CSSB 48(RES): "An Act authorizing the Department of Natural Resources to lease land for carbon management purposes; establishing a carbon offset program for state land; authorizing the sale of carbon offset credits; authorizing the use of land and water within the Haines State Forest Resource Management Area for a carbon offset project; authorizing the undertaking of carbon offset projects on land in legislatively designated state forests; relating to oil and gas lease expenditures; and providing for an effective date."
00 CS FOR SENATE BILL NO. 48(RES) 01 "An Act authorizing the Department of Natural Resources to lease land for carbon 02 management purposes; establishing a carbon offset program for state land; authorizing 03 the sale of carbon offset credits; authorizing the use of land and water within the Haines 04 State Forest Resource Management Area for a carbon offset project; authorizing the 05 undertaking of carbon offset projects on land in legislatively designated state forests; 06 relating to oil and gas lease expenditures; and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 36.30.850(b) is amended by adding a new paragraph to read: 09 (51) contracts between third parties and the Department of Natural 10 Resources under AS 38.95.400 - 38.95.499, unless the Department of Natural 11 Resources elects to use this chapter and announces at the time it solicits a contract that 12 this chapter will apply to the contract. 13 * Sec. 2. AS 37.05.146(c) is amended by adding a new paragraph to read:
01 (85) revenue from the carbon offset program under AS 38.95.400 - 02 38.95.499. 03 * Sec. 3. AS 38.05.075(a) is amended to read: 04 (a) Except as provided in AS 38.05.035, 38.05.070, 38.05.073, 38.05.081, 05 38.05.082, 38.05.083, 38.05.087, 38.05.102, 38.05.565, 38.05.600, 38.05.810, and this 06 section, when competitive interest has been demonstrated or the commissioner 07 determines that it is in the state's best interests, leasing shall be made at public auction 08 or by sealed bid, at the discretion of the director, to the highest qualified bidder as 09 determined by the commissioner. A bidder may be represented by an attorney or agent 10 at a public auction. In the public notice of a lease to be offered at public auction or by 11 sealed bid, the commissioner shall specify a minimum acceptable bid and the lease 12 compensation method. The lease compensation method shall be designed to maximize 13 the return on the lease to the state and shall be a form of compensation set out in 14 AS 38.05.073(m). An aggrieved bidder may appeal to the commissioner within five 15 days for a review of the determination. The leasing shall be conducted by the 16 commissioner, and the successful bidder shall deposit at the public auction or with the 17 sealed bid the first year's rental or other lease compensation as specified by the 18 commissioner, or that portion of it that the commissioner requires in accordance with 19 the bid. The commissioner shall require, under AS 38.05.860, qualified bidders to 20 deposit a sum equal to any survey or appraisal costs reasonably incurred by another 21 qualified bidder acting in accordance with the regulations of the commissioner or 22 incurred by the department under AS 38.04.045 and AS 38.05.840. If a bidder making 23 a deposit of survey or appraisal costs is determined by the commissioner to be the 24 highest qualified bidder under this subsection, the deposit shall be paid to the 25 unsuccessful bidder who incurred those costs or to the department if the department 26 incurred the costs. All costs for survey and appraisal shall be approved in advance in 27 writing by the commissioner. The commissioner shall immediately issue a receipt 28 containing a description of the land or interest leased, the price bid, and the terms of 29 the lease to the successful qualified bidder. If the receipt is not accepted in writing by 30 the bidder under this subsection, the commissioner may offer the land for lease again 31 under this subsection. A lease, on a form approved by the attorney general, shall be
01 signed by the successful bidder and by the commissioner. 02 * Sec. 4. AS 38.05 is amended by adding a new section to read: 03 Sec. 38.05.081. Leases of state land for carbon management purposes. (a) 04 The commissioner may lease state land for carbon management purposes. A lease 05 agreement under this section must include land use restrictions and authorizations 06 consistent with the carbon management purpose of the lease. 07 (b) A person may apply to lease land for a carbon management purpose by 08 submitting an application to the department. An application to lease land must include 09 (1) the specific location, description, and amount of land the applicant 10 wants to lease; 11 (2) a detailed summary of the proposed purpose the land will be used 12 for; and 13 (3) additional information and requirements established by the 14 department in regulation, including any application fees. 15 (c) If the director receives two or more applications for the same land, the 16 director shall award the lease to the most qualified applicant. In determining the most 17 qualified applicant, the director shall consider whether the applicant has previous 18 experience with carbon management, the anticipated lease term, how the proposed use 19 would accommodate concurrent use of the land, consistency with existing state area or 20 management plans, and any additional requirement established by the department in 21 regulation. If one or more applicants have proposed different carbon management 22 purposes, the director may evaluate each applicant's proposal and determine which 23 proposed use is more appropriate for the selected state land. An aggrieved applicant 24 may appeal to the commissioner for a review of the director's determination within 20 25 days after receiving notice of the determination. 26 (d) A lease under this section may not exceed a period of 55 years. The lease 27 must contain terms and conditions for performance, including benchmarks, and must 28 require the lessee to make progress toward development or continual maintenance of 29 the leased land sufficient to meet the carbon management purpose of the lease. During 30 the term of the lease, the commissioner shall terminate the lease if 31 (1) the commissioner determines that the land is not being used for the
01 carbon management purpose approved by the commissioner; or 02 (2) the lessee fails to meet the requirements of the lease and, after 03 being given a reasonable opportunity by the commissioner to comply with the lease, 04 the commissioner determines that the lessee has still failed to comply with the lease. 05 (e) A lessee under this section is not entitled to a preference right to purchase 06 the leased land. 07 (f) Compensation for a lease under this section 08 (1) shall be designed to maximize the return to the state and be a form 09 of compensation provided under AS 38.05.073(m); 10 (2) shall be separately accounted for under AS 37.05.142; and 11 (3) may be used by the legislature to make appropriations to the 12 department to carry out the purposes of this section. 13 (g) The provisions of AS 38.05.070 and 38.05.095 concerning subleasing, 14 assignment, lease renewals, and lease extensions apply to leasing under this section. 15 (h) Before entering into a lease of land under this section, the director must 16 find under AS 38.05.035(e) that leasing the land for the proposed carbon management 17 purpose is in the best interests of the state. The findings must include 18 (1) reasonably foreseeable effects that a project may have on the state 19 or local economy; and 20 (2) anticipated annual revenue that the lease will yield to the state. 21 (i) State land used for carbon management purposes must, to the extent 22 practicable, remain open to the public for access, hunting, fishing, and other generally 23 allowed uses as determined by the department. 24 (j) By February 1 of each year, the commissioner shall prepare a report on the 25 lease agreements entered into under this section, transmit the report to the senate 26 secretary and the chief clerk of the house of representatives, and notify the legislature 27 that the report is available. The report must contain the following information: 28 (1) the number of total leases entered into each fiscal year from the 29 fiscal year ending June 30, 2024, until the present; 30 (2) a complete list of lease information for each ongoing lease that 31 includes
01 (A) a general description of the location of the lease; 02 (B) the date the lease was executed; 03 (C) the identity of each person on the lease; 04 (D) a summary of the underlying carbon management purpose; 05 (E) the current status of the leased land with regard to the 06 carbon management purpose; 07 (F) the amount of carbon offset credits generated and sold 08 under the lease cumulatively and during the current fiscal year; 09 (G) a summary of the compensation agreed on for the lease and 10 an explanation of how the amount was determined; and 11 (H) the identity of each individual having an ownership interest 12 in an entity on the lease; 13 (3) a complete list of leases that expired or were terminated during the 14 preceding or current fiscal year and the reason the lease expired or was terminated; 15 and 16 (4) a description of the cumulative revenue received by the state from 17 leases, the revenue received by the state from leases during the preceding fiscal year, 18 and the anticipated revenue the state will receive from leases in the current fiscal year. 19 (k) In this section, "carbon management" means a greenhouse gas mitigation 20 measure or nongeologic carbon sequestration project. 21 * Sec. 5. AS 38.05.102 is amended to read: 22 Sec. 38.05.102. Lessee preference. Except for a lease under AS 38.05.081, if 23 [IF] land within a leasehold created under AS 38.05.070 - 38.05.105 is offered for sale 24 or long-term lease at the termination of the existing leasehold, the director may, upon 25 a finding that it is in the best interest of the state, allow a [THE] holder in good 26 standing of the existing [THAT] leasehold to purchase or lease the land for its 27 appraised fair market value at the time of the sale or long-term lease. 28 * Sec. 6. AS 38.95 is amended by adding new sections to read: 29 Article 8. Carbon Offset Program. 30 Sec. 38.95.400. Carbon offset program. (a) A carbon offset program is 31 established in the department to undertake carbon offset projects on state land.
01 (b) The commissioner shall adopt regulations to implement AS 38.95.400 - 02 38.95.499. 03 (c) Subject to the provisions of AS 38.95.440, the commissioner may enter 04 into a contract with third parties to carry out the purposes of AS 38.95.400 - 05 38.95.499. Under a commission in which a third party sells, markets, or otherwise 06 facilitates a carbon offset project for a percentage of the revenue generated, the cost to 07 the state of the commission may not exceed 30 percent of the revenue generated by the 08 carbon offset project. 09 (d) Nothing in AS 38.95.400 - 38.95.499 may be construed to prevent a 10 private landowner from participating in a registry or exchange or to impose additional 11 legal requirements on a private landowner undertaking the landowner's own carbon 12 offset project. 13 Sec. 38.95.410. Carbon offset project criteria; evaluation; best interest 14 finding. (a) The commissioner shall adopt criteria for evaluation of a proposed carbon 15 offset project on state land. The evaluation criteria must include, if applicable, 16 (1) consideration of a project's baseline and predicted additionality; 17 (2) whether registry protocols, including validation and verification 18 requirements, are consistent with applicable state law; 19 (3) whether a project would be consistent with AS 38.95.400 - 20 38.95.499 and applicable regulations; and 21 (4) reasonably foreseeable effects that a project may have on the state 22 or local economy. 23 (b) Except as otherwise provided in statute or regulation, state land shall be 24 available for carbon offset projects. 25 (c) Legislatively withdrawn land may not be used for a carbon offset project 26 without approval by the legislature or as otherwise provided by law. In this subsection, 27 "legislatively withdrawn land" means land set aside by the legislature under 28 AS 16.20.010 - 16.20.162, 16.20.300 - 16.20.360, AS 41.21, or AS 41.23. 29 (d) A carbon offset project may be undertaken on state land if the director, 30 with the consent of the commissioner, makes a written finding that the project will 31 best serve the interests of the state under AS 38.05.035(e).
01 (e) A carbon offset project term may not exceed 55 years. 02 (f) State land used for a carbon offset project must remain open to the public 03 for access, hunting, fishing, and other generally allowed uses as determined by the 04 department. 05 Sec. 38.95.420. Registration and sale of carbon offset credits; records. (a) 06 After a written finding under AS 38.95.410(d), the director may enter into an 07 agreement to register the carbon offset project to generate revenue from the sale of 08 carbon offset credits. 09 (b) The department shall maintain records for a carbon offset project 10 undertaken by the department under AS 38.95.400 - 38.95.499 for the project term and 11 any additional amount of time required by the registry. The records must include, for 12 each carbon offset project, 13 (1) the project term; 14 (2) the anticipated annual carbon offset credits that the carbon offset 15 project will yield; 16 (3) registry agreements; and 17 (4) project administration and technical documentation associated with 18 the valuation of baseline, valuation of additionality, project validation, and project 19 verification. 20 Sec. 38.95.430. Carbon offset revenue fund. (a) The carbon offset revenue 21 fund is established as a separate fund outside the general fund for the purpose of 22 providing funding for the carbon offset program. Revenue from the carbon offset 23 program shall be deposited in the carbon offset revenue fund. The carbon offset 24 revenue fund consists of money appropriated to the fund by the legislature and 25 program receipts from the sale of verified carbon offset credits. Appropriations to the 26 fund do not lapse. 27 (b) The commissioner may spend money appropriated to the fund for the 28 purposes of the carbon offset program and to pay the costs of administering the 29 program. 30 Sec. 38.95.440. Legislative approval for contracts over $10,000,000. (a) If 31 the commissioner intends to enter into a contract under AS 38.95.400(c) that has the
01 potential to exceed $10,000,000 in costs to one of the parties over the life of the 02 contract, the commissioner shall submit the contract to the legislature for approval. 03 The commissioner shall provide a legislative committee any information that the 04 committee requests during its review of the contract. 05 (b) A contract submitted under this section 06 (1) during a regular session may be executed only if the legislature 07 approves the contract by law within 45 days after submission; 08 (2) when the legislature is not in a regular session may be executed 09 only if the legislature approves the contract by law during the first 45 days of the next 10 regular session or during a special session convened to address the contract, whichever 11 occurs first. 12 (c) The cost to a party over the life of a contract includes the 13 (1) value of option provisions; 14 (2) value of known or reasonably foreseeable contract addenda or 15 additional durational terms or time extensions; and 16 (3) combined value of two or more contracts that are reasonably 17 related to one another based on contractor, subject matter, or locale. 18 Sec. 38.95.450. Annual report. By February 1 of each year, the commissioner 19 shall prepare a report on the carbon offset program established in AS 38.95.400 - 20 38.95.499, transmit the report to the senate secretary and the chief clerk of the house 21 of representatives, and notify the legislature that the report is available. The report 22 must contain the following information: 23 (1) a list of all carbon offset projects that are generating or eligible to 24 generate carbon offset credits, or that are in development, that includes 25 (A) a general description of each project location; 26 (B) the date a contract for a project was executed and the 27 duration of the project; 28 (C) the identity of each person who contracted with the state 29 for a project; 30 (D) a summary of each carbon offset project; 31 (E) the status of each carbon offset project;
01 (F) the amount of carbon offset credits generated and sold 02 cumulatively and anticipated during the current fiscal year for each carbon 03 offset project; 04 (G) for a project that is in development but is not yet generating 05 carbon offset credits, the anticipated timeline for when the project is expected 06 to generate credits; 07 (H) a summary of the monetary compensation agreed on for a 08 contract or project and an explanation of how the amount was determined; and 09 (I) the identity of each individual having an ownership interest 10 in an entity that has contracted with the state for a project; 11 (2) a complete list of projects that expired or were terminated during 12 the preceding or current fiscal year and the reason the project expired or was 13 terminated; 14 (3) a description of revenue generated to the carbon offset revenue 15 fund (AS 38.95.430) cumulatively over the life of the fund, during the preceding fiscal 16 year, and the anticipated revenue that will be generated to the fund in the current fiscal 17 year; and 18 (4) a list of all other individuals or entities with an ongoing contract 19 with the state under AS 38.95.400 - 38.95.499 that includes, for each contract, the 20 term length of the contract, the compensation agreed on under the contract, and a 21 summary of the service or product provided under the contract. 22 Sec. 38.95.499. Definitions. In AS 38.95.400 - 38.95.499, unless the context 23 requires otherwise, 24 (1) "additionality" means the reduction in greenhouse gas emissions or 25 increase in carbon storage represented by a carbon offset project that is in addition to 26 the baseline; 27 (2) "baseline" means the amount of carbon sequestration that would 28 occur if the present situation is maintained in the absence of a carbon offset project; 29 (3) "carbon offset credit" means a transferrable instrument issued by a 30 registry for a validated and verified project that represents an emission reduction of 31 one metric ton of carbon dioxide or other greenhouse gases;
01 (4) "carbon offset project" includes seaweed farming, afforestation, 02 reforestation, and similar land and resource management measures that mitigate 03 greenhouse gases by increasing the carbon stock on state land; 04 (5) "commissioner" means the commissioner of natural resources; 05 (6) "department" means the Department of Natural Resources; 06 (7) "director" means the director of the division of lands; 07 (8) "greenhouse gas" includes carbon dioxide, methane, nitrous oxide, 08 hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other gases that trap 09 and emit radiant energy in the earth's atmosphere; 10 (9) "project term" means the length of time required by a registry for a 11 carbon offset project to yield carbon offset credits; 12 (10) "registry" means an organization or program that brokers carbon 13 offset credits and develops standardized protocols for 14 (A) registering, validating, and verifying carbon offset projects; 15 and 16 (B) issuing carbon offset credits for validated and verified 17 carbon offset projects; 18 (11) "shoreland" means land covered by nontidal water that is 19 navigable under the laws of the United States up to ordinary highwater mark as 20 modified by accretion, erosion, or reliction; 21 (12) "state land" means all land, including shoreland, tideland, and 22 submerged land, or resources belonging to or acquired by the state; 23 (13) "submerged land" means land that is covered by tidal water 24 between the line of mean low water and seaward to a distance of three geographical 25 miles or further as may be properly claimed by the state; 26 (14) "tideland" means land that is periodically covered by tidal water 27 between the elevation of mean high water and mean low water; 28 (15) "validate" or "validation" means a registry's initial approval of a 29 project plan before verification of the project; 30 (16) "verify" or "verification" means a third party's review of a 31 validated project to confirm the project's greenhouse gas net emission reduction or
01 removals for the issuance of carbon offset credits by the registry that has validated the 02 project. 03 * Sec. 7. AS 41.15.300 is amended by adding a new subsection to read: 04 (c) The state land and water designated within the Haines State Forest 05 Resource Management Area under AS 41.15.305(a) may be used for a carbon offset 06 project under AS 38.95.400 - 38.95.499. 07 * Sec. 8. AS 41.15.315(d) is amended to read: 08 (d) The state land and water described in AS 41.15.305(a) are closed to sale 09 under state land disposal laws. The commissioner may lease the land described in 10 AS 41.15.305(a) under AS 38.05.070 - 38.05.105 for a purpose consistent with 11 AS 41.15.300(a) and a municipality may select land in the Haines State Forest 12 Resource Management Area under law. The commissioner may manage the land 13 and water described in AS 41.15.305(a) for purposes consistent with AS 38.95.400 14 - 38.95.499. 15 * Sec. 9. AS 41.15.315 is amended by adding a new subsection to read: 16 (e) A carbon offset project under AS 38.95.400 - 38.95.499 undertaken on 17 land identified in AS 41.15.305 must be consistent with the applicable management 18 plan under AS 41.15.320, and the management plan must identify the land appropriate 19 for the carbon offset project. The department may amend a management plan under 20 AS 41.15.320 to allow for a carbon offset project. 21 * Sec. 10. AS 41.17.200 is amended by adding a new subsection to read: 22 (c) A carbon offset project under AS 38.95.400 - 38.95.499 may be 23 undertaken on land identified in AS 41.17.200 - 41.17.230. 24 * Sec. 11. AS 41.17.220 is amended to read: 25 Sec. 41.17.220. Management of state forests. Land within a state forest or 26 within a unit of a state forest shall be managed under 27 (1) the sustained yield principle; 28 (2) this chapter; [AND] 29 (3) a forest management plan prepared by the department; and 30 (4) if applicable, a carbon offset project undertaken by the 31 department under AS 38.95.400 - 38.95.499.
01 * Sec. 12. AS 41.17.230(a) is amended to read: 02 (a) The commissioner shall prepare a forest management plan consistent with 03 AS 38.04.005 and this chapter for each state forest and for each unit of a state forest to 04 assist in meeting the requirements of this chapter. An operational level forest 05 inventory shall be completed before a forest management plan for the state forest or 06 the unit of a state forest is adopted. The forest management plan shall be adopted, 07 implemented, and maintained within three years of the establishment of a state forest 08 by the legislature. To the extent they are found to be compatible with the primary 09 purpose of state forests under AS 41.17.200, the forest management plan must 10 consider and permit uses of forest land for other [NONTIMBER] purposes, including 11 a carbon offset project under AS 38.95.400 - 38.95.499, recreation, tourism, mining, 12 mineral exploration, mineral leasing, material extraction, consumptive and 13 nonconsumptive uses of wildlife and fish, grazing and other agricultural activities, and 14 other traditional uses. If the commissioner finds that a permitted use is incompatible 15 with one or more other uses in a portion of a state forest, the commissioner shall 16 affirmatively state in the management plan that finding of incompatibility for the 17 specific area where the incompatibility is anticipated to exist and the time period when 18 the incompatibility is anticipated to exist together with the reasons and benefits for 19 each finding. 20 * Sec. 13. AS 41.17.230 is amended by adding a new subsection to read: 21 (g) A carbon offset project undertaken under AS 38.95.400 - 38.95.499 within 22 a state forest must be consistent with the applicable forest management plan, and the 23 applicable forest management plan must identify the land appropriate for the carbon 24 offset project. The department may amend a forest management plan to allow for a 25 carbon offset project. 26 * Sec. 14. AS 43.55.165(e) is amended to read: 27 (e) For purposes of this section, lease expenditures do not include 28 (1) depreciation, depletion, or amortization; 29 (2) oil or gas royalty payments, production payments, lease profit 30 shares, or other payments or distributions of a share of oil or gas production, profit, or 31 revenue, except that a producer's lease expenditures applicable to oil and gas produced
01 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 02 profit paid to the state under that lease; 03 (3) taxes based on or measured by net income; 04 (4) interest or other financing charges or costs of raising equity or debt 05 capital; 06 (5) acquisition costs for a lease or property or exploration license; 07 (6) costs arising from fraud, wilful misconduct, gross negligence, 08 violation of law, or failure to comply with an obligation under a lease, permit, or 09 license issued by the state or federal government; 10 (7) fines or penalties imposed by law; 11 (8) costs of arbitration, litigation, or other dispute resolution activities 12 that involve the state or concern the rights or obligations among owners of interests in, 13 or rights to production from, one or more leases or properties or a unit; 14 (9) costs incurred in organizing a partnership, joint venture, or other 15 business entity or arrangement; 16 (10) amounts paid to indemnify the state; the exclusion provided by 17 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 18 a third-party insurer or surety; 19 (11) surcharges levied under AS 43.55.201 or 43.55.300; 20 (12) an expenditure otherwise deductible under (b) of this section that 21 is a result of an internal transfer, a transaction with an affiliate, or a transaction 22 between related parties, or is otherwise not an arm's length transaction, unless the 23 producer establishes to the satisfaction of the department that the amount of the 24 expenditure does not exceed the fair market value of the expenditure; 25 (13) an expenditure incurred to purchase an interest in any corporation, 26 partnership, limited liability company, business trust, or any other business entity, 27 whether or not the transaction is treated as an asset sale for federal income tax 28 purposes; 29 (14) a tax levied under AS 43.55.011 or 43.55.014; 30 (15) costs incurred for dismantlement, removal, surrender, or 31 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the
01 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 02 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 03 excluded under this paragraph if the dismantlement, removal, surrender, or 04 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 05 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 06 (16) costs incurred for containment, control, cleanup, or removal in 07 connection with any unpermitted release of oil or a hazardous substance and any 08 liability for damages imposed on the producer or explorer for that unpermitted release; 09 this paragraph does not apply to the cost of developing and maintaining an oil 10 discharge prevention and contingency plan under AS 46.04.030; 11 (17) costs incurred to satisfy a work commitment under an exploration 12 license under AS 38.05.132; 13 (18) that portion of expenditures, that would otherwise be qualified 14 capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 15 are less than the product of $0.30 multiplied by the total taxable production from each 16 lease or property, in BTU equivalent barrels, during that calendar year, except that, 17 when a portion of a calendar year is subject to this provision, the expenditures and 18 volumes shall be prorated within that calendar year; 19 (19) costs incurred for repair, replacement, or deferred maintenance of 20 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 21 undertaken in response to a failure, problem, or event that results in an unscheduled 22 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 23 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 24 equipment, other than a well, that is undertaken in response to, or is otherwise 25 associated with, an unpermitted release of a hazardous substance or of gas; however, 26 costs under this paragraph that would otherwise constitute lease expenditures under (a) 27 and (b) of this section may be treated as lease expenditures if the department 28 determines that the repair or replacement is solely necessitated by an act of war, by an 29 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 30 inevitable, and irresistible character, the effects of which could not have been 31 prevented or avoided by the exercise of due care or foresight, or by an intentional or
01 negligent act or omission of a third party, other than a party or its agents in privity of 02 contract with, or employed by, the producer or an operator acting for the producer, but 03 only if the producer or operator, as applicable, exercised due care in operating and 04 maintaining the facility, pipeline, structure, or equipment, and took reasonable 05 precautions against the act or omission of the third party and against the consequences 06 of the act or omission; in this paragraph, 07 (A) "costs incurred for repair, replacement, or deferred 08 maintenance of a facility, a pipeline, a structure, or equipment" includes costs 09 to dismantle and remove the facility, pipeline, structure, or equipment that is 10 being replaced; 11 (B) "hazardous substance" has the meaning given in 12 AS 46.03.826; 13 (C) "replacement" includes renovation or improvement; 14 (20) costs incurred to construct, acquire, or operate a refinery or crude 15 oil topping plant, regardless of whether the products of the refinery or topping plant 16 are used in oil or gas exploration, development, or production operations; however, if 17 a producer owns a refinery or crude oil topping plant that is located on or near the 18 premises of the producer's lease or property in the state and that processes the 19 producer's oil produced from that lease or property into a product that the producer 20 uses in the operation of the lease or property in drilling for or producing oil or gas, the 21 producer's lease expenditures include the amount calculated by subtracting from the 22 fair market value of the product used the prevailing value, as determined under 23 AS 43.55.020(f), of the oil that is processed; 24 (21) costs of lobbying, public relations, public relations advertising, or 25 policy advocacy; 26 (22) costs incurred as part of a capital expenditure or other action 27 taken for a carbon management purpose under AS 38.05.081 or a carbon offset 28 project under AS 38.95.400 - 38.95.499. 29 * Sec. 15. This Act takes effect immediately under AS 01.10.070(c).