Legislature(2023 - 2024)BARNES 124
03/01/2023 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB50 | |
| HB49 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 49 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 50 | TELECONFERENCED | |
HB 50-CARBON STORAGE
1:37:46 PM
CHAIR MCKAY announced that the first order of business would be
HOUSE BILL NO. 50 "An Act relating to the geologic storage of
carbon dioxide; and providing for an effective date."
1:38:15 PM
The committee took an at-ease from 1:38 p.m. to 1:42 p.m.
1:42:43 PM
REPRESENTATIVE RAUSCHER moved to adopt the proposed committee
substitute (CS) for HB 50, Version 33-GH1567\S, Dunmire,
2/28/23, as the working document.
CHAIR MCKAY objected for the purpose of discussion.
1:43:52 PM
ED KING, Staff, Representative Tom McKay, Alaska State
Legislature, presented an explanation of changes in Version S
[included in the committee packet], which read as follow
[original punctuation provided]:
Change 1: Title was expanded by legal services
Change 2: Sections 4 and 5 were added as conforming
changes (page 2, lines 16-20)
Change 3: Clarifying language was added to the closure
trust fund statute (beginning page 2, line 24)
i. Ensure the fund was not susceptible to the
CBR sweep.
ii. Condense the fund to a single account
iii. Make technical drafting changes
Change 4: References to rental payments were removed
from sections 11
13 to conform with oil and gas procedures. (page
4, lines 15, 20, 22, and 29)
Change 5: Legal services redrafted the change to
38.05.184 as a new subsection rather than amending
(b) and made some technical drafting changes.
(page 5, line 29)
Change 6: The proposed carbon storage policy statements
in DNR and AOGCC statutes were deleted.
(page 6, lines 12-14)
Change 7: The minimum lease payments were replaced with
a requirement for DNR to establish market rates in
regulation.
(page 6, lines 12-14)
1:46:59 PM
REPRESENTATIVE MEARS, referencing change 7, asked why [the
references to minimum requirements for acreage, rental fees, and
injection charges] were removed.
MR. KING explained that Version S directed the department to
establish market rates under regulation. However, he said the
language was still imperfect and could be "tightened up" in the
amendment process.
1:47:48 PM
JOHN CROWTHER, Deputy Commissioner, Office of the Commissioner,
Department of Natural Resources (DNR), on behalf of the bill
sponsor, House Rules by request of the governor, spoke to the
overall policy intent of the change. He explained that as the
market for carbon capture, utilization and storage (CCUS)
projects rapidly developed, it was hard to identify set floors
that allowed projects to proceed while capturing the best value
for the state over the life of the project. Consequently, the
department wanted flexibility in statute to allow subsequent
regulation of public process to further define those terms as
the market matures.
1:49:06 PM
REPRESENTATIVE SADDLER asked Mr. Crowther to define "commercial
terms" and "economic terms".
MR. CROWTHER gave examples of annual lease rentals and lease
injection charges. He said he did not know which terms would be
used yet; however, a variety were used across existing
agreements and would evolve with the market. He reiterated his
belief that a fixed single option would be limiting.
REPRESENTATIVE SADDLER sought to confirm that "commercial terms"
were between the injector and some other entity.
MR. CROWTHER said at a conceptual level, the projects would
benefit from federal incentives and if there were changes to
increase federal incentives, the state may want to participate
in those.
1:51:16 PM
REPRESENTATIVE ARMSTRONG noticed that the $20 per acre minimum
was still included on page 6, line 30. She asked whether the
intent was to delete that language.
MR. KING confirmed that the language in question had been
identified as an area to be amended. He resumed the explanation
of changes, which read as follows [original punctuation
provided]:
Change 8: The license to lease terms were consolidated
in AS 38.05.715 and removed from AS 38.05.705.
(version A page 6, lines 14-17 to version S page
10, lines 14-16)
Change 9: The license renewal process was limited to
the time required for the lease conversion
determination to be completed.
(page 7, lines 10-11)
Change 10: The concurrent carbon storage leasing
section was changed to a transition from EOR to
storage process, which
i. Clarifies that oil and gas operators need to
obtain a storage permit before engaging in
activities outside the scope of their
production lease
ii. Requires lessees to assign DR&R between the
production and storage leases
iii. Aligns the EOR to storage processes among the
agencies (page 10, line 23 through page 11,
line 15)
Change 11: Amends the definitions by
i. Adding a definition for "unit agreement"
(11:24)
ii. Deleting the definition of "carbon dioxide"
(A11:29)
iii. Combining the definitions of "geologic
storage" and "carbon storage" (A12:5)
iv. Removing the phrase "perpetual or short-term"
from "carbon storage" (A12:6 and A28:21)
v. Deleting the unused terms "pore space,"
"reservoir," and "supercritical fluid" from
the DNR statutes (A12:6-11)
vi. Adding a definition of "carbon storage
capacity of a storage reservoir" (28:10-13)
vii. Adding a definition of "enhanced oil or gas
recovery" (28:25-27)
1:55:53 PM
REPRESENTATIVE SADDLER sought to verify that "enhanced oil or
gas recovery" was not included in Alaska Oil and Gas
Conservation Commission (AOGCC) statutes, but "pore space" and
"reservoir" were.
MR. KING confirmed that Representative Saddler was correct. He
resumed the explanation of changes, which read as follows
[original punctuation provided]:
Change 12: Clarified that "ton" means "metric ton"
(23:27 and 25:26)
Change 13: Aligned the accounting and expenditure
process of the new storage facility administrative
fund with existing procedures (beginning page 23,
line 26)
Change 14: Added DNR as an agency in charge of
requiring DR&R (page 25, line 13)
Change 15: Added a new bill section to exempt the use
of 45Q credits against state corporate income tax
liability
Change 16: Several technical drafting changes were made
throughout the bill
1:57:17 PM
REPRESENTATIVE MCCABE asked whether change 15 satisfied a
previously proposed amendment pertaining to 45Q credits.
REPRESENTATIVE ARMSTRONG answered in the affirmative.
MR. KING noted that there may be a need for further clarity on
the reference to tax credits. In addition, he highlighted
numerous small technical conforming changes in Version S, which
he characterized as non-substantive.
CHAIR MCKAY asked whether DNR had confirmed the changes in
Version S.
1:58:59 PM
MR. CROWTHER confirmed that the administration supported Version
S.
CHAIR MCKAY sought further questions from committee members on
Version S.
1:59:50 PM
REPRESENTATIVE SADDLER asked whether there was persuasive
evidence for condensing the fund into a single account.
MR. KING said the change was made by Legislative Legal Services.
He shared his understanding that the dedicated funds clause
within the Alaska State Constitution put a damper on the intent
of having two accounts.
REPRESENTATIVE SADDLER asked for verification that there was no
problem with intermingling the money and having the same fund
draw for operations and long-term liability.
MR. KING acknowledged that there was a separate administrative
fund that AOGCC put fees into. The closure trust, however, was
specifically for expenses that occur post closure when the state
takes title. He foresaw no interference or accounting
difficulties.
2:01:54 PM
CHAIR MCKAY removed his objection to the motion to adopt the
proposed committee substitute (CS) for HB 50, Version 33-
GH1567\S, Dunmire, 2/28/23, as a working document. There being
no further objection, Version S was before the committee.
2:02:20 PM
CHAIR MCKAY announced that HB 50 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB50 CS - S.pdf |
HRES 3/1/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 50 Summary of Changes (A to S).pdf |
HRES 3/1/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 50 |
| HB 49 - Forest Carbon 101 - ANEW - 3.01.2023.pdf |
HRES 3/1/2023 1:00:00 PM |
HB 49 |
| HB 49 Overview Presentation DNR 03.01.23.pdf |
HRES 3/1/2023 1:00:00 PM HRES 3/8/2023 1:00:00 PM |
HB 49 |