dealing 
with communized agreements.
    The ``Royalty Resiliency Act'' requires the Department of the 
Interior to make a timely determination regarding the amount of 
production operators pay royalties on to the federal government, so 
that producers aren't paying excess royalties while they wait for a BLM 
communization agreement approval.
    Current law states that the Secretary shall issue a determination 
for allocation of production for units and communization agreements 
within 120 days, however, it also gives the Secretary flexibility to 
exceed the 120-day deadline by waiving interest due on obligations 
until a determination is made. H.R. 7377 closes the exception loophole. 
The legislation also assumes that the pending plan for communization is 
correct rather than the other way around. This change will save 
companies from overpaying royalties that ONRR collects interest on 
while the agency determines approval. It is worth noting that the 
federal government does not live by these same rules, interest is not 
repaid to the company when communization plans are finally issued.
    Furthermore, current law states that ONRR gets to collect 100 
percent of the royalty rate on production even if the federal 
government does not own 100 percent of the land used during operation. 
The patchwork nature of landownership in the west makes this a 
complicated issue. It is common for federal land to mingle with private 
or state-owned land on parcels in the west, however, the treasury 
should only get the percentage of royalty that is rightfully owned by 
the federal government. H.R. 7377 corrects these flaws and provides a 
more equitable system where federal royalties are only collected on 
land owned by the federal government.
    IPAA member companies are committed to finding creative solutions 
to problems that exist within the scope of oil and natural gas 
production on federal lands. We commend the House Natural Resources 
Committee for seeking innovative solutions to these issues that will 
enhance the ability of America to continue to have a robust onshore oil 
and natural gas program.

    Thank you for the opportunity to join you today.

                                 ______
                                 

    Mr. Stauber. Thank you very much for all the witnesses and 
your testimony. We will now recognize Members for 5 minutes of 
questioning, and I will recognize myself for 5 minutes.
    Dr. Jones, turning to H.R. 6482, the bill exempts 
geothermal exploration wells from having to undergo the NEPA 
process. Under this legislation, the NEPA review is not totally 
waived, this only applies to the drilling of exploratory wells. 
Is that correct?
    Dr. Jones. Yes, that is correct.
    Mr. Stauber. So, contrary to what my colleagues on the 
opposite side of the aisle may claim, the project is still 
required to undergo the full NEPA review at multiple different 
points in the process. The bill only exempts one activity, the 
drilling of exploratory wells, as long as they meet the proper 
standards outlined in the bill.
    Mr. Jones, now turning to H.R. 7409, do you believe states 
have adequate permitting processes to ensure geothermal 
operations are carried out safely and environmental concerns 
are considered?
    Dr. Jones. Yes, I do.
    Mr. Stauber. And very quickly, just to address some 
misconceptions again about the bill from some of my colleagues, 
nothing in this bill would allow a geothermal project to move 
forward without proper environmental reviews. The reviews would 
simply adhere to state processes in the cases outlined in the 
bill. Is that correct?
    Dr. Jones. That is correct, yes.
    Mr. Stauber. For everybody listening, if you want to know 
what removal of a complete NEPA review is, just look at Floyd 
Bennett Field in the City of New York. That is Park Service 
land where illegal immigrants have been housed without any sort 
of review. That is a concern for many of us.
    Mr. Uehlein, you mentioned environmental review is sacred. 
Did you realize there was no environmental review on the Floyd 
Bennett Field, the National Park Service land to house 
immigrants? Yes or no.
    Mr. Uehlein. No.
    Mr. Stauber. Mr. Naatz, is access to capital a significant 
issue that IPAA's members who are small, independent oil and 
gas producers typically face?
    Mr. Naatz. Yes, it is a constant challenge to increase 
access to capital.
    Mr. Stauber. If your members had increased access to 
capital, would it be safe to say that they would likely utilize 
that capital to increase oil and gas production here in the 
United States?
    Mr. Naatz. Yes, Mr. Chairman. Again, there have been a lot 
of studies on this, and our membership continually looks to 
roll capital in and look for new opportunities.
    In fact, Raymond James did a study not long ago that said 
that independent producers reinvest 150 percent of their cash-
flow back into their operations. So, it is a very real issue, 
and important to our members.
    Mr. Stauber. It is no secret that energy demand, both in 
the United States and around the world, is going to continue to 
increase for decades to come. As we have discussed, we are 
going to need to take an all-of-the-above approach to energy 
production to address that increased demand. And, yes, that 
includes more responsible oil and gas production here in the 
United States.
    And I would like to point out that it is not just something 
Republicans agree on. It is bipartisan. In fact, President 
Biden has even called for more oil and gas development here in 
the United States. In an October 2022 speech from the White 
House, the President called on U.S. oil and gas companies to 
increase production in order to increase energy supply and, in 
turn, lower prices for Americans.
    Mr. Naatz, if your members were not required to overpay for 
their Federal royalties as they wait for the Department of the 
Interior to approve communitization agreements, is it safe to 
say they would likely utilize that freed-up capital to increase 
their production?
    Mr. Naatz. Yes, Mr. Chairman. Again, I think it is really 
important to understand our member companies aren't publicly 
traded, by and large, they are small producers. They have to 
access that capital. And when their capital is tied up for 
these situations that the bills address, it is going to have a 
negative impact on their ability to get out, operate, and 
produce.
    And really, I also want to stress the importance of what 
independent producers did in the shale revolution. They were 
the only ones that went out and took the chance, put the 
resources in that ushered in this opportunity that has been so 
beneficial for the country.
    Mr. Stauber. Thank you very much. It is clear that this 
capital could be put into much better use than being held in 
escrow by the Department of the Interior. It could be used to 
help lower energy prices.
    With that, my time is running out. I want to thank you all 
for being here, and I really support every one of these pieces 
of legislation that are before us today.
    I am now going to turn it over to Representative Huffman 
from California for 5 minutes.
    Representative Huffman.

    Mr. Huffman. Thank you, Mr. Chairman, and good afternoon, 
everyone. I would like to start briefly with the oil and gas 
part of the agenda.
    I am not necessarily opposed to Representative Hunt's bill, 
but I do want to point out that we need to look at both sides 
of the story here when it comes to this royalty program.
    From our oil and gas perspective that we have heard, the 
Federal Government is made out to be a bit of a bad guy here, 
and nobody wants to see anybody overpay royalties or 
gratuitously jerked around by the government. But the Federal 
Government is also there for an important reason: to protect 
American taxpayers and the American people to make sure we get 
a fair return for oil and gas companies extracting a public 
resource. And right now, those taxpayer protections don't even 
account at all for climate change, which, for those of you that 
get all your information from right-wing media or have been 
cryogenically frozen for the last couple of decades, it is a 
real thing.
    I will tell you something else that is a real thing: 
taxpayers getting ripped off by fossil fuel operators. Just 
last week, Federal prosecutors indicted a New Mexico woman on 
several wire fraud charges and violations of the Federal Oil 
and Gas Royalty Management Act. She has consistently under-
reported oil and gas production on Federal leases and on Navajo 
and Apache land. And this comes just days after the Department 
of Justice announced that Hilcorp San Juan LP, an oil company 
based in New Mexico and Texas, agreed to pay $34 million to 
resolve allegations that it knowingly underpaid Federal 
royalties.
    So, we want to be fair to everyone in a program like this. 
No one wants to see people overpay the royalties that are owed, 
but it is just as important that we hold people accountable and 
make sure that they pay the royalties that they do owe to the 
U.S. Treasury.
    Now, regarding the transition to geothermal energy, which I 
support and I am enthusiastic about, And I am glad to see us 
talking about in this hearing. The new technological 
advancements in geothermal do involve some techniques that have 
been honed in the oil and gas industry, including hydraulic 
fracturing, and that has caused some concerns among some 
stakeholders because we know from fracking in the oil and gas 
context that it can be risky. There can be impacts and risks to 
water. So, there is seismic activity that needs to be 
considered, and other things.
    Mr. Jones, I just want to ask you straight up, since we 
have heard some of these concerns and there is that 
association, at least in some people's mind, can you explain 
the difference between using this technology for enhanced 
geothermal versus the way it is used for fracking oil and gas?
    Dr. Jones. Yes, thank you for the question.
    It is important to think about well stimulation in two 
different ways. There is the physical and the chemical, and 
that is a big differentiation between how enhanced geothermal 
systems use well stimulation versus hydraulic fracturing, which 
is used in the oil and gas industry.
    So, geothermal is using the physical action of making the 
subsurface more permeable so that water can flow through the 
hot rock, then can be pumped out, and then spin a turbine to 
generate electricity, or provide thermal or air conditioning to 
local hospitals or schools. So, that is the physical aspect of 
it.
    But geothermal does not use the proppants and the chemicals 
that are used in the oil and gas industry, because the oil and 
gas industry is trying to take out mass from that subsurface, 
and that is not what the geothermal industry is doing. In fact, 
it is counter to what the geothermal industry and developers 
are doing. And if geothermal developers have an imbalanced 
ecological ecosystem, it is undermining their own business 
model. So, the water that is pumped out to spin that turbine 
for geothermal is then injected right back into the reservoir, 
creating that balanced ecosystem.
    So, that is a really pivotal distinction between the two.
    Mr. Huffman. Thank you for that distinction. I want to just 
follow up and ask you about water use.
    Conventional geothermal is often sited in locations of 
water scarcity in the West. For example, in my district I have 
a large geothermal project that we like a lot. What 
advancements have there been in improving water use efficiency 
to address concerns about water scarcity?
    Dr. Jones. Yes, another really great question. And that is 
where these new geothermal technologies are expanding the map 
of where geothermal can be, so that geothermal doesn't only 
have to be in places where there is water scarcity. So, 
enhanced geothermal systems and closed-loop systems are 
allowing geothermal energy production to happen in North 
Dakota, West Virginia, Texas, places where we don't 
traditionally think of it.
    Now, for geothermal projects that are in places with water 
scarcity, there is a lot of really involved and creative 
solutions that geothermal operators are deploying.
    And also, I want to mention that, again, it gets back to 
geothermal developers don't want to have an imbalanced 
reservoir, so it is important for them to maintain the balanced 
ecosystem.
    Mr. Huffman. All right. Thank you very much.
    I yield back.
    Mr. Stauber. Thank you very much. The next questioner will 
be Representative Tiffany from Wisconsin for 5 minutes.
    Mr. Tiffany. Thank you, Mr. Chairman.
    Mr. Jones, do you oppose hydraulic fracturing?
    Dr. Jones. I am not in the oil and gas industry, so I don't 
oppose it, no.
    Mr. Tiffany. OK, so you don't have a position, in other 
words.
    Dr. Jones. I don't have a position on it, yes.
    Mr. Tiffany. Yes, because one of the concerns that I heard 
from the gentleman from California is he brought up seismic 
activity that some have claimed results from hydraulic 
fracturing. And it seems to me if you are pushing any liquid, 
and this is not a question, just a statement, it seems like if 
you are pushing any liquid down there, that if that is actually 
the case, you could have seismic activity, regardless of what 
the liquid is.
    Mr. Gruber, where does your agency stand in regards to 
hydraulic fracturing for geothermal?
    Mr. Gruber. Thank you for the question. I don't know that 
the BLM has a position on that. I haven't seen that presented 
in the legislation today, and I am not aware of a position that 
the Administration has taken.
    Mr. Tiffany. So, the Bureau of Land Management does not 
have a position whether they support hydraulic fracturing for 
geothermal purposes?
    Mr. Gruber. I am not aware of a position that the Agency 
has.
    Mr. Tiffany. Mr. Uehlein, I read your testimony, and thank 
you for helping build America. It is really appreciated, all 
the work that you have done. Do you support fracking for, 
regardless of what it is, geothermal, oil, gas, whatever?
    You do not support it?
    Mr. Uehlein. Not regardless of whatever it is for. I am 
excited about it for geothermal.
    Mr. Tiffany. In here, it was stated in regard to third-
party environmental reviewers, and you mentioned it in your 
testimony, do you have any concern that the third-party 
environmental reviewers might make it harder to be able to get 
these geothermal projects completed?
    Mr. Uehlein. No, I am not concerned about that.
    Mr. Tiffany. So, you are confident that it is not going to 
put any additional constraints in place?
    Mr. Uehlein. Right.
    Mr. Tiffany. To the point that the Chairman made earlier, 
do you think there should have been a NEPA process done in 
regards to the Floyd Bennett Field, where they put the illegal 
aliens, before they put them there?
    Mr. Uehlein. I don't know enough about that to really 
answer.
    Mr. Tiffany. And that is a fair answer, Mr. Uehlein. 
Perhaps I will have my staff follow up with a question and give 
you more context in regards to that.
    Mr. Uehlein. Great, thank you.
    Mr. Tiffany. You referenced climate change throughout your 
testimony. How many lives have been lost as a result of climate 
change in, like, the last 100 years?
    Mr. Uehlein. I don't know the answer to that.
    Mr. Tiffany. Do you know that as a result of modern-day 
society over the last 100 years, we have actually reduced the 
number of deaths by, like, 98 percent because of putting in 
place technologies that actually protect people? We have 
actually seen a savings of life as a result of this tremendous 
oil and gas revolution that we have had in America over the 
last 150 years or so, ever since it was found in Pennsylvania.
    You cited melting polar ice caps. Do you know that some of 
the polar ice caps are gaining ice at this point?
    Mr. Uehlein. I know that it varies.
    Mr. Tiffany. And you cite, ``We will see mass migration of 
starving, angry people,'' and then you cite renewable energy as 
a big part of the solution. Do you support the conversion of 
productive farmland to these so-called renewables when you are 
concerned about starving, angry people?
    I will cite in the state of Wisconsin, some of the most 
productive farmland we have in the state is in Dane County, 
which is near Madison, Wisconsin. And they have been converting 
farm fields to these wind and solar facilities. Isn't it a 
concern if we are going to have starving, angry people, that we 
are converting productive farmland in the name of climate 
change?
    Mr. Uehlein. Well, the mass migration is coming because of 
climate change, so I am not sure that I can fully answer your 
question. I know why we are going to be looking at it.
    Mr. Tiffany. Under the previous administration, we did not 
have a mass migration coming into our country just 4 years ago.
    Mr. Uehlein. Well, we are at 1 C of warming right now.
    Mr. Tiffany. I will just close with this final question, 
Mr. Chairman.
    While we unilaterally disarm by going to intermittent 
sources of power like wind and solar, and China and India are 
now going to baseload power and they are building coal plants, 
natural gas plants, and all the rest, aren't we putting 
ourselves at a competitive disadvantage to the countries, in 
particular China, that seek global hegemony?
    Mr. Uehlein. I don't think so. I think we are improving the 
lives of Americans by doing it.
    Mr. Tiffany. Mr. Chairman, I yield back.
    Mr. Stauber. Thank you very much. The Chair now recognizes 
the Ranking Member, Representative Ocasio-Cortez.
    Ms. Ocasio-Cortez. Thank you so much, Mr. Chair.
    Mr. Gruber, thank you for being here today. I would like to 
ask a little bit about geothermal cost recovery. Right now, 
other renewable energies like solar and wind have the same cost 
recovery authority that we are currently proposing for 
geothermal. Oil and gas also have a similar authority, as well. 
While BLM can currently charge some fees for processing 
geothermal permits, how do you expect this cost recovery 
authority to help improve capacity at BLM for geothermal 
deployment?
    Mr. Gruber. Thank you for that question.
    FLPMA, the Federal Land Policy and Management Act, does 
provide the BLM with some authority to establish fees with 
respect to transactions, but the authority provided by H.R. 
7422 would provide the Department the comprehensive authority 
to establish a cost recovery program for geothermal energy 
development from leasing to development, production, and 
inspection enforcement.
    Ms. Ocasio-Cortez. Fabulous, thank you.
    And Mr. Uehlein, thank you for being here, as well. An 
essential part of the clean energy transition is making sure 
that no community or worker is left behind. And that means that 
the transition to renewable energy must be just, and that 
includes supporting fossil fuel workers through that transition 
to renewables.
    Geothermal also presents an exciting opportunity to put 
what have traditionally been fossil fuel industry skill sets to 
work towards building out renewable energy. From your 
perspective, how can we ensure that geothermal energy 
development actually benefits transitioning fossil fuel 
workers?
    And kind of the same question flipped, how can labor and 
the fossil fuel workforce benefit from geothermal energy?
    Mr. Uehlein. Well, to answer the second part first, if you 
think about what it is like to work in the skilled trades, 
construction, outdoor work, you only get your pay, your health 
care, and your pension based on hours worked. So, we need that 
work, and we can help the industry because we have the best 
apprenticeship and training programs anywhere.
    We have to open up pathways to people who have not had 
access to these skilled jobs in the past. And that has been a 
real problem. And we have a chance to address it with renewable 
energy.
    Ms. Ocasio-Cortez. Thank you. Your organization, the Labor 
Network for Sustainability, supports taking science-based 
climate action by building a labor and climate movement. Can 
you talk to us a little bit more generally about why organized 
labor is central to solving the climate crisis?
    Mr. Uehlein. Well, organized labor is central to solving it 
because many of our energy unions have opposed the answers to 
climate change. And our mission is to change that, to talk 
about how addressing climate is in the core self-interest of 
working people and the labor movement because of the impact it 
is going to have on our economy and jobs.
    Ms. Ocasio-Cortez. Thank you very much.
    And Mr. Jones, can you tell us how the geothermal industry 
views the relationship with the fossil fuel workforce?
    And how do you see geothermal as being able to support 
workers in transition?
    Dr. Jones. Yes, the oil and gas industry workforce is 
essential for the continued commercialization and scaling up of 
the geothermal industry. We need drillers, we need subsurface 
reservoir managers, we need geoscientists, geologists, 
engineers, mechanics that are currently being employed in the 
oil and gas industry. And we could use that workforce with 
little to no training in the geothermal industry.
    Ms. Ocasio-Cortez. Fabulous. Thank you very much. I yield 
back to the Chair.
    Mr. Stauber. Thank you very much. The Chair now recognizes 
the Chair of the Full Natural Resources Committee, Chairman 
Westerman, for 5 minutes.
    Mr. Westerman. Thank you, Chairman Stauber, and thank you 
for the witnesses here today. It has been a busy day on Capitol 
Hill, but I am glad I had a chance to make it over and ask a 
few questions.
    Dr. Jones, why does it make sense to specify that 
geothermal exploration activities are not Federal actions under 
NEPA?
    Dr. Jones. Sorry, what was the question?
    Mr. Westerman. Why does it make sense to specify that 
geothermal exploration activities are not major Federal actions 
under NEPA?
    Dr. Jones. Can I get back to you on that?
    Mr. Westerman. Yes. I don't think the answer is that hard, 
but it is a low impact surface analysis, and it is not required 
for oil and gas.
    Along that line, is it true that two NEPA reviews are done 
prior to exploration activities?
    Dr. Jones. It is actually around six NEPA reviews that are 
needed. So, when a geothermal developer begins exploration 
activities for a traditional hydrothermal site system, for 
example, that is when they start their first NEPA process. But 
then, if the developer finds a promising subsurface heat 
anomaly, they must go through a second NEPA process. And then 
they have to go through a third process to drill a slim hole or 
a confirmation well of that resource, and then a fourth NEPA 
review, and these are all full NEPA reviews, by the way, which 
include the ESA and National Historic Preservation Act reviews. 
So, that fourth NEPA review is required to develop the well 
field. Then a fifth one for the development of the power plant, 
and then, if this is speculative exploration on lands that have 
not already been leased, then BLM will do another NEPA review. 
So, that could be up to six full NEPA reviews.
    Mr. Westerman. Do you think there is any overkill in that?
    Dr. Jones. Yes, definitely.
    Mr. Westerman. Could one NEPA review cover most of that?
    Dr. Jones. Yes, because the subsequent ones are all 
redundant and, actually, probably tying up BLM's limited 
resources to do work they have already done.
    Mr. Westerman. And how much time and financial resources 
are we talking about to do all of those?
    Dr. Jones. Six to eight years' delays for geothermal 
projects. I don't know the dollar amount of how much those 
delays cost off the top of my head.
    Mr. Westerman. But no better environmental outcome?
    Dr. Jones. No, they have already conducted Endangered 
Species Act reviews and migratory bird paths, and National 
Historic Preservation cultural site reviews have already been 
conducted, as well, during that first NEPA review.
    Mr. Westerman. Thank you.
    Mr. Dudgeon, how often does the BLM find errors in the 
communitization agreements upon approval?
    Mr. Dudgeon. In my experience, very rarely.
    Mr. Westerman. Mr. Gruber, do you concur with that?
    Mr. Gruber. I don't have an analysis of that, but I don't 
have a basis on which to contest it.
    Mr. Westerman. So, given the fact that these are correct 
most of the time, it makes sense to pay by the initial 
apportionment instead of arbitrarily charging 100 percent or 0 
percent, which only creates more work and hassles for everyone 
on the back end. Mr. Dudgeon, what do you think about that?
    Mr. Dudgeon. I completely agree.
    Mr. Westerman. Mr. Gruber, how do you plan to get the BLM 
into compliance with the Geothermal Steam Act by holding lease 
sales in each state with nominations every other year?
    Mr. Gruber. Thank you, Mr. Chairman. The BLM has held lease 
sales every year of this Administration. We have plans for a 
lease sale later this year in Nevada, and we are exploring 
additional lease sales in other states.
    Mr. Westerman. Have you done it in every state that you are 
supposed to do lease sales in?
    Mr. Gruber. I am not familiar with the details of that 
provision, so I would have to go back and get you that 
information for the record.
    Mr. Westerman. Well, I know the answer, and it is no. So, 
you are still not in compliance with the law. But I hope there 
is a plan to get in compliance.
    And Mr. Chair, I yield back.
    Mr. Stauber. Thank you very much. The Chair now recognizes 
Representative Kamlager-Dove for 5 minutes.
    Ms. Kamlager-Dove. Thank you, Mr. Chair. These recent 
geothermal energy breakthroughs, I think, offer really exciting 
opportunities to develop clean and always available energy in 
communities that have previously hosted fossil fuel 
development. And I had a constituent meeting earlier today with 
some clean tech incubators who talked about how exciting the 
opportunities are, but also really referenced how it was still 
a big boys game.
    Mr. Jones, how can geothermal energy be leveraged to 
revitalize local economies in communities that have 
historically relied on fossil fuel extraction?
    Dr. Jones. That is a great question, and communities like 
Colstrip, Montana or Page, Arizona, parishes in Louisiana where 
a lot of our conventional energy comes from transition to 
geothermal production, and the existing infrastructure could be 
utilized for geothermal. That is grid connections, that is 
power plants, so those assets don't become stranded during the 
clean energy transition.
    And then you have an existing workforce that already knows 
how to operate those power plants.
    There are some concerns that need to be addressed, like the 
pollution from coal power plants, like who takes on the legal 
liability of the coal ash that is there, for example, but 
geothermal developers could potentially explore geothermal 
resources in some of these energy communities that are where 
the energy transition is moving the industry and the economy 
away from them.
    Ms. Kamlager-Dove. Thank you. I think repurposing fossil 
fuel infrastructure to make clean energy instead seems like a 
win-win for everyone involved. And like I said, when I was 
having my constituent meetings earlier today, I think they are 
also hopeful that at some point they can be included in this.
    Mr. Jones, again, as enhanced geothermal systems begin to 
be built, what measures can be taken to ensure the benefits of 
that clean energy development reach communities affected by the 
transition?
    I think environmental justice communities who have been the 
brunt of fossil fuel pollution tend to be sort of the same. So, 
we would love to just have you expand on and provide a response 
to that question.
    Dr. Jones. Yes, one of the downsides, but also positives of 
geothermal is that we are the invisible energy technology. We 
don't have large turbines or fields of power smokestacks or 
large infrastructure. We have the smallest environmental 
footprint of all energy technologies, and the smallest carbon 
footprint of all renewable energy technologies. So, we can also 
site geothermal power plants close to the load center, and 
geothermal developers, they are very rigorous and take a lot of 
caution around seismicity.
    And to some of the questions earlier, a CRS report that 
came out last year noted that there is little to no seismic 
concern when it comes to enhanced geothermal systems. And we 
can recirculate that report from the Congressional Research 
Service.
    Ms. Kamlager-Dove. Can you also talk about how the 
geothermal energy industry is working with the communities? 
Because you mentioned it is sort of seen as the invisible 
energy. Oftentimes, testing is taking place in the very same 
communities that have felt the brunt of all sorts of energy 
testings and innovations, failures, and successes. So, can you 
talk about your industry's approach to sort of threading that 
needle?
    Dr. Jones. Yes, a good question. Community engagement is 
critical, and that is one of our missions at Geothermal Rising, 
to engage communities, whether that is urban, rural, tribal 
communities, to help them become more familiar with what 
geothermal offers, from power to heating and cooling 
applications.
    So, an example of what Geothermal Rising is doing is we are 
having a geothermal Indigenous forum later this year, where 
Indigenous populations from the United States, North America, 
all around the Pacific Rim are coming to talk about how they 
are utilizing geothermal resources, and the audience are other 
Indigenous and Native populations and communities. So, that is 
Indigenous people hearing from other Indigenous people how they 
are utilizing geothermal. That is just an example of community 
engagement that the geothermal industry is promoting.
    Ms. Kamlager-Dove. Great, thank you.
    With that, Mr. Chair, I would like to yield back.
    Mr. Stauber. Thank you very much. The Chair now recognizes 
Representative Duarte for 5 minutes.
    Mr. Duarte. Thank you, Mr. Chair.
    Mr. Gruber, in your testimony, you mentioned H.R. 7049, the 
HEATS Act, would ``remove the Secretary's ability to ensure 
that geothermal operations are conducted safely and are 
following all applicable environmental laws.'' Mr. Gruber, I am 
sure you are aware California already has very strict 
environmental laws and, in some cases, stricter than what the 
Federal Government has imposed on citizens, EV mandates, et 
cetera, by 2030.
    What are you trying to imply, that if this bill were to be 
enacted into law, that California geothermal operators would 
not continue to follow Federal and state laws?
    Mr. Gruber. Thank you for that question. The Secretary has 
a duty under FLPMA to ensure that Federal resources are managed 
according to Federal law, and H.R. 7409 would take the 
Secretary's oversight out of the process.
    Mr. Duarte. So, even though we have state governments that 
regulate geothermal, and part of the conjunctive use of state 
lands is energy, as well as oftentimes these forest lands, 
logging, harvest, habitat, watershed, you are afraid that, it 
sounds like one of the most innocuous energy development types 
of projects there is, are some threat to the Secretary's 
mission to protect these state lands?
    Mr. Gruber. Again, under FLPMA, the Secretary of the 
Interior has the responsibility to ensure the responsible 
management of Federal resources, and H.R. 7409 would change 
that.
    Mr. Duarte. Sure. And please tell me a horror story that 
would frighten me in terms of some mishap that has occurred 
with geothermal energy development recently that requires the 
Secretary's involvement to protect such Federal interests.
    Mr. Gruber. Thank you. I am not aware of any example at 
this moment, but I can tell you that public safety and 
environmental responsibility are priorities of the 
Administration, and ensuring safe operations on Federal lands 
and involving Federal resources is a priority for the 
Department.
    Mr. Duarte. So, this is Federal priority to, I call it 
regulation by imagination. If you can't show me an example of 
what risk we are curing, why is there a Federal Government 
process that protects the Federal interest? What is the 
interest you are protecting if you can't identify a risk?
    Mr. Gruber. Ultimately, we are protecting the interests of 
the American people. These are federally managed resources that 
are owned and managed for the public.
    Mr. Duarte. Yes. Dr. Jones, what are we doing here?
    I mean, the American people want this sustainable, clean, 
safe energy that seems to be one of the most free things we can 
get. What are the disadvantages of having a Federal regulatory 
load on this energy source that doesn't seem to be founded in 
any real-world experience?
    Dr. Jones. I think some of the disadvantages are that we 
are slowing down our ability to address climate change and 
progress the clean energy transition.
    And to your question about any negative consequences of 
geothermal, the only one that I can think of is when the Boise, 
Idaho district use had a leak in it over New Year's Day, and 
hot water was coming out onto the streets, and it was New 
Year's Eve night, and people were just walking around, took 
their shoes off and walked around in the hot water. And it was 
sort of steaming up. And you can see pictures on the City of 
Boise's website about people sort of experiencing a special New 
Year's Eve treat of hot water in downtown Boise. And that is an 
example of a consequence that might happen.
    Mr. Duarte. It is a pretty broad panel here. Can any of you 
otherwise tell me why we need to regulate geothermal at a very 
involved Federal level to protect some Federal interest in 
regulating what might be imagined?
    [No response.]
    Mr. Duarte. So, it seems to me that we are talking about 
making available one of the easiest energy sources possible 
that we should be expanding.
    I mean, we are subsidizing windmills to a point of a 
trillion dollars. We are subsidizing solar panels across the 
landscape. But here, this seems to be one of the safest, most 
benign energy sources possible that we could--what do you 
think, Dr. Jones? What are the potentials for expanded 
geothermal development if we relieve some of these bureaucratic 
constraints?
    Dr. Jones. They are huge. We could power 16 million homes 
in the United States with geothermal. We could decarbonize the 
built environment. Dairy farmers and ranchers could use 
geothermal to process their products. We could dehydrate 
onions, potatoes, and all sorts of other vegetable and food 
processes. We could make beer, and we can use geothermal heat 
for all of those. And we can decarbonize the grid, as well.
    Mr. Duarte. Are the wrong people making money on this, or 
what is wrong here?
    I mean, we are subsidizing solar and wind, but we won't let 
geothermal just take its course through a rationalized 
regulatory framework. This is regulation by imagination. This 
is the worst waste of Federal resources that I can imagine.
    And thank you much, I yield back.
    Mr. Stauber. Thank you very much.
    Before we conclude here, I want to enter into the record, 
without objection, the American Exploration and Production 
Council letter stating their support for H.R. 7377, the Royalty 
Resiliency Act; and H.R. 7375, which is a bill to amend the 
Mineral Leasing Act to improve the assessment of Expression of 
Interest fees, and other purposes.
    Without objection.

    [The information follows:]

               American Exploration & Production Council

                                                  March 6, 2024    

Hon. Pete Stauber, Chairman
Hon. Alexandira Ocasio-Cortez, Ranking Member
House Natural Resources Committee
Subcommittee on Energy & Mineral Resources
1324 Longworth House Office Building
Washington, DC 20515

Re: Support for H.R. 7377 the ``Royalty Resiliency Act'', and H.R. 
        7375, a bill to amend the Mineral Leasing Act to improve the 
        assessment of expression of interest fees, and for other 
        purposes.

    Dear Chairman Stauber and Ranking Member Ocasio-Cortez:

    The American Exploration and Production Council (AXPC) appreciates 
this opportunity to provide a letter of support for the above-
referenced legislation. AXPC is a national trade association 
representing the leading independent oil and natural gas exploration 
and production companies in the United States. AXPC companies support 
millions of Americans in high-paying jobs and invest a wealth of 
resources in our communities. Dedicated to safety, stewardship, and 
technological advancement, our members strive to deliver affordable, 
reliable energy to consumers while positively impacting the economy and 
the communities in which we live and operate.
    As part of this mission, AXPC members understand and promote the 
importance of ensuring positive environmental and public welfare 
outcomes and responsible stewardship of the nation's natural resources. 
AXPC's members are committed to being good stewards of federal and 
Indian resources and operating in compliance with all federal 
requirements.
    AXPC member companies produce more than half of U.S. onshore 
production each year, including many active operations developing 
federal minerals that require compliance with federal laws administered 
by the Department of Interior (DOI), which includes working with the 
Bureau of Land Management and the Office of Natural Resources Revenue. 
Our members work hard every day to fulfill our obligations to develop 
oil and gas resources prudently and responsibly on public lands. 
Federal oil and natural gas exploration and production activities 
contribute billions of dollars to federal and state governments, 
support millions of jobs and local economies, and are conducted under 
some of the most stringent safety and environmental regulations in the 
world.
    AXPC writes this letter in strong support of both: Congressman 
Wesley Hunt's H.R. 7377 the ``Royalty Resiliency Act'', and 
Congresswoman Harriet Hageman's bill H.R. 7375, To amend the Mineral 
Leasing Act to improve the assessment of expression of interest fees, 
and for other purposes.
I. H.R. 7377 the ``Royalty Resiliency Act'' is narrowly designed to 
        rectify a very specific technical problem resulting in wrongful 
        overpayments to the Federal Government.

    Development of onshore oil and gas resources from public and Indian 
lands is complex. Domestic onshore oil and gas development is governed 
by a framework of federal, state, tribal, and local laws and 
regulations. Several federal agencies--including Interior's Bureau of 
Land Management (BLM), Bureau of Indian Affairs (BIA), and the Office 
of Natural Resources Revenue (ONRR)--and state regulatory agencies have 
responsibility for oversight and management of oil and gas development 
on federal or Indian lands. Oftentimes an oil and gas well will obtain 
production from several different leases located adjacent to one 
another, particularly through the use of horizontal drilling. The 
following illustration provided by the Government Accountability Office 
helps illustrate this situation: \1\
---------------------------------------------------------------------------
    \1\ Government Accountability Office (2014). Oil and Gas. Updated 
Guidance, Increased Coordination, and Comprehensive Data Could Improve 
BLM's Management and Oversight. Retrieved at GAO-14-238, OIL AND GAS 
[hereinafter GAO-14-238].

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 

    Wells are drilled in conformance with state rules governing 
well spacing and density. Many oil and gas producing states have issued 
minimum acreage requirements for oil or gas wells, which dictate the 
amount of acreage typically drained by the well from the producing 
formation.\2\ Congress recognized the importance of state conservation 
statutes, and state expertise on these matters, and accordingly amended 
the Mineral Leasing Act to allow federal lessees to conform to state 
well spacing orders through the issuance of what is commonly called a 
``communitization agreement''.\3\
---------------------------------------------------------------------------
    \2\ See Angela L. Franklin, Communitization Agreements in the 21st 
Century, Federal Onshore Oil and Gas Pooling and Communitization, Paper 
3-4 (Rocky Mt. Min. L. Fdn. 2006) [hereinafter Communitization 
Agreements].
    \3\ See Mineral Leasing Act, Pub. L. No. 696, Sec. 17(b), 60 Stat. 
952 (1946).
---------------------------------------------------------------------------
    In effect, communitization is the federal equivalent of pooling the 
lands contained in a spacing/proration unit under state law. The common 
thread of all federal communitization agreements is that at least one 
federal or Indian lease or tract must be covered by the communitization 
agreement.\4\ The production from that federal or Indian lease is then 
``communitized'' (i.e., pooled) with production from other leases that 
may be federal, Indian, state, or fee.
---------------------------------------------------------------------------
    \4\ Id. at 3-5.
---------------------------------------------------------------------------
    The purpose of the communitization agreement is to manage how the 
production revenues are shared from a well that develops multiple 
leases. The agreement identifies production allocations among mineral 
rights owners for the distribution of royalties and should be approved 
before operators can correctly distribute royalty payments for federal 
and Indian leases.\5\ The communitization agreement typically defines 
an individual's or entity's share of the revenue from the area covered 
by the agreement as an acreage-based pro-rata calculation. This is 
accomplished by the use of a recapitulation chart contained as an 
exhibit of the agreement. The recapitulation exhibit lists each lease 
(shown as a separate tract) included within the boundary of the 
communitized area. The recapitulation exhibit then shows the number of 
acres included in each tract and states what percentage of acres each 
tract contributes to the entire communitizated area. For example, for a 
communitization agreement that covers a total of 1280 acres that is 
encumbered by two different leases, one fee/private lease consisting of 
1120 acres and one federal lease consisting of 160 acres, the 
recapitulation formula would be:
---------------------------------------------------------------------------
    \5\ Id.

   [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 
    

    The operator of the wells within this 1280-acre communitized 
area would calculate and pay royalties using the recapitulation 
formula. The operator would pay royalties to ONRR on the federal lease 
by multiplying the federal lease royalty rate by 12.5% of the oil 
production that is sold or removed from the 1280 acres, and it would 
pay royalties on the fee/private lease to the private lessor by 
multiplying the fee/private lease royalty rate by the remaining 87.5% 
of the production from the 1280 acres. This formula is not difficult to 
calculate, and BLM reviews and approves many communitization agreements 
without requesting changes to the proposed allocation of production 
contained in the recapitulation exhibits.
    DOI is responsible under existing law to approve these revenue-
sharing agreements. The BLM is responsible for reviewing and approving 
communitization agreements for the development of federal leases and 
oftentimes both BIA and BLM review communitization agreements for the 
development of Indian leases. ONRR is then responsible for enforcing 
the payment of royalties of communitization agreements that cover 
federal or Indian royalties. Proposed agreements are typically 
submitted to BLM by the operator prior to the date of first production 
or first sales. The Federal Oil and Gas Royalty Management Act (FOGRMA) 
of 1982 (30 USC Sec. 1701 et seq.) provides that DOI must then issue 
all determinations of allocations of production for communitization 
agreements within 120 days of a request for determination.\6\ However, 
in reality, BLM frequently take one-two years to review and approve 
communitization agreements and in some cases much longer than that. 
This is particularly the case in BLM's busier state offices. As a 
result of these delays, approval of a communitization agreement may 
delay production and historically delayed royalty payments to the 
federal government, tribal nations, and individual Indian oil and gas 
resource owners.\7\ Once approved, the communitization agreement is 
backdated under BLM guidance to be effective on the date of first 
production or first sales.\8\
---------------------------------------------------------------------------
    \6\ 30 U.S.C. Sec. 1721(l).
    \7\ GAO-14-238, p. 37.
    \8\ See BLM Policy Manual 3160-9 Communitization, at 1(1)D.
---------------------------------------------------------------------------
    FOGRMA does not provide oil and gas operators with any real remedy 
if BLM fails to meet its 120-day deadline to issue a determination on 
the allocation of production contained within a proposed 
communitization agreement. In contrast, FOGRMA allows ONRR to assess 
significant penalties against operators if they fail to timely pay 
royalties on production from federal and Indian leases. And ONRR uses 
its authority under FOGRMA aggressively to ensure that operators are 
aware of potential penalties. The statute sets forth civil penalties of 
up to: (1) $500 per violation for each day any individual refuses to 
comply with any mineral leasing law requirement, refuses to comply with 
the terms of any lease, or fails to permit an authorized inspection or 
a lease; (2) $5000 per day per violation if corrective action is not 
taken within 40 days after due notice of a violation; (3) $25,000 per 
violation for each day any individual either knowingly prepares 
misleading reports, knowingly diverts oil or gas resources from any 
lease site without authority, or deals with any oil or gas resource 
having reason to know that the resource was stolen or unlawfully 
divested. The Act provides for the imposition of criminal penalties in 
addition to the civil penalties and it also requires the Secretary to 
charge interest on late royalty payments or on any underpayment due the 
Secretary.
    In past years, ONRR has sometimes asked that operators pay 8/8th 
(i.e., 100%) of the value of production coming from federal leases 
proposed to be included in a communitization agreement until BLM 
eventually approves the proposed communitization agreement. More 
recently, ONRR is demanding even more--that it receives 100% of the 
production from the entire communitized area. So, in the above example, 
ONRR would demand that it receive 100% of the royalties for the entire 
1280-acre tract, even though the federal lease only makes up 12.5% of 
the communitized area. Again, some BLM offices are taking two years to 
review these proposed agreements. Whereas, had the communitization 
agreement been approved, the operator would have been responsible for 
paying only the applicable federal royalty percentage (i.e., 12.5% of 
the production from the federal lease contained in the communitized 
area). This results in a gross overpayment to the federal government 
that can take several years to recoup.
    Once BLM finally approves the communitization agreement, the 
operator may then pursue a repayment or offset for the overpaid amount 
from ONRR. This has resulted in the BLM taking longer and longer to 
approve proposed communitization agreements, allowing the federal 
government to hold money that it is not actually entitled to obtain 
under the terms of the federal and Indian oil and gas lease agreements 
or the communitization agreements. The amount of money at issue is not 
inconsequential and can amount to hundreds of millions of dollars for 
some of the most active operators on federal lands. This ties up 
capital that operators could otherwise use for their operations.
    As a result of this unfair situation, AXPC strongly supports the 
proposed legislative fix which properly incentives BLM and BIA to 
timely review communitization agreements in and which would allow 
operators to pay royalties on the proposed communitization agreement 
payment formula without penalty until BLM officially approves the 
proposed communitization agreement. As proposed, the legislation would 
amend Section 1721(j) of FOGRMA to specifically allow operators to 
report and pay royalties on the proposed allocation formula contained 
in the communitization agreement submission until BLM makes a 
determination on the submission. After BLM makes a determination, the 
operator would have three months to amend its royalty reports without 
additional interest accruing. This is a reasonable solution to a 
grossly unfair stance currently taken by DOI and would better 
incentivize BLM to meet the 120-day statutory deadline to review these 
agreements already enacted by Congress.
II. AXPC supports Congresswoman Hageman's H.R. 7375, To amend the 
        Mineral Leasing Act to improve the assessment of expression of 
        interest fees, and for other purposes.

    The Inflation Reduction Act broadly requires entities to pay a $5 
per acre fee for the acreage they nominate for oil and gas lease sales, 
regardless of whether the acreage is ever offered for sale by the BLM. 
This provides an odd incentive for the BLM to encourage acreage 
nominations for upcoming lease sales but then fails to provide any 
incentive for the BLM to follow through with actually offering the 
acreage at the sale. Over the past several years, we have seen extreme 
reluctance from BLM to hold lease sales. BLM published data shows that 
the number of new acres leased by the BLM significantly decreased in 
fiscal years 2021 and 2022: \9\
---------------------------------------------------------------------------
    \9\ Data obtained from Oil and Gas Statistics/Bureau of Land 
Management (blm.gov).

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 

    A better solution is to require BLM to collect the expression 
of interest fee at the time the acreage is offered for sale. This would 
incentivize BLM to actually hold lease sales after acreage is nominated 
by interested parties.
    Moreover, the company that nominates the parcel is not guaranteed 
to receive that parcel at the end of the lease sale process. If the 
expression of interest fee is required to be paid at the time of sale, 
this would help ensure that the company that gets the benefit of 
obtaining the lease also pays the expression of interest fee associated 
with the leasing process. It is fundamentally unfair to compel one 
party to pay for property that another party receives.
    As a result, AXPC supports the proposed legislation which seeks to 
make these narrow edits to the express of interest fee provisions 
contained in the Mineral Leasing Act following the passage of the 
Inflation Reduction Act.
    AXPC appreciates the opportunity to submit this letter of support. 
Please do not hesitate to contact me if you have any questions or would 
like additional information.

            Sincerely,

                                             Anne Bradbury,
                                                    President & CEO

                                 ______
                                 

    Mr. Stauber. I want to thank all the witnesses for their 
time today. I appreciate you all.
    The members of the Subcommittee may have some additional 
questions for the witnesses, and we will ask you to respond to 
these in writing. Under Committee Rule 3, members of the 
Committee must submit questions to the Committee Clerk by 5 
p.m. on Monday, March 11. The hearing record will be held open 
for 10 business days for these responses.
    If there is no further business, without objection, the 
Committee stands adjourned.

    [Whereupon, at 3:30 p.m., the Subcommittee was adjourned.]

                                 [all]