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SENATE BILL NO. 48
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - FIRST SESSION
BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
Introduced: 1/27/23
Referred: Resources, Finance
A BILL
FOR AN ACT ENTITLED
"An Act authorizing the Department of Natural Resources to lease land for carbon 1
management purposes; establishing a carbon offset program for state land; authorizing 2
the sale of carbon offset credits; and providing for an effective date." 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
* Section 1. AS 36.30.850(b) is amended by adding a new paragraph to read: 5
(51) contracts between third parties and the Department of Natural 6
Resources under AS 38.95.400 - 38.95.499. 7
* Sec. 2. AS 37.05.146(c) is amended by adding a new paragraph to read: 8
(85) revenue from the carbon offset program under AS 38.95.400 - 9
38.95.499. 10
* Sec. 3. AS 38.05.075(a) is amended to read: 11
(a) Except as provided in AS 38.05.035, 38.05.070, 38.05.073, 38.05.081,
12
38.05.082, 38.05.083, 38.05.087, 38.05.102, 38.05.565, 38.05.600, 38.05.810, and this 13
section, when competitive interest has been demonstrated or the commissioner 14 33-GS1372\A
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determines that it is in the state's best interests, leasing shall be made at public auction 1
or by sealed bid, at the discretion of the director, to the highest qualified bidder as 2
determined by the commissioner. A bidder may be represented by an attorney or agent 3
at a public auction. In the public notice of a lease to be offered at public auction or by 4
sealed bid, the commissioner shall specify a minimum acceptable bid and the lease 5
compensation method. The lease compensation method shall be designed to maximize 6
the return on the lease to the state and shall be a form of compensation set out in 7
AS 38.05.073(m). An aggrieved bidder may appeal to the commissioner within five 8
days for a review of the determination. The leasing shall be conducted by the 9
commissioner, and the successful bidder shall deposit at the public auction or with the 10
sealed bid the first year's rental or other lease compensation as specified by the 11
commissioner, or that portion of it that the commissioner requires in accordance with 12
the bid. The commissioner shall require, under AS 38.05.860, qualified bidders to 13
deposit a sum equal to any survey or appraisal costs reasonably incurred by another 14
qualified bidder acting in accordance with the regulations of the commissioner or 15
incurred by the department under AS 38.04.045 and AS 38.05.840. If a bidder making 16
a deposit of survey or appraisal costs is determined by the commissioner to be the 17
highest qualified bidder under this subsection, the deposit shall be paid to the 18
unsuccessful bidder who incurred those costs or to the department if the department 19
incurred the costs. All costs for survey and appraisal shall be approved in advance in 20
writing by the commissioner. The commissioner shall immediately issue a receipt 21
containing a description of the land or interest leased, the price bid, and the terms of 22
the lease to the successful qualified bidder. If the receipt is not accepted in writing by 23
the bidder under this subsection, the commissioner may offer the land for lease again 24
under this subsection. A lease, on a form approved by the attorney general, shall be 25
signed by the successful bidder and by the commissioner. 26
* Sec. 4. AS 38.05 is amended by adding a new section to read: 27
Sec. 38.05.081. Leases of state land for carbon management purposes. (a) 28
The commissioner may lease state land for carbon management purposes. A lease 29
agreement under this section must include land use restrictions and authorizations 30
consistent with the carbon management purpose of the lease. 31 33-GS1372\A
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(b) A person may apply to lease land for a carbon management purpose by 1
submitting an application to the department. An application to lease land must include 2
(1) the specific location, description, and amount of land the applicant 3
wants to lease; 4
(2) a detailed summary of the proposed purpose the land will be used 5
for; and 6
(3) additional information and requirements established by the 7
department in regulation, including any application fees. 8
(c) If the director receives two or more applications for the same land, the 9
director shall award the lease to the most qualified applicant. In determining the most 10
qualified applicant, the director shall consider whether the applicant has previous 11
experience with carbon management, the anticipated lease term, how the proposed use 12
would accommodate concurrent use of the land, consistency with existing state area or 13
management plans, and any additional requirements established by the department in 14
regulation. If one or more applicants have proposed different carbon management 15
purposes, the director may evaluate each applicant's proposal and determine which 16
proposed use is more appropriate for the selected state land. An aggrieved applicant 17
may appeal to the commissioner for a review of the director's determination within 20 18
days after receiving notice of the determination. 19
(d) A lease under this section may not exceed a period of 55 years. If during 20
the term of the lease the commissioner determines that the land is not being used for 21
the carbon management purpose approved by the commissioner, the commissioner 22
may terminate the lease. 23
(e) A lessee under this section is not entitled to a preference right to purchase 24
the leased land. 25
(f) Compensation for a lease under this section shall be designed to maximize 26
the return to the state and be a form of compensation provided under 27
AS 38.05.073(m). 28
(g) The provisions of AS 38.05.070 and 38.05.095 concerning subleasing, 29
assignment, lease renewals, and lease extensions apply to leasing under this section.
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(h) Before entering into a lease of land under this section, the director must 31 33-GS1372\A
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find under AS 38.05.035(e) that leasing the land for the proposed carbon management 1
purpose is in the best interests of the state. 2
(i) In this section, "carbon management" means a greenhouse gas mitigation 3
measure or non-geologic carbon sequestration project. 4
* Sec. 5. AS 38.05.102 is amended to read: 5
Sec. 38.05.102. Lessee preference. Except for a lease under AS 38.05.081, if 6
[IF] land within a leasehold created under AS 38.05.070 - 38.05.105 is offered for sale 7
or long-term lease at the termination of the existing leasehold, the director may, upon 8
a finding that it is in the best interest of the state, allow the holder in good standing of 9
that leasehold to purchase or lease the land for its appraised fair market value at the 10
time of the sale or long-term lease. 11
* Sec. 6. AS 38.95 is amended by adding new sections to read: 12
Article 8. Carbon Offset Program. 13
Sec. 38.95.400. Carbon offset program. (a) A program is established in the 14
department to undertake carbon offset projects on state land. 15
(b) The commissioner shall adopt regulations to implement AS 38.95.400 - 16
38.95.499. 17
(c) The commissioner may enter into contracts with third parties to carry out 18
the purposes of AS 38.95.400 - 38.95.499. 19
(d) Nothing in AS 38.95.400 - 38.95.499 shall be construed as preventing a 20
private landowner from participating in a registry or exchange, or be construed as the 21
state instituting additional legal requirements on a private landowner undertaking their 22
own carbon offset projects. 23
Sec. 38.95.410. Carbon offset project criteria; evaluation; best interest 24
finding. (a) The commissioner shall adopt criteria for evaluation of a proposed carbon 25
offset project on state land. The evaluation criteria shall include, if applicable, 26
(1) consideration of a project's baseline and predicted additionality; 27
(2) whether registry protocols, including validation and verification 28
requirements, are consistent with applicable state law; 29
(3) whether a project would be consistent with AS 38.95.400 - 30
38.95.499 and applicable regulations; and 31 33-GS1372\A
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(4) reasonably foreseeable effects that a project may have on the state 1
or local economy. 2
(b) Except as otherwise provided in statute or regulation adopted by the 3
commissioner, state land shall be available for carbon offset projects. 4
(c) Legislatively withdrawn land may not be used for a carbon offset project 5
without approval by the legislature or as otherwise provided by law. In this subsection, 6
"legislatively withdrawn land" means land set aside by the legislature under 7
AS 16.20.010 - 16.20.170, 16.20.300 - 16.20.360, AS 41.21.110 - 41.21.990, and 8
AS 41.23.010 - 41.23.630. 9
(d) A carbon offset project may be undertaken on state land if the director, 10
with the consent of the commissioner, determines the project is in the best interests of 11
the state under AS 38.05.035(e). 12
(e) A carbon offset project term may not exceed 55 years. 13
(f) State land used for a carbon offset project must remain open to the public 14
for access, hunting, fishing, and other generally allowed uses as determined by the 15
department. 16
Sec. 38.95.420. Registration and sale of carbon offset credits; records. (a) 17
After a written finding under AS 38.95.410(d), the director may enter into an 18
agreement to register the carbon offset project to generate revenue from the sale of 19
carbon offset credits. 20
(b) The department shall maintain records for a carbon offset project 21
undertaken by the department under AS 38.95.400 - 38.95.499 for the project term and 22
any additional amount of time required by the registry. Department records must 23
include, for each carbon offset project, 24
(1) the project term; 25
(2) the anticipated annual carbon offset credits that the carbon offset 26
project will yield; 27
(3) registry agreements; and 28
(4) project administration and technical documentation associated with 29
the valuation of baseline, valuation of additionality, project validation, and project 30
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Sec. 38.95.430. Carbon offset revenue fund. (a) Revenue from the carbon 1
offset program shall be deposited in the carbon offset revenue fund. The carbon offset 2
revenue fund is established outside the general fund for the purpose of providing 3
funding for the carbon offset program. The carbon offset revenue fund consists of 4
money appropriated to the fund by the legislature, including program receipts from the 5
sale of verified carbon offset credits. Appropriations to the fund do not lapse. 6
(b) The commissioner may spend money appropriated to the fund for the 7
purposes of the carbon offset program and to pay the costs of administering the 8
program. 9
Sec. 38.95.499. Definitions. In AS 38.95.400 - 38.95.499, unless the context 10
requires otherwise, 11
(1) "additionality" means the reduction in greenhouse gas emissions or 12
increase in carbon storage represented by a carbon offset project that is in addition to 13
the baseline; 14
(2) "baseline" means the amount of carbon sequestration that would 15
occur if the present situation is maintained in the absence of a carbon offset project; 16
(3) "carbon offset credit" means a transferrable instrument issued by a 17
registry for a validated and verified project that represents an emission reduction of 18
one metric ton of carbon dioxide or other greenhouse gases; 19
(4) "carbon offset project" means a greenhouse gas mitigation measure 20
on state land that increases the land's carbon stock, including seaweed farming, 21
afforestation, reforestation, and similar land and resource management measures; 22
(5) "commissioner" means the commissioner of natural resources; 23
(6) "department" means the Department of Natural Resources; 24
(7) "director" means the director of the division of lands; 25
(8) "greenhouse gas" means a gas that traps and emits radiant energy in 26
the earth's atmosphere, including carbon dioxide, methane, nitrous oxide, 27
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride; 28
(9) "project term" means the length of time required by a registry for a 29
carbon offset project to yield carbon offset credits; 30
(10) "registry" means an organization or program that brokers
carbon 31 33-GS1372\A
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offset credits and develops standardized protocols for 1
(A) registering, validating, and verifying carbon offset projects; 2
and 3
(B) issuing carbon offset credits for validated and verified 4
carbon offset projects; 5
(11) "state land" means all land, including shoreland, tideland, and 6
submerged land, or resources belonging to or acquired by the state; in this paragraph, 7
(A) "submerged land" means land that is covered by tidal water 8
between the line of mean low water and seaward to a distance of three 9
geographical miles or further as may be properly claimed by the state; 10
(B) "tideland" means land that is periodically covered by tidal 11
water between the elevation of mean high water and mean low water; 12
(C) "shoreland" means land covered by nontidal water that is 13
navigable under the laws of the United States up to ordinary highwater mark as 14
modified by accretion, erosion, or reliction; 15
(12) "validate" or "validation" means a registry's initial approval of a 16
project plan prior to verification of the project; 17
(13) "verify" or "verification" means a third party's review of a 18
validated project to confirm the project's greenhouse gas net emission reduction or 19
removals for the issuance of carbon offset credits by the registry that has validated the 20
project. 21
* Sec. 7. AS 41.15.300 is amended by adding a new subsection to read: 22
(c) The state land and water designated within the Haines State Forest 23
Resource Management Area under AS 41.15.305(a) may be used for a carbon offset 24
project under AS 38.95.400 - 38.95.499. 25
* Sec. 8. AS 41.15.315(d) is amended to read: 26
(d) The state land and water described in AS 41.15.305(a) are closed to sale 27
under state land disposal laws. The commissioner may lease the land described in 28
AS 41.15.305(a) under AS 38.05.070 - 38.05.105 for a purpose consistent with 29
AS 41.15.300(a) and a municipality may select land in the Haines State Forest 30
Resource Management Area under law. The commissioner may manage the land 31 33-GS1372\A
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and water described in AS 41.15.305(a) for purposes consistent with AS 38.95.400 1
- 38.95.499. 2
* Sec. 9. AS 41.15.315 is amended by adding a new subsection to read: 3
(e) A carbon offset project under AS 38.95.400 - 38.95.499 undertaken on 4
land identified in AS 41.15.305 must be consistent with the applicable management 5
plan under AS 41.15.320, and the management plan must identify the land appropriate 6
for the carbon offset project. The department may amend a management plan under 7
AS 41.15.320 to allow for a carbon offset project. 8
* Sec. 10. AS 41.17.200 is amended by adding a new subsection to read: 9
(c) A carbon offset project under AS 38.95.400 - 38.95.499 may be 10
undertaken on land identified in AS 41.17.200 - 41.17.230. 11
* Sec. 11. AS 41.17.220 is amended to read: 12
Sec. 41.17.220. Management of state forests. Land within a state forest or 13
within a unit of a state forest shall be managed under 14
(1) the sustained yield principle; 15
(2) this chapter; [AND] 16
(3) a forest management plan prepared by the department; and 17
(4) a carbon offset project undertaken by the department under 18
AS 38.95.400 - 38.95.499. 19
* Sec. 12. AS 41.17.230(a) is amended to read: 20
(a) The commissioner shall prepare a forest management plan consistent with 21
AS 38.04.005 and this chapter for each state forest and for each unit of a state forest to 22
assist in meeting the requirements of this chapter. An operational level forest 23
inventory shall be completed before a forest management plan for the state forest or 24
the unit of a state forest is adopted. The forest management plan shall be adopted, 25
implemented, and maintained within three years of the establishment of a state forest 26
by the legislature. To the extent they are found to be compatible with the primary 27
purpose of state forests under AS 41.17.200, the forest management plan must 28
consider and permit uses of forest land for nontimber purposes, including a carbon 29
offset project under AS 38.95.400 - 38.95.499, recreation, tourism, mining, mineral 30
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uses of wildlife and fish, grazing and other agricultural activities, and other traditional 1
uses. If the commissioner finds that a permitted use is incompatible with one or more 2
other uses in a portion of a state forest, the commissioner shall affirmatively state in 3
the management plan that finding of incompatibility for the specific area where the 4
incompatibility is anticipated to exist and the time period when the incompatibility is 5
anticipated to exist together with the reasons and benefits for each finding. 6
* Sec. 13. AS 41.17.230 is amended by adding a new subsection to read: 7
(g) A carbon offset project undertaken under AS 38.95.400 - 38.95.499 within 8
a state forest must be consistent with the applicable forest management plan, and the 9
applicable forest management plan must identify the land appropriate for the carbon 10
offset project. The department may amend a forest management plan to allow for a 11
carbon offset project. 12
* Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to 13
read: 14
TRANSITION: REGULATIONS. The Department of Natural Resources may adopt 15
regulations to implement this Act. The regulations take effect under AS 44.62 (Administrative 16
Procedure Act), but not before the effective date of the law implemented by the regulations. 17
* Sec. 15. Section 14 of this Act takes effect immediately under AS 01.10.070(c). 18