CSSB 69(RES): "An Act relating to geothermal resources; and providing for an effective date."
00 CS FOR SENATE BILL NO. 69(RES) 01 "An Act relating to geothermal resources; and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 38.05.181(a) is amended to read: 04 (a) The commissioner may, under regulations adopted by the commissioner, 05 grant prospecting licenses [PERMITS] and leases to a qualified person to explore for, 06 develop, or use geothermal resources. When title to the surface parcel is held by a 07 person other than the state, that person shall have a preferential right to a geothermal 08 prospecting license [PERMIT] or lease for the area underlying the surface parcel. The 09 surface owner must exercise the preference right within 30 days after receiving notice 10 of the application for a license [PERMIT], or by agreeing to meet the terms of a bid 11 within 60 days after receiving notice of the acceptance of the bid for a lease. 12 * Sec. 2. AS 38.05.181(c) is amended to read: 13 (c) On state land that has not been declared a competitive geothermal area or 14 withdrawn from geothermal prospecting, the commissioner may issue a prospecting
01 license [PERMIT] to the first qualified applicant. The license [PERMIT] conveys an 02 exclusive right, for a period of five [TWO] years, to prospect for geothermal resources 03 on state land included under the license [PERMIT]. The commissioner has discretion 04 to renew the license [PERMIT] for an additional one-year term. A holder of a 05 prospecting license [PERMIT] has the right, after completion of an agreed-on work 06 commitment [UPON THE SHOWING OF A DISCOVERY OF GEOTHERMAL 07 RESOURCES IN COMMERCIAL QUANTITIES] and the submission of an 08 exploration [A DEVELOPMENT] plan acceptable to the commissioner, to convert 09 the license [PERMIT] to a noncompetitive lease at a royalty rate under (g) of this 10 section. The conversion privilege must be exercised not later than 30 days after the 11 expiration of the license [PERMIT]. If the land included within the license [PERMIT] 12 is designated a competitive geothermal area during the license [PERMIT] term, the 13 licensee [PERMITTEE] must apply for a noncompetitive lease within 30 days after 14 notification of the designation or forfeit the conversion privileges and the exclusive 15 right to prospect. 16 * Sec. 3. AS 38.05.181(d) is amended to read: 17 (d) On state land that is designated a competitive geothermal area and is not 18 subject to an existing prospecting license [PERMIT], the commissioner may issue 19 geothermal leases to the highest bidder by competitive bidding procedures established 20 by regulations adopted by the commissioner. At the discretion of the commissioner, 21 competitive lease sales may be by oral or sealed bid, on the basis of a cash bonus, 22 profit share, or royalty share. 23 * Sec. 4. AS 38.05.181(e) is amended to read: 24 (e) Prospecting licenses [PERMITS] and geothermal leases granted under this 25 section must [, EXCEPT IN THE CASE OF PARCELS SUBJECT TO A 26 PREFERENCE RIGHT UNDER (b) OF THIS SECTION,] be issued for at least 40 27 acres but not more than 2,560 acres. A person may not own, or hold an interest in, 28 geothermal leases covering more than 100,000 [51,200] acres. However, geothermal 29 leases in commercial production, individually or under a unit operation or well spacing 30 or pooling arrangement, do not count against the acreage limitation. All prospecting 31 licenses [PERMITS] and geothermal leases are subject to an annual rental fee
01 established by the department in regulation and [,] payable in advance [, OF $3 02 PER ACRE]. The rental for a year shall be credited against royalties accruing for that 03 year. 04 * Sec. 5. AS 38.05.181(f) is amended to read: 05 (f) A geothermal lease shall be issued for a primary term of 10 years and may 06 be renewed for an additional term of five years if the lessee is actively engaged in 07 drilling operations. A geothermal lease is valid for the duration of commercial 08 production. [BEGINNING 20 YEARS AFTER THE INITIATION OF 09 COMMERCIAL PRODUCTION AND AT 10-YEAR INTERVALS THEREAFTER, 10 THE COMMISSIONER MAY RENEGOTIATE THE RENTALS AND 11 ROYALTIES DUE ON A GEOTHERMAL LEASE.] 12 * Sec. 6. AS 38.05.965(6) is amended to read: 13 (6) "geothermal resources" means the natural heat of the earth at 14 temperatures greater than 80 [120] degrees Celsius, measured at the point where the 15 highest-temperature resources encountered enter or contact a well or other resource 16 extraction device, and includes 17 (A) the energy, including pressure, in whatever form present in, 18 resulting from, created by, or that may be extracted from that natural heat; 19 (B) the material medium, including the geothermal fluid 20 naturally present, as well as substances artificially introduced to serve as a heat 21 transfer medium; and 22 (C) all dissolved or entrained minerals and gases that may be 23 obtained from the material medium, but excluding hydrocarbon substances and 24 helium; 25 * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 TRANSITION: CONVERSION OF EXISTING PROSPECTING PERMIT 28 APPLICATIONS AND PROSPECTING PERMITS. (a) The commissioner of natural 29 resources shall convert an application for a prospecting permit made under AS 38.05.181(c), 30 as that subsection read on the day before the effective date of sec. 2 of this Act, that is 31 pending with the Department of Natural Resources on the effective date of sec. 2 of this Act,
01 to an application for a prospecting license under AS 38.05.181(c), as amended by sec. 2 of 02 this Act. 03 (b) A person with a valid permit issued under AS 38.05.181(c), as that subsection 04 read on the day before the effective date of sec. 2 of this Act, may request in writing that the 05 commissioner of natural resources convert the prospecting permit into a prospecting license 06 under AS 38.05.181, as amended by secs. 1 - 5 of this Act. The Department of Natural 07 Resources shall provide public notice of a request for the conversion of a prospecting permit 08 into a prospecting license under this section. 09 (c) Upon request of a person qualified under (b) of this section, the commissioner of 10 natural resources shall convert a prospecting permit issued under AS 38.05.181(c), as that 11 section read on the day before the effective date of sec. 2 of this Act, into a prospecting 12 license under AS 38.05.181, as amended by secs. 1 - 5 of this Act. Notwithstanding 13 AS 38.05.035(e), the director of the division of lands is not required to make a written finding 14 and the commissioner of natural resources is not required to expressly approve the conversion 15 of a prospecting permit into a prospecting license under this section. Notwithstanding 16 AS 38.05.181(c), as amended by sec. 2 of this Act, a prospecting permit converted into a 17 prospecting license under this section may not expire later than five years from the date the 18 permit was issued under AS 38.05.181(c), as that subsection read on the day before the 19 effective date of sec. 2 of this Act. 20 * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 21 read: 22 TRANSITION: REGULATIONS. The Department of Natural Resources may adopt 23 regulations to implement the changes made by this Act. The regulations take effect under 24 AS 44.62 (Administrative Procedure Act) but not before the effective date of the law 25 implemented by the regulation. 26 * Sec. 9. Section 8 of this Act takes effect immediately under AS 01.10.070(c). 27 * Sec. 10. Except as provided in sec. 9 of this Act, this Act takes effect July 1, 2024.