Bill Text


Add To My Favorites | print page

AJR-30 Geothermal power projects: section 1603 grant.(2009-2010)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
AJR30:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2009–2010 REGULAR SESSION

Assembly Joint Resolution
No. 30


Introduced  by  Assembly Member Salas
(Coauthor(s): Assembly Member V. Manuel Perez)

February 02, 2010


Relative to geothermal power projects and tax incentives.


LEGISLATIVE COUNSEL'S DIGEST


AJR 30, as introduced, Salas. Geothermal power projects: section 1603 grant.
This measure would memorialize the President and the Congress of the United States to request that the United States Treasury Department clarify that, for purposes of eligibility for a grant under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 in lieu of tax credits, “exploring” with respect to geothermal power projects does not constitute physical work for determining when construction commences.
Fiscal Committee: NO  

WHEREAS, To be eligible for a grant under section 1603 of the American Recovery and Reinvestment Tax Act of 2009 (Pub. L. 111-5) (act) in lieu of tax credits, a project that is to be placed in service after December 31, 2010, must commence construction after January 1, 2009. Program guidance issued by the United States Treasury Department specifies that construction is considered to have commenced “when physical work of a significant nature begins” and notes that “physical work does not include preliminary activities as planning or design, securing financing, exploring, or researching; and
WHEREAS, Wells drilled as part of exploratory resource verification for geothermal power projects should qualify as “exploring” or “researching” activities and not trigger the “commencement of construction” threshold. These test wells are not considered a part of any construction of a facility, and many of these wells are ultimately abandoned through proper closure procedures. If, these wells are subsequently used as future operational wells in instances where the resource is in fact verified due to exploratory drilling as being worthy of full-scale development, significant new construction permitting and construction on the wells would be required; and
WHEREAS, Imperial County is the second largest producer of geothermal energy in the nation. Several new proposed geothermal powerplants are under development in Imperial County. The proponents of some of these projects have applied for federal tax incentives that were enacted as part of the act; and
WHEREAS, Imperial County has the highest unemployment rate in the state, with an unemployment rate of 31.9 percent in October 2009, 29.2 percent in November 2009, and a high of 33.1 percent in August 2009, as reported by the Employment Development Department. The development of new geothermal powerplants in Imperial County will create new jobs for residents of Imperial County and will provide the kind of economic stimulus that the act was designed to encourage; and
WHEREAS, The United States Treasury Department should issue clarifying language to define eligible, drilling-related preconstruction costs with respect to geothermal power projects as follows:
“Exploring is a preliminary activity and does not constitute physical work in determining when construction commences. In a geothermal project, exploring includes any drilling performed prior to the date that a geothermal consultant or engineer would determine that a geothermal resource exists in the quantity and quality necessary to justify a commercially viable geothermal power generation plant at the site of the taxpayer’s facility. Drilling prior to that date does not constitute physical work of a significant nature”; now, therefore, be it
Resolved by the Assembly and the Senate of the State of California, jointly, That the Legislature respectfully memorializes the President and the Congress of the United States to request that the United States Treasury Department clarify that, for purposes of eligibility for a grant under section 1603 of the American Recovery and Reinvestment Act of 2009 in lieu of tax credits, “exploring” with respect to geothermal power projects does not constitute physical work for determining when construction commences; and be it further
Resolved, That the Chief Clerk of the Assembly transmit copies of this resolution to the President and Vice President of the United States, the Speaker of the House of Representatives, the Majority Leader of the Senate, and to each Senator and Representative from California in the Congress of the United States.