Alaska 2023-2024 Regular Session

Alaska Senate Bill SB48 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	Enrolled SB 48
2		-	LAWS OF ALASKA
3	1
4		-	2023
	2	+	SB0048C -1- CSSB 48(FIN)
	3	+	New Text Underlined [DELETED TEXT BRACKETED]
5	4
6		-
7		-
8		-	Source Chapter No.
9		-	CSSB 48(FIN) _______
	5	+	33-GS1372\R
10	6
11	7
12	8
13	9
14		-	~~AN ACT~~
	10	+	CS FOR SENATE BILL NO. 48(FIN)
15	11
16		-	Relating to the powers and duties of the Alaska Oil and Gas Conservation Commission;
17		-	authorizing the Department of Natural Resources to lease land for carbon management
18		-	purposes; establishing a carbon offset program for state land; authorizing the sale of carbon
19		-	offset credits; authorizing the use of land and water within the Haines State Forest Resource
20		-	Management Area for a carbon offset project; authorizing the undertaking of carbon offset
21		-	projects on land in legislatively designated state forests; relating to oil and gas lease
22		-	expenditures; and providing for an effective date.
	12	+	IN THE LEGISLATURE OF THE STATE OF ALASKA
23	13
	14	+	THIRTY-THIRD LEGISLATURE - FIRST SESSION
24	15
25		-	~~_______________~~
	16	+	BY THE SENATE FINANCE COMMITTEE
26	17
	18	+	Offered: 5/13/23
	19	+	Referred: Today's Calendar
27	20
28		-	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
	21	+	Sponsor(s): SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
	22	+	A BILL
29	23
	24	+	FOR AN ACT ENTITLED
30	25
31		-
32		-	THE ACT FOLLOWS ON PAGE 1
33		-	-1- Enrolled SB 48
34		-
35		-
36		-
37		-
38		-
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40		-
41		-
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43		-
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48		-
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52		-
53		-
54		-	AN ACT
55		-
56		-
57		-	Relating to the powers and duties of the Alaska Oil and Gas Conservation Commission; 1
58		-	authorizing the Department of Natural Resources to lease land for carbon management 2
59		-	purposes; establishing a carbon offset program for state land; authorizing the sale of carbon 3
60		-	offset credits; authorizing the use of land and water within the Haines State Forest Resource 4
61		-	Management Area for a carbon offset project; authorizing the undertaking of carbon offset 5
62		-	projects on land in legislatively designated state forests; relating to oil and gas lease 6
63		-	expenditures; and providing for an effective date. 7
64		-	_______________ 8
	26	+	"An Act relating to the powers and duties of the Alaska Oil and Gas Conservation 1
	27	+	Commission; authorizing the Department of Natural Resources to lease land for carbon 2
	28	+	management purposes; establishing a carbon offset program for state land; authorizing 3
	29	+	the sale of carbon offset credits; authorizing the use of land and water within the Haines 4
	30	+	State Forest Resource Management Area for a carbon offset project; authorizing the 5
	31	+	undertaking of carbon offset projects on land in legislatively designated state forests; 6
	32	+	relating to oil and gas lease expenditures; and providing for an effective date." 7
	33	+	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 8
65	34		* Section 1. AS 31.05.030(h) is amended to read: 9
66	35		(h) The commission may take all actions necessary to allow the state to 10
67	36		acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 11
68	37		300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f - 300j-26), for 12
69		-	the control of underground injection related to the recovery and production of oil and 13
70		-	Enrolled SB 48 -2-
	38	+	the control of underground injection related to the recovery and production of oil and 13 33-GS1372\R
	39	+	CSSB 48(FIN) -2- SB0048C
	40	+	New Text Underlined [DELETED TEXT BRACKETED]
	41	+
71	42		natural gas and the control of underground injection in Class I wells, as defined in 40 1
72	43		C.F.R. 144.6, as amended, and the control of underground injection in Class VI 2
73	44		wells, as defined in 40 C.F.R. 144.6, as amended. 3
74	45		* Sec. 2. AS 36.30.850(b) is amended by adding a new paragraph to read: 4
75	46		(51) contracts between a registry and the Department of Natural 5
76	47		Resources under AS 38.95.400 - 38.95.499; in this paragraph, "registry" has the 6
77	48		meaning given in AS 38.95.499. 7
78	49		* Sec. 3. AS 37.05.146(c) is amended by adding a new paragraph to read: 8
79	50		(85) revenue from the carbon offset program under AS 38.95.400 - 9
80	51		38.95.499. 10
81	52		* Sec. 4. AS 38.05.075(a) is amended to read: 11
82	53		(a) Except as provided in AS 38.05.035, 38.05.070, 38.05.073, 38.05.081, 12
83	54		38.05.082, 38.05.083, 38.05.087, 38.05.102, 38.05.565, 38.05.600, 38.05.810, and this 13
84	55		section, when competitive interest has been demonstrated or the commissioner 14
85	56		determines that it is in the state's best interests, leasing shall be made at public auction 15
86	57		or by sealed bid, at the discretion of the director, to the highest qualified bidder as 16
87	58		determined by the commissioner. A bidder may be represented by an attorney or agent 17
88	59		at a public auction. In the public notice of a lease to be offered at public auction or by 18
89	60		sealed bid, the commissioner shall specify a minimum acceptable bid and the lease 19
90	61		compensation method. The lease compensation method shall be designed to maximize 20
91	62		the return on the lease to the state and shall be a form of compensation set out in 21
92	63		AS 38.05.073(m). An aggrieved bidder may appeal to the commissioner within five 22
93	64		days for a review of the determination. The leasing shall be conducted by the 23
94	65		commissioner, and the successful bidder shall deposit at the public auction or with the 24
95	66		sealed bid the first year's rental or other lease compensation as specified by the 25
96	67		commissioner, or that portion of it that the commissioner requires in accordance with 26
97	68		the bid. The commissioner shall require, under AS 38.05.860, qualified bidders to 27
98	69		deposit a sum equal to any survey or appraisal costs reasonably incurred by another 28
99	70		qualified bidder acting in accordance with the regulations of the commissioner or 29
100	71		incurred by the department under AS 38.04.045 and AS 38.05.840. If a bidder making 30
101		-	a deposit of survey or appraisal costs is determined by the commissioner to be the 31
102		-	-3- Enrolled SB 48
	72	+	a deposit of survey or appraisal costs is determined by the commissioner to be the 31 33-GS1372\R
	73	+	SB0048C -3- CSSB 48(FIN)
	74	+	New Text Underlined [DELETED TEXT BRACKETED]
	75	+
103	76		highest qualified bidder under this subsection, the deposit shall be paid to the 1
104	77		unsuccessful bidder who incurred those costs or to the department if the department 2
105	78		incurred the costs. All costs for survey and appraisal shall be approved in advance in 3
106	79		writing by the commissioner. The commissioner shall immediately issue a receipt 4
107	80		containing a description of the land or interest leased, the price bid, and the terms of 5
108	81		the lease to the successful qualified bidder. If the receipt is not accepted in writing by 6
109	82		the bidder under this subsection, the commissioner may offer the land for lease again 7
110	83		under this subsection. A lease, on a form approved by the attorney general, shall be 8
111	84		signed by the successful bidder and by the commissioner. 9
112	85		* Sec. 5. AS 38.05 is amended by adding a new section to read: 10
113	86		Sec. 38.05.081. Leases of state land for carbon management purposes. (a) 11
114	87		The commissioner may lease state land for carbon management purposes. A lease 12
115	88		agreement under this section must include land use restrictions and authorizations 13
116	89		consistent with the carbon management purpose of the lease. 14
117	90		(b) A person may apply to lease land for a carbon management purpose by 15
118	91		submitting an application to the department. An application to lease land must include 16
119	92		(1) the specific location, description, and amount of land the applicant 17
120	93		wants to lease; 18
121	94		(2) a detailed summary of the proposed purpose the land will be used 19
122	95		for; and 20
123	96		(3) additional information and requirements established by the 21
124	97		department in regulation, including any application fees. 22
125	98		(c) Upon receiving an application, the department shall solicit competitive 23
126	99		interest by issuing a public notice in the manner prescribed in AS 38.05.945. The 24
127	100		notice must contain an announcement seeking competitive interest. If competing 25
128	101		carbon management applications are received following notice, the applications will 26
129	102		be awarded under (d) of this section. 27
130	103		(d) If the director receives two or more applications for the same land, the 28
131	104		director shall consider reasonable factors in awarding the lease, including proposed 29
132		-	monetary consideration, the value to the state, the potential revenue to the state, and
133		-	30
134		-	the qualifications of the applicant, including whether the applicant has previous 31
135		-	Enrolled SB 48 -4-
	105	+	monetary consideration, the value to the state, the potential revenue to the state, and 30
	106	+	the qualifications of the applicant, including whether the applicant has previous 31 33-GS1372\R
	107	+	CSSB 48(FIN) -4- SB0048C
	108	+	New Text Underlined [DELETED TEXT BRACKETED]
	109	+
136	110		experience with carbon management, the anticipated lease term, how the proposed use 1
137	111		would accommodate concurrent use of the land, consistency with existing state area or 2
138	112		management plans, and any additional requirement established by the department in 3
139	113		regulation. If one or more applicants have proposed different carbon management 4
140	114		purposes, the director shall consider each applicant's proposal and determine which 5
141	115		proposed use is more appropriate for the selected state land. An application for a lease 6
142	116		of state land under this section, including supporting documentation submitted to the 7
143	117		department for review, is a public record subject to AS 40.25.110 - 40.25.220. An 8
144	118		aggrieved applicant may appeal to the commissioner for a review of the director's 9
145	119		determination within 20 days after receiving notice of the determination. 10
146	120		(e) A lease under this section may not exceed a period of 55 years. The lease 11
147	121		must contain terms and conditions for performance, including benchmarks, and must 12
148	122		require the lessee to make progress toward development or continual maintenance of 13
149	123		the leased land sufficient to meet the carbon management purpose of the lease. During 14
150	124		the term of the lease, the commissioner shall terminate the lease if 15
151	125		(1) the commissioner determines that the land is not being used for the 16
152	126		carbon management purpose approved by the commissioner; or 17
153	127		(2) the lessee fails to meet the requirements of the lease and, after 18
154	128		being given a reasonable opportunity by the commissioner to comply with the lease, 19
155	129		the commissioner determines that the lessee has still failed to comply with the lease. 20
156	130		(f) A lessee under this section is not entitled to a preference right to purchase 21
157	131		the leased land. 22
158	132		(g) Compensation for a lease under this section 23
159	133		(1) shall be designed to maximize the return to the state and be a form 24
160	134		of compensation provided under AS 38.05.073(m); 25
161	135		(2) shall be separately accounted for under AS 37.05.142; and 26
162	136		(3) may be used by the legislature to make appropriations to the 27
163	137		department to carry out the purposes of this section. 28
164	138		(h) The provisions of AS 38.05.070 and 38.05.095 concerning subleasing, 29
165	139		assignment, lease renewals, and lease extensions apply to leasing under this section. 30
166	140		(i) Before entering into a lease of land under this section, t
167		-	he director must 31
168		-	-5- Enrolled SB 48
	141	+	he director must 31 33-GS1372\R
	142	+	SB0048C -5- CSSB 48(FIN)
	143	+	New Text Underlined [DELETED TEXT BRACKETED]
	144	+
169	145		(1) evaluate information received during a solicitation of competitive 1
170	146		interest under (c) of this section; and 2
171	147		(2) find under AS 38.05.035(e) that leasing the land for the proposed 3
172	148		carbon management purpose is in the best interests of the state; the findings must 4
173	149		include 5
174	150		(A) reasonably foreseeable effects that a project may have on 6
175	151		the state or local economy, including potential effects on mining, timber, and 7
176	152		other resource development sectors; 8
177	153		(B) anticipated annual revenue that the lease will yield to the 9
178	154		state; 10
179	155		(C) an assessment and consideration of the known mineral 11
180	156		potential, including current claim status, within the project area; 12
181	157		(D) the proposed monetary consideration under the agreement, 13
182	158		the value to the state, and the potential revenue to the state; and 14
183	159		(E) a summary of public comments received in response to the 15
184	160		solicitation of competitive interest required under (c) of this section and the 16
185	161		department's response to those comments. 17
186	162		(j) State land used for carbon management purposes must, to the extent 18
187	163		practicable, remain open to 19
188	164		(1) the public for access, hunting, fishing, and other generally allowed 20
189	165		uses as determined by the department; and 21
190	166		(2) other resource development, including mining. 22
191	167		(k) Notwithstanding AS 38.05.300, state land used for carbon management 23
192	168		purposes must remain open to mineral exploration and development. A lease under 24
193	169		this section does not constitute an exception to the requirements of AS 38.05.300(a). 25
194	170		(l) By February 1 of each year, the commissioner shall prepare a report on the 26
195	171		lease agreements entered into under this section, transmit the report to the senate 27
196	172		secretary and the chief clerk of the house of representatives, and notify the legislature 28
197	173		that the report is available. The report must contain the following information: 29
198	174		(1) the number of total leases entered into each fiscal year from the 30
199		-	fiscal year ending June 30, 2024, until the present; 31
200		-	Enrolled SB 48 -6-
	175	+	fiscal year ending June 30, 2024, until the present; 31 33-GS1372\R
	176	+	CSSB 48(FIN) -6- SB0048C
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	178	+
201	179		(2) a complete list of lease information for each ongoing lease that 1
202	180		includes 2
203	181		(A) a general description of the location of the lease; 3
204	182		(B) the date the lease was executed; 4
205	183		(C) the identity of each person on the lease; 5
206	184		(D) a summary of the underlying carbon management purpose; 6
207	185		(E) the current status of the leased land with regard to the 7
208	186		carbon management purpose; 8
209	187		(F) the amount of carbon offset credits generated and sold 9
210	188		under the lease cumulatively and during the current fiscal year; 10
211	189		(G) a summary of the compensation agreed on for the lease and 11
212	190		an explanation of how the amount was determined; and 12
213	191		(H) the identity of each individual having an ownership interest 13
214	192		in an entity on the lease; 14
215	193		(3) a complete list of leases that expired or were terminated during the 15
216	194		preceding or current fiscal year and the reason the lease expired or was terminated; 16
217	195		and 17
218	196		(4) a description of the cumulative revenue received by the state from 18
219	197		leases, the revenue received by the state from leases during the preceding fiscal year, 19
220	198		and the anticipated revenue the state will receive from leases in the current fiscal year. 20
221	199		(m) In this section, "carbon management" means a greenhouse gas mitigation 21
222	200		measure or nongeologic carbon sequestration project. 22
223	201		* Sec. 6. AS 38.05.102 is amended to read: 23
224	202		Sec. 38.05.102. Lessee preference. Except for a lease under AS 38.05.081, if 24
225	203		[IF] land within a leasehold created under AS 38.05.070 - 38.05.105 is offered for sale 25
226	204		or long-term lease at the termination of the existing leasehold, the director may, upon 26
227	205		a finding that it is in the best interest of the state, allow a [THE] holder in good 27
228	206		standing of the existing [THAT] leasehold to purchase or lease the land for its 28
229	207		appraised fair market value at the time of the sale or long-term lease. 29
230	208		* Sec. 7. AS 38.05.945(a) is amended to read: 30
231		-	(a) This section establishes the requirements for notice given by the 31
232		-	-7- Enrolled SB 48
	209	+	(a) This section establishes the requirements for notice given by the 31 33-GS1372\R
	210	+	SB0048C -7- CSSB 48(FIN)
	211	+	New Text Underlined [DELETED TEXT BRACKETED]
	212	+
233	213		department for the following actions: 1
234	214		(1) classification or reclassification of state land under AS 38.05.300 2
235	215		and the closing of land to mineral leasing or entry under AS 38.05.185; 3
236	216		(2) zoning of land under applicable law; 4
237	217		(3) issuance of a 5
238	218		(A) preliminary written finding under AS 38.05.035(e)(5)(A) 6
239	219		regarding the sale, lease, or disposal of an interest in state land or resources for 7
240	220		oil and gas, or for gas only, subject to AS 38.05.180(b); 8
241	221		(B) written finding for the sale, lease, or disposal of an interest 9
242	222		in state land or resources under AS 38.05.035(e)(6), except a lease sale 10
243	223		described in AS 38.05.035(e)(6)(F) for which the director must provide 11
244	224		opportunity for public comment under the provisions of that subparagraph; 12
245	225		(4) a competitive disposal of an interest in state land or resources after 13
246	226		final decision under AS 38.05.035(e); 14
247	227		(5) a preliminary finding under AS 38.05.035(e) concerning sites for 15
248	228		aquatic farms and related hatcheries; 16
249	229		(6) a decision under AS 38.05.132 - 38.05.134 regarding the sale, 17
250	230		lease, or disposal of an interest in state land or resources; 18
251	231		(7) an exchange of state land under AS 38.50; 19
252	232		(8) solicitation of competitive interest under AS 38.05.081(c). 20
253	233		* Sec. 8. AS 38.95 is amended by adding new sections to read: 21
254	234		Article 8. Carbon Offset Program. 22
255	235		Sec. 38.95.400. Carbon offset program. (a) A carbon offset program is 23
256	236		established in the department to undertake carbon offset projects on state land. 24
257	237		(b) The commissioner shall adopt regulations to implement AS 38.95.400 - 25
258	238		38.95.499. 26
259	239		(c) Nothing in AS 38.95.400 - 38.95.499 may be construed to prevent a 27
260	240		private landowner from participating in a registry or exchange or to impose additional 28
261	241		legal requirements on a private landowner undertaking the landowner's own carbon 29
262	242		offset project. 30
263		-	Sec. 38.95.410. Carbon offset project criteria; evaluation; best interest 31
264		-	Enrolled SB 48 -8-
	243	+	Sec. 38.95.410. Carbon offset project criteria; evaluation; best interest 31 33-GS1372\R
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	245	+	New Text Underlined [DELETED TEXT BRACKETED]
	246	+
265	247		finding. (a) The commissioner shall adopt criteria for evaluation of a proposed carbon 1
266	248		offset project on state land. The evaluation criteria must include, if applicable, 2
267	249		(1) consideration of a project's baseline and predicted additionality; 3
268	250		(2) whether registry protocols are consistent with applicable state law; 4
269	251		(3) whether a project would be consistent with AS 38.95.400 - 5
270	252		38.95.499 and applicable regulations; 6
271	253		(4) an assessment and consideration of the known mineral potential, 7
272	254		including current claim status, within the project area; 8
273	255		(5) reasonably foreseeable effects that a project may have on the state 9
274	256		or local economy, including potential effects on mining, timber, and other resource 10
275	257		development sectors; 11
276	258		(6) consideration of the effect of the project on the state's timber 12
277	259		industry; and 13
278	260		(7) the proposed monetary consideration under the project, the value to 14
279	261		the state, and the potential revenue to the state. 15
280	262		(b) Except as otherwise provided in statute or regulation, state land shall be 16
281	263		available for carbon offset projects. 17
282	264		(c) Legislatively withdrawn land may not be used for a carbon offset project 18
283	265		without approval by the legislature or as otherwise provided by law. In this subsection, 19
284	266		"legislatively withdrawn land" means land set aside by the legislature under 20
285	267		AS 16.20.010 - 16.20.162, 16.20.300 - 16.20.360, AS 41.21, or AS 41.23. 21
286	268		(d) A carbon offset project may be undertaken on state land if the director, 22
287	269		with the consent of the commissioner, makes a written finding that the project will 23
288	270		best serve the interests of the state under AS 38.05.035(e). 24
289	271		(e) A carbon offset project term may not exceed 55 years. 25
290	272		(f) State land used for a carbon offset project must, to the extent practicable, 26
291	273		remain open to 27
292	274		(1) the public for access, hunting, fishing, and other generally allowed 28
293	275		uses as determined by the department; and 29
294	276		(2) other resource development, including mining. 30
295		-	(g) Notwithstanding AS 38.05.300, state land used for a carbon offset project 31
296		-	-9- Enrolled SB 48
	277	+	(g) Notwithstanding AS 38.05.300, state land used for a carbon offset project 31 33-GS1372\R
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	280	+
297	281		must remain open to mineral exploration and development. A carbon offset project 1
298	282		under AS 38.95.400 - 38.95.499 does not constitute an exception to the requirements 2
299	283		of AS 38.05.300(a). 3
300	284		Sec. 38.95.420. Registration and sale of carbon offset credits; records. (a) 4
301	285		After a written finding under AS 38.95.410(d), the director may enter into an 5
302	286		agreement to register the carbon offset project to generate revenue from the sale of 6
303	287		carbon offset credits. 7
304	288		(b) The department shall maintain records for a carbon offset project 8
305	289		undertaken by the department under AS 38.95.400 - 38.95.499 for the project term and 9
306	290		any additional amount of time required by the registry. The records must include, for 10
307	291		each carbon offset project, 11
308	292		(1) the project term; 12
309	293		(2) the anticipated annual carbon offset credits that the carbon offset 13
310	294		project will yield; 14
311	295		(3) registry agreements; and 15
312	296		(4) project administration and technical documentation, including 16
313	297		documentation related to project implementation, monitoring, and reporting. 17
314	298		Sec. 38.95.430. Carbon offset revenue. Twenty percent of the revenue 18
315	299		generated from the carbon offset program shall be deposited into the renewable energy 19
316	300		grant fund (AS 42.45.045). The remaining 80 percent of the revenue from the carbon 20
317	301		offset program shall be separately accounted for under AS 37.05.142 and may be 21
318	302		appropriated by the legislature. 22
319	303		Sec. 38.95.440. Contracts. (a) Subject to AS 36.30, the department may enter 23
320	304		into a contract to carry out the purposes of AS 38.95.400 - 38.95.499. 24
321	305		(b) In evaluating a proposal for a contract, including competing proposals, the 25
322	306		department shall consider 26
323	307		(1) the criteria included in the request for proposals; 27
324	308		(2) the proposal's cost to the state; 28
325	309		(3) the revenue the carbon offset project associated with the proposal is 29
326	310		expected to generate; and 30
327		-	(4) the anticipated terms, including monetary terms, of a contract under 31
328		-	Enrolled SB 48 -10-
	311	+	(4) the anticipated terms, including monetary terms, of a contract under 31 33-GS1372\R
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329	315		the proposal. 1
330	316		(c) The department may not accept a proposed commission contract that 2
331	317		involves a commission that exceeds 30 percent of the revenue generated by the carbon 3
332	318		offset project. 4
333	319		Sec. 38.95.450. Annual report. By February 1 of each year, the commissioner 5
334	320		shall prepare a report on the carbon offset program established in AS 38.95.400 - 6
335	321		38.95.499, transmit the report to the senate secretary and the chief clerk of the house 7
336	322		of representatives, and notify the legislature that the report is available. The report 8
337	323		must contain the following information: 9
338	324		(1) a list of all carbon offset projects that are generating or eligible to 10
339	325		generate carbon offset credits, or that are in development, that includes 11
340	326		(A) a general description of each project location; 12
341	327		(B) the date a contract for a project was executed and the 13
342	328		duration of the project; 14
343	329		(C) the identity of each person who contracted with the state 15
344	330		for a project; 16
345	331		(D) a summary of each carbon offset project; 17
346	332		(E) the status of each carbon offset project; 18
347	333		(F) the amount of carbon offset credits generated and sold 19
348	334		cumulatively and anticipated during the current fiscal year for each carbon 20
349	335		offset project; 21
350	336		(G) for a project that is in development but is not yet generating 22
351	337		carbon offset credits, the anticipated timeline for when the project is expected 23
352	338		to generate credits; 24
353	339		(H) a summary of the monetary compensation agreed on for a 25
354	340		contract or project and an explanation of how the amount was determined; and 26
355	341		(I) the identity of each individual having an ownership interest 27
356	342		in an entity that has contracted with the state for a project; 28
357	343		(2) a complete list of projects that expired or were terminated during 29
358	344		the preceding or current fiscal year and the reason the project expired or was 30
359		-	terminated; 31
360		-	-11- Enrolled SB 48
	345	+	terminated; 31 33-GS1372\R
	346	+	SB0048C -11- CSSB 48(FIN)
	347	+	New Text Underlined [DELETED TEXT BRACKETED]
	348	+
361	349		(3) a description of revenue generated by program receipts from the 1
362	350		carbon offset program during the preceding fiscal year, cumulatively over the life of 2
363	351		the program, and the anticipated revenue that will be generated in program receipts in 3
364	352		the current fiscal year; and 4
365	353		(4) a list of all other individuals or entities with an ongoing contract 5
366	354		with the state under AS 38.95.400 - 38.95.499 that includes, for each contract, the 6
367	355		term length of the contract, the compensation agreed on under the contract, and a 7
368	356		summary of the service or product provided under the contract. 8
369	357		Sec. 38.95.499. Definitions. In AS 38.95.400 - 38.95.499, unless the context 9
370	358		requires otherwise, 10
371	359		(1) "additionality" means the reduction in greenhouse gas emissions or 11
372	360		increase in carbon storage represented by a carbon offset project that is in addition to 12
373	361		the baseline; 13
374	362		(2) "baseline" means the anticipated amount of carbon sequestration 14
375	363		that would occur in the absence of a carbon offset project; 15
376	364		(3) "carbon offset credit" means a transferrable instrument that 16
377	365		represents an emission reduction of one metric ton of carbon dioxide or other 17
378	366		greenhouse gases; 18
379	367		(4) "carbon offset project" includes seaweed farming, afforestation, 19
380	368		reforestation, and similar land and resource management measures that mitigate 20
381	369		greenhouse gases by maintaining or increasing the carbon stock on state land; 21
382	370		(5) "commissioner" means the commissioner of natural resources; 22
383	371		(6) "department" means the Department of Natural Resources; 23
384	372		(7) "director" means the director of the division of lands; 24
385	373		(8) "greenhouse gas" includes carbon dioxide, methane, nitrous oxide, 25
386	374		hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other gases that trap 26
387	375		and emit radiant energy in the earth's atmosphere; 27
388	376		(9) "project term" means the duration of the commitment made by the 28
389	377		department for a carbon offset project, ending when the state has no continuing 29
390	378		obligation related to the project; 30
391		-	(10) "registry" means an organization or program that registers and 31
392		-	Enrolled SB 48 -12-
	379	+	(10) "registry" means an organization or program that registers and 31 33-GS1372\R
	380	+	CSSB 48(FIN) -12- SB0048C
	381	+	New Text Underlined [DELETED TEXT BRACKETED]
	382	+
393	383		issues carbon offset credits for carbon offset projects; 1
394	384		(11) "shoreland" means land belonging to the state that is covered by 2
395		-	nontidal water and is navigable under the laws of the United States up to ordinary ~~high~~ 3
396		-	~~water~~ mark as modified by accretion, erosion, or reliction; 4
	385	+	nontidal water and is navigable under the laws of the United States up to ordinary 3
	386	+	highwater mark as modified by accretion, erosion, or reliction; 4
397	387		(12) "state land" means all land, including shoreland, tideland, and 5
398	388		submerged land, or resources belonging to or acquired by the state; 6
399	389		(13) "submerged land" means land that is covered by tidal water 7
400	390		between the line of mean low water and seaward to a distance of three geographical 8
401		-	miles or ~~farther~~ as may be properly claimed by the state; 9
	391	+	miles or further as may be properly claimed by the state; 9
402	392		(14) "tideland" means land that is periodically covered by tidal water 10
403	393		between the elevation of mean high water and mean low water. 11
404	394		* Sec. 9. AS 41.15.300 is amended by adding a new subsection to read: 12
405	395		(c) The state land and water designated within the Haines State Forest 13
406	396		Resource Management Area under AS 41.15.305(a) may be used for a carbon offset 14
407	397		project under AS 38.95.400 - 38.95.499. 15
408	398		* Sec. 10. AS 41.15.315(d) is amended to read: 16
409	399		(d) The state land and water described in AS 41.15.305(a) are closed to sale 17
410	400		under state land disposal laws. The commissioner may lease the land described in 18
411	401		AS 41.15.305(a) under AS 38.05.070 - 38.05.105 for a purpose consistent with 19
412	402		AS 41.15.300(a) and a municipality may select land in the Haines State Forest 20
413	403		Resource Management Area under law. The commissioner may manage the land 21
414	404		and water described in AS 41.15.305(a) for purposes consistent with AS 38.95.400 22
415	405		- 38.95.499. 23
416	406		* Sec. 11. AS 41.15.315 is amended by adding a new subsection to read: 24
417	407		(e) A carbon offset project under AS 38.95.400 - 38.95.499 undertaken on 25
418	408		land identified in AS 41.15.305 must be consistent with the applicable management 26
419	409		plan under AS 41.15.320, and the management plan must identify the land appropriate 27
420	410		for the carbon offset project. The department may amend a management plan under 28
421	411		AS 41.15.320 to allow for a carbon offset project. 29
422	412		* Sec. 12. AS 41.17.200 is amended by adding a new subsection to read: 30
423		-	(c) A carbon offset project under AS 38.95.400 - 38.95.499 may be 31
424		-	-13- Enrolled SB 48
	413	+	(c) A carbon offset project under AS 38.95.400 - 38.95.499 may be 31 33-GS1372\R
	414	+	SB0048C -13- CSSB 48(FIN)
	415	+	New Text Underlined [DELETED TEXT BRACKETED]
	416	+
425	417		undertaken on land identified in AS 41.17.200 - 41.17.230. 1
426	418		* Sec. 13. AS 41.17.220 is amended to read: 2
427	419		Sec. 41.17.220. Management of state forests. Land within a state forest or 3
428	420		within a unit of a state forest shall be managed under 4
429	421		(1) the sustained yield principle; 5
430	422		(2) this chapter; [AND] 6
431	423		(3) a forest management plan prepared by the department; and 7
432	424		(4) if applicable, a carbon offset project undertaken by the 8
433	425		department under AS 38.95.400 - 38.95.499. 9
434	426		* Sec. 14. AS 41.17.230(a) is amended to read: 10
435	427		(a) The commissioner shall prepare a forest management plan consistent with 11
436	428		AS 38.04.005 and this chapter for each state forest and for each unit of a state forest to 12
437	429		assist in meeting the requirements of this chapter. An operational level forest 13
438	430		inventory shall be completed before a forest management plan for the state forest or 14
439	431		the unit of a state forest is adopted. The forest management plan shall be adopted, 15
440	432		implemented, and maintained within three years of the establishment of a state forest 16
441	433		by the legislature. To the extent they are found to be compatible with the primary 17
442	434		purpose of state forests under AS 41.17.200, the forest management plan must 18
443	435		consider and permit uses of forest land for other [NONTIMBER] purposes, including 19
444	436		a carbon offset project under AS 38.95.400 - 38.95.499, recreation, tourism, mining, 20
445	437		mineral exploration, mineral leasing, material extraction, consumptive and 21
446	438		nonconsumptive uses of wildlife and fish, grazing and other agricultural activities, and 22
447	439		other traditional uses. If the commissioner finds that a permitted use is incompatible 23
448	440		with one or more other uses in a portion of a state forest, the commissioner shall 24
449	441		affirmatively state in the management plan that finding of incompatibility for the 25
450	442		specific area where the incompatibility is anticipated to exist and the time period when 26
451	443		the incompatibility is anticipated to exist together with the reasons and benefits for 27
452	444		each finding. 28
453	445		* Sec. 15. AS 41.17.230 is amended by adding a new subsection to read: 29
454	446		(g) A carbon offset project undertaken under AS 38.95.400 - 38.95.499 within 30
455		-	a state forest must be consistent with the applicable forest management plan, and the 31
456		-	Enrolled SB 48 -14-
	447	+	a state forest must be consistent with the applicable forest management plan, and the 31 33-GS1372\R
	448	+	CSSB 48(FIN) -14- SB0048C
	449	+	New Text Underlined [DELETED TEXT BRACKETED]
	450	+
457	451		applicable forest management plan must identify the land appropriate for the carbon 1
458	452		offset project. The department may amend a forest management plan to allow for a 2
459	453		carbon offset project. 3
460	454		* Sec. 16. AS 43.55.165(e) is amended to read: 4
461	455		(e) For purposes of this section, lease expenditures do not include 5
462	456		(1) depreciation, depletion, or amortization; 6
463	457		(2) oil or gas royalty payments, production payments, lease profit 7
464	458		shares, or other payments or distributions of a share of oil or gas production, profit, or 8
465	459		revenue, except that a producer's lease expenditures applicable to oil and gas produced 9
466	460		from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 10
467	461		profit paid to the state under that lease; 11
468	462		(3) taxes based on or measured by net income; 12
469	463		(4) interest or other financing charges or costs of raising equity or debt 13
470	464		capital; 14
471	465		(5) acquisition costs for a lease or property or exploration license; 15
472	466		(6) costs arising from fraud, wilful misconduct, gross negligence, 16
473	467		violation of law, or failure to comply with an obligation under a lease, permit, or 17
474	468		license issued by the state or federal government; 18
475	469		(7) fines or penalties imposed by law; 19
476	470		(8) costs of arbitration, litigation, or other dispute resolution activities 20
477	471		that involve the state or concern the rights or obligations among owners of interests in, 21
478	472		or rights to production from, one or more leases or properties or a unit; 22
479	473		(9) costs incurred in organizing a partnership, joint venture, or other 23
480	474		business entity or arrangement; 24
481	475		(10) amounts paid to indemnify the state; the exclusion provided by 25
482	476		this paragraph does not apply to the costs of obtaining insurance or a surety bond from 26
483	477		a third-party insurer or surety; 27
484	478		(11) surcharges levied under AS 43.55.201 or 43.55.300; 28
485	479		(12) an expenditure otherwise deductible under (b) of this section that 29
486	480		is a result of an internal transfer, a transaction with an affiliate, or a transaction 30
487		-	between related parties, or is otherwise not an arm's length transaction, unless the 31
488		-	-15- Enrolled SB 48
	481	+	between related parties, or is otherwise not an arm's length transaction, unless the 31 33-GS1372\R
	482	+	SB0048C -15- CSSB 48(FIN)
	483	+	New Text Underlined [DELETED TEXT BRACKETED]
	484	+
489	485		producer establishes to the satisfaction of the department that the amount of the 1
490	486		expenditure does not exceed the fair market value of the expenditure; 2
491	487		(13) an expenditure incurred to purchase an interest in any corporation, 3
492	488		partnership, limited liability company, business trust, or any other business entity, 4
493	489		whether or not the transaction is treated as an asset sale for federal income tax 5
494	490		purposes; 6
495	491		(14) a tax levied under AS 43.55.011 or 43.55.014; 7
496	492		(15) costs incurred for dismantlement, removal, surrender, or 8
497	493		abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 9
498	494		restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 10
499	495		conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 11
500	496		excluded under this paragraph if the dismantlement, removal, surrender, or 12
501	497		abandonment for which the cost is incurred is undertaken for the purpose of replacing, 13
502	498		renovating, or improving the facility, pipeline, well pad, platform, or other structure; 14
503	499		(16) costs incurred for containment, control, cleanup, or removal in 15
504	500		connection with any unpermitted release of oil or a hazardous substance and any 16
505	501		liability for damages imposed on the producer or explorer for that unpermitted release; 17
506	502		this paragraph does not apply to the cost of developing and maintaining an oil 18
507	503		discharge prevention and contingency plan under AS 46.04.030; 19
508	504		(17) costs incurred to satisfy a work commitment under an exploration 20
509	505		license under AS 38.05.132; 21
510	506		(18) that portion of expenditures, that would otherwise be qualified 22
511	507		capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 23
512	508		are less than the product of $0.30 multiplied by the total taxable production from each 24
513	509		lease or property, in BTU equivalent barrels, during that calendar year, except that, 25
514	510		when a portion of a calendar year is subject to this provision, the expenditures and 26
515	511		volumes shall be prorated within that calendar year; 27
516	512		(19) costs incurred for repair, replacement, or deferred maintenance of 28
517		-	a facility, a pipeline, a structure, or equipment, other than a well, that results in or is
518		-	29
	513	+	a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 29
519	514		undertaken in response to a failure, problem, or event that results in an unscheduled 30
520		-	interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 31
521		-	Enrolled SB 48 -16-
	515	+	interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 31 33-GS1372\R
	516	+	CSSB 48(FIN) -16- SB0048C
	517	+	New Text Underlined [DELETED TEXT BRACKETED]
	518	+
522	519		repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 1
523	520		equipment, other than a well, that is undertaken in response to, or is otherwise 2
524	521		associated with, an unpermitted release of a hazardous substance or of gas; however, 3
525	522		costs under this paragraph that would otherwise constitute lease expenditures under (a) 4
526	523		and (b) of this section may be treated as lease expenditures if the department 5
527	524		determines that the repair or replacement is solely necessitated by an act of war, by an 6
528	525		unanticipated grave natural disaster or other natural phenomenon of an exceptional, 7
529	526		inevitable, and irresistible character, the effects of which could not have been 8
530	527		prevented or avoided by the exercise of due care or foresight, or by an intentional or 9
531	528		negligent act or omission of a third party, other than a party or its agents in privity of 10
532	529		contract with, or employed by, the producer or an operator acting for the producer, but 11
533	530		only if the producer or operator, as applicable, exercised due care in operating and 12
534	531		maintaining the facility, pipeline, structure, or equipment, and took reasonable 13
535	532		precautions against the act or omission of the third party and against the consequences 14
536	533		of the act or omission; in this paragraph, 15
537	534		(A) "costs incurred for repair, replacement, or deferred 16
538	535		maintenance of a facility, a pipeline, a structure, or equipment" includes costs 17
539	536		to dismantle and remove the facility, pipeline, structure, or equipment that is 18
540	537		being replaced; 19
541	538		(B) "hazardous substance" has the meaning given in 20
542	539		AS 46.03.826; 21
543	540		(C) "replacement" includes renovation or improvement; 22
544	541		(20) costs incurred to construct, acquire, or operate a refinery or crude 23
545	542		oil topping plant, regardless of whether the products of the refinery or topping plant 24
546	543		are used in oil or gas exploration, development, or production operations; however, if 25
547	544		a producer owns a refinery or crude oil topping plant that is located on or near the 26
548	545		premises of the producer's lease or property in the state and that processes the 27
549	546		producer's oil produced from that lease or property into a product that the producer 28
550	547		uses in the operation of the lease or property in drilling for or producing oil or gas, the 29
551	548		producer's lease expenditures include the amount calculated by subtracting from the 30
552		-	fair market value of the product used the prevailing value, as determined under 31
553		-	-17- Enrolled SB 48
	549	+	fair market value of the product used the prevailing value, as determined under 31 33-GS1372\R
	550	+	SB0048C -17- CSSB 48(FIN)
	551	+	New Text Underlined [DELETED TEXT BRACKETED]
	552	+
554	553		AS 43.55.020(f), of the oil that is processed; 1
555	554		(21) costs of lobbying, public relations, public relations advertising, or 2
556	555		policy advocacy; 3
557	556		(22) costs incurred as part of a capital expenditure or other action 4
558	557		taken for a carbon management purpose under AS 38.05.081 or a carbon offset 5
559	558		project under AS 38.95.400 - 38.95.499. 6
560	559		* Sec. 17. This Act takes effect immediately under AS 01.10.070(c). 7