The subsidence risk in geothermal projects needs to be effectively managed by careful review of site conditions and legal and permitting precedents.
TAKEAWAYS
- Production of geothermal fluids can lead to subsidence of the land surface if not managed properly.
- Actual cases and prior permit applications showcase the types of subsidence risks and how they are addressed by operators and regulators.
- Diverse regulatory requirements and common-law causes of action for subsidence highlight the importance of managing risk exposures.
Geothermal projects in the United States and abroad face scrutiny of their potential impacts on the surrounding environment and communities. Seismic activity, noise and water contamination are commonly cited concerns.
Subsidence—the slow sinking of the land surface—is a frequently discussed risk. Indeed, the possibility of subsidence was the subject of long delays in the development of Southern California’s Imperial Valley geothermal fields. Those fears were motivated in part by the 50-year experience at Wairakei, New Zealand, where the ground subsided as much as 14 meters (over 45 feet). There, claims of subsidence-induced damage to several nearby houses were refuted by independent assessments.[1]
Understanding Subsidence
Subsidence can be a consequence of large-scale geothermal development and operation, although its potential magnitude varies significantly between fields. The overall phenomenon is not peculiar to geothermal projects, as it can occur wherever fluids, such as water or hydrocarbons, are withdrawn from underground reservoirs. Unless properly managed, the withdrawal results in a reduction of pressure supporting the reservoir rock itself or the rock overlying the reservoir.
Reinjection of fluids withdrawn for geothermal operations can help reduce the effects of subsidence. Subsidence mitigation plans that incorporate reinjection are commonly established early in field development and should be flexible enough to handle changes with time. If subsidence does occur, it can be reduced through adequate monitoring and reservoir management.[2]Reinjection may be required by regulating authorities as a condition of operating permits.
Subsidence claims have not been common for U.S. geothermal operations, but claims in other countries suggest that American developers should pay attention to this issue. Planning for geothermal projects should include a thorough understanding of the evolving regulatory landscape, and the impact subsidence-related evaluations may have on the necessary environmental assessments. While some advanced technologies may mitigate the risk of subsidence, projects involving these technologies may still face regulatory and permitting challenges due to concerns over subsidence, particularly before the technologies are sufficiently proven. Further, operators should be mindful of the possible legal claims involving subsidence, and the claimants who might be willing and able to make them.
The Regulatory Landscape
Geothermal projects are subject to numerous regulatory requirements at different project phases and levels of government. The regulatory landscape can be challenging to navigate, and it is not easy to address all necessary issues adequately and expediently. Knowledge of and compliance with the relevant federal, state and local regulations can help minimize the risk of legal action.
Federal
A typical geothermal project will raise environmental issues that may impact permitting or regulatory approvals from federal agencies. Nearly 90% of geothermal resources across the United States are located on lands managed by the federal government. A project that entails a “major federal action”—which can include operations on federal land, those receiving substantial federal funding or support, or those requiring a federal permit—will trigger review under the National Environmental Policy Act (NEPA).[3] The level and scope of NEPA review vary by project and federal involvement, ranging from categorical exclusions for actions that have minimal environmental impacts to a full Environmental Impact Statement (EIS) for actions that have significant environmental impacts.
NEPA review for geothermal projects is often conducted multiple times for a given location, including during land use planning, leasing, exploration, drilling and operation. Subsidence analyses can be introduced at different stages in the review process. For example, surveying for subsidence before and during resource operation is required for operators with leases from the federal Bureau of Land Management (BLM). At the Fourmile Hill Geothermal Project in California, the BLM reserved the right in the event of incipient subsidence to reduce production rates, increase reinjection rates, or suspend production entirely.
Even when subsidence is not expected for a geothermal project, a monitoring program may still be required. The U.S. Geological Survey noted that geothermal fluid extraction was not anticipated to cause subsidence at the Casa Diablo IV project in California. However, because “a degree of uncertainty” existed, the project established a monitoring and mitigation plan that included subsidence tolerances and prescribed actions in the event the tolerances were exceeded. This precedent suggests that even advanced geothermal technologies, which claim to mitigate subsidence risk, might still encounter permitting and regulatory issues until they have been sufficiently proven in practice.
State
On top of federal authorities, geothermal operators must comply with state environmental laws and regulations. Many state policies align with federal regulations, while others expand on them.
In Hawaii, the state’s Public Utilities Commission recently revised its interpretation of “state land” to include geothermal fluid, triggering state environmental review for projects, such as the Puna Geothermal Venture Repower Project. The subsequent study found that subsidence had progressed at a minimal rate of less than half an inch per year since 1958. The commission did not institute a mitigation plan because there was no evidence that the geothermal operations increased subsidence.
Other states with active geothermal fields similarly monitor subsidence over the long term. Nevada’s Dixie Valley has shown localized subsidence rates of up to 0.3 feet per year. Lowe, supra note v, at 8. The Geysers Geothermal Field in California was found to have subsided at approximately 0.15 feet per year. With increasingly extensive monitoring networks, states have focused on assessing and mitigating subsidence as needed. Arizona’s reviewing agency, for instance, is granted explicit statutory authority to mitigate subsidence. See Ariz. Rev. Stat. § 27-652).
Lastly, state-level subsidence analyses have revealed the importance of reinjection as a measure to stem subsidence in geothermal field development and operation. The long delays in the development of California’s Imperial Valley geothermal fields stemmed in part from a study of the consequences of reinjecting only some of the water produced from the geothermal reservoir. Partial reinjection was modeled to accelerate the risk of subsidence by up to three times. Full reinjection was determined to be an appropriate mitigation response to any evidence of subsidence.
Local
While the primary avenues for regulating geothermal operations occur at the federal and state levels, some local governments, especially in tectonically active regions where geothermal operations are common, have developed subsidence regulations. Harney County in Oregon is one such authority. There, geothermal resources must be designed and operated to minimize subsidence, and surveys of subsidence and mitigation measures must be submitted to the appropriate county authority. Harney Cnty., Ordinance § 6.020 (2014).
Legal Causes of Action
Several causes of action could be applied to instances of subsidence. In addition to understanding a complex regulatory landscape, planning for geothermal operations should include the identification and assessment of potential legal claims.
Subjacent Support
Subjacent support is the support that surface land receives from its underlying strata. The general rule is that those with a possessory interest in the surface land have an absolute right to subjacent support. Evans Fuel Co. v. Leyda, 77 Colo. 356, 361 (1925).
To make a claim, the surface owner must allege that the defendant’s actions caused the subsidence and that damage resulted from the subsidence. Because the right of subjacent support is absolute, it persists unless explicitly waived or contracted away by the surface owner. See Breeding v. Koch Carbon, Inc., 726 F.Supp. 625, 649 (1989).
Lateral Support
Lateral support is the support that surface land receives from adjacent land. The common law rule establishes liability without fault for withdrawal of lateral support. Wharam v. Investment Underwriters, 58 Cal. App. 2d 346, 349–50 (1943). State law may excuse a landowner from common law liability for withdrawal of lateral support by complying with the statute’s notice, ordinary care and reasonable precaution provisions when conducting excavations.
Trespass
Trespass is the intentional interference with a plaintiff’s right to possess land. The requisite physical invasion can occur without the defendant’s physical presence on the property. In some cases, trespass can result from physical invasion of subsurface rights, not just surface rights. See e.g., Cassinos v. Union Oil Co., 14 Cal. App. 4th 1770, 1778 (1993) (damage to mineral estate by injection of offsite wastewater into oil well).
Proving trespass requires demonstrating essential elements, which can vary depending on the jurisdiction and context. Generally, the defendant’s conduct must be intentional and cause injury to the plaintiff. See generally Wilen v. Falkenstein, 191 S.W.3d 791, 798 (2006). The plaintiff can be anyone with a possessory interest in the affected land.
Nuisance
Nuisance is generally an activity that interferes with the use or enjoyment of property. Unlike trespass, nuisance requires no physical invasion of a property right.
Nuisance claims have been successful for other activities that modified the flow of fluids onto property of others. A defendant’s cut-and-fill operation that diverted water and silt onto the plaintiff’s property during rainstorms was found actionable. Such claims also result from water seeping into the plaintiff’s property due to a neighbor’s paving of previously grassy surfaces. Shields v. Wondries, 154 Cal. App. 2d 249 (1957).
Negligence
Negligence requires the plaintiff to allege that the defendant failed to observe the applicable standard of care for a particular activity, and that failure caused harm to the plaintiff. See, e.g., Grabowski v. Smith & Nephew, Inc., 149 So.3d 899, 908 (2014). In the absence of an otherwise clear duty, the plaintiff generally must show that the injury was reasonably foreseeable. Negligence actions can include injury to either persons or property.
Interference with Prospective Economic Advantage
Intentional interference with prospective economic advantage involves intentional actions by the defendant which are designed to disrupt the plaintiff’s interests. See, e.g., Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1153 (2003). Generally, the plaintiff must prove several elements, including:
- an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff;
- the defendant’s knowledge of the relationship;
- intentional acts by the defendant designed to disrupt the relationship;
- actual disruption of the relationship; and
- economic harm to the plaintiff proximately caused by the acts of the defendant.
State law may also recognize a tort of negligent interference with prospective economic advantage. For this cause of action, the plaintiff need only show that it was reasonably foreseeable that the interference would result if the defendant failed to exercise due care. J’Aire Corp. v. Gregory, 24 Cal. 3d 799, 804 (1979).
Misrepresentation
Fraud, or intentional misrepresentation, is based on the defendant’s false or materially misleading statements made with the intent to induce the plaintiff to alter his or her position to his injury. Generally, the plaintiff must show:
- false statement of material fact;
- knowledge of falsity;
- intent to defraud, i.e., to induce reliance;
- justifiable reliance; and
- resulting damage.[4]
In the geothermal context, statements made in the course of negotiating leases and operating agreements or applying for permits might be invoked as representations and exposed to liability.
Looking Forward
Geothermal operators must navigate a complex landscape to mitigate regulatory and legal risks related to subsidence. To reduce the legal exposures, the development and operation team must conduct appropriate due diligence; be mindful of environmental and tort laws, regulations, and permit and contractual obligations; and engage in transparent community relations.
The authors gratefully acknowledge the contributions of Andrew Jacobs to this Client Alert.
[1] See A. Bloomer and S. Currie, Effects of Geothermal Induced Subsidence, in Proceedings of the 23rd New Zealand Geothermal Workshop 3 (2001).
[2] Mike Lowe, Subsidence in Sedimentary Basins Due to Groundwater Withdrawal for Geothermal Energy Development, Open-File Report 601, Utah Geological Surv. 4-6 (2012).
[3] Kristen Hite, Cong. Rsch. Serv., IF12560, National Environmental Policy Act: An Overview 1-3 (2023).
[4] See, e.g., Bacon & Bacon Mfg. Co., Inc. v. Bonsey Partners, 62 So.3d 1285, 1288 (2011).
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