SCS CSHB 50(RES): "An Act relating to carbon storage on state land; relating to the powers and duties of the Alaska Oil and Gas Conservation Commission; relating to deposits into the permanent fund; establishing the carbon storage closure trust fund and carbon dioxide storage facility administrative fund; relating to carbon storage exploration licenses; relating to carbon storage leases; relating to carbon storage operator permits; relating to enhanced oil or gas recovery; relating to long-term monitoring and maintenance of storage facilities; requiring the Department of Natural Resources to make Cook Inlet seismic survey data available to certain persons; relating to records of the Regulatory Commission of Alaska; relating to regulation of liquefied natural gas import facilities; establishing an income tax on certain entities producing or transporting oil or gas in the state; relating to carbon oxide sequestration tax credits; relating to the oil and gas production tax; relating to the duties of the Department of Natural Resources; relating to carbon dioxide pipelines; relating to state loans for oil and gas development projects in the Cook Inlet sedimentary basin; relating to the Alaska Industrial Development and Export Authority; requiring the Alaska Industrial Development and Export Authority to make certain reports to the legislature; relating to the duties of the Regulatory Commission of Alaska, the Department of Revenue, and the Department of Natural Resources; relating to an audit of carbon storage leases conducted by the legislative audit division; and providing for an effective date."
00 SENATE CS FOR CS FOR HOUSE BILL NO. 50(RES) 01 "An Act relating to carbon storage on state land; relating to the powers and duties of the 02 Alaska Oil and Gas Conservation Commission; relating to deposits into the permanent 03 fund; establishing the carbon storage closure trust fund and carbon dioxide storage 04 facility administrative fund; relating to carbon storage exploration licenses; relating to 05 carbon storage leases; relating to carbon storage operator permits; relating to enhanced 06 oil or gas recovery; relating to long-term monitoring and maintenance of storage 07 facilities; requiring the Department of Natural Resources to make Cook Inlet seismic 08 survey data available to certain persons; relating to records of the Regulatory 09 Commission of Alaska; relating to regulation of liquefied natural gas import facilities; 10 establishing an income tax on certain entities producing or transporting oil or gas in the 11 state; relating to carbon oxide sequestration tax credits; relating to the oil and gas 12 production tax; relating to the duties of the Department of Natural Resources; relating
01 to carbon dioxide pipelines; relating to state loans for oil and gas development projects 02 in the Cook Inlet sedimentary basin; relating to the Alaska Industrial Development and 03 Export Authority; requiring the Alaska Industrial Development and Export Authority 04 to make certain reports to the legislature; relating to the duties of the Regulatory 05 Commission of Alaska, the Department of Revenue, and the Department of Natural 06 Resources; relating to an audit of carbon storage leases conducted by the legislative 07 audit division; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 10 to read: 11 SHORT TITLE. This Act may be known as the Carbon Capture, Utilization, and 12 Storage Act. 13 * Sec. 2. AS 31.05.027 is amended to read: 14 Sec. 31.05.027. Land subject to commission's authority. The authority of the 15 commission applies to all land in the state lawfully subject to its police powers, 16 including land of the United States and land subject to the jurisdiction of the United 17 States. The authority of the commission further applies to all land included in a 18 voluntary cooperative or unit plan of development or operation entered into in 19 accordance with AS 38.05.180(p) or 38.05.725. 20 * Sec. 3. AS 31.05.030(m) is amended to read: 21 (m) The commission has jurisdiction and authority over all persons and 22 property, public and private, necessary to carry out the purposes and intent of 23 AS 41.06, except for provisions in AS 41.06.005 - 41.06.060 and 41.06.305 24 [AS 41.06] for which the Department of Natural Resources has jurisdiction. 25 * Sec. 4. AS 31.05.030 is amended by adding a new subsection to read: 26 (o) Each year, the commission shall 27 (1) prepare a report documenting each case of oil and gas waste in the 28 state during the preceding calendar year and the actions taken by the commission in
01 response to the waste; and 02 (2) by the first day of each regular session of the legislature, deliver the 03 report prepared under this subsection to the senate secretary and the chief clerk of the 04 house of representatives and notify the legislature that the report is available. 05 * Sec. 5. AS 37.05.146(c) is amended by adding new paragraphs to read: 06 (86) carbon dioxide storage facility administrative fund 07 (AS 41.06.160); 08 (87) carbon storage closure trust fund (AS 37.14.850). 09 * Sec. 6. AS 37.13.010(a) is amended to read: 10 (a) Under art. IX, sec. 15, of the state constitution, there is established as a 11 separate fund the Alaska permanent fund. The Alaska permanent fund consists of 12 (1) 25 percent of all mineral lease rentals, royalties, royalty sale 13 proceeds, net profit shares under AS 38.05.180(f) and (g), and federal mineral revenue 14 sharing payments received by the state from mineral leases issued on or before 15 December 1, 1979, and 25 percent of all bonuses received by the state from mineral 16 leases issued on or before February 15, 1980; 17 (2) 50 percent of all mineral lease rentals, royalties, royalty sale 18 proceeds, net profit shares under AS 38.05.180(f) and (g), carbon storage injection 19 royalties required under AS 38.05.705(c)(3)(B), and federal mineral revenue sharing 20 payments received by the state from mineral leases issued after December 1, 1979, and 21 50 percent of all bonuses received by the state from mineral leases issued after 22 February 15, 1980; and 23 (3) any other money appropriated to or otherwise allocated by law or 24 former law to the Alaska permanent fund. 25 * Sec. 7. AS 37.14 is amended by adding a new section to read: 26 Article 11. Carbon Storage Closure Trust Fund. 27 Sec. 37.14.850. Carbon storage closure trust fund. (a) The carbon storage 28 closure trust fund is established as a separate trust fund of the state outside and 29 separate from the general fund. The legislature may appropriate the principal and 30 earnings of the fund for the purpose of protecting the public interest in maintaining 31 and closing carbon storage facilities in the state. Money in the fund does not lapse.
01 (b) The carbon storage closure trust fund consists of payments received under 02 AS 41.06.175 and earnings on the fund. The payments received for each storage 03 facility shall be separately accounted for under AS 37.05.142. The commissioner of 04 revenue is a fiduciary of the fund. The commissioner of revenue shall manage and 05 invest the fund assets as provided in AS 37.10.071. 06 (c) The commissioner of natural resources may make expenditures from the 07 carbon storage closure trust fund for the purpose of conducting long-term monitoring 08 and maintenance of a storage facility under AS 41.06.305. If a storage operator is 09 unable to fulfill the storage operator's duties and the financial assurance provided by 10 the storage operator under AS 41.06.110(c)(2) is exhausted or insufficient, the Alaska 11 Oil and Gas Conservation Commission may make expenditures from the fund for the 12 purposes allowed under AS 41.06.105 - 41.06.210. 13 (d) Nothing in this section creates a dedicated fund. 14 (e) In this section, 15 (1) "fund" means the carbon storage closure trust fund; 16 (2) "storage facility" and "storage operator" have the meanings given 17 in AS 41.06.210. 18 * Sec. 8. AS 38.05.069(e) is amended to read: 19 (e) Nothing in (c) of this section affects the disposal of minerals under 20 AS 38.05.135 - 38.05.183 or carbon storage under AS 38.05.700 - 38.05.795. 21 * Sec. 9. AS 38.05.070(a) is amended to read: 22 (a) Land, including tide, submerged, or shoreland, to which the state holds title 23 or to which the state [IT] may become entitled, may be leased, except for the 24 extraction of natural resources and for carbon storage under AS 38.05.700 - 25 38.05.795, in the manner provided in AS 38.05.070 - 38.05.105. 26 * Sec. 10. AS 38.05.130 is amended to read: 27 Sec. 38.05.130. Damages and posting of bond. Rights may not be exercised 28 by the state, its lessees, successors, or assigns under the reservation as set out in 29 AS 38.05.125 until the state, its lessees, successors, or assigns make provision to pay 30 the owner of the land full payment for all damages sustained by the owner, by reason 31 of entering onto [UPON] the land. If the owner for any cause refuses or neglects to
01 settle the damages, the state, its lessees, successors, assigns, or an applicant for a lease 02 or contract from the state for the purpose of prospecting for valuable minerals, or 03 option, contract, or lease for carbon storage or mining coal or a lease for extracting 04 geothermal resources, petroleum, or natural gas, may enter onto [UPON] the land in 05 the exercise of the reserved rights after posting a surety bond determined by the 06 director, after notice and an opportunity to be heard, to be sufficient as to form, 07 amount, and security to secure to the owner payment for damages, and may institute 08 legal proceedings in a court where the land is located, as may be necessary to 09 determine the damages that [WHICH] the owner may suffer. 10 * Sec. 11. AS 38.05.135(a) is amended to read: 11 (a) Except as otherwise provided, valuable mineral deposits in land belonging 12 to the state shall be open to exploration, development, and the extraction of minerals. 13 All land, together with tide, submerged, or shoreland, to which the state holds title to 14 or to which the state may become entitled, may be obtained by permit or lease for the 15 purpose of exploration, development, and the extraction of minerals. Except as 16 specifically limited by AS 38.05.131 - 38.05.181 and 38.05.700 - 38.05.795, land may 17 be withheld from lease application on a first-come, first-served basis, and offered only 18 on a competitive bid basis when determined by the commissioner to be in the best 19 interests of the state. 20 * Sec. 12. AS 38.05.135(c) is amended to read: 21 (c) Payment of a royalty or a net profit share payment to the state under a lease 22 issued under AS 38.05.135 - 38.05.181 or an injection charge under AS 38.05.700 - 23 38.05.795 becomes due on the date and in the manner specified in the lease or in a 24 regulation adopted by the commissioner. 25 * Sec. 13. AS 38.05.135(d) is amended to read: 26 (d) If a royalty or net profit share payment to which the state is entitled under 27 AS 38.05.135 - 38.05.181 or an injection charge under AS 38.05.700 - 38.05.795 is 28 not paid or is underpaid when it becomes due under (c) of this section, the unpaid 29 amount of the royalty, [OR] net profit share payment, or injection charge bears 30 interest in a calendar quarter at the rate of five percentage points above the annual rate 31 charged member banks for advances by the 12th Federal Reserve District as of the
01 first day of that calendar quarter, or at the annual rate of 11 percent, whichever is 02 greater, compounded quarterly as of the last day of that quarter. 03 * Sec. 14. AS 38.05.135(e) is amended to read: 04 (e) If a royalty or net profit share payment to which the state is entitled under 05 AS 38.05.135 - 38.05.181 or an injection charge under AS 38.05.700 - 38.05.795 is 06 overpaid, interest at the rate and compounded in the manner provided in (d) of this 07 section shall be allowed and paid on the overpayment. The interest allowance is 08 subject to the following: 09 (1) if the state grants a credit against future payments for the 10 overpayment, the state shall pay interest on the overpayment 11 (A) from the date that is the later of the date the overpayment 12 was 13 (i) due; or 14 (ii) received; 15 (B) to the date that is the earlier of the date 16 (i) of notice to the lessee of the credit; or 17 (ii) on which the lessee actually takes the credit; 18 (2) if the state refunds the overpayment, the state shall pay interest on 19 the overpayment 20 (A) from the date that is the later of the date the overpayment 21 was 22 (i) due; or 23 (ii) received; 24 (B) to the date the state issues the refund. 25 * Sec. 15. AS 38.05.140(a) is amended to read: 26 (a) A person may not take or hold coal leases or permits during the life of coal 27 leases on state land exceeding an aggregate of 92,160 acres, except that a person may 28 apply for coal leases or permits for acreage in addition to 92,160 acres, not exceeding 29 a total of 5,120 additional acres of state land. The additional area applied for shall be 30 in multiples of 40 acres, and the application shall contain a statement that the granting 31 of a lease for additional land is necessary for the person to carry on business
01 economically and is in the public interest. On the filing of the application, except as 02 provided by AS 38.05.180(ff)(3) or 38.05.180(gg) and 38.05.700 - 38.05.795, the coal 03 deposits in the land covered by the application shall be temporarily set aside and 04 withdrawn from all other forms of disposal provided under AS 38.05.135 - 38.05.181. 05 * Sec. 16. AS 38.05.184 is amended by adding a new subsection to read: 06 (h) A department or other state agency may not issue a carbon storage license 07 or lease on state-owned land and water seaward of the mean higher high water line, 08 beginning at Anchor Point; then around the perimeter of Kachemak Bay, to Point 09 Pogibshi; then west to the three mile limit of state land and water; then north to a point 10 three miles west of Anchor Point; then east to the mean higher high water line of 11 Anchor Point, the point of beginning. 12 * Sec. 17. AS 38.05 is amended by adding new sections to read: 13 Article 15A. Carbon Storage Exploration Licenses; Leases. 14 Sec. 38.05.700. Applicability; regulations. (a) The provisions of 15 AS 38.05.700 - 38.05.795 apply to the licensing of state land for carbon storage 16 exploration and the leasing of state land for carbon storage. 17 (b) The commissioner may adopt regulations necessary to implement 18 AS 38.05.700 - 38.05.795. 19 Sec. 38.05.705. Carbon storage exploration licensing. (a) The commissioner 20 may issue carbon storage exploration licenses on state land. 21 (b) A carbon storage exploration license gives the licensee 22 (1) the exclusive right to explore, for carbon storage purposes, the state 23 land described in the license for a five-year term; and 24 (2) the option to convert the license for all or part of the state land 25 described in the license into a carbon storage lease after the licensee complies with the 26 lease conversion process described in AS 38.05.715. 27 (c) A carbon storage exploration license must 28 (1) be conditioned on the posting of a bond or other security acceptable 29 to the department and in favor of the state; 30 (2) be conditioned on an obligation by the licensee to fulfill a specified 31 work commitment as set out in the license; the work commitment must include
01 mandatory provisions for 02 (A) an annual fee paid by the licensee to the department in an 03 amount that is at least $20 an acre, subject to the license; and 04 (B) an annual report describing the licensee's exploration 05 activities in the previous calendar year, which the licensee shall provide to the 06 department; and 07 (3) include proposed commercial terms that apply if the license is 08 converted into a carbon storage lease, which must, at a minimum, provide for 09 (A) an annual rent of at least $20 an acre; and 10 (B) a charge on injected volumes of carbon dioxide of at least 11 $2.50 a ton. 12 (d) The commissioner may revoke a carbon storage exploration license before 13 the termination of the five-year term of the license if the licensee fails to comply with 14 the requirements of (c) of this section or applicable regulations. 15 (e) The department may renew a carbon storage exploration license for a term 16 sufficient to determine whether the licensee's permit application will be accepted 17 under AS 41.06.105 - 41.06.210 if the licensee 18 (1) before the expiration of the license, applies for a permit under 19 AS 41.06.120; 20 (2) is in compliance with the conditions of the license; 21 (3) provides documentation acceptable to the department of the 22 pending permit application; and 23 (4) submits to the department an executed renewal form affirming the 24 original terms of the license for the term of the renewed license. 25 (f) A carbon storage exploration license that has been renewed under (e) of 26 this section terminates immediately if the Alaska Oil and Gas Conservation 27 Commission denies the licensee's permit application under AS 41.06.105 - 41.06.210. 28 (g) The dollar amounts in (c) of this section shall increase every five years in 29 proportion to the Consumer Price Index for urban consumers for urban Alaska, as 30 determined by the United States Department of Labor, Bureau of Labor Statistics. The 31 index for January 2024 is the reference base index.
01 (h) A charge on injected volumes of carbon dioxide required under (c)(3)(B) 02 of this section or as altered by the commissioner under AS 38.05.715(c) is a royalty 03 for the purposes of the Alaska permanent fund under AS 37.13.010. 04 Sec. 38.05.710. License procedures. (a) To apply for a carbon storage 05 exploration license under AS 38.05.705, an applicant shall submit to the commissioner 06 a proposal that 07 (1) identifies the specific area to be subject to the license; 08 (2) proposes minimum work commitments; 09 (3) proposes commercial terms applicable to a carbon storage lease 10 that satisfy the requirements of AS 38.05.705(c)(3); 11 (4) demonstrates the applicant's ability to assume responsibility of a 12 carbon storage lease; 13 (5) describes how the applicant meets the minimum qualifications for a 14 licensee under applicable regulations; and 15 (6) includes an attestation of the applicant's ability to perform the 16 requirements of (2) - (4) of this subsection. 17 (b) The commissioner shall publish notice of a proposal received under (a) of 18 this section. The notice must include a solicitation for competing proposals. The 19 commissioner shall send a copy of the published notice to each lessee under 20 AS 38.05.135 - 38.05.181 within one-half mile of the area proposed for the 21 exploration license. Any person may submit a competing proposal, including a 22 proposal for the authorization of subsurface storage of oil or gas under 23 AS 38.05.180(u), under the process established by the commissioner in regulation. 24 The regulations must require that a competing proposal be submitted not later than 90 25 days after the commissioner's notice is published. 26 (c) After the period for submission of competing proposals has passed, the 27 commissioner shall issue a written finding determining whether issuance of a carbon 28 storage exploration license is in the best interests of the state. If the commissioner 29 determines that issuance of a carbon storage exploration license is in the best interests 30 of the state, the finding must 31 (1) describe the limitations, stipulations, and conditions of the license
01 and any changes to the conditions detailed in the proposal submitted under (a) of this 02 section, or a competing proposal, that are required before issuance of the exploration 03 license; 04 (2) set out the commercial terms required for the eventual conversion 05 of the exploration license into a carbon storage lease; 06 (3) if there are competing proposals from multiple applicants, identify 07 which applicants are qualified for the issuance of the exploration license and include 08 information about the competitive bid process as set out in (e) of this section; and 09 (4) include a copy of the exploration license to be issued and the form 10 of lease that will be used for any portion of the exploration license area that is later 11 converted to a lease under AS 38.05.715. 12 (d) If the commissioner determines that issuance of a carbon storage 13 exploration license is in the best interests of the state and that only one applicant is 14 qualified for a license, the applicant may accept or reject the exploration license, as 15 limited or conditioned by the terms of the finding made under (c) of this section and in 16 the form of lease attached to the finding, not later than 30 days after the date the 17 finding was issued. The applicant shall accept or reject the issuance of the carbon 18 storage exploration license in writing. If an applicant fails to respond within 30 days 19 after the finding was issued, the commissioner shall consider the applicant's failure to 20 respond as a rejection of the license. 21 (e) If the commissioner determines that issuance of a carbon storage 22 exploration license is in the best interests of the state and that more than one applicant 23 is qualified for a license, the commissioner shall issue a request for competitive sealed 24 bids, under procedures adopted by regulation, to determine which qualified applicants 25 will receive a license. If the commissioner determines that a competitive bid process is 26 necessary, the best interest finding made under (c) of this section must include notice 27 that the commissioner intends to request competitive bids. 28 (f) The commissioner shall establish in regulation the criteria for the 29 assessment of competitive bids under (e) of this section and for the determination of a 30 successful bidder. 31 (g) If a lessee under AS 38.05.135 - 38.05.181 in the area covered by a
01 proposed carbon storage exploration license participates in a competitive bid process 02 under (e) of this section and is not the successful bidder, before issuing the license, the 03 commissioner shall provide the lessee an opportunity to match the successful bid. If 04 the lessee matches the successful bid, the commissioner shall issue a carbon storage 05 exploration license to the lessee. 06 (h) A carbon storage exploration license issued under this section and a carbon 07 storage lease under AS 38.05.715 or 38.05.720 must include 08 (1) a covenant from the licensee or lessee not to unreasonably interfere 09 with the rights of a lessee under AS 38.05.135 - 38.05.181; and 10 (2) a clause by which the licensee or lessee indemnifies the state for 11 any unreasonable interference the licensee or lessee might cause to the rights of a 12 lessee under AS 38.05.135 - 38.05.181. 13 (i) When notice is required under this section, the department shall follow the 14 requirements for notice under AS 38.05.945(b) and (c). 15 Sec. 38.05.715. Conversion to lease by licensee. (a) The commissioner may 16 convert a carbon storage exploration license to a carbon storage lease if the licensee 17 complies with (b) of this section. 18 (b) To convert a carbon storage exploration license to a carbon storage lease, a 19 licensee shall provide to the commissioner a copy of the permit obtained under 20 AS 41.06.120. After receiving a copy of the permit, the commissioner may issue a 21 carbon storage lease for those areas of the exploration license approved for carbon 22 storage by the permit if the licensee has 23 (1) fulfilled the work commitments set out in the license; 24 (2) demonstrated the ability to meet the commercial terms for the lease 25 as set out in the license. 26 (c) Notwithstanding (b) of this section, if the commissioner determines that a 27 carbon storage project is in the best interests of the state and would not be 28 economically feasible under the commercial terms set by the license, the 29 commissioner may issue the carbon storage lease under alternative commercial terms. 30 A lease issued under this subsection must be supported by a written finding that 31 contains specific factual details justifying the decision, an explanation of the
01 commissioner's reasons for issuing the lease, and a description of the original terms 02 and the alternative terms of the lease. The finding must be published on the 03 commissioner's publicly available Internet website. 04 (d) A lease issued under this section must include 05 (1) commercial terms for the lease; 06 (2) the agreements required under AS 38.05.710(h); and 07 (3) any other condition or obligation the commissioner considers 08 necessary or that is required by regulation. 09 Sec. 38.05.720. Transition from enhanced oil recovery operations to 10 carbon storage operations. (a) A lessee under AS 38.05.180 shall acquire a carbon 11 storage lease before engaging in carbon storage activity that is not associated with 12 enhanced oil or gas recovery. 13 (b) At the commissioner's discretion, the commissioner may issue a carbon 14 storage lease to a lessee under AS 38.05.180 if the lessee is in compliance with 15 regulations adopted under AS 41.06.185(b). The commissioner may consider the 16 qualifications and abilities of the lessee to meet the commercial requirements of a 17 carbon storage lease and whether issuance of the lease is in the best interests of the 18 state. 19 (c) A carbon storage lease issued under this section must include 20 (1) commercial terms acceptable to the department that satisfy the 21 requirements of AS 38.05.705(c)(3); 22 (2) the agreements required under AS 38.05.710(h); 23 (3) any other condition or obligation the commissioner considers 24 necessary or that is required by regulation. 25 (d) Before a carbon storage lease issued under this section may be transferred 26 or assigned to an entity that is not the responsible party under the existing oil and gas 27 lease under AS 38.05.180, the assuming party must provide financial assurance 28 acceptable to the department that the obligations of the lease can be met. 29 (e) The department may adopt regulations that allow all or part of a lease 30 issued under AS 38.05.180 to be transitioned to a lease under this section upon the 31 receipt of a permit issued under AS 41.06.185.
01 Sec. 38.05.725. Plan of development and operations; unitization. (a) The 02 commissioner shall require the filing and approval of a plan of development and 03 operation for a carbon storage lease. 04 (b) To prevent or assist in preventing waste, and to protect the correlative 05 rights of persons owning interest in the tracts of land affected, with the approval of the 06 commissioner, a group of lessees may validly integrate the lessees' interests to provide 07 for the unitized management, development, and operation of the tracts of land as a 08 unit. The commissioner may suspend or modify a development plan approved under 09 (a) of this section in accordance with the unit agreement. In this subsection, "unit 10 agreement" means an agreement by lessees with an interest in the unit, the state, and 11 any other carbon storage lessor with an interest in the unit. 12 (c) A lease operated under a plan approved or prescribed by the commissioner 13 under this section is excepted from determining holdings or control under 14 AS 38.05.140. The provisions of this section concerning cooperative or unit plans are 15 in addition to and do not affect AS 31.05 and AS 41.06. 16 Sec. 38.05.730. Payments from carbon storage exploration licenses and 17 carbon storage leases. Except as otherwise provided in AS 38.05.705(h) or under art. 18 IX, sec. 15, Constitution of the State of Alaska, the department shall deposit in the 19 general fund the money it collects under AS 38.05.700 - 38.05.795. 20 Sec. 38.05.735. Annual report to the legislature. The commissioner shall 21 prepare an annual report that includes an accounting of the carbon storage closure trust 22 fund established under AS 37.14.850 and information on carbon storage licensing 23 applications and decisions and the issuance of carbon storage leases. The 24 commissioner shall submit the report to the senate secretary and the chief clerk of the 25 house of representatives on or before February 1 of each year and notify the legislature 26 that the report is available. 27 Sec. 38.05.740. Removal and restoration after termination. Upon 28 termination of a license under AS 38.05.705 or a lease under AS 38.05.715 or 29 38.05.720, a licensee or lessee shall promptly remove all improvements and 30 equipment, except as otherwise approved in writing by the commissioner, and shall 31 restore the land to a condition that is approved by the commissioner.
01 Sec. 38.05.795. Definitions. In AS 38.05.700 - 38.05.795, unless the context 02 requires otherwise, 03 (1) "carbon storage" means the underground storage of carbon dioxide 04 in a carbon storage reservoir; 05 (2) "enhanced oil or gas recovery" has the meaning in AS 41.06.210; 06 (3) "reservoir" has the meaning given in AS 41.06.210. 07 * Sec. 18. AS 38.35.020(a) is amended to read: 08 (a) Rights-of-way on state land, including rights-of-way over, under, along, 09 across, or on [UPON] the right-of-way of a public road or highway or the right-of-way 10 of a railroad or other public utility, or across, on [UPON], over, or under a river or 11 other body of water or land belonging to or administered by the state may be granted 12 by noncompetitive lease by the commissioner for pipeline purposes for the 13 transportation of oil, products, carbon dioxide, or natural gas under those conditions 14 prescribed by law or by administrative regulation. Except to the extent authorized by 15 an oil and gas lease, a gas only lease, or a carbon storage lease, or an oil and gas, 16 [OR] gas only, or carbon storage unit agreement approved by the state, no person 17 may engage in any construction or operation of any part of an oil, products, carbon 18 dioxide, or natural gas pipeline that is or is proposed to be, [WHICH] in whole or in 19 part, [IS OR IS PROPOSED TO BE] on state land unless that person has obtained 20 from the commissioner a right-of-way lease of the land under this chapter. 21 * Sec. 19. AS 38.35.020(b) is amended to read: 22 (b) The commissioner may by regulation exempt from the requirement of a 23 right-of-way lease under this chapter the construction or operation of 24 (1) field gathering lines or any reasonable classification of field 25 gathering lines; and 26 (2) a pipeline transporting carbon dioxide within a field for the 27 purpose of an enhanced oil or gas recovery project under AS 41.06.185 or field 28 pressurization measures within that same field [THEM FROM THE 29 REQUIREMENT OF A RIGHT-OF-WAY LEASE UNDER THIS CHAPTER]. 30 * Sec. 20. AS 38.35.122 is amended to read: 31 Sec. 38.35.122. Products pipeline and carbon dioxide transportation
01 pipeline leases. The commissioner has discretion to include any or all of the terms set 02 out in AS 38.35.120 in leases of state land for products pipeline right-of-way purposes 03 or carbon dioxide transportation pipeline right-of-way purposes. 04 * Sec. 21. AS 38.35.230(3) is amended to read: 05 (3) "lease" means the instrument or extension of an instrument issued 06 under this chapter granting a leasehold interest in state land for pipeline right-of-way 07 purposes to a person and authorizing the construction or operation of, or the 08 transportation, service, or sale by, a pipeline for crude oil, natural gas, carbon 09 dioxide, or products; 10 * Sec. 22. AS 38.35.230(7) is amended to read: 11 (7) "pipeline" or "pipeline facility" means all the facilities of a total 12 system of pipe, whether owned or operated under a contract, agreement, or lease, used 13 by a carrier for transportation of crude oil, natural gas, carbon dioxide, or products for 14 delivery, for storage, or for further transportation, and including all pipe, pump or 15 compressor stations, station equipment, tanks, valves, access roads, bridges, airfields, 16 terminals and terminal facilities, including docks and tanker loading facilities, 17 operations control center for both the upstream part of the pipeline and the terminal, 18 tanker ballast treatment facilities, and fire protection system, communication system, 19 and all other facilities used or necessary for an integral line of pipe, taken as a whole, 20 to carry out [EFFECTUATE] transportation, including an extension or enlargement 21 of the line; 22 * Sec. 23. AS 38.35.230(10) is amended to read: 23 (10) "transportation" means the shipment or carriage by a pipeline of 24 crude oil, natural gas, carbon dioxide, or products from an upstream terminus in one 25 or more fields or points of production or supply of the minerals to a downstream 26 terminus in one or more points for delivery of the minerals to a purchaser or 27 consignee, for storage, or for further carriage or shipment, including shipment or 28 carriage within the state that may be classified as interstate or foreign transportation to 29 the extent that the transportation may constitutionally be subjected to the provisions of 30 this chapter, as well as all services necessary to carry out [EFFECTUATE] shipment 31 or carriage, including [, AMONG OTHER THINGS,] the receipt, storage, processing,
01 handling, transfer in transit, forwarding, and delivery of the minerals. 02 * Sec. 24. AS 38.35.230 is amended by adding a new paragraph to read: 03 (11) "carbon dioxide" has the meaning given in AS 41.06.210. 04 * Sec. 25. AS 41.06.005 is amended to read: 05 Sec. 41.06.005. Jurisdiction over geothermal resources. (a) The commission 06 has jurisdiction under AS 41.06.005 - 41.06.060 [THIS CHAPTER] over geothermal 07 wells to prevent waste, to protect correlative rights, and to ensure public safety. 08 (b) The Department of Natural Resources has jurisdiction under AS 41.06.005 09 - 41.06.060 [THIS CHAPTER] over management of geothermal leases and units in the 10 public interest and to effect development. 11 * Sec. 26. AS 41.06.020 is amended to read: 12 Sec. 41.06.020. Authority of commission; application. (a) The commission 13 has jurisdiction over all persons and property, public and private, necessary to carry 14 out the purposes and intent of AS 41.06.005 - 41.06.060 [THIS CHAPTER]. 15 (b) The authority of the commission applies to all land in the state lawfully 16 subject to the police power of the state, including private land, municipal land, state 17 land, land of the United States, and land subject to the jurisdiction of the United 18 States, and to all land included in a voluntary cooperative or unit plan of development 19 or operation entered into in accordance with AS 38.05.181. When land that is subject 20 to the commission's authority is committed to a unit agreement involving land subject 21 to federal jurisdiction, the operation of AS 41.06.005 - 41.06.060 [THIS CHAPTER] 22 or a part of AS 41.06.005 - 41.06.060 [THIS CHAPTER] may be suspended if 23 (1) the unit operations are regulated by the United States; and 24 (2) the conservation of geothermal resources is accomplished under the 25 unit agreement. 26 (c) The provisions of AS 41.06.005 - 41.06.060 apply [THIS CHAPTER 27 APPLIES] 28 (1) to wells drilled in search of, in support of, or for the recovery or 29 production of geothermal resources; 30 (2) when a person engaged in drilling activity not otherwise subject to 31 the provisions of AS 41.06.005 - 41.06.060 [THIS CHAPTER] encounters geothermal
01 resources, fluid, or water of sufficient heat or pressure to constitute a threat to human 02 life or health unless the drilling operation is subject to oil and gas drilling regulation 03 under AS 31.05; 04 (3) in areas and under conditions in which the commission determines 05 that drilling may encounter geothermal resources, fluid, or water of sufficient heat or 06 pressure to constitute a threat to human life or health. 07 (d) To the extent the provisions of AS 31.05 do not conflict with the 08 provisions of AS 41.06.005 - 41.06.060 [THIS CHAPTER], the provisions of 09 AS 31.05 are applicable to wells drilled in search of, in support of, or for the recovery 10 or production of geothermal resources. 11 (e) Nothing in AS 41.06.005 - 41.06.060 [THIS CHAPTER] limits the 12 authority of the department 13 (1) over geothermal resources under AS 38.05.181; or 14 (2) to approve and manage geothermal units or operations that include 15 state land. 16 * Sec. 27. AS 41.06.030(e) is amended to read: 17 (e) The commissioner may adopt regulations under AS 44.62 (Administrative 18 Procedure Act) to carry out the purposes and intent of AS 41.06.005 - 41.06.060 19 [THIS CHAPTER] for duties assigned to the department, including the promotion of 20 maximum economic recovery. 21 * Sec. 28. AS 41.06.035(b) is amended to read: 22 (b) The commission may adopt regulations under AS 44.62 (Administrative 23 Procedure Act) and issue orders appropriate to carry out the purposes and intent of 24 AS 41.06.005 - 41.06.060 [THIS CHAPTER] for duties assigned to the commission, 25 including orders regarding the establishment of drilling units for pools as set out in 26 AS 31.05.100 and orders regarding unitized operation and integration of interests as 27 set out in AS 31.05.110. 28 * Sec. 29. AS 41.06.040(a) is amended to read: 29 (a) The commission shall adopt regulations under AS 44.62 (Administrative 30 Procedure Act), issue orders, and take other appropriate action to carry out the 31 purposes and intent of AS 41.06.005 - 41.06.060 [THIS CHAPTER], including
01 adopting regulations to prevent 02 (1) geothermal resources, water or other fluids, and gases from 03 escaping into strata other than that in which they are found, unless in accordance with 04 an approved reinjection program; 05 (2) contamination of surface and groundwater; 06 (3) premature degradation of a geothermal system by water 07 encroachment or otherwise; 08 (4) blowouts, cavings, and seepage; and 09 (5) unreasonable disturbance or injury to neighboring properties, prior 10 water rights, prior oil or gas rights, human life, health, and the natural environment. 11 * Sec. 30. AS 41.06.050(e) is amended to read: 12 (e) In making the determination under (d) of this section, the commission shall 13 consider whether the 14 (1) proposed well will significantly interfere with or substantially 15 impair a prior water, oil, or gas right; 16 (2) proposed well is contrary to a provision of AS 41.06.005 - 17 41.06.060 [THIS CHAPTER], a regulation adopted by the commission, another law, 18 or an order, stipulation, or term of a permit issued by the commission; and 19 (3) applicant is in violation of a provision of AS 41.06.005 - 41.06.060 20 [THIS CHAPTER], a regulation adopted by the commission, another law, or an order, 21 stipulation, or term of a permit issued by the commission; the commission shall 22 consider the magnitude of the violation. 23 * Sec. 31. AS 41.06.055(c) is amended to read: 24 (c) The commission shall determine the regulatory cost charges levied under 25 this section so that the total amount to be collected approximately equals the 26 appropriations made for the operating costs of the commission that have been incurred 27 under AS 41.06.005 - 41.06.060 [THIS CHAPTER] for the fiscal year. 28 * Sec. 32. AS 41.06.055(d) is amended to read: 29 (d) The commission shall collect the regulatory cost charges imposed under 30 this section. The Department of Administration shall identify the amount of 31 appropriations made for the operating costs of the commission under AS 41.06.005 -
01 41.06.060 [THIS CHAPTER] that lapse into the general fund each year. The 02 legislature may appropriate an amount that is at least equal to the lapsed amount to the 03 commission for its operating costs under AS 41.06.005 - 41.06.060 [THIS 04 CHAPTER] for the next fiscal year. If the legislature makes an appropriation to the 05 commission under this subsection that is equal to or greater than the lapsed amount, 06 the commission shall reduce the total regulatory cost charge collected for that fiscal 07 year by a comparable amount. 08 * Sec. 33. AS 41.06.060 is amended to read: 09 Sec. 41.06.060. Definitions. In AS 41.06.005 - 41.06.060 [THIS CHAPTER], 10 unless the context otherwise requires, 11 (1) "commercial use" means the sale of heat or power to a third party; 12 (2) "commission" means the Alaska Oil and Gas Conservation 13 Commission created under AS 31.05.005; 14 (3) "correlative rights" means the right of an owner of each property in 15 a geothermal system to produce without waste the owner's just and equitable share of 16 the geothermal resources in the geothermal system; a just and reasonable share is an 17 amount, so far as can be practically determined and so far as can be practically 18 produced without waste, that is substantially in proportion to the quantity of 19 recoverable geothermal resources under the owner's property relative to the total 20 recoverable geothermal resources in the geothermal system; 21 (4) "geothermal fluid" means liquids and steam at temperatures greater 22 than 120 degrees Celsius or any commercial use of liquids and steam naturally present 23 in a geothermal system at temperatures less than 120 degrees Celsius; 24 (5) "geothermal resources" 25 (A) means the natural heat of the earth at temperatures greater 26 than 120 degrees Celsius, or any use of that heat for commercial purposes, 27 measured at the point at which [WHERE] the highest-temperature resources 28 encountered enter or contact a well or other resource extraction device or any 29 commercial use of the natural heat of the earth; 30 (B) includes 31 (i) the energy, including pressure, in whatever form
01 present in, resulting from, created by, or that may be extracted from 02 that natural heat; 03 (ii) the material medium, including steam and other 04 gases, hot water, and hot brines constituting the geothermal fluid 05 naturally present, as well as substances artificially introduced to serve 06 as a heat transfer medium; and 07 (iii) all dissolved or entrained minerals and gases that 08 may be obtained from the material medium, but excluding hydrocarbon 09 substances and helium; 10 (6) "geothermal system" means a stratum, pool, reservoir, or other 11 geologic formation containing geothermal resources; 12 (7) "operator" means a person drilling, maintaining, operating, 13 producing, or in control of a well; 14 (8) "owner" means the person who has the right to drill into or produce 15 from a geothermal system and to appropriate the geothermal resources produced from 16 a geothermal system for that person and others; 17 (9) "waste" means, in addition to its ordinary meaning, physical waste, 18 and includes an inefficient, excessive, or improper production, use, or dissipation of 19 geothermal resources, including 20 (A) drilling, transporting, or storage methods that cause or tend 21 to cause unnecessary surface loss of geothermal resources; 22 (B) locating, spacing, drilling, equipping, operating, producing, 23 or venting of a well in a manner that results or tends to result in reducing the 24 ultimate economic recovery of geothermal resources; 25 (10) "well" means a well drilled, converted, or reactivated for the 26 discovery, testing, production, or subsurface injection of geothermal resources. 27 * Sec. 34. AS 41.06 is amended by adding new sections to read: 28 Article 2. Carbon Storage; Injection. 29 Sec. 41.06.105. Jurisdiction over storage facilities. The commission has 30 jurisdiction under AS 41.06.105 - 41.06.210 over storage facilities to prevent waste, 31 protect correlative rights, and ensure public health and safety.
01 Sec. 41.06.110. Authority of the commission. (a) The authority of the 02 commission applies to all land 03 (1) in the state lawfully subject to the police power of the state, 04 including private land, municipal land, state land, federal land, and land subject to the 05 jurisdiction of the United States; and 06 (2) included in a voluntary cooperative or unit plan of development or 07 operation entered into in accordance with AS 38.05.725. 08 (b) When land that is subject to the commission's authority is committed to a 09 unit agreement involving land subject to federal jurisdiction, the operation of 10 AS 41.06.105 - 41.06.210 may be suspended if 11 (1) the unit operations are regulated by the United States; and 12 (2) conservation of resources in the reservoir or pool is accomplished 13 in the agreement. 14 (c) The commission has the authority to 15 (1) regulate activities related to a storage facility, including the 16 construction, operation, and closure of the facility; 17 (2) require that storage operators provide assurance, including bonds, 18 that money is available to fulfill the storage operator's duties; 19 (3) enter, at a reasonable time and in a reasonable manner, a storage 20 facility to 21 (A) inspect equipment and facilities; 22 (B) observe, monitor, and investigate operation; and 23 (C) inspect records required to be maintained at the facility; 24 (4) exercise continuing jurisdiction over storage operators and storage 25 facilities, including the authority, after notice and hearing, to amend provisions in a 26 permit and to revoke a permit; and 27 (5) dissolve or change the boundaries of an oil or gas field or unit 28 established by the commission that is within or near the boundaries of a storage 29 reservoir. 30 (d) To the extent AS 31.05 does not conflict with AS 41.06.105 - 41.06.210, 31 the provisions of AS 31.05 are applicable to wells drilled in search of, in support of,
01 and for carbon storage. 02 (e) Nothing in AS 41.06.105 - 41.06.210 limits the authority of the 03 Department of Natural Resources under AS 38.05.700 - 38.05.795 or AS 41.06.305. 04 Sec. 41.06.115. Waste prohibited; investigation. Waste in a storage facility 05 or storage reservoir in the state is prohibited. The commission may investigate to 06 determine whether waste exists or is imminent, or whether other facts exist that justify 07 or require action by the commission to prohibit waste. The injection of carbon dioxide 08 and substances commonly associated with carbon dioxide injection is not considered 09 waste. 10 Sec. 41.06.120. Storage facility permit. (a) A storage operator is required to 11 obtain a permit from the commission to operate a storage facility. 12 (b) A permit may not be transferred unless the commission consents. 13 (c) A person applying for a permit shall 14 (1) request a preapplication meeting with the commission staff; 15 (2) comply with application requirements; 16 (3) pay a fee in an amount determined by the commission; and 17 (4) pay the commission the cost the commission incurs in reviewing 18 the person's application, publishing notices for hearings, and holding hearings on the 19 person's permit application. 20 (d) A permit application must include sufficient information to enable the 21 commission to determine whether the storage facility will interfere with or impair an 22 existing water, oil, gas, or other mineral interest. 23 (e) The commission shall set the amount of the fee in (c)(3) of this section 24 based on the anticipated cost to the commission associated with processing 25 applications, including preliminary work in advance of receiving an application. The 26 commission may enter into an agreement with a prospective applicant that requires the 27 applicant to reimburse the commission for reasonable costs of work incurred in 28 preparing for activities before the commission receives an application. 29 (f) The commission shall deposit fees collected under this section in the 30 carbon dioxide storage facility administrative fund established in AS 41.06.160. 31 Sec. 41.06.125. Hearing on permit application. (a) Before issuing a permit
01 for a storage facility, the commission shall hold a public hearing. 02 (b) The commission shall provide notice of a public hearing under this section. 03 The commission shall provide notice in the same manner as a notice under 04 AS 31.05.050(b) and shall provide notice to 05 (1) each mineral lessee, mineral owner, and mineral right owner of 06 record within the storage reservoir and within one-half mile of the boundaries of the 07 storage reservoir; 08 (2) each surface owner of land overlying the storage reservoir and 09 within one-half mile of the boundaries of the storage reservoir; and 10 (3) any additional persons that the commission considers necessary. 11 (c) A hearing notice required by this section must comply with deadlines set 12 by the commission. 13 Sec. 41.06.130. Permit requirements. (a) The commission shall consult with 14 the Department of Environmental Conservation and the Department of Natural 15 Resources before issuing a permit under AS 41.06.120. 16 (b) Before the commission may approve a permit application submitted under 17 AS 41.06.120, the commission must find 18 (1) that the storage operator has complied with all requirements set by 19 the commission; 20 (2) that the proposed storage facility is suitable and feasible for carbon 21 storage; 22 (3) that the carbon dioxide to be stored is of a quality that allows it to 23 be safely and efficiently stored in the storage reservoir; 24 (4) that the storage operator has made a good faith effort to get the 25 consent of all persons with an ownership interest in the proposed storage reservoir and 26 surface owners of land overlying the proposed storage reservoir; 27 (5) if the proposed storage facility contains commercially valuable 28 minerals, that the interests of the mineral owners or mineral lessees will not be 29 adversely affected or have been addressed in an arrangement entered into by the 30 mineral owners or mineral lessees and the storage operator; 31 (6) that the proposed storage facility will not adversely affect surface
01 water or formations containing fresh water; 02 (7) that carbon dioxide is not reasonably anticipated to escape from the 03 storage reservoir; 04 (8) that substances that compromise the objectives of AS 41.06.105 - 05 41.06.210 or the integrity of a storage reservoir will not enter a storage reservoir; 06 (9) that the proposed storage facility will not endanger human health or 07 unduly endanger the environment; 08 (10) that the proposed storage facility is in the public interest; 09 (11) that the horizontal and vertical boundaries of the proposed storage 10 reservoir are defined and the boundaries include buffer areas to ensure that the storage 11 facility is operated safely and as contemplated; 12 (12) that the storage operator will establish monitoring facilities and 13 protocols to assess the location and migration of carbon dioxide injected for carbon 14 storage and to ensure compliance with all permit, statutory, and administrative 15 requirements; 16 (13) that all nonconsenting landowners or holders of mineral rights are, 17 or will be, equitably compensated; and 18 (14) that the storage operator is not in violation of a provision of 19 AS 41.06.105 - 41.06.210 or regulations adopted by the commission. 20 Sec. 41.06.135. Permit provisions. The commission may include in a permit 21 or order any parameters necessary to carry out the objectives of AS 41.06.105 - 22 41.06.210, prevent waste, protect correlative rights, and ensure the health and safety of 23 persons affected by the permit. 24 Sec. 41.06.140. Amalgamating property interests. If a storage operator does 25 not obtain the consent of all persons with an ownership interest in the storage 26 reservoir, the commission may order that the pore space rights of nonconsenting 27 owners be included in a storage facility and subject to carbon storage. Before the 28 commission may issue an order forming an amalgamation under this section, the 29 commission shall provide public notice and hold a hearing. 30 Sec. 41.06.145. Certificate. When the commission issues a permit under 31 AS 41.06.120, the commission shall also issue a certificate that states that the permit
01 has been issued, describes the area covered, and contains other information the 02 commission considers appropriate. The storage operator may file a copy of the 03 certificate with the office of the recorder in the district in which the storage facility is 04 located. 05 Sec. 41.06.150. Environmental protection; storage reservoir integrity. (a) 06 The commission shall take action to ensure that 07 (1) substances that compromise the integrity of a storage reservoir do 08 not enter a storage reservoir; and 09 (2) carbon dioxide does not escape from a storage facility. 10 (b) For the purposes of this section, and in the application of other laws, 11 carbon dioxide that is stored and remains in carbon storage under a permit is not 12 considered a pollutant and does not constitute a nuisance. 13 (c) The commission's authority under (a) of this section does not limit the 14 jurisdiction of the Department of Environmental Conservation. 15 Sec. 41.06.155. Preservation of rights. Nothing in AS 41.06.105 - 41.06.210 16 (1) prejudices the rights of a person with a property interest in a 17 storage facility to exercise rights that have not been committed to the storage facility; 18 or 19 (2) prevents a mineral owner or mineral lessee from drilling through or 20 near a storage reservoir to explore for and develop minerals if the drilling, production, 21 and related activities comply with requirements set by the commission to preserve the 22 integrity of the storage facility and protect the objectives of AS 41.06.105 - 41.06.210. 23 Sec. 41.06.160. Fees; carbon dioxide storage facility administrative fund. 24 (a) A storage operator shall pay to the commission a fee on each metric ton of carbon 25 dioxide injected for carbon storage. The commission shall set the amount of the fee 26 based on the anticipated expenses the commission will incur in regulating storage 27 facilities during each phase, including the construction, operational, and pre- 28 completion phases. The commission shall deposit a fee collected under this subsection 29 in the carbon dioxide storage facility administrative fund established in (b) of this 30 section. 31 (b) The carbon dioxide storage facility administrative fund is established in
01 the general fund. The fund consists of 02 (1) fees received under (a) of this section; 03 (2) fees received under AS 41.06.120 and 41.06.195; and 04 (3) interest earned on money in the fund. 05 (c) Money in the carbon dioxide storage facility administrative fund shall be 06 separately accounted for under AS 37.05.142. The legislature may appropriate the 07 money in the fund to the commission to carry out the purposes of AS 41.06.105 - 08 41.06.210. 09 Sec. 41.06.165. Title to carbon dioxide. The storage operator has title to the 10 carbon dioxide injected into and stored in a storage reservoir and holds title until the 11 commission issues a certificate of completion under AS 41.06.170. While the storage 12 operator holds title, the operator is liable for any damage the carbon dioxide may 13 cause, including damage caused by carbon dioxide that escapes from the storage 14 facility. When a certificate of completion is issued under AS 41.06.170, title to carbon 15 dioxide injected into and stored in a storage reservoir is transferred to the owner of the 16 pore space, unless the storage operator and the owner of the pore space have a 17 contrary agreement. 18 Sec. 41.06.170. Certificate of completion. (a) Once a storage operator 19 discontinues carbon dioxide injections into a storage reservoir, and upon application 20 by the storage operator, the commission may issue a certificate of completion 21 (1) only after public notice and hearing; the commission shall establish 22 notice requirements for a hearing under this paragraph; 23 (2) only after the commission consults with the Department of 24 Environmental Conservation, the Department of Natural Resources, and all persons 25 with an ownership interest in the storage reservoir; and 26 (3) after a period of at least 50 years, or another period approved by 27 the commission for the storage reservoir based on requirements established in 28 regulation, has elapsed since the last carbon dioxide injection into the storage 29 reservoir. 30 (b) The commission may issue a certificate of completion only if the storage 31 operator
01 (1) has fully complied with all laws governing the storage facility; 02 (2) shows that the operator has addressed all pending claims regarding 03 the operation of the storage facility; 04 (3) shows that the underground place or pore space in which the 05 injected carbon dioxide is stored is not expected to pose a threat to human health, 06 human safety, the environment, or underground sources of drinking water; 07 (4) shows that the stored or injected carbon dioxide is unlikely to cross 08 an underground or pore space boundary and is not expected to endanger an 09 underground source of drinking water or otherwise endanger human health, human 10 safety, or the environment; 11 (5) shows that all wells, equipment, and facilities allowed to remain in 12 place following post-injection site care and site closure are in good condition and 13 retain mechanical integrity; 14 (6) shows that the operator has plugged wells, removed equipment and 15 facilities, and completed reclamation work as required by the commission and the 16 Department of Natural Resources; 17 (7) has paid all fees and surcharges owed for the storage facility; and 18 (8) meets any other regulatory requirements established by the state. 19 (c) Once a certificate of completion is issued, the department assumes primary 20 responsibility for long-term monitoring and maintenance of the storage facility, as 21 provided in AS 41.06.305. The storage operator and all persons who generated 22 injected carbon dioxide are released from liability to the state associated with the 23 storage facility in an amount equal to the amount attributed to the storage facility in 24 the carbon storage closure trust fund established in AS 37.14.850. The state, the 25 department, or the commission is not liable for damages arising out of, or in any 26 manner connected with, long-term monitoring and maintenance of a storage facility if 27 the amount for the storage facility separately accounted for in the carbon storage 28 closure trust fund established in AS 37.14.850 is unavailable or insufficient. A bond 29 posted by the storage operator under AS 41.06.110(c)(2) must be released. In this 30 subsection, "long-term monitoring and maintenance" has the meaning given in 31 AS 41.06.305(e).
01 Sec. 41.06.175. Carbon storage facility injection surcharge. (a) A storage 02 operator injecting carbon dioxide at a storage facility shall pay to the commission a 03 surcharge each year for the first 12 years that carbon dioxide is injected at the storage 04 facility. The commission shall deposit the surcharge into the general fund. The 05 legislature may appropriate a surcharge collected under this subsection into the carbon 06 storage closure trust fund established in AS 37.14.850. 07 (b) The annual surcharge in this section is determined by the following 08 formula: S = (7,500,000 x (I/261.78)) / 12, where 09 (1) S is the dollar amount of the annual surcharge for a storage facility; 10 (2) I is equal to the Consumer Price Index for urban consumers for 11 urban Alaska, as determined by the United States Department of Labor, Bureau of 12 Labor Statistics, without seasonal adjustment, for December of the calendar year 13 immediately preceding the year of issuance of the storage facility permit. 14 Sec. 41.06.180. Penalties. (a) In addition to the penalties in (b) - (d) of this 15 section, a person who violates a provision of AS 41.06.105 - 41.06.210, a regulation 16 adopted under AS 41.06.105 - 41.06.210, or an order or term of a permit issued by the 17 commission under AS 41.06.105 - 41.06.210 is liable for a civil penalty of not more 18 than $100,000 for the initial violation and not more than $10,000 for each day 19 thereafter on which the violation continues. 20 (b) A person who knowingly commits an act specified in AS 11.46.630(a) for 21 the purpose of evading a provision of AS 41.06.105 - 41.06.210, a regulation adopted 22 under AS 41.06.105 - 41.06.210, or an order, stipulation, or term of a permit issued by 23 the commission is guilty of a class A misdemeanor. 24 (c) A person who knowingly violates a provision of AS 41.06.105 - 41.06.210, 25 a regulation adopted under AS 41.06.105 - 41.06.210, or an order, stipulation, or term 26 of a permit issued by the commission is guilty of a class A misdemeanor punishable 27 by a fine of not more than $10,000 a day for each day of violation. 28 (d) A person who knowingly aids or abets another person in the violation of a 29 provision of AS 41.06.105 - 41.06.210, a regulation adopted under AS 41.06.105 - 30 41.06.210, or an order, stipulation, or term of a permit issued by the commission is 31 subject to the same penalty as that prescribed in this section for the violation by the
01 other person. 02 (e) The commission may assess the civil penalties provided in this section, 03 and, if not paid, the penalties are recoverable by suit filed by the attorney general in 04 the name and on behalf of the commission in the superior court. The payment of a 05 penalty does not relieve a person on whom the penalty is imposed from liability to any 06 other person for damages arising out of the violation. 07 (f) In determining the amount of a penalty assessed under (a) of this section, 08 the commission shall consider 09 (1) the extent to which the person committing the violation was acting 10 in good faith in attempting to comply; 11 (2) the extent to which the person committing the violation acted in a 12 wilful or knowing manner; 13 (3) the extent and seriousness of the violation and the actual or 14 potential threat to public health or the environment; 15 (4) the economic or environmental harm or injury to the public caused 16 by the violation; 17 (5) the economic value or other benefits derived by the person 18 committing the violation from the commission of the violation; 19 (6) any history of previous violations by the person committing the 20 violation; 21 (7) the need to deter similar behavior by the person committing the 22 violation and others similarly situated at the time of the violation or in the future; 23 (8) the effort made by the person committing the violation to correct 24 the violation and prevent future violations; and 25 (9) other matters justice requires. 26 Sec. 41.06.185. Enhanced oil or gas recovery. (a) Except as provided in (b) 27 of this section, the provisions of AS 41.06.105 - 41.06.210 do not apply to 28 applications filed with the commission proposing to use carbon dioxide for enhanced 29 oil or gas recovery. 30 (b) The commission may adopt regulations that allow enhanced oil or gas 31 recovery and related well activities to be converted to a storage facility. The
01 regulations must require that, in considering whether to approve a conversion, and 02 upon conversion, the provisions of AS 41.06.105 - 41.06.210 apply. The regulations 03 may impose additional requirements to AS 41.06.105 - 41.06.210, or describe specific 04 situations in which the requirements of AS 41.06.105 - 41.06.210 are waived, to 05 ensure that the objectives of AS 41.06.105 - 41.06.210 are met. 06 Sec. 41.06.190. Cooperative agreements and contracts. (a) The commission 07 may enter into agreements with other governments, government entities, and state 08 agencies for the purpose of carrying out the objectives of AS 41.06.105 - 41.06.210. 09 (b) The commission may enter into contracts with private persons to assist in 10 carrying out the objectives of AS 41.06.105 - 41.06.210. If an emergency exists, the 11 commission may enter into contracts without public notice and without competitive 12 bidding. 13 Sec. 41.06.195. Determining capacity of storage reservoir; carbon credits; 14 fees. (a) The commission may adopt a written policy establishing procedures and 15 criteria that the commission will use to determine the carbon storage capacity of a 16 storage reservoir, including for the purpose of enhanced oil or gas recovery. 17 (b) The purpose of determining the carbon storage capacity of a storage 18 reservoir is to facilitate calculating the amount of stored carbon dioxide for matters 19 including carbon credits, allowances, trading, emissions allocations, and offsets. The 20 commission may charge a reasonable fee to a person requesting a capacity 21 determination. The commission shall set the fee by regulation. The commission shall 22 deposit fees received under this subsection in the carbon dioxide storage facility 23 administrative fund established in AS 41.06.160. 24 (c) In this section, "carbon storage capacity of a storage reservoir" means the 25 maximum injected volume in a storage reservoir at which the pressure in the reservoir 26 does not pose a risk to the integrity of the reservoir or its ability to maintain carbon 27 storage. 28 Sec. 41.06.210. Definitions. In AS 41.06.105 - 41.06.210, unless the context 29 requires otherwise, 30 (1) "carbon dioxide" means carbon dioxide of a quality that will not 31 compromise
01 (A) the safety of carbon storage; and 02 (B) the properties of a storage reservoir that allow the reservoir 03 to effectively enclose and contain a stored gas or stored supercritical fluid; 04 (2) "carbon storage" means the underground storage of carbon dioxide 05 in a storage reservoir; 06 (3) "commission" means the Alaska Oil and Gas Conservation 07 Commission created under AS 31.05.005; 08 (4) "enhanced oil or gas recovery" means the increased recovery of 09 hydrocarbons, including oil and gas, from a common source of supply achieved by 10 artificial means or by the application of energy extrinsic to the common source of 11 supply, including pressuring, cycling, pressure maintenance or injection of a substance 12 or form of energy, including injection of water, gas, carbon dioxide, or both gas and 13 carbon dioxide, including immiscible and miscible floods, as long as the enhanced oil 14 or gas recovery does not include injection of a substance or form of energy for the sole 15 purpose of 16 (A) aiding in the lifting of fluids in the well; or 17 (B) stimulation of the reservoir at or near the well by 18 mechanical, chemical, thermal, or explosive means; 19 (5) "permit" means a storage facility permit issued under 20 AS 41.06.120; 21 (6) "pore space" means a cavity or void in a subsurface sedimentary 22 stratum; 23 (7) "reservoir" means a subsurface sedimentary stratum, formation, 24 aquifer, cavity, or void, including pore space, oil and gas reservoirs, saline formations, 25 and coal seams that are suitable, or capable of being made suitable, for injection and 26 carbon storage; 27 (8) "storage facility" means the storage reservoir, underground 28 equipment, well, and surface facilities and equipment used in accordance with a 29 permit; "storage facility" does not include pipelines, compressors, surface facilities, 30 and equipment used to transport carbon dioxide to the storage facility that are 31 unrelated to well safety and metering;
01 (9) "storage operator" means a person holding or applying for a permit; 02 (10) "storage reservoir" means a reservoir proposed, authorized, or 03 used for carbon storage; 04 (11) "supercritical fluid" means a substance at or above its critical 05 temperature and critical pressure that is neither a liquid nor a gas but that has 06 properties of both; 07 (12) "waste" means, in addition to its ordinary meaning, physical 08 waste, and includes inefficient, excessive, or improper operation of a storage facility 09 or well; 10 (13) "well" means a well that is drilled, converted, or reactivated for 11 discovery, testing, or subsurface injection into a reservoir. 12 Article 3. Long-Term Monitoring and Maintenance of Carbon Storage Facilities. 13 Sec. 41.06.305. Long-term monitoring and maintenance. (a) The 14 department shall conduct long-term monitoring and maintenance of a storage facility 15 that has been issued a certificate of completion under AS 41.06.170. 16 (b) Under this section, the authority of the department applies to all land in the 17 state lawfully subject to the police power of the state, including private land, 18 municipal land, state land, land of the United States, and land subject to the 19 jurisdiction of the United States. The department may enter, at a reasonable time and 20 in a reasonable manner, the site of a storage facility that has been issued a certificate 21 of completion under AS 41.06.170. 22 (c) The state, the department, and the commission have no obligation to pay 23 costs associated with long-term monitoring and maintenance of a storage facility in an 24 amount greater than the amount attributable to that storage facility and separately 25 accounted for under AS 37.14.850. 26 (d) The department may adopt regulations under AS 44.62 (Administrative 27 Procedure Act) to carry out the purposes of this section. 28 (e) In this section, 29 (1) "commission" means the Alaska Oil and Gas Conservation 30 Commission created under AS 31.05.005; 31 (2) "long-term monitoring and maintenance" means an activity
01 associated with monitoring and maintenance of a storage facility that has been issued a 02 certificate of completion under AS 41.06.170 and may include 03 (A) operational and long-term inspecting, testing, and 04 monitoring of the storage facility site, wells, and remaining facilities; 05 (B) remediation measures arising from the storage facility site, 06 including remediation of property and mechanical problems associated with 07 wells and remaining facilities; 08 (C) repairing mechanical leaks at the storage facility site; 09 (D) plugging and abandoning wells; 10 (E) converting wells for use as observation wells; 11 (F) purchasing or paying insurance costs for a storage facility, 12 whether commercially or through government funding; 13 (3) "storage facility" has the meaning given in AS 41.06.210. 14 * Sec. 35. AS 41.08.020(b) is amended to read: 15 (b) In addition to the requirements of (a) of this section, the division of 16 geological and geophysical surveys shall [:] 17 (1) collect, record, evaluate, and distribute data on the quantity, 18 quality, and location of underground, surface, and coastal water of the state; 19 (2) publish or have published data on the water of the state; 20 (3) require the [FILING WITH IT OF THE] results and findings of 21 surveys of water quality, quantity, and location to be filed with the division; 22 (4) require [OF] water well contractors to file with the division [, 23 THE FILING WITH IT OF] basic water and aquifer data normally obtained, including 24 [BUT NOT LIMITED TO] well location, estimated elevation, well driller's logs, 25 pumping tests and flow measurements, and water quality determinations; 26 (5) accept and spend funds for the purposes of this section, 27 AS 41.08.017, and 41.08.035 and enter into agreements with individuals, public or 28 private agencies, communities, private industry, state agencies, and agencies of the 29 federal government; 30 (6) collect, evaluate, and distribute geologic data on seismic events and 31 engineering geology of the state;
01 (7) identify potential seismic hazards that might affect development in 02 the state; 03 (8) inform public officials and industry about potential seismic hazards 04 that might affect development in the state; and 05 (9) make available to a qualified person without charge seismic 06 survey and other geophysical data in possession of the department that relates to 07 land inside the Cook Inlet sedimentary basin, unless the data is 08 (A) required to be kept confidential under AS 31.05.035(c) 09 or AS 43.55.025(f); or 10 (B) well data from a well on private land that the owner of 11 the oil or gas resource has not provided permission to release to the 12 public. 13 * Sec. 36. AS 41.08.020 is amended by adding a new subsection to read: 14 (c) In this section, "qualified person" means an accredited domestic research 15 institution, a person actively exploring for, developing, or producing oil, gas, or 16 minerals in the state, or another person to whom the provision of seismic survey and 17 other geophysical data would serve the best interests of the state as determined by the 18 department. 19 * Sec. 37. AS 41.21.167(a) is amended to read: 20 (a) The land and water areas described in AS 41.21.161 are not open to 21 mineral entry under AS 38.05.135 - 38.05.275 or 38.05.700 - 38.05.795. 22 * Sec. 38. AS 41.21.491(d) is amended to read: 23 (d) Except for oil and gas leasing under AS 38.05.180 and carbon storage 24 licensing and leasing under AS 38.05.700 - 38.05.795, the mineral estate in the state- 25 owned land and water described in (a) of this section is closed to mineral entry under 26 AS 38.05.181 - 38.05.275. 27 * Sec. 39. AS 41.21.502(c) is amended to read: 28 (c) The mineral estate in the state-owned land and water described in (a) of 29 this section is open to oil and gas leasing under AS 38.05.180 and carbon storage 30 licensing and leasing under AS 38.05.700 - 38.05.795. The mineral estate in the 31 state-owned land and water described in (a) of this section is closed to mineral entry
01 under AS 38.05.181 - 38.05.275. 02 * Sec. 40. AS 41.21.617 is amended to read: 03 Sec. 41.21.617. Other uses generally. The state land and water described in 04 AS 41.21.611(b) is closed to mineral entry under AS 38.05.135 - 38.05.275 and 05 38.05.700 - 38.05.795, to commercial harvest of timber, and to sale under state land 06 disposal laws. The commissioner may lease the land described in AS 41.21.611(b) 07 under AS 38.05.070 - 38.05.105 for a purpose consistent with AS 41.21.610(a) and 08 (b). A municipality may select land within the Alaska Chilkat Bald Eagle Preserve 09 under law. 10 * Sec. 41. AS 42.05.141 is amended by adding new subsections to read: 11 (g) The commission shall, as required under AS 44.88.850(b), determine 12 whether the sale price in a gas sales agreement for gas produced through a project 13 partially or fully funded by a loan under AS 44.88.850 constitutes a just and 14 reasonable immediate delivery price for gas. 15 (h) Except as provided in AS 42.05.711(q) and (s), the commission shall 16 regulate under this chapter the service of natural gas storage and the service of 17 liquefied natural gas storage, including storage furnished by operating a natural gas 18 storage facility that is part of a 19 (1) pipeline facility operated by a pipeline carrier; or 20 (2) natural gas pipeline facility operated by a natural gas pipeline 21 carrier. 22 (i) In (h) of this section, "natural gas pipeline carrier," "natural gas pipeline 23 facility," "pipeline carrier," and "pipeline facility" have the meanings given in 24 AS 42.06.630. 25 * Sec. 42. AS 42.05.381(k) is amended to read: 26 (k) The cost to the utility of storing gas in a gas storage facility or storing 27 liquefied natural gas in a liquefied natural gas storage facility that is allowed in 28 determining a just and reasonable rate shall reflect the 29 (1) reduction in cost attributable to any exemption from a payment due 30 under AS 38.05.096 or 38.05.180(u), as applicable, and the value of a tax credit that 31 the owner of the gas storage facility received under AS 43.20.046 or 43.20.047, as
01 applicable; the [. THE] commission may request the 02 (A) [(1)] commissioner of natural resources to report the value 03 of the exemption from a payment due under AS 38.05.096 or 38.05.180(u), as 04 applicable, that the gas storage facility received; and 05 (B) [(2)] commissioner of revenue to report information on the 06 amount of tax credits claimed under AS 43.20.046 and 43.20.047, as 07 applicable, for the gas storage facility or liquefied natural gas storage facility; 08 (2) fair market value of oil and gas fields, drilling rigs, production 09 platforms, wells, and similar assets used for gas storage or liquefied natural gas 10 storage and a fair return on the fair market value of those assets; 11 (3) costs related to the dismantlement, removal, and restoration of 12 a gas storage facility or liquefied natural gas storage facility [. IN THIS 13 SUBSECTION, "GAS STORAGE FACILITY" HAS THE MEANING GIVEN IN 14 AS 31.05.032]. 15 * Sec. 43. AS 42.05.381 is amended by adding new subsections to read: 16 (p) For rate-making purposes, the commission shall consider the investment of 17 a public utility in a liquefied natural gas import or export facility as utility property, 18 even if the liquefied natural gas import or export facility is exempt from regulation by 19 the commission. In this subsection, 20 (1) "investment" includes an investment in land used to connect to a 21 liquefied natural gas import or export facility used by the public utility to render 22 service to the public; 23 (2) "liquefied natural gas import or export facility" includes a facility 24 used to receive, unload, load, store, transport, gasify, liquefy, or process natural gas. 25 (q) In (k) of this subsection, "gas storage facility" has the meaning given in 26 AS 31.05.032(e). 27 * Sec. 44. AS 42.05 is amended by adding a new section to article 5 to read: 28 Sec. 42.05.505. Records of gas storage facilities. Records held by the 29 commission related to the finances of a gas storage facility, a liquefied natural gas 30 storage facility, or a public utility providing the service of natural gas storage, 31 including financial statements and financial assurance agreements, are confidential
01 and are not public records under AS 40.25.100 - 40.25.295 (Alaska Public Records 02 Act). The commission may disclose information from a record subject to this section 03 only to a state or federal agency if the commission determines that disclosure of the 04 information is necessary for the commission to complete its duties. 05 * Sec. 45. AS 42.05.711(q) is amended to read: 06 (q) The service of natural gas storage furnished by operating a natural gas 07 storage facility that is [(1) PART OF A PIPELINE FACILITY OPERATED BY A 08 PIPELINE CARRIER, (2) PART OF A NATURAL GAS PIPELINE FACILITY 09 OPERATED BY A NATURAL GAS PIPELINE CARRIER, OR (3)] part of a North 10 Slope natural gas pipeline facility operated by a North Slope natural gas pipeline 11 carrier is exempt from this chapter. In this subsection, ["NATURAL GAS PIPELINE 12 CARRIER," "NATURAL GAS PIPELINE FACILITY,"] "North Slope natural gas 13 pipeline carrier [,]" and "North Slope natural gas pipeline facility [,]" ["PIPELINE 14 CARRIER," AND "PIPELINE FACILITY"] have the meanings given in 15 AS 42.06.630. 16 * Sec. 46. AS 42.05.711 is amended by adding a new subsection read: 17 (w) A liquefied natural gas import facility under the jurisdiction of the Federal 18 Energy Regulatory Commission is exempt from this chapter. 19 * Sec. 47. AS 42.06.140 is amended by adding new subsections to read: 20 (c) The commission shall regulate under AS 42.05 the service of natural gas 21 and liquefied natural gas storage, including storage furnished by operating a natural 22 gas storage facility that is part of a 23 (1) pipeline facility operated by a pipeline carrier; or 24 (2) natural gas pipeline facility operated by a natural gas pipeline 25 carrier. 26 (d) In this section, 27 (1) "service of liquefied natural gas storage" means the operation of a 28 liquefied natural gas storage facility; "service of liquefied natural gas storage" does 29 not include the storage of liquefied natural gas 30 (A) owned by or contractually obligated to the owner, operator, 31 or manager of the liquefied natural gas storage facility; or
01 (B) for which the price of storage is not separately itemized; 02 (2) "service of natural gas storage" means the operation of a natural 03 gas storage facility primarily or exclusively for the benefit of third-party customers, 04 and not for the benefit of the owner, operator, or manager of the natural gas storage 05 facility; "service of natural gas storage" does not include the storage of natural gas 06 (A) owned by or contractually obligated to the owner, operator, 07 or manager of the natural gas storage facility; or 08 (B) for which the price of storage is not separately itemized. 09 * Sec. 48. AS 43.20 is amended by adding a new section to read: 10 Sec. 43.20.019. Tax on income attributable to a qualified entity. (a) If an 11 entity has qualified taxable income over $4,000,000 in a tax year, the entity shall pay a 12 tax of 9.4 percent on the qualified taxable income over $4,000,000. 13 (b) The tax under this section does not apply to a corporation paying tax under 14 AS 43.20.011. 15 (c) The department shall aggregate the qualified taxable income of two or 16 more entities for the purpose of determining the tax due under this section if the 17 department determines that, without the provisions of this section, the qualified 18 taxable income would reasonably be expected to be attributed to a single entity. 19 (d) The Department of Administration shall separately account for the tax 20 collected under this section. The legislature may appropriate tax revenue collected 21 under this section to fund renewable energy or electrical grid projects and upgrades. 22 (e) In this section, 23 (1) "entity" means a 24 (A) sole proprietorship; 25 (B) partnership; or 26 (C) entity that has elected to file federal returns under 26 27 U.S.C. 1361 - 1379 (Internal Revenue Code); 28 (2) "qualified taxable income" means income from the production of 29 oil or gas from a lease or property in the state or from the transportation of oil or gas 30 by pipeline in the state before deductions for 31 (A) dividends and gifts; and
01 (B) wages, salaries, bonuses, or other similar payments to 02 owners, partners, members, or shareholders of the entity. 03 * Sec. 49. AS 43.20.036 is amended by adding a new subsection to read: 04 (k) For purposes of calculating the income tax payable under this chapter, the 05 taxpayer may not apply as a credit against tax liability the carbon oxide sequestration 06 credit allowed as to federal taxes under 26 U.S.C. 45Q (Internal Revenue Code). 07 * Sec. 50. AS 43.55.165(e) is amended to read: 08 (e) For purposes of this section, lease expenditures do not include 09 (1) depreciation, depletion, or amortization; 10 (2) oil or gas royalty payments, production payments, lease profit 11 shares, or other payments or distributions of a share of oil or gas production, profit, or 12 revenue, except that a producer's lease expenditures applicable to oil and gas produced 13 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 14 profit paid to the state under that lease; 15 (3) taxes based on or measured by net income; 16 (4) interest or other financing charges or costs of raising equity or debt 17 capital; 18 (5) acquisition costs for a lease or property or exploration license; 19 (6) costs arising from fraud, wilful misconduct, gross negligence, 20 violation of law, or failure to comply with an obligation under a lease, permit, or 21 license issued by the state or federal government; 22 (7) fines or penalties imposed by law; 23 (8) costs of arbitration, litigation, or other dispute resolution activities 24 that involve the state or concern the rights or obligations among owners of interests in, 25 or rights to production from, one or more leases or properties or a unit; 26 (9) costs incurred in organizing a partnership, joint venture, or other 27 business entity or arrangement; 28 (10) amounts paid to indemnify the state; the exclusion provided by 29 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 30 a third-party insurer or surety; 31 (11) surcharges levied under AS 43.55.201 or 43.55.300;
01 (12) an expenditure otherwise deductible under (b) of this section that 02 is a result of an internal transfer, a transaction with an affiliate, or a transaction 03 between related parties, or is otherwise not an arm's length transaction, unless the 04 producer establishes to the satisfaction of the department that the amount of the 05 expenditure does not exceed the fair market value of the expenditure; 06 (13) an expenditure incurred to purchase an interest in any corporation, 07 partnership, limited liability company, business trust, or any other business entity, 08 whether or not the transaction is treated as an asset sale for federal income tax 09 purposes; 10 (14) a tax levied under AS 43.55.011 or 43.55.014; 11 (15) costs incurred for dismantlement, removal, surrender, or 12 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 13 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 14 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 15 excluded under this paragraph if the dismantlement, removal, surrender, or 16 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 17 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 18 (16) costs incurred for containment, control, cleanup, or removal in 19 connection with any unpermitted release of oil or a hazardous substance and any 20 liability for damages imposed on the producer or explorer for that unpermitted release; 21 this paragraph does not apply to the cost of developing and maintaining an oil 22 discharge prevention and contingency plan under AS 46.04.030; 23 (17) costs incurred to satisfy a work commitment under an exploration 24 license under AS 38.05.132; 25 (18) that portion of expenditures, that would otherwise be qualified 26 capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 27 are less than the product of $0.30 multiplied by the total taxable production from each 28 lease or property, in BTU equivalent barrels, during that calendar year, except that, 29 when a portion of a calendar year is subject to this provision, the expenditures and 30 volumes shall be prorated within that calendar year; 31 (19) costs incurred for repair, replacement, or deferred maintenance of
01 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 02 undertaken in response to a failure, problem, or event that results in an unscheduled 03 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 04 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 05 equipment, other than a well, that is undertaken in response to, or is otherwise 06 associated with, an unpermitted release of a hazardous substance or of gas; however, 07 costs under this paragraph that would otherwise constitute lease expenditures under (a) 08 and (b) of this section may be treated as lease expenditures if the department 09 determines that the repair or replacement is solely necessitated by an act of war, by an 10 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 11 inevitable, and irresistible character, the effects of which could not have been 12 prevented or avoided by the exercise of due care or foresight, or by an intentional or 13 negligent act or omission of a third party, other than a party or its agents in privity of 14 contract with, or employed by, the producer or an operator acting for the producer, but 15 only if the producer or operator, as applicable, exercised due care in operating and 16 maintaining the facility, pipeline, structure, or equipment, and took reasonable 17 precautions against the act or omission of the third party and against the consequences 18 of the act or omission; in this paragraph, 19 (A) "costs incurred for repair, replacement, or deferred 20 maintenance of a facility, a pipeline, a structure, or equipment" includes costs 21 to dismantle and remove the facility, pipeline, structure, or equipment that is 22 being replaced; 23 (B) "hazardous substance" has the meaning given in 24 AS 46.03.826; 25 (C) "replacement" includes renovation or improvement; 26 (20) costs incurred to construct, acquire, or operate a refinery or crude 27 oil topping plant, regardless of whether the products of the refinery or topping plant 28 are used in oil or gas exploration, development, or production operations; however, if 29 a producer owns a refinery or crude oil topping plant that is located on or near the 30 premises of the producer's lease or property in the state and that processes the 31 producer's oil produced from that lease or property into a product that the producer
01 uses in the operation of the lease or property in drilling for or producing oil or gas, the 02 producer's lease expenditures include the amount calculated by subtracting from the 03 fair market value of the product used the prevailing value, as determined under 04 AS 43.55.020(f), of the oil that is processed; 05 (21) costs of lobbying, public relations, public relations advertising, or 06 policy advocacy; 07 (22) costs incurred as part of a capital expenditure or other action taken 08 for a carbon management purpose under AS 38.05.081 or a carbon offset project under 09 AS 38.95.400 - 38.95.499; 10 (23) costs incurred to become eligible for, or that result in 11 eligibility to claim, the carbon oxide sequestration credit allowed as to federal 12 taxes under 26 U.S.C. 45Q (Internal Revenue Code), when the costs are expended 13 to construct, acquire, modify, operate, dismantle, or remove a facility for carbon 14 capture, carbon utilization, or carbon storage, including construction and 15 modification of new or existing infrastructure, as well as fees incurred under 16 AS 41.06.160, surcharges incurred under AS 41.06.175, or costs associated with 17 obtaining, operating, or maintaining a license or lease under AS 38.05.700 - 18 38.05.795. 19 * Sec. 51. AS 44.25.020 is amended to read: 20 Sec. 44.25.020. Duties of department. The Department of Revenue shall 21 (1) enforce the tax laws of the state; 22 (2) collect, account for, have custody of, invest, and manage all state 23 funds and all revenues of the state except revenues incidental to a program of licensing 24 and regulation carried on by another state department, funds managed and invested by 25 the Alaska Retirement Management Board, and as otherwise provided by law; 26 (3) invest and manage the balance of the power development fund in 27 accordance with AS 44.83.386; 28 (4) administer the surety bond program for licensure as a fish 29 processor or primary fish buyer; 30 (5) provide reasonable assistance to the Alaska Industrial 31 Development and Export Authority under AS 44.88.850(c).
01 * Sec. 52. AS 44.37.020 is amended by adding a new subsection to read: 02 (d) The Department of Natural Resources shall provide reasonable assistance 03 to the Alaska Industrial Development and Export Authority under AS 44.88.850(c). 04 * Sec. 53. AS 44.88 is amended by adding new sections to read: 05 Article 10A. Cook Inlet Reserve-Based Lending. 06 Sec. 44.88.850. Cook Inlet reserve-based lending account. (a) The Cook 07 Inlet reserve-based lending account is established in the revolving fund. The account 08 consists of money or assets deposited into the account by the authority and 09 contributions from other sources. 10 (b) The authority may use money in the account to make one or more reserve- 11 based loans to fund oil and gas development projects the authority considers necessary 12 to increase oil and gas production from the Cook Inlet sedimentary basin. The 13 authority may, as a term of the loan, accept an ownership share in the project funded 14 by the loan. If the authority accepts an ownership share as a term of the loan, the 15 ownership share must be in the form of a carried interest that does not obligate the 16 authority to contribute to the development costs of the project. The authority may 17 make a loan under this section only 18 (1) to a legal entity in compliance with state and federal laws; 19 (2) if the loan applicant provides a written waiver permitting the 20 authority to access or obtain copies of the loan applicant's confidential records that are 21 in possession of the Department of Natural Resources or the Department of Revenue; 22 information provided to the authority under this section shall be kept confidential by 23 the authority unless disclosure is authorized by the loan applicant or borrower; 24 (3) if the authority obtains an independent study performed by an 25 experienced, qualified expert that confirms the valuation of the loan security and the 26 capacity of the loan to support the oil and gas development project and to cause or 27 increase the commercial production of oil or gas from the Cook Inlet sedimentary 28 basin; 29 (4) if the Regulatory Commission of Alaska determines, under 30 AS 42.05.141(g), that the sale price in a gas sales agreement for gas produced through 31 a project partially or fully funded by a loan under this section does not exceed a just
01 and reasonable immediate delivery price for gas; 02 (5) if the authority determines that the sales price for oil and gas 03 produced through a project partially or fully funded by a loan under this section is 04 reasonable and in the best interests of residents of the state. 05 (c) The authority may request assistance from the Department of Revenue 06 under AS 44.25.020(a)(5) or the Department of Natural Resources under 07 AS 44.37.020(d) to execute this section. 08 (d) The authority may accept an overriding royalty interest in a lease for 09 which a loan has been extended under (b) of this section if, as a term of the loan, the 10 overriding royalty interest is subject to prior approval by the Department of Natural 11 Resources. The authority may only have the overriding royalty interest transferred to 12 the authority if the borrower defaults. 13 Sec. 44.88.855. Cook Inlet oil and gas development projects; report. (a) 14 The authority shall evaluate oil and gas development projects the authority believes 15 have reasonable potential to increase oil and gas production from the Cook Inlet 16 sedimentary basin. Each year, the authority shall prepare a report related to those oil 17 and gas development projects and shall, by the first day of each regular session of the 18 legislature, deliver the report to the senate secretary and the chief clerk of the house of 19 representatives and notify the legislature that the report is available. At the request of a 20 legislative committee, a representative of the authority shall appear in that committee 21 to review the report. For each oil and gas development project, the report must include 22 (1) a cost estimate for the project; 23 (2) the potential recoverable gas from the project; 24 (3) the projected rate of return for the project; 25 (4) if the authority recommends a reserve-based loan for the project, 26 the amount of funds necessary for deposit into the Cook Inlet reserve-based lending 27 account to provide a loan for the project and the recommended source of funds for the 28 deposit. 29 (b) Notwithstanding AS 44.88.215, 44.88.850(b)(2), or any other law, a 30 borrower's information shall be subject to the public reporting requirements under this 31 section. Each year, the authority shall prepare a report related to Cook Inlet reserve-
01 based loans made under AS 44.88.850 and shall, by the first day of each regular 02 session of the legislature, deliver the report to the senate secretary and the chief clerk 03 of the house of representatives and notify the legislature that the report is available. At 04 the request of a legislative committee, a representative of the authority shall appear in 05 that committee to review the report. The report must 06 (1) identify each entity borrowing funds under AS 44.88.850; 07 (2) list the amount borrowed by each borrower and the date each loan 08 was approved; 09 (3) include a summary of the terms of the lending agreement with each 10 borrower; 11 (4) summarize each project for which a loan was made, including the 12 status of the project and the volume of oil and gas produced and expected to be 13 produced from the project; 14 (5) list the status of payments made on the loan, including whether the 15 loan is or ever was in default. 16 * Sec. 54. AS 44.88.900 is amended by adding new paragraphs to read: 17 (20) "oil and gas development project" means a development project to 18 produce proven oil or gas reserves; 19 (21) "reserve-based loan" means a loan made against and fully secured 20 by an oil and gas field, proven undeveloped or developed oil and gas reserves, or other 21 assets of the entity receiving the loan. 22 * Sec. 55. AS 46.03.020 is amended to read: 23 Sec. 46.03.020. Powers of the department. The department may 24 (1) enter into contracts and compliance agreements necessary or 25 convenient to carry out the functions, powers, and duties of the department; 26 (2) review and appraise programs and activities of state departments 27 and agencies in light of the policy set out in AS 46.03.010 for the purpose of 28 determining the extent to which the programs and activities are contributing to the 29 achievement of that policy and to make recommendations to the departments and 30 agencies, including environmental guidelines; 31 (3) consult with and cooperate with
01 (A) officials and representatives of any nonprofit corporation or 02 organization in the state; 03 (B) persons, organizations, and groups, public and private, 04 using, served by, interested in, or concerned with the environment of the state; 05 (4) appear and participate in proceedings before any state or federal 06 regulatory agency involving or affecting the purposes of the department; 07 (5) undertake studies, inquiries, surveys, or analyses it may consider 08 essential to the accomplishment of the purposes of the department; these activities 09 may be carried out by the personnel of the department or in cooperation with public or 10 private agencies, including educational, civic, and research organizations, colleges, 11 universities, institutes, and foundations; 12 (6) at reasonable times, enter and inspect with the consent of the owner 13 or occupier any property or premises to investigate either actual or suspected sources 14 of pollution or contamination or to ascertain compliance or noncompliance with a 15 regulation that may be adopted under AS 46.03.020 - 46.03.040; information relating 16 to secret processes or methods of manufacture discovered during investigation is 17 confidential; 18 (7) conduct investigations and hold hearings and compel the 19 attendance of witnesses and the production of accounts, books, and documents by the 20 issuance of a subpoena; 21 (8) advise and cooperate with municipal, regional, and other local 22 agencies and officials in the state, to carry out the purposes of this chapter; 23 (9) act as the official agency of the state in all matters affecting the 24 purposes of the department under federal laws now or hereafter enacted; 25 (10) adopt regulations necessary to carry out the purposes of this 26 chapter, including regulations providing for 27 (A) control, prevention, and abatement of air, water, or land or 28 subsurface land pollution; 29 (B) safeguard standards for carbon dioxide, petroleum, and 30 natural gas pipeline construction, operation, modification, or alteration; 31 (C) protection of public water supplies by establishing
01 minimum drinking water standards, and standards for the construction, 02 improvement, and maintenance of public water supply systems; 03 (D) collection and disposal of sewage and industrial waste; 04 (E) collection and disposal of garbage, refuse, and other 05 discarded solid materials from industrial, commercial, agricultural, and 06 community activities or operations; 07 (F) control of pesticides; 08 (G) other purposes as may be required for the implementation 09 of the policy declared in AS 46.03.010; 10 (H) handling, transportation, treatment, storage, and disposal of 11 hazardous wastes; 12 (11) inspect the premises of sellers and suppliers of paint, vessels, and 13 marine and boating supplies, and take other actions necessary to enforce 14 AS 46.03.715; 15 (12) notwithstanding any other provision of law, take all actions 16 necessary to receive authorization from the administrator of the United States 17 Environmental Protection Agency to administer and enforce a National Pollutant 18 Discharge Elimination System program in accordance with 33 U.S.C. 1342 (sec. 402, 19 Clean Water Act), 33 U.S.C. 1345 (sec. 405, Clean Water Act), 40 C.F.R. Part 123, 20 and 40 C.F.R. Part 403, as amended; 21 (13) require the owner or operator of a facility to undertake 22 monitoring, sampling, and reporting activities described in 33 U.S.C. 1318 (sec. 308, 23 Clean Water Act); 24 (14) notwithstanding any other provision of law, take all actions 25 necessary to receive federal authorization of a state program for the department and 26 the Department of Natural Resources to administer and enforce a dredge and fill 27 permitting program allowed under 33 U.S.C. 1344 (sec. 404, Clean Water Act) and to 28 implement the program, if authorized. 29 * Sec. 56. AS 42.05.990(10)(B) and 42.05.990(11)(B) are repealed. 30 * Sec. 57. The uncodified law of the State of Alaska is amended by adding a new section to 31 read:
01 LEGISLATIVE AUDIT DIVISION REPORT TO THE LEGISLATURE. The 02 legislative audit division shall conduct an audit of carbon storage leases in the state under 03 AS 38.05.700 - 38.05.795 and submit the audit to the senate secretary and the chief clerk of 04 the house of representatives on or before January 1, 2033, and notify the legislature that the 05 audit is available. The audit must include detailed fiscal information from each fiscal year, 06 beginning with the fiscal year ending June 30, 2025, total revenues and costs to the state 07 associated with carbon storage leases in each fiscal year, and recommendations to improve the 08 carbon storage program. 09 * Sec. 58. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 APPLICABILITY. Section 48 of this Act applies to an entity with qualified taxable 12 income over $4,000,000 for a tax year beginning on or after January 1, 2023. 13 * Sec. 59. The uncodified law of the State of Alaska is amended by adding a new section to 14 read: 15 TRANSITION: PAYMENT OF TAX. A person subject to tax before the effective 16 date of sec. 48 of this Act under AS 43.20.019, added by sec. 48 of this Act, shall pay the 17 balance of the tax due for a tax year ending before January 1, 2024, by January 1, 2025. Until 18 January 1, 2025, the Department of Revenue shall waive interest that would otherwise accrue 19 under AS 43.05.225 and civil and criminal penalties accruing under AS 43.05.220, 43.05.245, 20 and 43.05.290 that are a result of the retroactivity of this Act. 21 * Sec. 60. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 TRANSITION: REGULATIONS. The Department of Natural Resources, the 24 Department of Revenue, and the Alaska Oil and Gas Conservation Commission may adopt 25 regulations necessary to implement the changes made by this Act. The regulations take effect 26 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law 27 implemented by the regulation. 28 * Sec. 61. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 REVISOR'S INSTRUCTION. The revisor of statutes is requested to change the 31 chapter heading for AS 41.06 from "Geothermal Resources" to "Geothermal Resources and
01 Carbon Storage." 02 * Sec. 62. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 RETROACTIVITY OF REGULATIONS. Notwithstanding a contrary provision of 05 AS 44.62.240, if the Department of Revenue expressly designates in the regulation that the 06 regulation applies retroactively to a specific date, a regulation adopted by the department to 07 implement, interpret, make specific, or otherwise carry out sec. 48 of this Act applies 08 retroactively to that date. 09 * Sec. 63. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 RETROACTIVITY. Sections 48, 58, and 59 of this Act are retroactive to January 1, 12 2023. 13 * Sec. 64. Sections 48, 58 - 60, 62, and 63 of this Act take effect immediately under 14 AS 01.10.070(c).