CSHB 349(RES): "An Act relating to feasibility licenses for and leases of state land for renewable energy projects; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 349(RES) 01 "An Act relating to feasibility licenses for and leases of state land for renewable energy 02 projects; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 38.05.035(a) is amended to read: 05 (a) The director shall 06 (1) have general charge and supervision of the division and may 07 exercise the powers specifically delegated to the director; the director may employ and 08 fix the compensation of assistants and employees necessary for the operations of the 09 division; the director is the certifying officer of the division, with the consent of the 10 commissioner, and may approve vouchers for disbursements of money appropriated to 11 the division; 12 (2) manage, inspect, and control state land and improvements on it 13 belonging to the state and under the jurisdiction of the division; 14 (3) execute laws, rules, regulations, and orders adopted by the
01 commissioner; 02 (4) prescribe application procedures and practices for the sale, lease, or 03 other disposition of available land, resources, property, or interest in them; 04 (5) prescribe fees or service charges, with the consent of the 05 commissioner, for any public service rendered; 06 (6) under the conditions and limitations imposed by law and the 07 commissioner, issue deeds, leases, or other conveyances disposing of available land, 08 resources, property, or any interests in them; 09 (7) have jurisdiction over state land, except that land acquired by the 10 Alaska World War II Veterans Board and the Agricultural Loan Board or the 11 departments or agencies succeeding to their respective functions through foreclosure 12 or default; to this end, the director possesses the powers and, with the approval of the 13 commissioner, shall perform the duties necessary to protect the state's rights and 14 interest in state land, including the taking of all necessary action to protect and enforce 15 the state's contractual or other property rights; 16 (8) maintain the records the commissioner considers necessary, 17 administer oaths, and do all things incidental to the authority imposed; the following 18 records and files shall be kept confidential upon request of the person supplying the 19 information: 20 (A) the name of the person nominating or applying for the sale, 21 lease, or other disposal of land by competitive bidding; 22 (B) before the announced time of opening, the names of the 23 bidders and the amounts of the bids; 24 (C) all geological, geophysical, hydrological, meteorological, 25 and engineering data supplied, whether or not concerned with the extraction or 26 development of natural resources; 27 (D) except as provided in AS 38.05.036, cost data and financial 28 information submitted in support of applications, bonds, leases, and similar 29 items; 30 (E) applications for rights-of-way or easements; 31 (F) requests for information or applications by public agencies
01 for land that is being considered for use for a public purpose; 02 (G) the name of the person submitting a proposal, and 03 information in the proposal submitted under AS 38.05.093; 04 (9) account for the fees, licenses, taxes, or other money received in the 05 administration of this chapter, including the sale or leasing of land, identify their 06 source, and promptly transmit them to the proper fiscal department after crediting 07 them to the proper fund; receipts from land application filing fees and charges for 08 copies of maps and records shall be deposited immediately in the general fund of the 09 state by the director; 10 (10) select and employ or obtain at reasonable compensation cadastral, 11 appraisal, or other professional personnel the director considers necessary for the 12 proper operation of the division; 13 (11) be the certifying agent of the state to select, accept, and secure by 14 whatever action is necessary in the name of the state, by deed, sale, gift, devise, 15 judgment, operation of law, or other means, any land, of whatever nature or interest, 16 available to the state; and be the certifying agent of the state [,] to select, accept, or 17 secure by whatever action is necessary in the name of the state any land, or title or 18 interest to land, available, granted, or subject to being transferred to the state for any 19 purpose; 20 (12) on request, furnish records, files, and other information related to 21 the administration of AS 38.05.180 to the Department of Revenue for use in 22 forecasting state revenue under or administering AS 43.55, whether or not those 23 records, files, and other information are required to be kept confidential under (8) of 24 this subsection; in the case of records, files, or other information required to be kept 25 confidential under (8) of this subsection, the Department of Revenue shall maintain 26 the confidentiality that the Department of Natural Resources is required to extend to 27 records, files, and other information under (8) of this subsection; 28 (13) when reasonably possible, give priority to and expedite the 29 processing of an application for a lease or assignment of a lease of state land for 30 development and operation of a gas storage facility, for a right-of-way to a gas storage 31 facility, for a change to the allocation of production within a unit, and for a permit
01 necessary for the operation of a gas storage facility; in this paragraph, "gas storage 02 facility" has the meaning given in AS 31.05.032; 03 (14) prepare and submit to the senate secretary and chief clerk of the 04 house of representatives, on or before the first day of each regular session of the 05 legislature, an annual report in electronic form concerning site lease applications 06 submitted under AS 38.05.083; in preparing and submitting the report, the director 07 shall 08 (A) include in the report 09 (i) a list of all applications pending with the department, 10 including applications for a new lease and applications for renewal, 11 amendment, and assignment of a lease, and the length of time each 12 application has been pending with the department; 13 (ii) for an application that has not been granted, the 14 reason the application has not been granted; and 15 (iii) the number of leases that the director elected not to 16 renew under AS 38.05.070; 17 (B) notify the legislature that the report is available. 18 * Sec. 2. AS 38.05.070(e) is amended to read: 19 (e) The director may renew a lease issued under this section, AS 38.05.075, 20 38.05.083, 38.05.094, or 38.05.810 upon its expiration if the lease is in good standing 21 and the lease renewal is determined to be in the best interests of the state. A renewal 22 issued under this subsection is not subject to AS 38.05.035(e). A lease under this 23 section, AS 38.05.075, 38.05.083, or 38.05.810 may be renewed only once for a term 24 not longer than the initial term of the lease. The director shall provide notice of the 25 lease renewal decision. 26 * Sec. 3. AS 38.05.075(a) is amended to read: 27 (a) Except as provided in AS 38.05.035, 38.05.070, 38.05.073, 38.05.081, 28 38.05.082, 38.05.083, 38.05.087, 38.05.094, 38.05.102, 38.05.565, 38.05.600, 29 38.05.810, and this section, when competitive interest has been demonstrated or the 30 commissioner determines that it is in the state's best interests, leasing shall be made at 31 public auction or by sealed bid, at the discretion of the director, to the highest qualified
01 bidder as determined by the commissioner. A bidder may be represented by an 02 attorney or agent at a public auction. In the public notice of a lease to be offered at 03 public auction or by sealed bid, the commissioner shall specify a minimum acceptable 04 bid and the lease compensation method. The lease compensation method shall be 05 designed to maximize the return on the lease to the state and shall be a form of 06 compensation set out in AS 38.05.073(m). An aggrieved bidder may appeal to the 07 commissioner within five days for a review of the determination. The leasing shall be 08 conducted by the commissioner, and the successful bidder shall deposit at the public 09 auction or with the sealed bid the first year's rental or other lease compensation as 10 specified by the commissioner, or that portion of it that the commissioner requires in 11 accordance with the bid. The commissioner shall require, under AS 38.05.860, 12 qualified bidders to deposit a sum equal to any survey or appraisal costs reasonably 13 incurred by another qualified bidder acting in accordance with the regulations of the 14 commissioner or incurred by the department under AS 38.04.045 and AS 38.05.840. If 15 a bidder making a deposit of survey or appraisal costs is determined by the 16 commissioner to be the highest qualified bidder under this subsection, the deposit shall 17 be paid to the unsuccessful bidder who incurred those costs or to the department if the 18 department incurred the costs. All costs for survey and appraisal shall be approved in 19 advance in writing by the commissioner. The commissioner shall immediately issue a 20 receipt containing a description of the land or interest leased, the price bid, and the 21 terms of the lease to the successful qualified bidder. If the receipt is not accepted in 22 writing by the bidder under this subsection, the commissioner may offer the land for 23 lease again under this subsection. A lease, on a form approved by the attorney general, 24 shall be signed by the successful bidder and by the commissioner. 25 * Sec. 4. AS 38.05 is amended by adding new sections to read: 26 Sec. 38.05.091. Applicability; determination; regulations. (a) Unless 27 specifically provided otherwise in AS 38.05.091 - 38.05.094, the provisions of 28 AS 38.05.005 - 38.05.037 and 38.05.920 - 38.05.990 apply to the issuance of 29 feasibility licenses for renewable energy projects under AS 38.05.091 - 38.05.094. 30 (b) The commissioner shall make preliminary written determinations of the 31 state land that may be subject to the provisions of AS 38.05.092. The determinations
01 shall be given public notice using the methods described in AS 38.05.945(b). After 02 completion of the comment period and evaluation of the comments received, the 03 commissioner shall issue a written determination of the state land that is subject to the 04 provisions of AS 38.05.092. 05 (c) The commissioner may adopt regulations necessary to implement 06 AS 38.05.091 - 38.05.094. 07 (d) The commissioner may not issue feasibility licenses to a licensee so that, at 08 any one time, the licensee holds feasibility licenses on more than 2,000,000 acres. 09 Sec. 38.05.092. Feasibility licenses for renewable energy projects. (a) To 10 encourage energy production on state land, the commissioner may issue feasibility 11 licenses. 12 (b) A feasibility license issued under this section gives the licensee 13 (1) the exclusive right to explore, for a term not to exceed 10 years, the 14 surface estate on state land described in the feasibility license to evaluate the land's 15 potential for a renewable energy project, unless the feasibility license is terminated 16 under (d)(1) of this section or the land is earlier relinquished, removed, or deleted 17 under (d)(2) of this section; and 18 (2) unless the feasibility license is terminated under (d)(1) of this 19 section, the option to convert the feasibility license for all or part of the state land, 20 except the land that is deleted or removed from the land described in the feasibility 21 license under (d)(2) of this section, into a lease of state land for a renewable energy 22 project, upon fulfillment of the work commitments contained in the feasibility license. 23 (c) A feasibility license issued under this section 24 (1) may cover, subject to the maximum acreage limitation on 25 feasibility licenses by one licensee under AS 38.05.091(d), an area of not more than 26 500,000 acres that must be reasonably compact and contiguous; 27 (2) must be conditioned on an obligation to perform a specified work 28 commitment, in total for the term of the license, expressed in dollars of direct 29 expenditures; the specified work commitment 30 (A) may include a provision that adjusts the total amount of 31 work commitment, expressed in dollars of direct expenditures, to account for
01 inflation; 02 (B) must include a requirement that the licensee complete at 03 least 25 percent of the licensee's total specified work commitment by the fourth 04 anniversary of the effective date of the issuance of the feasibility license; 05 (3) must be conditioned on the posting of a bond or other security 06 acceptable to the commissioner, in favor of the state and subject to the following 07 requirements: 08 (A) the bond or other security must be renewed annually; 09 (B) the annual bond or other security shall be calculated as the 10 entire work commitment expressed in dollars, less the cumulative direct 11 expenditures of the licensee as of the last day of the most recent project year, 12 divided by the number of years remaining in the term of the feasibility license; 13 (C) the bond or other security must provide sufficient financial 14 assurances to cover costs for the demolition and removal of project 15 infrastructure and restoration of land affected by the feasibility licensee, 16 including, as applicable, the possible costs of remediating oil or other minerals, 17 fiberglass, microplastics, or other contamination; 18 (4) is subject to an annual review and revocation if the commissioner 19 determines that the licensee has failed to provide or maintain in effect the bond or 20 other security required by (3) of this subsection; and 21 (5) must be conditioned on an agreement that direct expenditures are 22 subject to audit by the commissioner. 23 (d) If, on the fourth anniversary of the effective date of the issuance of the 24 feasibility license issued under this section, 25 (1) the licensee has not completed at least 25 percent of the licensee's 26 total specified work commitment, as measured by the licensee's direct expenditures, 27 the feasibility license terminates; 28 (2) the licensee has completed at least 25 percent but has not 29 completed at least 50 percent of the licensee's total specified work commitment, as 30 measured by the licensee's direct expenditures, the commissioner shall remove or 31 delete, or shall require the licensee to relinquish, a portion of the area within the
01 feasibility license; relinquishment, removal, or deletion of an area from the state land 02 described in the feasibility license terminates the licensee's rights under AS 38.05.091 03 - 38.05.094 in the area that is relinquished, removed, or deleted; a relinquishment, 04 removal, or deletion of a portion of the area described in the feasibility license must be 05 in areas that are reasonably compact and contiguous; the areas relinquished from the 06 state land described in the feasibility license must be areas identified by the licensee 07 but, if the licensee fails to identify sufficient area, the commissioner may identify any 08 additional acreage required to be removed or deleted from the area under license to 09 meet the requirements of this subsection; within the area described in the feasibility 10 license issued under (a) - (c) of this section, 11 (A) 25 percent must be relinquished, removed, or deleted not 12 later than the fourth anniversary of the effective date of the issuance of the 13 feasibility license; 14 (B) an additional 10 percent of the acreage remaining after 15 relinquishment, removal, or deletion of acreage required by (A) of this 16 paragraph and by previous relinquishments, removals, or deletions under this 17 paragraph must be removed or deleted on each of the succeeding anniversaries 18 of the effective date of the issuance of the feasibility license; 19 (C) the cumulative total of the acreage relinquished, removed, 20 or deleted under (A) and (B) of this paragraph may not be required to exceed 21 50 percent of the area described in the original feasibility license area. 22 (e) If, immediately before the beginning of the period for annual renewal of 23 the bond or other security under (c)(3)(A) of this section, the licensee fails to provide 24 or maintain in effect the bond or other security required by (c) of this section for the 25 period covered by the annual renewal and the commissioner revokes the feasibility 26 license, the bond or other security then in effect for the licensee's obligations under the 27 feasibility license is forfeited to the state. 28 (f) Land and water included within an area subject to a feasibility license 29 under this section must, to the extent practicable, remain open to 30 (1) the public for access, hunting, fishing, and other generally allowed 31 uses as determined by the department; and
01 (2) other resource development, including mining. 02 (g) Notwithstanding AS 38.05.300, state land subject to a feasibility license 03 must remain open to mineral exploration and development, so long as the mineral 04 exploration and development does not interfere with the licensee's feasibility 05 evaluation. Issuance of a license under AS 38.05.091 - 38.05.094 does not constitute 06 an exception to the requirements of AS 38.05.300(a). 07 (h) In this section, 08 (1) "direct expenditure" 09 (A) means cash expenses undertaken in the performance of a 10 specified work commitment under the provisions of AS 38.05.091 - 38.05.094 11 and necessarily incurred by the licensee in the permitting, mobilization, 12 conducting, demobilization, and evaluation of geological, hydrological, 13 meteorological, or other surveys, in determining the feasibility of a renewable 14 energy project; 15 (B) does not include noncash expenses, including depreciation 16 and reserves, interest or other costs of borrowed funds, return on investment, 17 overhead, insurance or bond premiums, or any other expense that is 18 unreasonable or that the licensee has not incurred to satisfy the licensee's work 19 commitment; 20 (2) "work commitment" includes the gathering of data from activities 21 described in (1) of this subsection. 22 Sec. 38.05.093. License procedures. (a) The procedures in this section apply 23 to the issuance of a feasibility license under AS 38.05.092. 24 (b) The licensing process is initiated by a prospective licensee submitting a 25 proposal to the commissioner that identifies a specific area to be subject to the 26 feasibility license, proposes specific minimum work commitments, and states the 27 minimum qualifications for a licensee as established by regulations adopted by the 28 commissioner. The proposal must include 29 (1) the specific location, description, and amount of land the 30 prospective licensee wants included in a feasibility license; 31 (2) a detailed summary of the proposed purpose the land will be used
01 for; and 02 (3) additional information and requirements established by the 03 department in regulation, including any application fees. 04 (c) Within 180 days after receiving a proposal from a prospective licensee 05 under (b) of this section, the commissioner shall either reject the proposal in a written 06 decision or give public notice of the intent to evaluate the acceptability of the 07 proposal. The commissioner shall solicit comments on a proposal for which public 08 notice is given under this subsection and shall request competing proposals. 09 (d) The commissioner may make a written request to a prospective licensee 10 for additional information on the prospective licensee's proposal. The commissioner 11 shall keep confidential information described in AS 38.05.035(a)(8) that is voluntarily 12 provided if the prospective licensee has made a written request that the information 13 remain confidential. 14 (e) After considering proposals not rejected under (c) of this section and 15 public comment on those proposals, the commissioner shall issue a written finding 16 addressing the qualifications of a prospective licensee, including whether the 17 prospective licensee has previous experience with renewable energy projects, how the 18 proposed project would accommodate concurrent use of the land, consistency with 19 existing state area or management plans, and all matters set out in AS 38.05.035(e). If 20 the finding concludes that the state's best interests would be served by issuing a 21 feasibility license, the finding must describe the limitations, stipulations, conditions, or 22 changes from the initiating proposal or competing proposals that are required to make 23 the issuance of the feasibility license conform to the best interests of the state and, if 24 only one proposal was submitted, identify the prospective licensee whom the 25 commissioner finds should be issued the feasibility license. The commissioner shall 26 attach to the finding a copy of the feasibility license to be issued and the form of lease 27 that will be used for any portion of the feasibility license area subsequently converted 28 to a lease under AS 38.05.094. The commissioner may not issue a feasibility license 29 under this section unless the written findings under AS 38.05.035(e) include 30 (1) reasonably foreseeable effects that a renewable energy project may 31 have on the state or local economy, including potential effects on mining, timber, and
01 other resource development sectors; 02 (2) anticipated annual revenue that the renewable energy project may 03 yield to the state; 04 (3) an assessment and consideration of the known mineral potential, 05 including current claim status, within the feasibility license area; 06 (4) the renewable energy project's value to the state and potential 07 revenue to the state; and 08 (5) a summary of public comments received in response to the 09 solicitation under (c) of this section and the department's response to those comments. 10 (f) If only one prospective licensee submits a proposal and the commissioner's 11 finding under (e) of this section concludes that a feasibility license should be issued to 12 that prospective licensee, the prospective licensee has 120 days after issuance of the 13 finding within which to accept or reject the issuance of the feasibility license, as 14 limited or conditioned by the terms contained in the finding. The feasibility license to 15 be issued and the form of lease that will be used must be attached to that finding. The 16 prospective licensee must accept or reject the issuance of the feasibility license in 17 writing. 18 (g) If competing proposals are submitted and the commissioner's finding 19 under (e) of this section concludes that a feasibility license should be issued, the 20 commissioner shall issue a request for competitive sealed bids, under procedures 21 adopted by the commissioner by regulation, to determine which prospective licensee 22 should be issued the feasibility license. The finding provided to the prospective 23 licensees and to the public under (e) of this section must contain notice that (1) the 24 commissioner intends to request competitive sealed bids; (2) a prospective licensee 25 who intends to participate in the bidding must notify the commissioner in writing by 26 the date specified in the notice; and (3) a prospective licensee's notice of intent to 27 participate in the bidding constitutes acceptance of issuance of the feasibility license, 28 as limited or conditioned by the terms contained in the finding and by the feasibility 29 license to be issued and the form of lease to be used that have been attached to that 30 finding, if the prospective licensee is the successful bidder. The successful bidder is 31 the prospective licensee who submits the highest bid in terms of the minimum work
01 commitment dollar amount. 02 (h) In this section, "work commitment" has the meaning given in 03 AS 38.05.092(h). 04 Sec. 38.05.094. Conversion to lease. (a) If the licensee requests and the 05 commissioner determines that the work commitment obligation set out in a feasibility 06 license issued under AS 38.05.092 has been met, the commissioner shall convert to 07 one or more leases all or part, as the licensee may indicate, of the area described in the 08 feasibility license that remains after the relinquishments, removals, or deletions 09 required by AS 38.05.092(d)(2). A lease agreement must include 10 (1) land use restrictions and authorizations consistent with the 11 requirements of AS 38.05.092(f) relating to multiple use and mineral exploration, the 12 purpose of the lease, and other conditions and obligations that are specified in the 13 lease; and 14 (2) bonding requirements the commissioner determines are sufficient 15 to cover the costs to the department of the demolition and removal of project 16 infrastructure and restoration of land affected by the lessee, including, as applicable, 17 the possible costs of remediating oil or other minerals, fiberglass, microplastics, or 18 other contamination. 19 (b) Compensation for a lease under this section 20 (1) shall be designed to maximize the return to the state and be a form 21 of compensation provided under AS 38.05.073(m); 22 (2) shall be separately accounted for under AS 37.05.142; and 23 (3) may be used by the legislature to make appropriations to the 24 department to carry out the purposes of AS 38.05.091 - 38.05.094. 25 (c) The provisions of AS 38.05.070 and 38.05.095 concerning subleasing, 26 assignment, lease renewals, and lease extensions apply to leasing under this section. 27 (d) By February 1 of each year, the commissioner shall prepare a report on the 28 lease agreements entered into under this section, transmit the report to the senate 29 secretary and the chief clerk of the house of representatives, and notify the legislature 30 that the report is available. The report must contain the following information: 31 (1) the number of total leases entered into each fiscal year;
01 (2) a complete list of lease information for each ongoing lease that 02 includes 03 (A) a general description of the location of the lease; 04 (B) the date the lease was executed; 05 (C) the identity of each person on the lease; 06 (D) a summary of the underlying renewable energy project; 07 (E) the current status of the renewable energy project; 08 (F) a summary of the compensation agreed on for the lease and 09 an explanation of how the amount was determined; and 10 (G) the identity of each individual having an ownership interest 11 in an entity on the lease; 12 (3) a complete list of leases that expired or were terminated during the 13 preceding or current fiscal year and the reason the lease expired or was terminated; 14 and 15 (4) a description of the cumulative revenue received by the state from 16 leases, the revenue received by the state from leases during the preceding fiscal year, 17 and the anticipated revenue the state will receive from leases in the current fiscal year. 18 (e) In this section, "work commitment" has the meaning given in 19 AS 38.05.092(h). 20 * Sec. 5. AS 38.05.102 is amended to read: 21 Sec. 38.05.102. Lessee preference. Except for a lease under AS 38.05.081 or 22 38.05.094, if land within a leasehold created under AS 38.05.070 - 38.05.105 is 23 offered for sale or long-term lease at the termination of the existing leasehold, the 24 director may, upon a finding that it is in the best interest of the state, allow a holder in 25 good standing of the existing leasehold to purchase or lease the land for its appraised 26 fair market value at the time of the sale or long-term lease. 27 * Sec. 6. AS 38.05.945(a) is amended to read: 28 (a) This section establishes the requirements for notice given by the 29 department for the following actions: 30 (1) classification or reclassification of state land under AS 38.05.300 31 and the closing of land to mineral leasing or entry under AS 38.05.185;
01 (2) zoning of land under applicable law; 02 (3) issuance of a 03 (A) preliminary written finding under AS 38.05.035(e)(5)(A) 04 regarding the sale, lease, or disposal of an interest in state land or resources for 05 oil and gas, or for gas only, subject to AS 38.05.180(b); 06 (B) written finding for the sale, lease, or disposal of an interest 07 in state land or resources under AS 38.05.035(e)(6), except a lease sale 08 described in AS 38.05.035(e)(6)(F) for which the director must provide 09 opportunity for public comment under the provisions of that subparagraph; 10 (4) a competitive disposal of an interest in state land or resources after 11 final decision under AS 38.05.035(e); 12 (5) a preliminary finding under AS 38.05.035(e) concerning sites for 13 aquatic farms and related hatcheries; 14 (6) a decision under AS 38.05.091 - 38.05.094 or 38.05.131 - 15 38.05.134 [AS 38.05.132 - 38.05.134] regarding the sale, lease, or disposal of an 16 interest in state land or resources; 17 (7) an exchange of state land under AS 38.50; 18 (8) solicitation of competitive interest under AS 38.05.081(c). 19 * Sec. 7. AS 38.05.945(e) is amended to read: 20 (e) Except for a feasibility license issued under AS 38.05.091 - 38.05.094, 21 notice [NOTICE] is not required under this section for a permit or other authorization 22 revocable by the department. 23 * Sec. 8. AS 38.05.965 is amended by adding a new paragraph to read: 24 (29) "renewable energy project" means an indoor or outdoor facility 25 that 26 (A) requires industrial infrastructure and maintenance; and 27 (B) produces energy that 28 (i) is from a resource that naturally replenishes within a 29 100-year period; 30 (ii) is derived from solar, water, or wind power; and 31 (iii) minimizes the output of toxic material in the
01 conversion of the energy. 02 * Sec. 9. This Act takes effect immediately under AS 01.10.070(c).