00 CS FOR HOUSE BILL NO. 49(RES) 01 "An Act authorizing the Department of Natural Resources to lease land for carbon 02 management purposes; establishing a carbon offset program for state land; authorizing 03 the sale of carbon offset credits; authorizing the use of land and water within the Haines 04 State Forest Resource Management Area for a carbon offset project; authorizing the 05 undertaking of carbon offset projects on land in legislatively designated state forests; 06 and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08  * Section 1. AS 36.30.850(b) is amended by adding a new paragraph to read: 09 (51) contracts between third parties and the Department of Natural 10 Resources under AS 38.95.400 - 38.95.499. 11  * Sec. 2. AS 37.05.146(c) is amended by adding a new paragraph to read: 12 (85) revenue from the carbon offset program under AS 38.95.400 - 13 38.95.499. 01  * Sec. 3. AS 38.05.075(a) is amended to read: 02 (a) Except as provided in AS 38.05.035, 38.05.070, 38.05.073, 38.05.081, 03 38.05.082, 38.05.083, 38.05.087, 38.05.102, 38.05.565, 38.05.600, 38.05.810, and this 04 section, when competitive interest has been demonstrated or the commissioner 05 determines that it is in the state's best interests, leasing shall be made at public auction 06 or by sealed bid, at the discretion of the director, to the highest qualified bidder as 07 determined by the commissioner. A bidder may be represented by an attorney or agent 08 at a public auction. In the public notice of a lease to be offered at public auction or by 09 sealed bid, the commissioner shall specify a minimum acceptable bid and the lease 10 compensation method. The lease compensation method shall be designed to maximize 11 the return on the lease to the state and shall be a form of compensation set out in 12 AS 38.05.073(m). An aggrieved bidder may appeal to the commissioner within five 13 days for a review of the determination. The leasing shall be conducted by the 14 commissioner, and the successful bidder shall deposit at the public auction or with the 15 sealed bid the first year's rental or other lease compensation as specified by the 16 commissioner, or that portion of it that the commissioner requires in accordance with 17 the bid. The commissioner shall require, under AS 38.05.860, qualified bidders to 18 deposit a sum equal to any survey or appraisal costs reasonably incurred by another 19 qualified bidder acting in accordance with the regulations of the commissioner or 20 incurred by the department under AS 38.04.045 and AS 38.05.840. If a bidder making 21 a deposit of survey or appraisal costs is determined by the commissioner to be the 22 highest qualified bidder under this subsection, the deposit shall be paid to the 23 unsuccessful bidder who incurred those costs or to the department if the department 24 incurred the costs. All costs for survey and appraisal shall be approved in advance in 25 writing by the commissioner. The commissioner shall immediately issue a receipt 26 containing a description of the land or interest leased, the price bid, and the terms of 27 the lease to the successful qualified bidder. If the receipt is not accepted in writing by 28 the bidder under this subsection, the commissioner may offer the land for lease again 29 under this subsection. A lease, on a form approved by the attorney general, shall be 30 signed by the successful bidder and by the commissioner. 31  * Sec. 4. AS 38.05 is amended by adding a new section to read: 01 Sec. 38.05.081. Leases of state land for carbon management purposes. (a) 02 The commissioner may lease state land for carbon management purposes. A lease 03 agreement under this section must include land use restrictions and authorizations 04 consistent with the carbon management purpose of the lease. 05 (b) A person may apply to lease land for a carbon management purpose by 06 submitting an application to the department. An application to lease land must include 07 (1) the specific location, description, and amount of land the applicant 08 wants to lease; 09 (2) a detailed summary of the proposed purpose the land will be used 10 for; and 11 (3) additional information and requirements established by the 12 department in regulation, including any application fees. 13 (c) If the director receives two or more applications for the same land, the 14 director shall award the lease to the most qualified applicant. In determining the most 15 qualified applicant, the director shall consider whether the applicant has previous 16 experience with carbon management, the anticipated lease term, how the proposed use 17 would accommodate concurrent use of the land, consistency with existing state area or 18 management plans, and any additional requirement established by the department in 19 regulation. If one or more applicants have proposed different carbon management 20 purposes, the director may evaluate each applicant's proposal and determine which 21 proposed use is more appropriate for the selected state land. An aggrieved applicant 22 may appeal to the commissioner for a review of the director's determination within 20 23 days after receiving notice of the determination. 24 (d) A lease under this section may not exceed a period of 55 years. If during 25 the term of the lease the commissioner determines that the land is not being used for 26 the carbon management purpose approved by the commissioner, the commissioner 27 may terminate the lease. 28 (e) A lessee under this section is not entitled to a preference right to purchase 29 the leased land. 30 (f) Compensation for a lease under this section 31 (1) shall be designed to maximize the return to the state and be a form 01 of compensation provided under AS 38.05.073(m); 02 (2) shall be separately accounted for under AS 37.05.142; and 03 (3) may be used by the legislature to make appropriations to the 04 department to carry out the purposes of this section. 05 (g) The provisions of AS 38.05.070 and 38.05.095 concerning subleasing, 06 assignment, lease renewals, and lease extensions apply to leasing under this section. 07 (h) Before entering into a lease of land under this section, the director must 08 find under AS 38.05.035(e) that leasing the land for the proposed carbon management 09 purpose is in the best interests of the state. The findings must include 10 (1) reasonably foreseeable effects that a project may have on the state 11 or local economy; and 12 (2) anticipated annual revenue that the lease will yield to the state. 13 (i) State land used for carbon management purposes must, to the extent 14 practicable, remain open to the public for access, hunting, fishing, and other generally 15 allowed uses as determined by the department. 16 (j) In this section, "carbon management" means a greenhouse gas mitigation 17 measure or nongeologic carbon sequestration project. 18  * Sec. 5. AS 38.05.102 is amended to read: 19 Sec. 38.05.102. Lessee preference. Except for a lease under AS 38.05.081, if 20 [IF] land within a leasehold created under AS 38.05.070 - 38.05.105 is offered for sale 21 or long-term lease at the termination of the existing leasehold, the director may, upon 22 a finding that it is in the best interest of the state, allow a [THE] holder in good 23 standing of the existing [THAT] leasehold to purchase or lease the land for its 24 appraised fair market value at the time of the sale or long-term lease.  25  * Sec. 6. AS 38.95 is amended by adding new sections to read: 26 Article 8. Carbon Offset Program.  27 Sec. 38.95.400. Carbon offset program. (a) A carbon offset program is 28 established in the department to undertake carbon offset projects on state land. 29 (b) The commissioner shall adopt regulations to implement AS 38.95.400 - 30 38.95.499. 31 (c) The commissioner may enter into contracts with third parties to carry out 01 the purposes of AS 38.95.400 - 38.95.499. 02 (d) Nothing in AS 38.95.400 - 38.95.499 may be construed to prevent a 03 private landowner from participating in a registry or exchange or to impose additional 04 legal requirements on a private landowner undertaking the landowner's own carbon 05 offset project. 06 Sec. 38.95.410. Carbon offset project criteria; evaluation; best interest  07 finding. (a) The commissioner shall adopt criteria for evaluation of a proposed carbon 08 offset project on state land. The evaluation criteria must include, if applicable, 09 (1) consideration of a project's baseline and predicted additionality; 10 (2) whether registry protocols, including validation and verification 11 requirements, are consistent with applicable state law; 12 (3) whether a project would be consistent with AS 38.95.400 - 13 38.95.499 and applicable regulations; and 14 (4) reasonably foreseeable effects that a project may have on the state 15 or local economy. 16 (b) Except as otherwise provided in statute or regulation, state land shall be 17 available for carbon offset projects. 18 (c) Legislatively withdrawn land may not be used for a carbon offset project 19 without approval by the legislature or as otherwise provided by law. In this subsection, 20 "legislatively withdrawn land" means land set aside by the legislature under 21 AS 16.20.010 - 16.20.162, 16.20.300 - 16.20.360, AS 41.21, or AS 41.23. 22 (d) A carbon offset project may be undertaken on state land if the director, 23 with the consent of the commissioner, makes a written finding that the project will 24 best serve the interests of the state under AS 38.05.035(e). 25 (e) A carbon offset project term may not exceed 55 years. 26 (f) State land used for a carbon offset project must remain open to the public 27 for access, hunting, fishing, and other generally allowed uses as determined by the 28 department. 29 Sec. 38.95.420. Registration and sale of carbon offset credits; records. (a) 30 After a written finding under AS 38.95.410(d), the director may enter into an 31 agreement to register the carbon offset project to generate revenue from the sale of 01 carbon offset credits. 02 (b) The department shall maintain records for a carbon offset project 03 undertaken by the department under AS 38.95.400 - 38.95.499 for the project term and 04 any additional amount of time required by the registry. The records must include, for 05 each carbon offset project, 06 (1) the project term; 07 (2) the anticipated annual carbon offset credits that the carbon offset 08 project will yield; 09 (3) registry agreements; and 10 (4) project administration and technical documentation associated with 11 the valuation of baseline, valuation of additionality, project validation, and project 12 verification. 13 Sec. 38.95.430. Carbon offset revenue fund. (a) The carbon offset revenue 14 fund is established as a separate fund outside the general fund for the purpose of 15 providing funding for the carbon offset program. Revenue from the carbon offset 16 program shall be deposited in the carbon offset revenue fund. 17 (b) The legislature may appropriate money in the fund to implement 18 AS 38.95.400 - 38.95.499. 19 (c) On June 30 of each year, the unobligated amount in the carbon offset 20 revenue fund in excess of $10,000,000 lapses into the general fund. 21 Sec. 38.95.499. Definitions. In AS 38.95.400 - 38.95.499, unless the context 22 requires otherwise, 23 (1) "additionality" means the reduction in greenhouse gas emissions or 24 increase in carbon storage represented by a carbon offset project that is in addition to 25 the baseline; 26 (2) "baseline" means the amount of carbon sequestration that would 27 occur if the present situation is maintained in the absence of a carbon offset project; 28 (3) "carbon offset credit" means a transferrable instrument issued by a 29 registry for a validated and verified project that represents an emission reduction of 30 one metric ton of carbon dioxide or other greenhouse gases; 31 (4) "carbon offset project" includes seaweed farming, afforestation, 01 reforestation, and similar land and resource management measures that mitigate 02 greenhouse gases by increasing the carbon stock on state land; 03 (5) "commissioner" means the commissioner of natural resources; 04 (6) "department" means the Department of Natural Resources; 05 (7) "director" means the director of the division of lands; 06 (8) "greenhouse gas" includes carbon dioxide, methane, nitrous oxide, 07 hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other gases that trap 08 and emit radiant energy in the earth's atmosphere; 09 (9) "project term" means the length of time required by a registry for a 10 carbon offset project to yield carbon offset credits; 11 (10) "registry" means an organization or program that brokers carbon 12 offset credits and develops standardized protocols for 13 (A) registering, validating, and verifying carbon offset projects; 14 and 15 (B) issuing carbon offset credits for validated and verified 16 carbon offset projects; 17 (11) "shoreland" means land covered by nontidal water that is 18 navigable under the laws of the United States up to ordinary highwater mark as 19 modified by accretion, erosion, or reliction; 20 (12) "state land" means all land, including shoreland, tideland, and 21 submerged land, or resources belonging to or acquired by the state; 22 (13) "submerged land" means land that is covered by tidal water 23 between the line of mean low water and seaward to a distance of three geographical 24 miles or further as may be properly claimed by the state; 25 (14) "tideland" means land that is periodically covered by tidal water 26 between the elevation of mean high water and mean low water; 27 (15) "validate" or "validation" means a registry's initial approval of a 28 project plan before verification of the project; 29 (16) "verify" or "verification" means a third party's review of a 30 validated project to confirm the project's greenhouse gas net emission reduction or 31 removals for the issuance of carbon offset credits by the registry that has validated the 01 project. 02  * Sec. 7. AS 41.15.300 is amended by adding a new subsection to read: 03 (c) The state land and water designated within the Haines State Forest 04 Resource Management Area under AS 41.15.305(a) may be used for a carbon offset 05 project under AS 38.95.400 - 38.95.499. 06  * Sec. 8. AS 41.15.315(d) is amended to read: 07 (d) The state land and water described in AS 41.15.305(a) are closed to sale 08 under state land disposal laws. The commissioner may lease the land described in 09 AS 41.15.305(a) under AS 38.05.070 - 38.05.105 for a purpose consistent with 10 AS 41.15.300(a) and a municipality may select land in the Haines State Forest 11 Resource Management Area under law. The commissioner may manage the land  12 and water described in AS 41.15.305(a) for purposes consistent with AS 38.95.400  13 - 38.95.499. 14  * Sec. 9. AS 41.15.315 is amended by adding a new subsection to read: 15 (e) A carbon offset project under AS 38.95.400 - 38.95.499 undertaken on 16 land identified in AS 41.15.305 must be consistent with the applicable management 17 plan under AS 41.15.320, and the management plan must identify the land appropriate 18 for the carbon offset project. The department may amend a management plan under 19 AS 41.15.320 to allow for a carbon offset project. 20  * Sec. 10. AS 41.17.200 is amended by adding a new subsection to read: 21 (c) A carbon offset project under AS 38.95.400 - 38.95.499 may be 22 undertaken on land identified in AS 41.17.200 - 41.17.230. 23  * Sec. 11. AS 41.17.220 is amended to read: 24 Sec. 41.17.220. Management of state forests. Land within a state forest or 25 within a unit of a state forest shall be managed under  26 (1) the sustained yield principle; 27 (2) this chapter; [AND] 28 (3) a forest management plan prepared by the department; and  29 (4) if applicable, a carbon offset project undertaken by the  30 department under AS 38.95.400 - 38.95.499. 31  * Sec. 12. AS 41.17.230(a) is amended to read: 01 (a) The commissioner shall prepare a forest management plan consistent with 02 AS 38.04.005 and this chapter for each state forest and for each unit of a state forest to 03 assist in meeting the requirements of this chapter. An operational level forest 04 inventory shall be completed before a forest management plan for the state forest or 05 the unit of a state forest is adopted. The forest management plan shall be adopted, 06 implemented, and maintained within three years of the establishment of a state forest 07 by the legislature. To the extent they are found to be compatible with the primary 08 purpose of state forests under AS 41.17.200, the forest management plan must 09 consider and permit uses of forest land for other [NONTIMBER] purposes, including 10 a carbon offset project under AS 38.95.400 - 38.95.499, recreation, tourism, mining, 11 mineral exploration, mineral leasing, material extraction, consumptive and 12 nonconsumptive uses of wildlife and fish, grazing and other agricultural activities, and 13 other traditional uses. If the commissioner finds that a permitted use is incompatible 14 with one or more other uses in a portion of a state forest, the commissioner shall 15 affirmatively state in the management plan that finding of incompatibility for the 16 specific area where the incompatibility is anticipated to exist and the time period when 17 the incompatibility is anticipated to exist together with the reasons and benefits for 18 each finding. 19  * Sec. 13. AS 41.17.230 is amended by adding a new subsection to read: 20 (g) A carbon offset project undertaken under AS 38.95.400 - 38.95.499 within 21 a state forest must be consistent with the applicable forest management plan, and the 22 applicable forest management plan must identify the land appropriate for the carbon 23 offset project. The department may amend a forest management plan to allow for a 24 carbon offset project. 25  * Sec. 14. This Act takes effect immediately under AS 01.10.070(c).