For the last four years, the Los Alamos Scientific Laboratory has been investigating the feasibility demonstration of a technique for extracting geothermal energy from hot dry rock existing at moderate depths beneath the surface of the earth. In the hot dry rock (HDR) concept, a manmade geothermal reservoir would be formed by drilling an initial borehole into a region of hot rock, creating a large fracture at the bottom of the hole, then intersecting the fractured area with a second borehole. The heat contained in this underground reservoir would then be brought to the surface by the circulation of water through the system. The objectives of this environmental monitoring report are to provide a brief conceptual and historical summary of the Hot Dry Rock Geothermal Project, a brief overview of the environmental monitoring responsibilities and activities of the Los Alamos Scientific Laboratory, and descriptions of the studies, problems, and results obtained from the various monitoring programs. Included are descriptions of the work that has been done in three major monitoring areas: (1) water quality, both surface and subsurface; (2) seismicity, with a discussion of the monitoring strategy of regional, local, and close-in detection networks; and (3) climatology. The purpose of these programs is to record baseline data, define potential effects from the project activities, and determine and record any impacts that may occur. The development of the hot dry rock geothermal energy resource and associated energy extraction technology is a new field of endeavor, with no established environmental guidelines. It is doubtful if the problems encountered and solutions devised in traditional geothermal systems will apply directly to hot dry rock development. Therefore, the impacts that are encountered in this project will be of particular value in making future environmental Assessments for this type of energy resource development in other locations in different geologic settings. By the end of the reporting period, there had been no unacceptable impacts on the environment in any of the three monitoring areas