This article shall be known and may be cited as the Geothermal Resources Act.

The Legislature hereby finds and declares that development of geothermal resources beneath state lands is an essential element in the development of additional energy sources for the State of California. It is further recognized by the Legislature that different parcels of state lands have varying degrees of potential for the successful development of geothermal resources. As some parcels display strong indications of geothermal resources and likelihood of commercially producible energy which could be let at competitive lease sale, and other parcels indicate potential but need additional exploration, and still other parcels have never been explored, the flexible leasing program established by this chapter is necessary to promote more rapid and extensive geothermal development on state lands.

For the purposes of this chapter, “geothermal resources” shall mean the natural heat of the earth, the energy, in whatever form, below the surface of the earth present in, resulting from, or created by, or which may be extracted from, such natural heat, and all minerals in solution or other products obtained from naturally heated fluids, brines, associated gases, and steam, in whatever form, found below the surface of the earth, but excluding oil, hydrocarbon gas or other hydrocarbon substances.

Permits and leases for exploration and development of geothermal resources on lands belonging to the state and leases for the development of geothermal resources reserved by the state may be issued by the commission as provided in this article. For purposes of this article, state lands shall be defined as all lands owned by the state, including school lands, lieu lands, proprietary lands, tidelands, submerged lands, swamp and overflowed lands, and beds of navigable rivers and lakes, and lands in which geothermal resources have been reserved to the state.

Permits and leases may be issued pursuant to this article only to those who qualify for permits and leases under Section 6801.

Administration of this article shall be under the principle of multiple use of public lands and resources, and shall allow coexistence of other permits or leases of the same lands for deposits of other minerals under applicable laws, and the existence of permits or leases issued pursuant to the provisions of this article shall not preclude other uses of the areas covered thereby. However, operations under such other permits or leases or such other uses shall not unreasonably interfere with or endanger operations under any permit or lease issued pursuant to this article, nor shall operations under permits or leases issued pursuant to the provisions of this article unreasonably interfere with or endanger operations under any permit or lease issued pursuant to the provisions of any other act. Nor shall this article be construed as superseding the authority which the head of any state department or agency has with respect to the management, protection, and utilization of the state lands and resources under his jurisdiction. The commission may prescribe in its rules and regulations those conditions it deems to be necessary for the protection of other resources.

Where it is determined by the commission that the production or use of geothermal resources is also susceptible of economically producing other of the geothermal resources in commercially valuable quantities, and a market therefor exists, production of such other geothermal resources may be required by the commission.

The commission may grant nonexclusive geological or geophysical exploration permits for geothermal resources upon such terms and conditions as the commission may prescribe, but any such permit shall not give the permittee any preferential right to a geothermal resources lease.

The applicant shall submit for the commission’s approval a prospecting program, including a time schedule, which may include, but not be limited to, the conduct of surveys, tests, or experiments using geological, geophysical, or other exploratory methods, including exploration drilling. Such prospecting program shall be specified in the terms and conditions of the prospecting permit. At a minimum, each prospecting permit issued under this article shall provide that the permittee is required to drill a geothermal well during the term of the permit, and such term shall not be extended pursuant to subdivision (b) unless the permittee has commenced the drilling or applied for the necessary permits to drill such a well. Rental shall escalate each year until a well is drilled, whereupon the rental, royalties, and other terms shall be as specified in Section 6913. The escalating rental shall be one dollar ($1) per acre during the first year, not more than five dollars ($5) per acre during the second year, and not more than twenty-five dollars ($25) per acre during the third year and every year thereafter. In the event the permittee elects to quitclaim its interest in a permit prior to the expiration of the initial two-year term, its obligation to drill a geothermal well shall thereupon terminate.

Each prospecting permit and lease issued under this article shall provide for the following rentals and royalties with respect to geothermal resources produced, saved and sold from the lands included within said permit or lease:

The holder of any geothermal resources permit or lease may quitclaim or relinquish his or her rights under that permit or lease pursuant to the provisions of Section 6804.1 of this code.

Subject to the other provisions of this article, the permittee or lessee shall be entitled to use so much of the surface as is reasonably necessary as determined by the commission for the production and conservation of geothermal resources.

A permit or lease may be terminated by the commission only pursuant to the provisions of Section 6805 of this code.

Leases under this article shall be for a primary term not to exceed 10 years and so long thereafter as geothermal resources are being or capable of being produced or utilized in commercial quantities, if the lessee is in compliance with the terms and conditions of an exploration and development program specified in the lease pursuant to Section 6911.

Notwithstanding any other provision of law to the contrary, the commission may negotiate and enter into agreements for compensation for drainage or geothermal leases of state-owned lands if any of the following conditions exist:

Any person engaged in the production of geothermal resources under a lease issued by the commission may commingle geothermal resources from any two or more wells without regard to whether such wells are located on the lands for which such lease was issued or elsewhere, provided, however, that said lessee shall install and maintain meters or other measuring devices satisfactory to the commission to measure the amount of geothermal resources produced from lands for which leases were issued by the commission.

A permittee or lessee may, upon the approval of the commission and pursuant to the provisions of Chapter 4 (commencing with Section 3700) of Division 3, drill special wells, convert producing wells or reactivate and convert abandoned wells for the sole purpose of reinjecting geothermal resources or the residue thereof. If the lessee realizes a profit on such operations or if the geothermal resources proposed for reinjection are produced from other than state leased lands, then the commission may charge such consideration as is determined to be in the public interest, not to exceed the net profits or royalties payable under the lease.