CSHB 50(FIN): "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 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; relating to carbon oxide sequestration tax credits; relating to the duties of the Department of Natural Resources; relating to carbon dioxide pipelines; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 50(FIN) 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 carbon storage exploration 03 licenses; relating to carbon storage leases; relating to carbon storage operator permits; 04 relating to enhanced oil or gas recovery; relating to long-term monitoring and 05 maintenance of storage facilities; relating to carbon oxide sequestration tax credits; 06 relating to the duties of the Department of Natural Resources; relating to carbon dioxide 07 pipelines; 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:
01 Sec. 31.05.027. Land subject to commission's authority. The authority of the 02 commission applies to all land in the state lawfully subject to its police powers, 03 including land of the United States and land subject to the jurisdiction of the United 04 States. The authority of the commission further applies to all land included in a 05 voluntary cooperative or unit plan of development or operation entered into in 06 accordance with AS 38.05.180(p) or 38.05.725. 07 * Sec. 3. AS 31.05.030(m) is amended to read: 08 (m) The commission has jurisdiction and authority over all persons and 09 property, public and private, necessary to carry out the purposes and intent of 10 AS 41.06, except for provisions in AS 41.06.005 - 41.06.060 and 41.06.305 11 [AS 41.06] for which the Department of Natural Resources has jurisdiction. 12 * Sec. 4. AS 37.05.146(c) is amended by adding new paragraphs to read: 13 (86) carbon dioxide storage facility administrative fund 14 (AS 41.06.160); 15 (87) carbon storage closure trust fund (AS 37.14.850). 16 * Sec. 5. AS 37.14 is amended by adding a new section to read: 17 Article 11. Carbon Storage Closure Trust Fund. 18 Sec. 37.14.850. Carbon storage closure trust fund. (a) The carbon storage 19 closure trust fund is established as a separate trust fund of the state outside and 20 separate from the general fund. The legislature may appropriate the principal and 21 earnings of the fund for the purpose of protecting the public interest in maintaining 22 and closing carbon storage facilities in the state. Money in the fund does not lapse. 23 (b) The carbon storage closure trust fund consists of payments received under 24 AS 41.06.175 and earnings on the fund. The payments received for each storage 25 facility shall be separately accounted for under AS 37.05.142. The commissioner of 26 revenue is a fiduciary of the fund. The commissioner of revenue shall manage and 27 invest the fund assets as provided in AS 37.10.071. 28 (c) The commissioner of natural resources may make expenditures from the 29 carbon storage closure trust fund for the purpose of conducting long-term monitoring 30 and maintenance of a storage facility under AS 41.06.305. If a storage operator is 31 unable to fulfill the storage operator's duties and the financial assurance provided by
01 the storage operator under AS 41.06.110(c)(2) is exhausted or insufficient, the Alaska 02 Oil and Gas Conservation Commission may make expenditures from the fund for the 03 purposes allowed under AS 41.06.105 - 41.06.210. 04 (d) Nothing in this section creates a dedicated fund. 05 (e) In this section, 06 (1) "fund" means the carbon storage closure trust fund; 07 (2) "storage facility" and "storage operator" have the meanings given 08 in AS 41.06.210. 09 * Sec. 6. AS 38.05.069(e) is amended to read: 10 (e) Nothing in (c) of this section affects the disposal of minerals under 11 AS 38.05.135 - 38.05.183 or carbon storage under AS 38.05.700 - 38.05.795. 12 * Sec. 7. AS 38.05.070(a) is amended to read: 13 (a) Land, including tide, submerged, or shoreland, to which the state holds title 14 or to which the state [IT] may become entitled, may be leased, except for the 15 extraction of natural resources and for carbon storage under AS 38.05.700 - 16 38.05.795, in the manner provided in AS 38.05.070 - 38.05.105. 17 * Sec. 8. AS 38.05.130 is amended to read: 18 Sec. 38.05.130. Damages and posting of bond. Rights may not be exercised 19 by the state, its lessees, successors, or assigns under the reservation as set out in 20 AS 38.05.125 until the state, its lessees, successors, or assigns make provision to pay 21 the owner of the land full payment for all damages sustained by the owner, by reason 22 of entering onto [UPON] the land. If the owner for any cause refuses or neglects to 23 settle the damages, the state, its lessees, successors, assigns, or an applicant for a lease 24 or contract from the state for the purpose of prospecting for valuable minerals, or 25 option, contract, or lease for carbon storage or mining coal or a lease for extracting 26 geothermal resources, petroleum, or natural gas, may enter onto [UPON] the land in 27 the exercise of the reserved rights after posting a surety bond determined by the 28 director, after notice and an opportunity to be heard, to be sufficient as to form, 29 amount, and security to secure to the owner payment for damages, and may institute 30 legal proceedings in a court where the land is located, as may be necessary to 31 determine the damages that [WHICH] the owner may suffer.
01 * Sec. 9. AS 38.05.135(a) is amended to read: 02 (a) Except as otherwise provided, valuable mineral deposits in land belonging 03 to the state shall be open to exploration, development, and the extraction of minerals. 04 All land, together with tide, submerged, or shoreland, to which the state holds title to 05 or to which the state may become entitled, may be obtained by permit or lease for the 06 purpose of exploration, development, and the extraction of minerals. Except as 07 specifically limited by AS 38.05.131 - 38.05.181 and 38.05.700 - 38.05.795, land may 08 be withheld from lease application on a first-come, first-served basis, and offered only 09 on a competitive bid basis when determined by the commissioner to be in the best 10 interests of the state. 11 * Sec. 10. AS 38.05.135(c) is amended to read: 12 (c) Payment of a royalty or a net profit share payment to the state under a lease 13 issued under AS 38.05.135 - 38.05.181 or an injection charge under AS 38.05.700 - 14 38.05.795 becomes due on the date and in the manner specified in the lease or in a 15 regulation adopted by the commissioner. 16 * Sec. 11. AS 38.05.135(d) is amended to read: 17 (d) If a royalty or net profit share payment to which the state is entitled under 18 AS 38.05.135 - 38.05.181 or an injection charge under AS 38.05.700 - 38.05.795 is 19 not paid or is underpaid when it becomes due under (c) of this section, the unpaid 20 amount of the royalty, [OR] net profit share payment, or injection charge bears 21 interest in a calendar quarter at the rate of five percentage points above the annual rate 22 charged member banks for advances by the 12th Federal Reserve District as of the 23 first day of that calendar quarter, or at the annual rate of 11 percent, whichever is 24 greater, compounded quarterly as of the last day of that quarter. 25 * Sec. 12. AS 38.05.135(e) is amended to read: 26 (e) 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 overpaid, interest at the rate and compounded in the manner provided in (d) of this 29 section shall be allowed and paid on the overpayment. The interest allowance is 30 subject to the following: 31 (1) if the state grants a credit against future payments for the
01 overpayment, the state shall pay interest on the overpayment 02 (A) from the date that is the later of the date the overpayment 03 was 04 (i) due; or 05 (ii) received; 06 (B) to the date that is the earlier of the date 07 (i) of notice to the lessee of the credit; or 08 (ii) on which the lessee actually takes the credit; 09 (2) if the state refunds the overpayment, the state shall pay interest on 10 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 the state issues the refund. 16 * Sec. 13. AS 38.05.140(a) is amended to read: 17 (a) A person may not take or hold coal leases or permits during the life of coal 18 leases on state land exceeding an aggregate of 92,160 acres, except that a person may 19 apply for coal leases or permits for acreage in addition to 92,160 acres, not exceeding 20 a total of 5,120 additional acres of state land. The additional area applied for shall be 21 in multiples of 40 acres, and the application shall contain a statement that the granting 22 of a lease for additional land is necessary for the person to carry on business 23 economically and is in the public interest. On the filing of the application, except as 24 provided by AS 38.05.180(ff)(3) or 38.05.180(gg) and 38.05.700 - 38.05.795, the coal 25 deposits in the land covered by the application shall be temporarily set aside and 26 withdrawn from all other forms of disposal provided under AS 38.05.135 - 38.05.181. 27 * Sec. 14. AS 38.05.184 is amended by adding a new subsection to read: 28 (h) A department or other state agency may not issue a carbon storage license 29 or lease on state-owned land and water seaward of the mean higher high water line, 30 beginning at Anchor Point; then around the perimeter of Kachemak Bay, to Point 31 Pogibshi; then west to the three mile limit of state land and water; then north to a point
01 three miles west of Anchor Point; then east to the mean higher high water line of 02 Anchor Point, the point of beginning. 03 * Sec. 15. AS 38.05 is amended by adding new sections to read: 04 Article 15A. Carbon Storage Exploration Licenses; Leases. 05 Sec. 38.05.700. Applicability; regulations. (a) The provisions of 06 AS 38.05.700 - 38.05.795 apply to the licensing of state land for carbon storage 07 exploration and the leasing of state land for carbon storage. 08 (b) The commissioner may adopt regulations necessary to implement 09 AS 38.05.700 - 38.05.795. 10 (c) The commissioner shall establish in regulation minimum acceptable 11 commercial terms for carbon storage exploration licenses and carbon storage leases, 12 including license fees, rental payments, injection charges, other forms of 13 compensation, and financial assurances. The commissioner shall review and update a 14 regulation adopted under this subsection at least every five years. 15 Sec. 38.05.705. Carbon storage exploration licensing. (a) The commissioner 16 may issue carbon storage exploration licenses on state land. 17 (b) A carbon storage exploration license gives the licensee 18 (1) the exclusive right to explore, for carbon storage purposes, the state 19 land described in the license for a five-year term; and 20 (2) the option to convert the license for all or part of the state land 21 described in the license into a carbon storage lease after the licensee complies with the 22 lease conversion process described in AS 38.05.715. 23 (c) A carbon storage exploration license must 24 (1) be conditioned on the posting of a bond or other security acceptable 25 to the department and in favor of the state; 26 (2) be conditioned on an obligation by the licensee to fulfill a specified 27 work commitment as set out in the license; the work commitment must include 28 mandatory provisions for 29 (A) an annual fee paid by the licensee to the department in an 30 amount applicable to a carbon storage exploration license under regulations 31 adopted under AS 38.05.700(c), subject to the license; and
01 (B) an annual report describing the licensee's exploration 02 activities in the previous calendar year, which the licensee shall provide to the 03 department; and 04 (3) include proposed commercial terms that apply if the license is 05 converted into a carbon storage lease, which must, at a minimum, meet the 06 requirements of regulations adopted under AS 38.05.700(c). 07 (d) The commissioner may revoke a carbon storage exploration license before 08 the termination of the five-year term of the license if the licensee fails to comply with 09 the requirements of (c) of this section or applicable regulations. 10 (e) The department may renew a carbon storage exploration license for a term 11 sufficient to determine whether the licensee's permit application will be accepted 12 under AS 41.06.105 - 41.06.210 if the licensee 13 (1) before the expiration of the license, applies for a permit under 14 AS 41.06.120; 15 (2) is in compliance with the conditions of the license; 16 (3) provides documentation acceptable to the department of the 17 pending permit application; and 18 (4) submits to the department an executed renewal form affirming the 19 original terms of the license for the term of the renewed license. 20 (f) A carbon storage exploration license that has been renewed under (e) of 21 this section terminates immediately if the Alaska Oil and Gas Conservation 22 Commission denies the licensee's permit application under AS 41.06.105 - 41.06.210. 23 Sec. 38.05.710. License procedures. (a) To apply for a carbon storage 24 exploration license under AS 38.05.705, an applicant shall submit to the commissioner 25 a proposal that 26 (1) identifies the specific area to be subject to the license; 27 (2) proposes minimum work commitments; 28 (3) proposes commercial terms applicable to a carbon storage lease 29 under regulations adopted under AS 38.05.700(c); 30 (4) demonstrates the applicant's ability to assume responsibility of a 31 carbon storage lease;
01 (5) describes how the applicant meets the minimum qualifications for a 02 licensee under applicable regulations; and 03 (6) includes an attestation of the applicant's ability to perform the 04 requirements of (2) - (4) of this subsection. 05 (b) The commissioner shall publish notice of a proposal received under (a) of 06 this section. The notice must include a solicitation for competing proposals. The 07 commissioner shall send a copy of the published notice to each lessee under 08 AS 38.05.135 - 38.05.181 within one-half mile of the area proposed for the 09 exploration license. Any person may submit a competing proposal under the process 10 established by the commissioner in regulation. The regulations must require that a 11 competing proposal be submitted not later than 90 days after the commissioner's 12 notice is published. 13 (c) After the period for submission of competing proposals has passed, the 14 commissioner shall issue a written finding determining whether issuance of a carbon 15 storage exploration license is in the best interests of the state. If the commissioner 16 determines that issuance of a carbon storage exploration license is in the best interests 17 of the state, the finding must 18 (1) describe the limitations, stipulations, and conditions of the license 19 and any changes to the conditions detailed in the proposal submitted under (a) of this 20 section, or a competing proposal, that are required before issuance of the exploration 21 license; 22 (2) set out the commercial terms required for the eventual conversion 23 of the exploration license into a carbon storage lease; 24 (3) if there are competing proposals from multiple applicants, identify 25 which applicants are qualified for the issuance of the exploration license and include 26 information about the competitive bid process as set out in (e) of this section; and 27 (4) include a copy of the exploration license to be issued and the form 28 of lease that will be used for any portion of the exploration license area that is later 29 converted to a lease under AS 38.05.715. 30 (d) If the commissioner determines that issuance of a carbon storage 31 exploration license is in the best interests of the state and that only one applicant is
01 qualified for a license, the applicant may accept or reject the exploration license, as 02 limited or conditioned by the terms of the finding made under (c) of this section and in 03 the form of lease attached to the finding, not later than 30 days after the date the 04 finding was issued. The applicant shall accept or reject the issuance of the carbon 05 storage exploration license in writing. If an applicant fails to respond within 30 days 06 after the finding was issued, the commissioner shall consider the applicant's failure to 07 respond as a rejection of the license. 08 (e) If the commissioner determines that issuance of a carbon storage 09 exploration license is in the best interests of the state and that more than one applicant 10 is qualified for a license, the commissioner shall issue a request for competitive sealed 11 bids, under procedures adopted by regulation, to determine which qualified applicants 12 will receive a license. If the commissioner determines that a competitive bid process is 13 necessary, the best interest finding made under (c) of this section must include notice 14 that the commissioner intends to request competitive bids. 15 (f) The commissioner shall establish in regulation the criteria for the 16 assessment of competitive bids under (e) of this section and for the determination of a 17 successful bidder. 18 (g) If a lessee under AS 38.05.135 - 38.05.181 in the area covered by a 19 proposed carbon storage exploration license participates in a competitive bid process 20 under (e) of this section and is not the successful bidder, before issuing the license, the 21 commissioner shall provide the lessee an opportunity to match the successful bid. If 22 the lessee matches the successful bid, the commissioner shall issue a carbon storage 23 exploration license to the lessee. 24 (h) A carbon storage exploration license issued under this section and a carbon 25 storage lease under AS 38.05.715 or 38.05.720 must include 26 (1) a covenant from the licensee or lessee not to unreasonably interfere 27 with the rights of a lessee under AS 38.05.135 - 38.05.181; and 28 (2) a clause by which the licensee or lessee indemnifies the state for 29 any unreasonable interference the licensee or lessee might cause to the rights of a 30 lessee under AS 38.05.135 - 38.05.181. 31 (i) When notice is required under this section, the department shall follow the
01 requirements for notice under AS 38.05.945(b) and (c). 02 Sec. 38.05.715. Conversion to lease by licensee. (a) The commissioner may 03 convert a carbon storage exploration license to a carbon storage lease if the licensee 04 complies with (b) of this section. 05 (b) To convert a carbon storage exploration license to a carbon storage lease, a 06 licensee shall provide to the commissioner a copy of the permit obtained under 07 AS 41.06.120. After receiving a copy of the permit, the commissioner may issue a 08 carbon storage lease for those areas of the exploration license approved for carbon 09 storage by the permit if the licensee has 10 (1) fulfilled the work commitments set out in the license; 11 (2) demonstrated the ability to meet the commercial terms for the lease 12 as set out in the license or in regulation. 13 (c) A lease issued under this section must include 14 (1) commercial terms for the lease as set out in the commissioner's 15 finding under AS 38.05.710(c); 16 (2) the agreements required under AS 38.05.710(h); and 17 (3) any other condition or obligation the commissioner considers 18 necessary or that is required by regulation. 19 Sec. 38.05.720. Transition from enhanced oil recovery operations to 20 carbon storage operations. (a) A lessee under AS 38.05.180 shall acquire a carbon 21 storage lease before engaging in carbon storage activity that is not associated with 22 enhanced oil or gas recovery. 23 (b) At the commissioner's discretion, the commissioner may issue a carbon 24 storage lease to a lessee under AS 38.05.180 if the lessee is in compliance with 25 regulations adopted under AS 41.06.185(b). The commissioner may consider the 26 qualifications and abilities of the lessee to meet the commercial requirements of a 27 carbon storage lease and whether issuance of the lease is in the best interests of the 28 state. 29 (c) A carbon storage lease issued under this section must include 30 (1) commercial terms acceptable to the department as required by 31 regulations adopted under AS 38.05.700(c);
01 (2) the agreements required under AS 38.05.710(h); 02 (3) any other condition or obligation the commissioner considers 03 necessary or that is required by regulation. 04 (d) Before a carbon storage lease issued under this section may be transferred 05 or assigned to an entity that is not the responsible party under the existing oil and gas 06 lease under AS 38.05.180, the assuming party must provide financial assurance 07 acceptable to the department that the obligations of the lease can be met. 08 (e) The department may adopt regulations that allow all or part of a lease 09 issued under AS 38.05.180 to be transitioned to a lease under this section upon the 10 receipt of a permit issued under AS 41.06.185. 11 Sec. 38.05.725. Plan of development and operations; unitization. (a) The 12 commissioner shall require the filing and approval of a plan of development and 13 operation for a carbon storage lease. 14 (b) To prevent or assist in preventing waste, and to protect the correlative 15 rights of persons owning interest in the tracts of land affected, with the approval of the 16 commissioner, a group of lessees may validly integrate the lessees' interests to provide 17 for the unitized management, development, and operation of the tracts of land as a 18 unit. The commissioner may suspend or modify a development plan approved under 19 (a) of this section in accordance with the unit agreement. In this subsection, "unit 20 agreement" means an agreement by lessees with an interest in the unit, the state, and 21 any other carbon storage lessor with an interest in the unit. 22 (c) A lease operated under a plan approved or prescribed by the commissioner 23 under this section is excepted from determining holdings or control under 24 AS 38.05.140. The provisions of this section concerning cooperative or unit plans are 25 in addition to and do not affect AS 31.05 and AS 41.06. 26 Sec. 38.05.730. Payments from carbon storage exploration licenses and 27 carbon storage leases. Except as otherwise provided under art. IX, sec. 15, 28 Constitution of the State of Alaska, the department shall deposit in the general fund 29 the money it collects under AS 38.05.700 - 38.05.795. 30 Sec. 38.05.735. Annual report to the legislature. The commissioner shall 31 prepare an annual report that includes an accounting of the carbon storage closure trust
01 fund established under AS 37.14.850 and information on carbon storage licensing 02 applications and decisions and the issuance of carbon storage leases. The 03 commissioner shall submit the report to the senate secretary and the chief clerk of the 04 house of representatives on or before February 1 of each year and notify the legislature 05 that the report is available. 06 Sec. 38.05.795. Definitions. In AS 38.05.700 - 38.05.795, unless the context 07 requires otherwise, 08 (1) "carbon storage" means the underground storage of carbon dioxide 09 in a carbon storage reservoir; 10 (2) "enhanced oil or gas recovery" has the meaning in AS 41.06.210; 11 (3) "reservoir" has the meaning given in AS 41.06.210. 12 * Sec. 16. AS 38.35.020(a) is amended to read: 13 (a) Rights-of-way on state land, including rights-of-way over, under, along, 14 across, or on [UPON] the right-of-way of a public road or highway or the right-of-way 15 of a railroad or other public utility, or across, on [UPON], over, or under a river or 16 other body of water or land belonging to or administered by the state may be granted 17 by noncompetitive lease by the commissioner for pipeline purposes for the 18 transportation of oil, products, carbon dioxide, or natural gas under those conditions 19 prescribed by law or by administrative regulation. Except to the extent authorized by 20 an oil and gas lease, a gas only lease, or a carbon storage lease, or an oil and gas, 21 [OR] gas only, or carbon storage unit agreement approved by the state, no person 22 may engage in any construction or operation of any part of an oil, products, carbon 23 dioxide, or natural gas pipeline that is or is proposed to be, [WHICH] in whole or in 24 part, [IS OR IS PROPOSED TO BE] on state land unless that person has obtained 25 from the commissioner a right-of-way lease of the land under this chapter. 26 * Sec. 17. AS 38.35.020(b) is amended to read: 27 (b) The commissioner may by regulation exempt from the requirement of a 28 right-of-way lease under this chapter the construction or operation of 29 (1) field gathering lines or any reasonable classification of field 30 gathering lines; and 31 (2) a pipeline transporting carbon dioxide within a field for the
01 purpose of an enhanced oil or gas recovery project under AS 41.06.185 or field 02 pressurization measures within that same field [THEM FROM THE 03 REQUIREMENT OF A RIGHT-OF-WAY LEASE UNDER THIS CHAPTER]. 04 * Sec. 18. AS 38.35.122 is amended to read: 05 Sec. 38.35.122. Products pipeline and carbon dioxide transportation 06 pipeline leases. The commissioner has discretion to include any or all of the terms set 07 out in AS 38.35.120 in leases of state land for products pipeline right-of-way purposes 08 or carbon dioxide transportation pipeline right-of-way purposes. 09 * Sec. 19. AS 38.35.230(3) is amended to read: 10 (3) "lease" means the instrument or extension of an instrument issued 11 under this chapter granting a leasehold interest in state land for pipeline right-of-way 12 purposes to a person and authorizing the construction or operation of, or the 13 transportation, service, or sale by, a pipeline for crude oil, natural gas, carbon 14 dioxide, or products; 15 * Sec. 20. AS 38.35.230(7) is amended to read: 16 (7) "pipeline" or "pipeline facility" means all the facilities of a total 17 system of pipe, whether owned or operated under a contract, agreement, or lease, used 18 by a carrier for transportation of crude oil, natural gas, carbon dioxide, or products for 19 delivery, for storage, or for further transportation, and including all pipe, pump or 20 compressor stations, station equipment, tanks, valves, access roads, bridges, airfields, 21 terminals and terminal facilities, including docks and tanker loading facilities, 22 operations control center for both the upstream part of the pipeline and the terminal, 23 tanker ballast treatment facilities, and fire protection system, communication system, 24 and all other facilities used or necessary for an integral line of pipe, taken as a whole, 25 to carry out [EFFECTUATE] transportation, including an extension or enlargement 26 of the line; 27 * Sec. 21. AS 38.35.230(10) is amended to read: 28 (10) "transportation" means the shipment or carriage by a pipeline of 29 crude oil, natural gas, carbon dioxide, or products from an upstream terminus in one 30 or more fields or points of production or supply of the minerals to a downstream 31 terminus in one or more points for delivery of the minerals to a purchaser or
01 consignee, for storage, or for further carriage or shipment, including shipment or 02 carriage within the state that may be classified as interstate or foreign transportation to 03 the extent that the transportation may constitutionally be subjected to the provisions of 04 this chapter, as well as all services necessary to carry out [EFFECTUATE] shipment 05 or carriage, including [, AMONG OTHER THINGS,] the receipt, storage, processing, 06 handling, transfer in transit, forwarding, and delivery of the minerals. 07 * Sec. 22. AS 38.35.230 is amended by adding a new paragraph to read: 08 (11) "carbon dioxide" has the meaning given in AS 41.06.210. 09 * Sec. 23. AS 41.06.005 is amended to read: 10 Sec. 41.06.005. Jurisdiction over geothermal resources. (a) The commission 11 has jurisdiction under AS 41.06.005 - 41.06.060 [THIS CHAPTER] over geothermal 12 wells to prevent waste, to protect correlative rights, and to ensure public safety. 13 (b) The Department of Natural Resources has jurisdiction under AS 41.06.005 14 - 41.06.060 [THIS CHAPTER] over management of geothermal leases and units in the 15 public interest and to effect development. 16 * Sec. 24. AS 41.06.020 is amended to read: 17 Sec. 41.06.020. Authority of commission; application. (a) The commission 18 has jurisdiction over all persons and property, public and private, necessary to carry 19 out the purposes and intent of AS 41.06.005 - 41.06.060 [THIS CHAPTER]. 20 (b) The authority of the commission applies to all land in the state lawfully 21 subject to the police power of the state, including private land, municipal land, state 22 land, land of the United States, and land subject to the jurisdiction of the United 23 States, and to all land included in a voluntary cooperative or unit plan of development 24 or operation entered into in accordance with AS 38.05.181. When land that is subject 25 to the commission's authority is committed to a unit agreement involving land subject 26 to federal jurisdiction, the operation of AS 41.06.005 - 41.06.060 [THIS CHAPTER] 27 or a part of AS 41.06.005 - 41.06.060 [THIS CHAPTER] may be suspended if 28 (1) the unit operations are regulated by the United States; and 29 (2) the conservation of geothermal resources is accomplished under the 30 unit agreement. 31 (c) The provisions of AS 41.06.005 - 41.06.060 apply [THIS CHAPTER
01 APPLIES] 02 (1) to wells drilled in search of, in support of, or for the recovery or 03 production of geothermal resources; 04 (2) when a person engaged in drilling activity not otherwise subject to 05 the provisions of AS 41.06.005 - 41.06.060 [THIS CHAPTER] encounters geothermal 06 resources, fluid, or water of sufficient heat or pressure to constitute a threat to human 07 life or health unless the drilling operation is subject to oil and gas drilling regulation 08 under AS 31.05; 09 (3) in areas and under conditions in which the commission determines 10 that drilling may encounter geothermal resources, fluid, or water of sufficient heat or 11 pressure to constitute a threat to human life or health. 12 (d) To the extent the provisions of AS 31.05 do not conflict with the 13 provisions of AS 41.06.005 - 41.06.060 [THIS CHAPTER], the provisions of 14 AS 31.05 are applicable to wells drilled in search of, in support of, or for the recovery 15 or production of geothermal resources. 16 (e) Nothing in AS 41.06.005 - 41.06.060 [THIS CHAPTER] limits the 17 authority of the department 18 (1) over geothermal resources under AS 38.05.181; or 19 (2) to approve and manage geothermal units or operations that include 20 state land. 21 * Sec. 25. AS 41.06.030(e) is amended to read: 22 (e) The commissioner may adopt regulations under AS 44.62 (Administrative 23 Procedure Act) to carry out the purposes and intent of AS 41.06.005 - 41.06.060 24 [THIS CHAPTER] for duties assigned to the department, including the promotion of 25 maximum economic recovery. 26 * Sec. 26. AS 41.06.035(b) is amended to read: 27 (b) The commission may adopt regulations under AS 44.62 (Administrative 28 Procedure Act) and issue orders appropriate to carry out the purposes and intent of 29 AS 41.06.005 - 41.06.060 [THIS CHAPTER] for duties assigned to the commission, 30 including orders regarding the establishment of drilling units for pools as set out in 31 AS 31.05.100 and orders regarding unitized operation and integration of interests as
01 set out in AS 31.05.110. 02 * Sec. 27. AS 41.06.040(a) is amended to read: 03 (a) The commission shall adopt regulations under AS 44.62 (Administrative 04 Procedure Act), issue orders, and take other appropriate action to carry out the 05 purposes and intent of AS 41.06.005 - 41.06.060 [THIS CHAPTER], including 06 adopting regulations to prevent 07 (1) geothermal resources, water or other fluids, and gases from 08 escaping into strata other than that in which they are found, unless in accordance with 09 an approved reinjection program; 10 (2) contamination of surface and groundwater; 11 (3) premature degradation of a geothermal system by water 12 encroachment or otherwise; 13 (4) blowouts, cavings, and seepage; and 14 (5) unreasonable disturbance or injury to neighboring properties, prior 15 water rights, prior oil or gas rights, human life, health, and the natural environment. 16 * Sec. 28. AS 41.06.050(e) is amended to read: 17 (e) In making the determination under (d) of this section, the commission shall 18 consider whether the 19 (1) proposed well will significantly interfere with or substantially 20 impair a prior water, oil, or gas right; 21 (2) proposed well is contrary to a provision of AS 41.06.005 - 22 41.06.060 [THIS CHAPTER], a regulation adopted by the commission, another law, 23 or an order, stipulation, or term of a permit issued by the commission; and 24 (3) applicant is in violation of a provision of AS 41.06.005 - 41.06.060 25 [THIS CHAPTER], a regulation adopted by the commission, another law, or an order, 26 stipulation, or term of a permit issued by the commission; the commission shall 27 consider the magnitude of the violation. 28 * Sec. 29. AS 41.06.055(c) is amended to read: 29 (c) The commission shall determine the regulatory cost charges levied under 30 this section so that the total amount to be collected approximately equals the 31 appropriations made for the operating costs of the commission that have been incurred
01 under AS 41.06.005 - 41.06.060 [THIS CHAPTER] for the fiscal year. 02 * Sec. 30. AS 41.06.055(d) is amended to read: 03 (d) The commission shall collect the regulatory cost charges imposed under 04 this section. The Department of Administration shall identify the amount of 05 appropriations made for the operating costs of the commission under AS 41.06.005 - 06 41.06.060 [THIS CHAPTER] that lapse into the general fund each year. The 07 legislature may appropriate an amount that is at least equal to the lapsed amount to the 08 commission for its operating costs under AS 41.06.005 - 41.06.060 [THIS 09 CHAPTER] for the next fiscal year. If the legislature makes an appropriation to the 10 commission under this subsection that is equal to or greater than the lapsed amount, 11 the commission shall reduce the total regulatory cost charge collected for that fiscal 12 year by a comparable amount. 13 * Sec. 31. AS 41.06.060 is amended to read: 14 Sec. 41.06.060. Definitions. In AS 41.06.005 - 41.06.060 [THIS CHAPTER], 15 unless the context otherwise requires, 16 (1) "commercial use" means the sale of heat or power to a third party; 17 (2) "commission" means the Alaska Oil and Gas Conservation 18 Commission created under AS 31.05.005; 19 (3) "correlative rights" means the right of an owner of each property in 20 a geothermal system to produce without waste the owner's just and equitable share of 21 the geothermal resources in the geothermal system; a just and reasonable share is an 22 amount, so far as can be practically determined and so far as can be practically 23 produced without waste, that is substantially in proportion to the quantity of 24 recoverable geothermal resources under the owner's property relative to the total 25 recoverable geothermal resources in the geothermal system; 26 (4) "geothermal fluid" means liquids and steam at temperatures greater 27 than 120 degrees Celsius or any commercial use of liquids and steam naturally present 28 in a geothermal system at temperatures less than 120 degrees Celsius; 29 (5) "geothermal resources" 30 (A) means the natural heat of the earth at temperatures greater 31 than 120 degrees Celsius, or any use of that heat for commercial purposes,
01 measured at the point at which [WHERE] the highest-temperature resources 02 encountered enter or contact a well or other resource extraction device or any 03 commercial use of the natural heat of the earth; 04 (B) includes 05 (i) the energy, including pressure, in whatever form 06 present in, resulting from, created by, or that may be extracted from 07 that natural heat; 08 (ii) the material medium, including steam and other 09 gases, hot water, and hot brines constituting the geothermal fluid 10 naturally present, as well as substances artificially introduced to serve 11 as a heat transfer medium; and 12 (iii) all dissolved or entrained minerals and gases that 13 may be obtained from the material medium, but excluding hydrocarbon 14 substances and helium; 15 (6) "geothermal system" means a stratum, pool, reservoir, or other 16 geologic formation containing geothermal resources; 17 (7) "operator" means a person drilling, maintaining, operating, 18 producing, or in control of a well; 19 (8) "owner" means the person who has the right to drill into or produce 20 from a geothermal system and to appropriate the geothermal resources produced from 21 a geothermal system for that person and others; 22 (9) "waste" means, in addition to its ordinary meaning, physical waste, 23 and includes an inefficient, excessive, or improper production, use, or dissipation of 24 geothermal resources, including 25 (A) drilling, transporting, or storage methods that cause or tend 26 to cause unnecessary surface loss of geothermal resources; 27 (B) locating, spacing, drilling, equipping, operating, producing, 28 or venting of a well in a manner that results or tends to result in reducing the 29 ultimate economic recovery of geothermal resources; 30 (10) "well" means a well drilled, converted, or reactivated for the 31 discovery, testing, production, or subsurface injection of geothermal resources.
01 * Sec. 32. AS 41.06 is amended by adding new sections to read: 02 Article 2. Carbon Storage; Injection. 03 Sec. 41.06.105. Jurisdiction over storage facilities. The commission has 04 jurisdiction under AS 41.06.105 - 41.06.210 over storage facilities to prevent waste, 05 protect correlative rights, and ensure public health and safety. 06 Sec. 41.06.110. Authority of the commission. (a) The authority of the 07 commission applies to all land 08 (1) in the state lawfully subject to the police power of the state, 09 including private land, municipal land, state land, federal land, and land subject to the 10 jurisdiction of the United States; and 11 (2) included in a voluntary cooperative or unit plan of development or 12 operation entered into in accordance with AS 38.05.725. 13 (b) When land that is subject to the commission's authority is committed to a 14 unit agreement involving land subject to federal jurisdiction, the operation of 15 AS 41.06.105 - 41.06.210 may be suspended if 16 (1) the unit operations are regulated by the United States; and 17 (2) conservation of resources in the reservoir or pool is accomplished 18 in the agreement. 19 (c) The commission has the authority to 20 (1) regulate activities related to a storage facility, including the 21 construction, operation, and closure of the facility; 22 (2) require that storage operators provide assurance, including bonds, 23 that money is available to fulfill the storage operator's duties; 24 (3) enter, at a reasonable time and in a reasonable manner, a storage 25 facility to 26 (A) inspect equipment and facilities; 27 (B) observe, monitor, and investigate operation; and 28 (C) inspect records required to be maintained at the facility; 29 (4) exercise continuing jurisdiction over storage operators and storage 30 facilities, including the authority, after notice and hearing, to amend provisions in a 31 permit and to revoke a permit; and
01 (5) dissolve or change the boundaries of an oil or gas field or unit 02 established by the commission that is within or near the boundaries of a storage 03 reservoir. 04 (d) To the extent AS 31.05 does not conflict with AS 41.06.105 - 41.06.210, 05 the provisions of AS 31.05 are applicable to wells drilled in search of, in support of, 06 and for carbon storage. 07 (e) Nothing in AS 41.06.105 - 41.06.210 limits the authority of the 08 Department of Natural Resources under AS 38.05.700 - 38.05.795 or AS 41.06.305. 09 Sec. 41.06.115. Waste prohibited; investigation. Waste in a storage facility 10 or storage reservoir in the state is prohibited. The commission may investigate to 11 determine whether waste exists or is imminent, or whether other facts exist that justify 12 or require action by the commission to prohibit waste. The injection of carbon dioxide 13 and substances commonly associated with carbon dioxide injection is not considered 14 waste. 15 Sec. 41.06.120. Storage facility permit. (a) A storage operator is required to 16 obtain a permit from the commission to operate a storage facility. 17 (b) A permit may not be transferred unless the commission consents. 18 (c) A person applying for a permit shall 19 (1) request a preapplication meeting with the commission staff; 20 (2) comply with application requirements; 21 (3) pay a fee in an amount determined by the commission; and 22 (4) pay the commission the cost the commission incurs in reviewing 23 the person's application, publishing notices for hearings, and holding hearings on the 24 person's permit application. 25 (d) A permit application must include sufficient information to enable the 26 commission to determine whether the storage facility will interfere with or impair an 27 existing water, oil, gas, or other mineral interest. 28 (e) The commission shall set the amount of the fee in (c)(3) of this section 29 based on the anticipated cost to the commission associated with processing 30 applications, including preliminary work in advance of receiving an application. The 31 commission may enter into an agreement with a prospective applicant that requires the
01 applicant to reimburse the commission for reasonable costs of work incurred in 02 preparing for activities before the commission receives an application. 03 (f) The commission shall deposit fees collected under this section in the 04 carbon dioxide storage facility administrative fund established in AS 41.06.160. 05 Sec. 41.06.125. Hearing on permit application. (a) Before issuing a permit 06 for a storage facility, the commission shall hold a public hearing. 07 (b) The commission shall provide notice of a public hearing under this section. 08 The commission shall provide notice in the same manner as a notice under 09 AS 31.05.050(b) and shall provide notice to 10 (1) each mineral lessee, mineral owner, and mineral right owner of 11 record within the storage reservoir and within one-half mile of the boundaries of the 12 storage reservoir; 13 (2) each surface owner of land overlying the storage reservoir and 14 within one-half mile of the boundaries of the storage reservoir; and 15 (3) any additional persons that the commission considers necessary. 16 (c) A hearing notice required by this section must comply with deadlines set 17 by the commission. 18 Sec. 41.06.130. Permit requirements. (a) The commission shall consult with 19 the Department of Environmental Conservation and the Department of Natural 20 Resources before issuing a permit under AS 41.06.120. 21 (b) Before the commission may approve a permit application submitted under 22 AS 41.06.120, the commission must find 23 (1) that the storage operator has complied with all requirements set by 24 the commission; 25 (2) that the proposed storage facility is suitable and feasible for carbon 26 storage; 27 (3) that the carbon dioxide to be stored is of a quality that allows it to 28 be safely and efficiently stored in the storage reservoir; 29 (4) that the storage operator has made a good faith effort to get the 30 consent of all persons with an ownership interest in the proposed storage reservoir and 31 surface owners of land overlying the proposed storage reservoir;
01 (5) if the proposed storage facility contains commercially valuable 02 minerals, that the interests of the mineral owners or mineral lessees will not be 03 adversely affected or have been addressed in an arrangement entered into by the 04 mineral owners or mineral lessees and the storage operator; 05 (6) that the proposed storage facility will not adversely affect surface 06 water or formations containing fresh water; 07 (7) that carbon dioxide is not reasonably anticipated to escape from the 08 storage reservoir; 09 (8) that substances that compromise the objectives of AS 41.06.105 - 10 41.06.210 or the integrity of a storage reservoir will not enter a storage reservoir; 11 (9) that the proposed storage facility will not endanger human health or 12 unduly endanger the environment; 13 (10) that the proposed storage facility is in the public interest; 14 (11) that the horizontal and vertical boundaries of the proposed storage 15 reservoir are defined and the boundaries include buffer areas to ensure that the storage 16 facility is operated safely and as contemplated; 17 (12) that the storage operator will establish monitoring facilities and 18 protocols to assess the location and migration of carbon dioxide injected for carbon 19 storage and to ensure compliance with all permit, statutory, and administrative 20 requirements; 21 (13) that all nonconsenting landowners or holders of mineral rights are, 22 or will be, equitably compensated; and 23 (14) that the storage operator is not in violation of a provision of 24 AS 41.06.105 - 41.06.210 or regulations adopted by the commission. 25 Sec. 41.06.135. Permit provisions. The commission may include in a permit 26 or order any parameters necessary to carry out the objectives of AS 41.06.105 - 27 41.06.210, prevent waste, protect correlative rights, and ensure the health and safety of 28 persons affected by the permit. 29 Sec. 41.06.140. Amalgamating property interests. If a storage operator does 30 not obtain the consent of all persons with an ownership interest in the storage 31 reservoir, the commission may order that the pore space rights of nonconsenting
01 owners be included in a storage facility and subject to carbon storage. Before the 02 commission may issue an order forming an amalgamation under this section, the 03 commission shall provide public notice and hold a hearing. 04 Sec. 41.06.145. Certificate. When the commission issues a permit under 05 AS 41.06.120, the commission shall also issue a certificate that states that the permit 06 has been issued, describes the area covered, and contains other information the 07 commission considers appropriate. The storage operator may file a copy of the 08 certificate with the office of the recorder in the district in which the storage facility is 09 located. 10 Sec. 41.06.150. Environmental protection; storage reservoir integrity. (a) 11 The commission shall take action to ensure that 12 (1) substances that compromise the integrity of a storage reservoir do 13 not enter a storage reservoir; and 14 (2) carbon dioxide does not escape from a storage facility. 15 (b) For the purposes of this section, and in the application of other laws, 16 carbon dioxide that is stored and remains in carbon storage under a permit is not 17 considered a pollutant and does not constitute a nuisance. 18 (c) The commission's authority under (a) of this section does not limit the 19 jurisdiction of the Department of Environmental Conservation. 20 Sec. 41.06.155. Preservation of rights. Nothing in AS 41.06.105 - 41.06.210 21 (1) prejudices the rights of a person with a property interest in a 22 storage facility to exercise rights that have not been committed to the storage facility; 23 or 24 (2) prevents a mineral owner or mineral lessee from drilling through or 25 near a storage reservoir to explore for and develop minerals if the drilling, production, 26 and related activities comply with requirements set by the commission to preserve the 27 integrity of the storage facility and protect the objectives of AS 41.06.105 - 41.06.210. 28 Sec. 41.06.160. Fees; carbon dioxide storage facility administrative fund. 29 (a) A storage operator shall pay to the commission a fee on each metric ton of carbon 30 dioxide injected for carbon storage. The commission shall set the amount of the fee 31 based on the anticipated expenses the commission will incur in regulating storage
01 facilities during each phase, including the construction, operational, and pre- 02 completion phases. The commission shall deposit a fee collected under this subsection 03 in the carbon dioxide storage facility administrative fund established in (b) of this 04 section. 05 (b) The carbon dioxide storage facility administrative fund is established in 06 the general fund. The fund consists of 07 (1) fees received under (a) of this section; 08 (2) fees received under AS 41.06.120 and 41.06.195; and 09 (3) interest earned on money in the fund. 10 (c) Money in the carbon dioxide storage facility administrative fund shall be 11 separately accounted for under AS 37.05.142. The legislature may appropriate the 12 money in the fund to the commission to carry out the purposes of AS 41.06.105 - 13 41.06.210. 14 Sec. 41.06.165. Title to carbon dioxide. The storage operator has title to the 15 carbon dioxide injected into and stored in a storage reservoir and holds title until the 16 commission issues a certificate of completion under AS 41.06.170. While the storage 17 operator holds title, the operator is liable for any damage the carbon dioxide may 18 cause, including damage caused by carbon dioxide that escapes from the storage 19 facility. When a certificate of completion is issued under AS 41.06.170, title to carbon 20 dioxide injected into and stored in a storage reservoir is transferred to the owner of the 21 pore space, unless the storage operator and the owner of the pore space have a 22 contrary agreement. 23 Sec. 41.06.170. Certificate of completion. (a) Once a storage operator 24 discontinues carbon dioxide injections into a storage reservoir, and upon application 25 by the storage operator, the commission may issue a certificate of completion 26 (1) only after public notice and hearing; the commission shall establish 27 notice requirements for a hearing under this paragraph; 28 (2) only after the commission consults with the Department of 29 Environmental Conservation, the Department of Natural Resources, and all persons 30 with an ownership interest in the storage reservoir; and 31 (3) after a period of at least 50 years, or another period approved by
01 the commission for the storage reservoir based on requirements established in 02 regulation, has elapsed since the last carbon dioxide injection into the storage 03 reservoir. 04 (b) The commission may issue a certificate of completion only if the storage 05 operator 06 (1) has fully complied with all laws governing the storage facility; 07 (2) shows that the operator has addressed all pending claims regarding 08 the operation of the storage facility; 09 (3) shows that the underground place or pore space in which the 10 injected carbon dioxide is stored is not expected to pose a threat to human health, 11 human safety, the environment, or underground sources of drinking water; 12 (4) shows that the stored or injected carbon dioxide is unlikely to cross 13 an underground or pore space boundary and is not expected to endanger an 14 underground source of drinking water or otherwise endanger human health, human 15 safety, or the environment; 16 (5) shows that all wells, equipment, and facilities allowed to remain in 17 place following post-injection site care and site closure are in good condition and 18 retain mechanical integrity; 19 (6) shows that the operator has plugged wells, removed equipment and 20 facilities, and completed reclamation work as required by the commission and the 21 Department of Natural Resources; 22 (7) has paid all fees and surcharges owed for the storage facility; and 23 (8) meets any other regulatory requirements established by the state. 24 (c) Once a certificate of completion is issued, the department assumes primary 25 responsibility for long-term monitoring and maintenance of the storage facility, as 26 provided in AS 41.06.305. The storage operator and all persons who generated 27 injected carbon dioxide are released from liability to the state associated with the 28 storage facility in an amount equal to the amount attributed to the storage facility in 29 the carbon storage closure trust fund established in AS 37.14.850. The state, the 30 department, or the commission is not liable for damages arising out of, or in any 31 manner connected with, long-term monitoring and maintenance of a storage facility if
01 the amount for the storage facility separately accounted for in the carbon storage 02 closure trust fund established in AS 37.14.850 is unavailable or insufficient. A bond 03 posted by the storage operator under AS 41.06.110(c)(2) must be released. In this 04 subsection, "long-term monitoring and maintenance" has the meaning given in 05 AS 41.06.305(e). 06 Sec. 41.06.175. Carbon storage facility injection surcharge. (a) A storage 07 operator injecting carbon dioxide at a storage facility shall pay to the commission a 08 surcharge each year for the first 12 years that carbon dioxide is injected at the storage 09 facility. The commission shall deposit the surcharge into the general fund. The 10 legislature may appropriate a surcharge collected under this subsection into the carbon 11 storage closure trust fund established in AS 37.14.850. 12 (b) The annual surcharge in this section is determined by the following 13 formula: S = (7,500,000 x (I/261.78)) / 12, where 14 (1) S is the dollar amount of the annual surcharge for a storage facility; 15 (2) I is equal to the Consumer Price Index for urban consumers for 16 urban Alaska, as determined by the United States Department of Labor, Bureau of 17 Labor Statistics, without seasonal adjustment, for December of the calendar year 18 immediately preceding the year of issuance of the storage facility permit. 19 Sec. 41.06.180. Penalties. (a) In addition to the penalties in (b) - (d) of this 20 section, a person who violates a provision of AS 41.06.105 - 41.06.210, a regulation 21 adopted under AS 41.06.105 - 41.06.210, or an order or term of a permit issued by the 22 commission under AS 41.06.105 - 41.06.210 is liable for a civil penalty of not more 23 than $100,000 for the initial violation and not more than $10,000 for each day 24 thereafter on which the violation continues. 25 (b) A person who knowingly commits an act specified in AS 11.46.630(a) for 26 the purpose of evading a provision of AS 41.06.105 - 41.06.210, a regulation adopted 27 under AS 41.06.105 - 41.06.210, or an order, stipulation, or term of a permit issued by 28 the commission is guilty of a class A misdemeanor. 29 (c) A person who knowingly violates a provision of AS 41.06.105 - 41.06.210, 30 a regulation adopted under AS 41.06.105 - 41.06.210, or an order, stipulation, or term 31 of a permit issued by the commission is guilty of a class A misdemeanor punishable
01 by a fine of not more than $10,000 a day for each day of violation. 02 (d) A person who knowingly aids or abets another person in the violation of a 03 provision of AS 41.06.105 - 41.06.210, a regulation adopted under AS 41.06.105 - 04 41.06.210, or an order, stipulation, or term of a permit issued by the commission is 05 subject to the same penalty as that prescribed in this section for the violation by the 06 other person. 07 (e) The commission may assess the civil penalties provided in this section, 08 and, if not paid, the penalties are recoverable by suit filed by the attorney general in 09 the name and on behalf of the commission in the superior court. The payment of a 10 penalty does not relieve a person on whom the penalty is imposed from liability to any 11 other person for damages arising out of the violation. 12 (f) In determining the amount of a penalty assessed under (a) of this section, 13 the commission shall consider 14 (1) the extent to which the person committing the violation was acting 15 in good faith in attempting to comply; 16 (2) the extent to which the person committing the violation acted in a 17 wilful or knowing manner; 18 (3) the extent and seriousness of the violation and the actual or 19 potential threat to public health or the environment; 20 (4) the economic or environmental harm or injury to the public caused 21 by the violation; 22 (5) the economic value or other benefits derived by the person 23 committing the violation from the commission of the violation; 24 (6) any history of previous violations by the person committing the 25 violation; 26 (7) the need to deter similar behavior by the person committing the 27 violation and others similarly situated at the time of the violation or in the future; 28 (8) the effort made by the person committing the violation to correct 29 the violation and prevent future violations; and 30 (9) other matters justice requires. 31 Sec. 41.06.185. Enhanced oil or gas recovery. (a) Except as provided in (b)
01 of this section, the provisions of AS 41.06.105 - 41.06.210 do not apply to 02 applications filed with the commission proposing to use carbon dioxide for enhanced 03 oil or gas recovery. 04 (b) The commission may adopt regulations that allow enhanced oil or gas 05 recovery and related well activities to be converted to a storage facility. The 06 regulations must require that, in considering whether to approve a conversion, and 07 upon conversion, the provisions of AS 41.06.105 - 41.06.210 apply. The regulations 08 may impose additional requirements to AS 41.06.105 - 41.06.210, or describe specific 09 situations in which the requirements of AS 41.06.105 - 41.06.210 are waived, to 10 ensure that the objectives of AS 41.06.105 - 41.06.210 are met. 11 Sec. 41.06.190. Cooperative agreements and contracts. (a) The commission 12 may enter into agreements with other governments, government entities, and state 13 agencies for the purpose of carrying out the objectives of AS 41.06.105 - 41.06.210. 14 (b) The commission may enter into contracts with private persons to assist in 15 carrying out the objectives of AS 41.06.105 - 41.06.210. If an emergency exists, the 16 commission may enter into contracts without public notice and without competitive 17 bidding. 18 Sec. 41.06.195. Determining capacity of storage reservoir; carbon credits; 19 fees. (a) The commission may adopt a written policy establishing procedures and 20 criteria that the commission will use to determine the carbon storage capacity of a 21 storage reservoir, including for the purpose of enhanced oil or gas recovery. 22 (b) The purpose of determining the carbon storage capacity of a storage 23 reservoir is to facilitate calculating the amount of stored carbon dioxide for matters 24 including carbon credits, allowances, trading, emissions allocations, and offsets. The 25 commission may charge a reasonable fee to a person requesting a capacity 26 determination. The commission shall set the fee by regulation. The commission shall 27 deposit fees received under this subsection in the carbon dioxide storage facility 28 administrative fund established in AS 41.06.160. 29 (c) In this section, "carbon storage capacity of a storage reservoir" means the 30 maximum injected volume in a storage reservoir at which the pressure in the reservoir 31 does not pose a risk to the integrity of the reservoir or its ability to maintain carbon
01 storage. 02 Sec. 41.06.210. Definitions. In AS 41.06.105 - 41.06.210, unless the context 03 requires otherwise, 04 (1) "carbon dioxide" means carbon dioxide of a quality that will not 05 compromise 06 (A) the safety of carbon storage; and 07 (B) the properties of a storage reservoir that allow the reservoir 08 to effectively enclose and contain a stored gas or stored supercritical fluid; 09 (2) "carbon storage" means the underground storage of carbon dioxide 10 in a storage reservoir; 11 (3) "commission" means the Alaska Oil and Gas Conservation 12 Commission created under AS 31.05.005; 13 (4) "enhanced oil or gas recovery" means the increased recovery of 14 hydrocarbons, including oil and gas, from a common source of supply achieved by 15 artificial means or by the application of energy extrinsic to the common source of 16 supply, including pressuring, cycling, pressure maintenance or injection of a substance 17 or form of energy, including injection of water, gas, carbon dioxide, or both gas and 18 carbon dioxide, including immiscible and miscible floods, as long as the enhanced oil 19 or gas recovery does not include injection of a substance or form of energy for the sole 20 purpose of 21 (A) aiding in the lifting of fluids in the well; or 22 (B) stimulation of the reservoir at or near the well by 23 mechanical, chemical, thermal, or explosive means; 24 (5) "permit" means a storage facility permit issued under 25 AS 41.06.120; 26 (6) "pore space" means a cavity or void in a subsurface sedimentary 27 stratum; 28 (7) "reservoir" means a subsurface sedimentary stratum, formation, 29 aquifer, cavity, or void, including pore space, oil and gas reservoirs, saline formations, 30 and coal seams that are suitable, or capable of being made suitable, for injection and 31 carbon storage;
01 (8) "storage facility" means the storage reservoir, underground 02 equipment, well, and surface facilities and equipment used in accordance with a 03 permit; "storage facility" does not include pipelines, compressors, surface facilities, 04 and equipment used to transport carbon dioxide to the storage facility that are 05 unrelated to well safety and metering; 06 (9) "storage operator" means a person holding or applying for a permit; 07 (10) "storage reservoir" means a reservoir proposed, authorized, or 08 used for carbon storage; 09 (11) "supercritical fluid" means a substance at or above its critical 10 temperature and critical pressure that is neither a liquid nor a gas but that has 11 properties of both; 12 (12) "waste" means, in addition to its ordinary meaning, physical 13 waste, and includes inefficient, excessive, or improper operation of a storage facility 14 or well; 15 (13) "well" means a well that is drilled, converted, or reactivated for 16 discovery, testing, or subsurface injection into a reservoir. 17 Article 3. Long-Term Monitoring and Maintenance of Carbon Storage Facilities. 18 Sec. 41.06.305. Long-term monitoring and maintenance. (a) The 19 department shall conduct long-term monitoring and maintenance of a storage facility 20 that has been issued a certificate of completion under AS 41.06.170. 21 (b) Under this section, the authority of the department applies to all land in the 22 state lawfully subject to the police power of the state, including private land, 23 municipal land, state land, land of the United States, and land subject to the 24 jurisdiction of the United States. The department may enter, at a reasonable time and 25 in a reasonable manner, the site of a storage facility that has been issued a certificate 26 of completion under AS 41.06.170. 27 (c) The state, the department, and the commission have no obligation to pay 28 costs associated with long-term monitoring and maintenance of a storage facility in an 29 amount greater than the amount attributable to that storage facility and separately 30 accounted for under AS 37.14.850. 31 (d) The department may adopt regulations under AS 44.62 (Administrative
01 Procedure Act) to carry out the purposes of this section. 02 (e) In this section, 03 (1) "commission" means the Alaska Oil and Gas Conservation 04 Commission created under AS 31.05.005; 05 (2) "long-term monitoring and maintenance" means an activity 06 associated with monitoring and maintenance of a storage facility that has been issued a 07 certificate of completion under AS 41.06.170 and may include 08 (A) operational and long-term inspecting, testing, and 09 monitoring of the storage facility site, wells, and remaining facilities; 10 (B) remediation measures arising from the storage facility site, 11 including remediation of property and mechanical problems associated with 12 wells and remaining facilities; 13 (C) repairing mechanical leaks at the storage facility site; 14 (D) plugging and abandoning wells; 15 (E) converting wells for use as observation wells; 16 (F) purchasing or paying insurance costs for a storage facility, 17 whether commercially or through government funding; 18 (3) "storage facility" has the meaning given in AS 41.06.210. 19 * Sec. 33. 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. 34. 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. 35. 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. 36. 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. 37. AS 43.20.036 is amended by adding a new subsection to read: 11 (k) For purposes of calculating the income tax payable under this chapter, the 12 taxpayer may not apply as a credit against tax liability the carbon oxide sequestration 13 credit allowed as to federal taxes under 26 U.S.C. 45Q (Internal Revenue Code). 14 * Sec. 38. AS 46.03.020 is amended to read: 15 Sec. 46.03.020. Powers of the department. The department may 16 (1) enter into contracts and compliance agreements necessary or 17 convenient to carry out the functions, powers, and duties of the department; 18 (2) review and appraise programs and activities of state departments 19 and agencies in light of the policy set out in AS 46.03.010 for the purpose of 20 determining the extent to which the programs and activities are contributing to the 21 achievement of that policy and to make recommendations to the departments and 22 agencies, including environmental guidelines; 23 (3) consult with and cooperate with 24 (A) officials and representatives of any nonprofit corporation or 25 organization in the state; 26 (B) persons, organizations, and groups, public and private, 27 using, served by, interested in, or concerned with the environment of the state; 28 (4) appear and participate in proceedings before any state or federal 29 regulatory agency involving or affecting the purposes of the department; 30 (5) undertake studies, inquiries, surveys, or analyses it may consider 31 essential to the accomplishment of the purposes of the department; these activities
01 may be carried out by the personnel of the department or in cooperation with public or 02 private agencies, including educational, civic, and research organizations, colleges, 03 universities, institutes, and foundations; 04 (6) at reasonable times, enter and inspect with the consent of the owner 05 or occupier any property or premises to investigate either actual or suspected sources 06 of pollution or contamination or to ascertain compliance or noncompliance with a 07 regulation that may be adopted under AS 46.03.020 - 46.03.040; information relating 08 to secret processes or methods of manufacture discovered during investigation is 09 confidential; 10 (7) conduct investigations and hold hearings and compel the 11 attendance of witnesses and the production of accounts, books, and documents by the 12 issuance of a subpoena; 13 (8) advise and cooperate with municipal, regional, and other local 14 agencies and officials in the state, to carry out the purposes of this chapter; 15 (9) act as the official agency of the state in all matters affecting the 16 purposes of the department under federal laws now or hereafter enacted; 17 (10) adopt regulations necessary to carry out the purposes of this 18 chapter, including regulations providing for 19 (A) control, prevention, and abatement of air, water, or land or 20 subsurface land pollution; 21 (B) safeguard standards for carbon dioxide, petroleum, and 22 natural gas pipeline construction, operation, modification, or alteration; 23 (C) protection of public water supplies by establishing 24 minimum drinking water standards, and standards for the construction, 25 improvement, and maintenance of public water supply systems; 26 (D) collection and disposal of sewage and industrial waste; 27 (E) collection and disposal of garbage, refuse, and other 28 discarded solid materials from industrial, commercial, agricultural, and 29 community activities or operations; 30 (F) control of pesticides; 31 (G) other purposes as may be required for the implementation
01 of the policy declared in AS 46.03.010; 02 (H) handling, transportation, treatment, storage, and disposal of 03 hazardous wastes; 04 (11) inspect the premises of sellers and suppliers of paint, vessels, and 05 marine and boating supplies, and take other actions necessary to enforce 06 AS 46.03.715; 07 (12) notwithstanding any other provision of law, take all actions 08 necessary to receive authorization from the administrator of the United States 09 Environmental Protection Agency to administer and enforce a National Pollutant 10 Discharge Elimination System program in accordance with 33 U.S.C. 1342 (sec. 402, 11 Clean Water Act), 33 U.S.C. 1345 (sec. 405, Clean Water Act), 40 C.F.R. Part 123, 12 and 40 C.F.R. Part 403, as amended; 13 (13) require the owner or operator of a facility to undertake 14 monitoring, sampling, and reporting activities described in 33 U.S.C. 1318 (sec. 308, 15 Clean Water Act); 16 (14) notwithstanding any other provision of law, take all actions 17 necessary to receive federal authorization of a state program for the department and 18 the Department of Natural Resources to administer and enforce a dredge and fill 19 permitting program allowed under 33 U.S.C. 1344 (sec. 404, Clean Water Act) and to 20 implement the program, if authorized. 21 * Sec. 39. 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. 40. 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. 41. Section 39 of this Act takes effect immediately under AS 01.10.070(c).