Alaska 2023-2024 Regular Session

Alaska House Bill HB74 Compare Versions

Only one version of the bill is available at this time.

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2	2	HB0074a -1- HB 74
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5	5	33-GH1618\A
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11	11	HOUSE BILL NO. 74
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13	13	IN THE LEGISLATURE OF THE STATE OF ALASKA
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15	15	THIRTY-THIRD LEGISLATURE - FIRST SESSION
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17	17	BY THE HOUSE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
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19	19	Introduced: 2/15/23
20	20	Referred: House Special Committee on Energy, Resources
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22	22
23	23	A BILL
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25	25	FOR AN ACT ENTITLED
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27	27	"An Act relating to geothermal resources; relating to the definition of 'geothermal 1
28	28	resources'; and providing for an effective date." 2
29	29	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 3
30	30	* Section 1. AS 31.05.030(h) is amended to read: 4
31	31	(h) The commission may take all actions necessary to allow the state to 5
32	32	acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 6
33	33	300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f - 300j-26), for 7
34	34	the control of underground injection related to the recovery and production of oil and 8
35	35	natural gas, [AND] the control of underground injection in Class I wells, and the
36	36	9
37	37	control of underground injection in Class V wells associated with the recovery of 10
38	38	geothermal energy for heating, aquaculture, and production of electric power for 11
39	39	commercial or industrial uses, as defined in 40 C.F.R. 144.6, as amended. 12
40	40	* Sec. 2. AS 31.05.030(m) is amended to read: 13
41	41	(m) The commission has jurisdiction and authority over all persons and 14 33-GH1618\A
42	42	HB 74 -2- HB0074a
43	43	New Text Underlined [DELETED TEXT BRACKETED]
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45	45	property, public and private, necessary to carry out the purposes and intent of 1
46	46	AS 41.06 [, EXCEPT FOR PROVISIONS IN AS 41.06 FOR WHICH THE 2
47	47	DEPARTMENT OF NATURAL RESOURCES HAS JURISDICTION]. 3
48	48	* Sec. 3. AS 38.05.181(a) is amended to read: 4
49	49	(a) The commissioner may, under regulations adopted by the commissioner, 5
50	50	grant prospecting licenses [PERMITS] and leases to a qualified person to explore for, 6
51	51	develop, or use geothermal resources. A prospecting license or lease is not required 7
52	52	under this section to explore for, develop, or use geothermal resources if the 8
53	53	geothermal resource is intended for domestic, noncommercial, or small-scale 9
54	54	industrial use [WHEN TITLE TO THE SURFACE PARCEL IS HELD BY A 10
55	55	PERSON OTHER THAN THE STATE, THAT PERSON SHALL HAVE A 11
56	56	PREFERENTIAL RIGHT TO A GEOTHERMAL PROSPECTING PERMIT OR 12
57	57	LEASE FOR THE AREA UNDERLYING THE SURFACE PARCEL. THE 13
58	58	SURFACE OWNER MUST EXERCISE THE PREFERENCE RIGHT WITHIN 30 14
59	59	DAYS AFTER RECEIVING NOTICE OF THE APPLICATION FOR A PERMIT, 15
60	60	OR BY AGREEING TO MEET THE TERMS O F A BID WITHIN 60 DAYS AFTER 16
61	61	RECEIVING NOTICE OF THE ACCEPTANCE OF THE BID FOR A LEASE]. 17
62	62	* Sec. 4. AS 38.05.181(c) is amended to read: 18
63	63	(c) On state land that has not been declared a competitive geothermal area or 19
64	64	withdrawn from geothermal prospecting, the commissioner may issue a prospecting 20
65	65	license [PERMIT] to the first qualified applicant. The license [PERMIT] conveys an 21
66	66	exclusive right, for a period of five [TWO] years, to prospect for geothermal resources 22
67	67	on state land included under the license [PERMIT]. The commissioner has discretion 23
68	68	to renew the license [PERMIT] for an additional one-year term. A holder of a 24
69	69	prospecting license [PERMIT] has the right, after completion of an agreed-upon 25
70	70	work commitment [UPON THE SHOWING OF A DISCOVERY OF 26
71	71	GEOTHERMAL RESOURCES IN COMMERCIAL QUANTITIES] and the 27
72	72	submission of an exploration [A DEVELOPMENT] plan acceptable to the 28
73	73	commissioner, to convert the license [PERMIT] to a noncompetitive lease at a royalty 29
74	74	rate under (g) of this section. The conversion privilege must be exercised not later than 30
75	75	30 days after the expiration of the license [PERMIT]. If the land included within the 31 33-GH1618\A
76	76	HB0074a -3- HB 74
77	77	New Text Underlined [DELETED TEXT BRACKETED]
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79	79	license [PERMIT] is designated a competitive geothermal area during the license 1
80	80	[PERMIT] term, the licensee [PERMITTEE] must apply for a noncompetitive lease 2
81	81	within 30 days after notification of the designation or forfeit the conversion privileges 3
82	82	and the exclusive right to prospect. 4
83	83	* Sec. 5. AS 38.05.181(d) is amended to read: 5
84	84	(d) On state land that is designated a competitive geothermal area and is not 6
85	85	subject to an existing prospecting license [PERMIT], the commissioner may issue 7
86	86	geothermal leases to the highest bidder by competitive bidding procedures established 8
87	87	by regulations adopted by the commissioner. At the discretion of the commissioner, 9
88	88	competitive lease sales may be by oral or sealed bid, on the basis of a cash bonus, 10
89	89	profit share, or royalty share. 11
90	90	* Sec. 6. AS 38.05.181(e) is amended to read: 12
91	91	(e) Prospecting licenses [PERMITS] and geothermal leases granted under this 13
92	92	section must [, EXCEPT IN THE CASE OF PARCELS SUBJECT TO A 14
93	93	PREFERENCE RIGHT UNDER (b) OF THIS SECTION,] be issued for at least 40 15
94	94	acres but not more than 2,560 acres. A person may not own, or hold an interest in, 16
95	95	geothermal leases covering more than 100,000 [51,200] acres. However, geothermal 17
96	96	leases in commercial production, individually or under a unit operation or well spacing 18
97	97	or pooling arrangement, do not count against the acreage limitation. All prospecting 19
98	98	licenses [PERMITS] and geothermal leases are subject to an annual rental fee 20
99	99	established by the department in regulation and [,] payable in advance [, OF $3 21
100	100	PER ACRE]. The rental for a year shall be credited against royalties accruing for that 22
101	101	year. 23
102	102	* Sec. 7. AS 38.05.181(f) is amended to read: 24
103	103	(f) A geothermal lease shall be issued for a primary term of 10 years and may 25
104	104	be renewed for an additional term of five years if the lessee is actively engaged in 26
105	105	drilling operations. A geothermal lease is valid for the duration of commercial 27
106	106	production. [BEGINNING 20 YEARS AFTER THE INITIATION OF 28
107	107	COMMERCIAL PRODUCTION AND AT 10-YEAR INTERVALS THEREAFTER, 29
108	108	THE COMMISSIONER MAY RENEGOTIATE THE RENTALS AND 30
109	109	ROYALTIES DUE ON A GEOTHERMAL LEASE.] 31 33-GH1618\A
110	110	HB 74 -4- HB0074a
111	111	New Text Underlined [DELETED TEXT BRACKETED]
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113	113	* Sec. 8. AS 38.05.181 is amended by adding new subsections to read: 1
114	114	(i) The commissioner may require a lessee of a geothermal resource to operate 2
115	115	under a unit agreement that prescribes the conditions under which the lessee must 3
116	116	operate. A unit agreement must adequately protect all parties in interest, including the 4
117	117	state. Except as provided in (j) of this section, the commissioner may not reduce the 5
118	118	royalty on a geothermal lease issued under this section in, or in connection with, a unit 6
119	119	agreement. 7
120	120	(j) When determined by the commissioner to be in the public interest, the 8
121	121	commissioner may authorize a lessee and the lessee's representative, together with 9
122	122	each other or jointly or severally with another lessee, to collectively adopt or operate 10
123	123	under a unit agreement. The commissioner may, with the consent of the involved 11
124	124	lessees, establish, change, or revoke the drilling, producing, and royalty requirements 12
125	125	of the leases. 13
126	126	(k) A geothermal lease and a unit agreement approved under this section must 14
127	127	specify that the lease and unit agreement are subject to applicable statutes and 15
128	128	regulations in force at the time the lease or unit agreement is entered into and to future 16
129	129	amendments to those statutes and regulations. 17
130	130	* Sec. 9. AS 38.05.965(6) is repealed and reenacted to read: 18
131	131	(6) "geothermal resources" means the natural heat of the earth and 19
132	132	energy, in whatever form, below the surface of the earth present in, resulting from, 20
133	133	created by, or that may be extracted from the natural heat, and all minerals in solution 21
134	134	or other products obtained from naturally heated fluids, brines, associated gases, and 22
135	135	steam, in whatever form, found below the surface of the earth that may be produced 23
136	136	for a commercial use; "geothermal resources" does not include oil, hydrocarbon gases, 24
137	137	or other hydrocarbon substances; 25
138	138	* Sec. 10. AS 41.06.020(e) is amended to read: 26
139	139	(e) Nothing in this chapter limits the authority of the department 27
140	140	[(1)] over geothermal resources under AS 38.05.181, including the 28
141	141	authority [; OR 29
142	142	(2)] to approve and manage geothermal units or operations that include 30
143	143	state land. 31 33-GH1618\A
144	144	HB0074a -5- HB 74
145	145	New Text Underlined [DELETED TEXT BRACKETED]
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147	147	* Sec. 11. AS 41.06.020 is amended by adding a new subsection to read: 1
148	148	(f) The commission may, when consistent with the purpose and intent of this 2
149	149	chapter, exempt from this chapter a domestic, noncommercial, or small-scale 3
150	150	industrial use of geothermal resources. 4
151	151	* Sec. 12. AS 41.06 is amended by adding a new section to read: 5
152	152	Sec. 41.06.057. Penalties. (a) In addition to the penalties in (b) - (d) of this 6
153	153	section, a person who violates a provision of this chapter, a regulation adopted under 7
154	154	this chapter, or an order, stipulation, or term of a permit issued by the commission is 8
155	155	liable for a civil penalty of not more than $100,000 for the initial violation and not 9
156	156	more than $10,000 for each day thereafter on which the violation continues. 10
157	157	(b) A person who knowingly commits an act specified in AS 11.46.630(a) for 11
158	158	the purpose of evading a provision of this chapter, a regulation adopted under this 12
159	159	chapter, or an order, stipulation, or term of a permit issued by the commission is guilty 13
160	160	of a class A misdemeanor. 14
161	161	(c) A person who knowingly aids or abets another person in the violation of a 15
162	162	provision of this chapter, a regulation adopted under this chapter, or an order, 16
163	163	stipulation, or term of a permit issued by the commission is subject to the same 17
164	164	penalty as that prescribed in this chapter for the violation by the other person. 18
165	165	(d) A person who knowingly violates a provision of this chapter, a regulation 19
166	166	adopted under this chapter, or an order, stipulation, or term of a permit issued by the 20
167	167	commission is guilty of a misdemeanor punishable by a fine of not more than $10,000 21
168	168	a day for each day of violation. 22
169	169	(e) The commission may assess the civil penalties provided in this section, 23
170	170	and, if not paid, the penalties are recoverable by suit filed by the attorney general in 24
171	171	the name and on behalf of the commission in the superior court. The payment of a 25
172	172	penalty does not relieve a person on whom the penalty is imposed from liability to any 26
173	173	other person for damages arising out of the violation. 27
174	174	(f) In determining the amount of a penalty assessed under (a) of this section, 28
175	175	the commission shall consider 29
176	176	(1) the extent to which the person committing the violation was acting 30
177	177	in good faith in attempting to comply; 31 33-GH1618\A
178	178	HB 74 -6- HB0074a
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181	181	(2) the extent to which the person committing the violation acted in a 1
182	182	wilful or knowing manner; 2
183	183	(3) the extent and seriousness of the violation and the actual or 3
184	184	potential threat to public health or the environment; 4
185	185	(4) the injury to the public resulting from the violation; 5
186	186	(5) the benefits derived by the person committing the violation from 6
187	187	the violation; 7
188	188	(6) the history of compliance or noncompliance by the person 8
189	189	committing the violation with the provisions of this chapter, the regulations adopted 9
190	190	under this chapter, and the orders, stipulations, or terms of permits issued by the 10
191	191	commission; 11
192	192	(7) the need to deter similar behavior by the person committing the 12
193	193	violation and others similarly situated at the time of the violation or in the future; 13
194	194	(8) the effort made by the person committing the violation to correct 14
195	195	the violation and prevent future violations; and 15
196	196	(9) other factors considered relevant to the assessment that are adopted 16
197	197	by the commission in regulation. 17
198	198	* Sec. 13. AS 41.06.060(4) is amended to read: 18
199	199	(4) "geothermal fluid" means liquids, brines, water, gases, or [AND] 19
200	200	steam [AT TEMPERATURES GREA TER THAN 120 DEGREES CELSIUS OR 20
201	201	ANY COMMERCIAL USE OF LIQUIDS AND STEAM] naturally or artificially 21
202	202	present in a geothermal system that may be produced for a commercial use; 22
203	203	"geothermal fluid" does not include oil, hydrocarbon gases, or other 23
204	204	hydrocarbon substances [AT TEMPERATURES LESS THAN 120 DEGREES 24
205	205	CELSIUS]; 25
206	206	* Sec. 14. AS 41.06.060(5)is repealed and reenacted to read: 26
207	207	(5) "geothermal resources" means the natural heat of the earth and 27
208	208	energy, in whatever form, below the surface of the earth present in, resulting from, 28
209	209	created by, or that may be extracted from the natural heat, and all minerals in solution 29
210	210	or other products obtained from naturally heated fluids, brines, associated gases, and 30
211	211	steam, in whatever form, found below the surface of the earth that may be produced 31 33-GH1618\A
212	212	HB0074a -7- HB 74
213	213	New Text Underlined [DELETED TEXT BRACKETED]
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215	215	for a commercial use; "geothermal resources" does not include oil, hydrocarbon gases, 1
216	216	or other hydrocarbon substances; 2
217	217	* Sec. 15. AS 41.06.005(b) and 41.06.030 are repealed. 3
218	218	* Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 4
219	219	read: 5
220	220	APPLICABILITY. (a) Except as provided in (b) of this section, this Act applies to a 6
221	221	license or lease for a geothermal resource granted or entered into on or after the effective date 7
222	222	of secs. 1 - 11 and 13 - 15 of this Act. 8
223	223	(b) An application made under AS 38.05.181(c), as that subsection read before the 9
224	224	effective date of sec. 4 of this Act, that is pending with the Department of Natural Resources 10
225	225	on the effective date of sec. 4 of this Act is considered to be an application under 11
226	226	AS 38.05.181(c), as amended by sec. 4 of this Act. 12
227	227	* Sec. 17. The uncodified law of the State of Alaska is amended by adding a new section to 13
228	228	read: 14
229	229	TRANSITION: CONVERSION OF AN EXISTING PROSPECTING PERMIT TO A 15
230	230	PROSPECTING LICENSE. A permittee with a valid permit issued under AS 38.05.181(c), as 16
231	231	that subsection read before the effective date of sec. 4 of this Act, may request in writing that 17
232	232	the commissioner of natural resources convert the prospecting permit into a prospecting 18
233	233	license under AS 38.05.181, as amended by this Act. The Department of Natural Resources 19
234	234	shall give public notice of a request for conversion under this section. In this section, the 20
235	235	legislature finds that conversion of a prospecting permit under this section into a prospecting 21
236	236	license under AS 38.05.181, as amended by this Act, will best serve the interests of the state. 22
237	237	The commissioner of natural resources is not required to make a written finding under 23
238	238	AS 38.05.035 to approve a request to convert a prospecting permit into a prospecting license. 24
239	239	The expiration date of a prospecting license converted under this section may not be later than 25
240	240	five years from the date the prospecting permit was issued under AS 38.05.181(c), as that 26
241	241	subsection read before the effective date of sec. 4 of this Act. 27
242	242	* Sec. 18. The uncodified law of the State of Alaska is amended by adding a new section to 28
243	243	read: 29
244	244	TRANSITION: REGULATIONS. The Department of Natural Resources and the 30
245	245	Alaska Oil and Gas Conservation Commission may adopt regulations to implement the 31 33-GH1618\A
246	246	HB 74 -8- HB0074a
247	247	New Text Underlined [DELETED TEXT BRACKETED]
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249	249	changes made by this Act. The regulations take effect under AS 44.62 (Administrative 1
250	250	Procedure Act) but not before the effective date of the law implemented by the regulation. 2
251	251	* Sec. 19. Section 18 of this Act takes effect immediately under AS 01.10.070(c). 3
252	252	* Sec. 20. Except as provided in sec. 19 of this Act, this Act takes effect July 1, 2023. 4