05/11/2023 01:30 PM Senate FINANCE

SENATE BILL NO. 48                                                                                                            
                                                                                                                                
     "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; and providing for an effective date."                                                                             
                                                                                                                                
5:12:11 PM                                                                                                                    
                                                                                                                                
Co-Chair  Olson relayed  that SB  48 had  been heard  by the                                                                    
committee on  May 8, at  which time the committee  had heard                                                                    
public  testimony. The  co-chairs had  requested amendments,                                                                    
most of which were incorporated into a CS.                                                                                      
                                                                                                                                
5:12:39 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
5:12:48 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Olson informed that there was a CS to consider.                                                                        
                                                                                                                                
5:13:00 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
5:13:20 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair   Stedman  MOVED   to   ADOPT  proposed   committee                                                                    
substitute    for   SB    48,    Work   Draft    33-GS1372\U                                                                    
(Dunmire,5/11/23).                                                                                                              
                                                                                                                                
Co-Chair Olson OBJECTED for discussion.                                                                                         
                                                                                                                                
5:13:51 PM                                                                                                                    
                                                                                                                                
KEN ALPER, STAFF, SENATOR DONNY  OLSON, explained that there                                                                    
were  a lot  of technical  changes  to the  bill, which  was                                                                    
relatively long.  The committee had worked  closely with the                                                                    
Department of Natural Resources (DNR)  as well as members of                                                                    
the  Senate  Resources Committee,  where  there  had been  a                                                                    
number of amendments to consider  and refine. He addressed a                                                                    
Summary of Changes Document (copy on file):                                                                                     
                                                                                                                                
     Fund Status of Carbon Revenues                                                                                             
     Removed  the  creation  of a  separate  "carbon  offset                                                                    
     revenue  fund." Carbon  revenues are  presumptively UGF                                                                    
     but separately  accounted for  and may  be used  by the                                                                    
     legislature  to  make  appropriations  to  support  the                                                                    
     program.                                                                                                                   
                                                                                                                                
     Use of Procurement Code                                                                                                    
     The blanket  procurement code waiver is  now limited to                                                                    
     only contracts between the  state and the "registries."                                                                    
     Other  contracts related  to carbon  projects would  be                                                                    
     subject  to  the  code.  Removed  the  requirement  for                                                                    
     legislative   approval   of  certain   contracts,   and                                                                    
     replaced with  a limitation that contracts  not pay the                                                                    
     contractor more than a 30% commission.                                                                                     
                                                                                                                                
     Solicitation of Competitive Interest                                                                                       
     When there  is an application  to lease state  land for                                                                    
     carbon  management, DNR  must issue  public notice  and                                                                    
     solicit competing applications on that same land.                                                                          
                                                                                                                                
     Examining Monetary Proposals                                                                                               
     For  both  leases  and contracts,  clarifies  that  the                                                                    
     revenue potential  to the state  should be  a criterion                                                                    
     when evaluating competing proposals.                                                                                       
                                                                                                                                
     Ensuring Other Resources Not Impacted                                                                                      
     A variety of clarifying  amendments were made to ensure                                                                    
     any carbon  projects consider the potential  impacts to                                                                    
     mining,   timber,   and  other   resource   development                                                                    
     sectors.  State land  used for  carbon management  must                                                                    
     remain open to mineral exploration.                                                                                        
                                                                                                                                
     Class 6 Well Primacy                                                                                                       
     Authorizes  AOGCC  to take  enforcement  responsibility                                                                    
     for underground injection in Class  VI wells. This is a                                                                    
     provision from  the carbon storage bill,  but will take                                                                    
     several  years   to  implement.  This   ensures  Alaska                                                                    
     projects  are  able  to make  maximum  use  of  federal                                                                    
     carbon tax credits.                                                                                                        
                                                                                                                                
Mr. Alper continued to address the summary document:                                                                            
                                                                                                                                
     Other Technical Changes                                                                                                    
     Replaced  certain terms  such as  "validate," "verify,"                                                                    
     and  other current  industry  terms  with more  general                                                                    
     language to  account for potential changes  in registry                                                                    
     protocols as the industry matures.                                                                                         
                                                                                                                                
Mr.  Alper  explained  that the   other  technical  changes                                                                     
regarding certain terms were made at the request of DNR.                                                                        
                                                                                                                                
5:19:22 PM                                                                                                                    
                                                                                                                                
JOHN BOYLE,  COMMISSIONER, DEPARTMENT OF  NATURAL RESOURCES,                                                                    
relayed that  the department was continuing  to look through                                                                    
the  CS  in  detail.   He  expressed  appreciation  for  the                                                                    
committee and  staff that worked  on the changes.  He looked                                                                    
forward to continuing the dialogue.                                                                                             
                                                                                                                                
5:19:55 PM                                                                                                                    
                                                                                                                                
RENA   MILLER,  SPECIAL   ASSISTANT  TO   THE  COMMISSIONER,                                                                    
DEPARTMENT  OF  NATURAL  RESOURCES,  relayed  that  she  had                                                                    
nothing to add.                                                                                                                 
                                                                                                                                
5:20:11 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
5:20:16 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Olson  WITHDREW  his  objection.  There  being  NO                                                                    
further OBJECTION, it  was so ordered. The CS for  SB 48 was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
SB  48  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.