The Hunt family of Texas, accused in the past of trying to corner the markets in silver and soybeans, once again is trying to dominate an important natural resource.
This time the Hunts are in hot water.
Family members have obtained federal leases making them the biggest developers for geothermal energy: the power of Old Faithful and Mount Mt. Helens, hot water, steam and blistering rock trapped below the earth's surface.
Hunt family members, Hunt trusts and Hunt corporations have staked claims on roughly one-sixth of all the federal land that has been leased for geothermal power exploration, Department of Interior records show.
The Hunts hold 252 of the 1,600 geothermal leases issued by the Bureau of Land Management, which oversees development of resources on federal property. The Hunts' leases give them control over about 480,000 of the 2.9 million acres of federally leased geothermal land, according to BLM records.
And they are trying to get still more, with applications pending to lease 435,000 additional acres.
A little-publicized source of energy, geothermal power generates much of the electricity for San Francisco and heats homes and offices in Boise. It is used to dry onions in Nevada and heat greenhouses for growing roses in Utah. The hot springs in Bath County, Va., use geothermal energy, and an exploratory well at Crisfield, Md., has shown geothermal potential.
Geothermal power someday could supply 10 percent of the nation's energy needs, the Department of Energy estimates.
Many major oil companies -- Phillips Petroleum, Chevron, Occidental Petroleum, Atlantic Richfield -- are getting into geothermal energy, but the Hunts' holdings are already three times as big as any of theirs.
The Hunts have moved into geothermal energy with the same techniques they used in silver and soybeans.
As with silver, once they decided to invest the Hunts went in heavily, quickly making themselves the biggest in the business. Their purchase of as much silver as the United States consumes in six months is still being investigated by three federal agencies, a congressional committee and a federal grand jury.
As with soybeans, the Hunts evaded limits on how much geothermal land an individual can control by obtaining leases in a dozen different names. A federal judge ruled that all the Hunts' beans had to be counted together, but the Department of Interior says there is nothing illegal about splitting geothermal leases among several family members.
Geothermal is one of two alternative energies into which America's richest oil family is trying to diversify.
The other is gasohol, the blend of grain alcohol and gasoline.
Until last week, when they abruptly withdrew their application, the Hunts were seeking federal subsidies to build the third-largest fuel alcohol plant in the United States.
The Hunts pulled back their application for gasohol loan guarantees after a House investigations subcommittee headed by Rep. Benjamin S. Rosenthal (D-N.Y.) began asking questions about it.
The heads of the Hunt family tangled with Rosenthal last year, when the same Commerce consumer and monetary affairs subcommittee investigated their silver dealings. The committee slapped a contempt of Congress citation on Nelson Bunker Hunt and his brother, W. Herbert, and withdrew it only after the two agreed to testify and turn over records.
The House panel is still pursuing the Hunts, and has expanded its probe into other activities of the billionaire Texas clan, including both the gasohol project and the geothermal leases.
The Hunts, who shun publicity, did not respond to inquiries abaout their interest in geothermal energy. Calls to the Dallas law firm that represents the family were not returned.
Geothermal is an infant energy industry, just as petroleum was when H. L. Hunt founded what has become an oil dynasty.
The U.S. Geological Survey has identified about 2.1 million of acres of federal land that have known geothermal resources: deposits of 300-degree hot water and steam. The government has taken bids on some of the tracts, and several successful geothermal wells have been drilled. Electricity is being produced from geysers in California. Other sites are waiting for power plants to be built to harness the heat.
But the frontier of geothermal development is 55 million acres of national forests, Indian reservations and other federal lands in 12 western states that have been identified as "potentially valuable geothermal resource areas."
On these tracts, hot water wildcatters can stake a claim and, without competitive bidding, get the right to develop geothermal power for the next 10 years.
BLM records show that virtually all the Hunt investments have been in noncompetitive leases, in Nevada, New Mexico, Oregon, Idaho and Utah.The Hunts have also filed for noncompetitive geothermal leases in Arizona and California.
Getting a noncompetitive geothermal lease is a relatively simple process, BLM officials say. It takes about 20 minutes to fill out the forms.
The maximum size for an individual geothermal claim is 2,560 acres, or four square miles. Hot-water wildcatters typically "block up" several adjacent claims, giving them a bigger target at which to aim.
The leases are cheap, $1 per acre per year for the first five years. The government gets a 10 percent royalty of any geothermal energy found, and can get ore if the lease produces over a long period.
Federal law limits the amount of geothermal land an individual can lease to 20,480 acres per state, but that has not prevented the Hunts from acquiring nearly half a million acres of federal claims in five states.
The Hunts have made the limit meaningless by taking out leases in 20 names, including individuals, corporations and trust funds consisting of various groups of Hunts.
Nelson Bunker Hunt has leased 50,000 acres in his name. Brother W. Herbert has 24,000. The third brother, Lamar, owner of the Kansas City Chiefs football team, has the biggest individual holding, more than 56,000 acres.
Herbert's wife, Nancy's, name is on leases for 33,500 acres, and his son, Douglas, is listed as owner of 21,000 acres.
Several other groups of leases are held by trusts composed of various Hunt family members. A Hunt son-in-law, Hugo M. Schoellkopf, has 24,500 acres under lease. About 48,000 acres are held by the Rosewood Corp., whose mailing address is the Dallas office of various Hunt enterprises.
Interior Department officials said use of various entities to acquire more than the usual limit of land does not violate regulations, as long as any one does not exceed the limit.
If all the pending applications for additional leases are approved, some members of the Hunt group would appear to have more than their legal shares. BLM officials said that if any Hunt hits his limit, he will have to turn back some leases before getting new ones.
The Hunts used a similar technique of splitting holdings among family members when they invested heavily in the soybean market, where there is also a federal limit on how much one investor can own.
That time they got in trouble with the Commodity Futures Trading Commission, which ordered that all the Hunts' holdings be counted as one. A federal judge upheld the CFTC and ordered the Hunts collectively to observe the limit.
The CFTC soybean case against the Hunts is still open. Their dealings in the silver futures market are under investigation by the CFTC, a federal interagency task force and a U.S. grand jury in Denver.
Several bills to increase the acreage limit on geothermal leases were introduced the last session of Congress, including one by then-representative Steven D. Symms (R-Idaho).Nelson Bunker Hunt served on Symms' campaign finance committee in his successful race for the Senate last fall.
The Hunts "generally are pretty aggressive" in exploring for geothermal power, say Geological Service officials who oversee the tracts after they are leased. Family members reportedly have drilled several deep wells more than a mile into the ground in New Mexico.
Drilling a well that deep can cost more than $1 million, and geothermal exploration is frequently more expensive than drilling for oil.
To keep the rights to a geothemal claim, the leaseholder is obligated to "explore diligently" for the first five years. As a practical matter, no one has ever lost a lease for not exploring diligently enough, BLM officials concede.
After five years, however, the annual rent starts going up $1 a year per acre to $5 an acre in the 10th year. By the sixth year, the explorer is required to start spending money to prove the claim. The required expenditure starts at $4 an acre in the sixth year and escalates $2 a year to $12 in the final year.
To hold on to the tract for 10 years, the lessee has to invest $50 an acre under current federal rules.
The cost of drilling a $1 million well could be spread across several adjoining tracts, covering the spending requirement for 20,000 acres.
The escalating investment requirements are meant to encourage early exploration. It is cheapest to check out the land the first five years and, if nothing is found, turn back the lease before the mandatory expenditure period starts.