Alaska 2023-2024 Regular Session

Alaska Senate Bill SB49 Compare Versions

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

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11	11	SENATE BILL NO. 49
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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
16	16
17	17	BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
18	18
19	19	Introduced: 1/27/23
20	20	Referred: Resources, Finance
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22	22
23	23	A BILL
24	24
25	25	FOR AN ACT ENTITLED
26	26
27	27	"An Act relating to the geologic storage of carbon dioxide; and providing for an 1
28	28	effective date." 2
29	29	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 3
30	30	* Section 1. SHORT TITLE. This Act may be known as the Carbon Capture, Utilization, 4
31	31	and Storage Act. 5
32	32	* Sec. 2. AS 31.05.027 is amended to read: 6
33	33	Sec. 31.05.027. Land subject to commission's authority. The authority of the 7
34	34	commission applies to all land in the state lawfully subject to its police powers, 8
35	35	including land of the United States and land subject to the jurisdiction of the United 9
36	36	States. The authority of the commission further applies to all land included in a 10
37	37	voluntary cooperative or unit plan of development or operation entered into in 11
38	38	accordance with AS 38.05.180(p) or 38.05.730.
39	39	12
40	40	* Sec. 3. AS 31.05.030(h) is amended to read: 13
41	41	(h) The commission may take all actions necessary to allow the state to 14 33-GS1567\A
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45	45	acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 1
46	46	300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f - 300j-26), for 2
47	47	the control of underground injection related to the recovery and production of oil and 3
48	48	natural gas and the control of underground injection in Class I wells, as defined in 40 4
49	49	C.F.R. 144.6, as amended, and the control of underground injection in Class VI 5
50	50	wells, as defined in 40 C.F.R. 144.6, as amended. 6
51	51	* Sec. 4. AS 37.14 is amended by adding a new section to read: 7
52	52	Article 11. Carbon Storage Closure Trust Fund. 8
53	53	Sec. 37.14.850. Carbon storage closure trust fund. (a) The carbon storage 9
54	54	closure trust fund is established as a separate trust fund of the state. The principal and 10
55	55	earnings of the fund shall be held by the state for the purpose of protecting the public 11
56	56	interest in maintenance and closure of carbon storage facilities in the state. The fund is 12
57	57	composed of the carbon storage closure trust fund income account and the carbon 13
58	58	storage closure trust fund operating account. 14
59	59	(b) The carbon storage closure trust fund income account consists of payments 15
60	60	received under (c) of this section, AS 41.06.180, and earnings on the income account. 16
61	61	The carbon storage closure trust fund operating account consists of appropriations by 17
62	62	the legislature of the annual balance of the carbon storage closure trust fund income 18
63	63	account and any earnings on those appropriations while in the operating account. 19
64	64	(c) Before payments are accepted into the carbon storage closure trust fund 20
65	65	income account for a particular carbon storage facility, the Alaska Oil and Gas 21
66	66	Conservation Commission and the operator may execute a memorandum of 22
67	67	understanding that outlines a schedule of expected payments into the fund and the 23
68	68	relationship of the payments and accumulated earnings in the fund to the operator's 24
69	69	obligations under AS 41.06.155 or 41.06.175. If the memorandum of understanding 25
70	70	addresses investment of the fund with respect to payments made by the operator, the 26
71	71	commissioner of revenue must also sign the memorandum. 27
72	72	(d) Nothing in this section creates a dedicated fund. 28
73	73	(e) In this section, unless the context requires otherwise, 29
74	74	(1) "fund" means the carbon storage closure trust fund; 30
75	75	(2) "storage facility" has the meaning given in AS 41.06.210. 31 33-GS1567\A
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79	79	* Sec. 5. AS 38.05.069(e) is amended to read: 1
80	80	(e) Nothing in (c) of this section affects the disposal of minerals under 2
81	81	AS 38.05.135 - 38.05.183 or carbon storage under AS 38.05.700 - 38.05.795. 3
82	82	* Sec. 6. AS 38.05.070(a) is amended to read: 4
83	83	(a) Land, including tide, submerged, or shoreland, to which the state holds title 5
84	84	or to which it may become entitled, may be leased, except for the extraction of natural 6
85	85	resources and carbon storage under AS 38.05.700 - 38.05.795, in the manner 7
86	86	provided in AS 38.05.070 - 38.05.105. 8
87	87	* Sec. 7. AS 38.05.130 is amended to read: 9
88	88	Sec. 38.05.130. Damages and posting of bond. Rights may not be exercised 10
89	89	by the state, its lessees, successors, or assigns under the reservation as set out in 11
90	90	AS 38.05.125 until the state, its lessees, successors, or assigns make provision to pay 12
91	91	the owner of the land full payment for all damages sustained by the owner, by reason 13
92	92	of entering upon the land. If the owner for any cause refuses or neglects to settle the 14
93	93	damages, the state, its lessees, successors, assigns, or an applicant for a lease or 15
94	94	contract from the state for the purpose of prospecting for valuable minerals, or option, 16
95	95	contract, or lease for carbon storage or mining coal, or lease for extracting 17
96	96	geothermal resources, petroleum, or natural gas, may enter upon the land in the 18
97	97	exercise of the reserved rights after posting a surety bond determined by the director, 19
98	98	after notice and an opportunity to be heard, to be sufficient as to form, amount, and 20
99	99	security to secure to the owner payment for damages, and may institute legal 21
100	100	proceedings in a court where the land is located, as may be necessary to determine the 22
101	101	damages which the owner may suffer. 23
102	102	* Sec. 8. AS 38.05.135(a) is amended to read: 24
103	103	(a) Except as otherwise provided, valuable mineral deposits in land belonging 25
104	104	to the state shall be open to exploration, development, and the extraction of minerals. 26
105	105	All land, together with tide, submerged, or shoreland, to which the state holds title to 27
106	106	or to which the state may become entitled, may be obtained by permit or lease for the 28
107	107	purpose of exploration, development, and the extraction of minerals. Except as 29
108	108	specifically limited by AS 38.05.131 - 38.05.181 and 38.05.700 - 38.05.795, land may 30
109	109	be withheld from lease application on a first-come, first-served basis, and offered only 31 33-GS1567\A
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113	113	on a competitive bid basis when determined by the commissioner to be in the best 1
114	114	interests of the state. 2
115	115	* Sec. 9. AS 38.05.135(c) is amended to read: 3
116	116	(c) Payment of a royalty or a net profit share payment to the state under a lease 4
117	117	issued under AS 38.05.135 - 38.05.181 or a payment of a rent or charge under 5
118	118	AS 38.05.700 - 38.05.795 becomes due on the date and in the manner specified in the 6
119	119	lease or in a regulation adopted by the commissioner. 7
120	120	* Sec. 10. AS 38.05.135(d) is amended to read: 8
121	121	(d) If a royalty or net profit share payment to which the state is entitled under 9
122	122	AS 38.05.135 - 38.05.181 or a payment of a rent or charge under AS 38.05.700 - 10
123	123	38.05.795 is not paid or is underpaid when it becomes due under (c) of this section, the 11
124	124	unpaid amount of the rent, charge, royalty, or net profit share payment bears interest 12
125	125	in a calendar quarter at the rate of five percentage points above the annual rate charged 13
126	126	member banks for advances by the 12th Federal Reserve District as of the first day of 14
127	127	that calendar quarter, or at the annual rate of 11 percent, whichever is greater, 15
128	128	compounded quarterly as of the last day of that quarter. 16
129	129	* Sec. 11. AS 38.05.135(e) is amended to read: 17
130	130	(e) If a royalty or net profit share payment to which the state is entitled under 18
131	131	AS 38.05.135 - 38.05.181 or a payment of a rent or charge under AS 38.05.700 - 19
132	132	38.05.795 is overpaid, interest at the rate and compounded in the manner provided in 20
133	133	(d) of this section shall be allowed and paid on the overpayment. The interest 21
134	134	allowance is subject to the following: 22
135	135	(1) if the state grants a credit against future payments for the 23
136	136	overpayment, the state shall pay interest on the overpayment 24
137	137	(A) from the date that is the later of the date the overpayment 25
138	138	was 26
139	139	(i) due; or 27
140	140	(ii) received; 28
141	141	(B) to the date that is the earlier of the date 29
142	142	(i) of notice to the lessee of the credit; or 30
143	143	(ii) on which the lessee actually takes the credit; 31 33-GS1567\A
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147	147	(2) if the state refunds the overpayment, the state shall pay interest on 1
148	148	the overpayment 2
149	149	(A) from the date that is the later of the date the overpayment 3
150	150	was 4
151	151	(i) due; or 5
152	152	(ii) received; 6
153	153	(B) to the date the state issues the refund. 7
154	154	* Sec. 12. AS 38.05.140(a) is amended to read: 8
155	155	(a) A person may not take or hold coal leases or permits during the life of coal 9
156	156	leases on state land exceeding an aggregate of 92,160 acres, except that a person may 10
157	157	apply for coal leases or permits for acreage in addition to 92,160 acres, not exceeding 11
158	158	a total of 5,120 additional acres of state land. The additional area applied for shall be 12
159	159	in multiples of 40 acres, and the application shall contain a statement that the granting 13
160	160	of a lease for additional land is necessary for the person to carry on business 14
161	161	economically and is in the public interest. On the filing of the application, except as 15
162	162	provided by AS 38.05.180(ff)(3) or 38.05.180(gg) and 38.05.700 - 38.05.795, the coal 16
163	163	deposits in the land covered by the application shall be temporarily set aside and 17
164	164	withdrawn from all other forms of disposal provided under AS 38.05.135 - 38.05.181. 18
165	165	* Sec. 13. AS 38.05.184(b) is amended to read: 19
166	166	(b) No carbon storage licenses or leases or additional oil or gas leases may 20
167	167	be issued by the department or any other state agency for the exploration for or the 21
168	168	development or production of oil and gas on state-owned land and waters seaward of 22
169	169	the mean higher high water line, beginning at Anchor Point; then around the perimeter 23
170	170	of Kachemak Bay, to Point Pogibshi; then west to the three mile limit of state land and 24
171	171	waters; then north to a point three miles west of Anchor Point; then east to the mean 25
172	172	higher high water line of Anchor Point, the point of beginning. 26
173	173	* Sec. 14. AS 38.05 is amended by adding new sections to read: 27
174	174	Article 15A. Carbon Storage Exploration Licenses; Leases. 28
175	175	Sec. 38.05.700. Policy on carbon dioxide storage. It is in the public interest 29
176	176	to promote the geologic storage of carbon dioxide. The geologic storage of carbon 30
177	177	dioxide benefits the citizens of the state and the environment by reducing greenhouse 31 33-GS1567\A
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181	181	gas emissions. 1
182	182	Sec. 38.05.705. Applicability; regulations. (a) The provisions of 2
183	183	AS 38.05.700 - 38.05.795 apply to exploration licensing and the leasing of state land 3
184	184	for carbon storage. 4
185	185	(b) The commissioner may adopt regulations necessary to implement 5
186	186	AS 38.05.700 - 38.05.795. 6
187	187	Sec. 38.05.710. Carbon storage exploration licensing. (a) The commissioner 7
188	188	may issue carbon storage exploration licenses on state land. 8
189	189	(b) A carbon storage exploration license gives the licensee 9
190	190	(1) the exclusive right to explore, for carbon storage purposes, the state 10
191	191	land described in the license for a five-year term; 11
192	192	(2) the option to convert the license for all or part of the state land 12
193	193	described in the license into a carbon storage lease after the licensee 13
194	194	(A) fulfills the work commitments set out in the license; 14
195	195	(B) demonstrates the ability to meet the commercial terms for 15
196	196	the lease as set out in the license or in regulation; 16
197	197	(C) obtains a permit under AS 41.06.125; and 17
198	198	(D) complies with the lease conversion process of 18
199	199	AS 38.05.720(b). 19
200	200	(c) A carbon storage exploration license must 20
201	201	(1) be conditioned on an obligation by the licensee to fulfill a specified 21
202	202	work commitment as set out in the license; the work commitment must include 22
203	203	mandatory provisions for 23
204	204	(A) an annual fee paid by the licensee to the department in an 24
205	205	amount of at least $20 per acre subject to the license; and 25
206	206	(B) an annual report describing the licensee's exploration 26
207	207	activities in the previous calendar year, which must be provided by the licensee 27
208	208	to the department; 28
209	209	(2) include proposed commercial terms if the license is converted into 29
210	210	a carbon storage lease, which must at a minimum provide for 30
211	211	(A) an annual rent of at least $20 per acre; and 31 33-GS1567\A
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215	215	(B) a per-ton injection charge on all injected volumes of carbon 1
216	216	dioxide of at least $2.50; 2
217	217	(C) the posting of a bond or other security acceptable to the 3
218	218	department and in favor of the state; 4
219	219	(3) be conditioned on the posting of a bond or other security acceptable 5
220	220	to the department and in favor of the state; and 6
221	221	(4) be subject to revocation at the commissioner's discretion under (d) 7
222	222	of this section. 8
223	223	(d) The commissioner may revoke a carbon storage exploration license before 9
224	224	the termination of the license's five-year term if the licensee fails to comply with the 10
225	225	requirements of (c) of this section or applicable regulations. 11
226	226	(e) The department shall renew a carbon storage exploration license if the 12
227	227	licensee 13
228	228	(1) before the expiration of the license term, applies for a permit under 14
229	229	AS 41.06.125; 15
230	230	(2) is in compliance with the conditions of the license; 16
231	231	(3) provides documentation acceptable to the department of the 17
232	232	pending permit application; and 18
233	233	(4) submits an executed renewal form to the department affirming the 19
234	234	original terms of the license for the renewed license term. 20
235	235	(f) In the commissioner's discretion, a carbon storage exploration license may 21
236	236	be renewed for a term sufficient to determine whether the licensee's permit application 22
237	237	will be accepted under AS 41.06.105 - 41.06.210. 23
238	238	(g) A carbon storage exploration license that has been renewed under (e) of 24
239	239	this section terminates upon denial of the licensee's permit application by the Alaska 25
240	240	Oil and Gas Conservation Commission under AS 41.06.105 - 41.06.210. 26
241	241	(h) The dollar amounts in (c) of this section shall change every five years 27
242	242	according to changes in the Consumer Price Index for all urban consumers for the 28
243	243	Anchorage Metropolitan Area compiled by the Bureau of Labor Statistics, United 29
244	244	States Department of Labor. The index for January 2023 is the reference base index. 30
245	245	Sec. 38.05.715. License procedures. (a) The procedures in this section apply 31 33-GS1567\A
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249	249	to the issuance of a carbon storage exploration license under AS 38.05.710. 1
250	250	(b) To initiate the licensing procedure, an applicant shall submit to the 2
251	251	commissioner a proposal that 3
252	252	(1) identifies a specific area to be subject to the license; 4
253	253	(2) proposes minimum work commitments; 5
254	254	(3) proposes commercial terms applicable to a carbon storage lease 6
255	255	under AS 38.05.710(c)(2); 7
256	256	(4) demonstrates the applicant's ability to assume responsibility of a 8
257	257	carbon storage lease; 9
258	258	(5) describes how the applicant meets the minimum qualifications for a 10
259	259	licensee under applicable regulations; and 11
260	260	(6) includes an attestation of the applicant's ability to perform the 12
261	261	requirements of (2) - (4) of this subsection. 13
262	262	(c) The commissioner shall publish notice of a proposal received under (b) of 14
263	263	this section. The notice shall include a solicitation for competing proposals. A copy of 15
264	264	the published notice shall be sent to any lessee under AS 38.05.135 - 38.05.181 in one-16
265	265	half mile of the area proposed for an exploration license. Any person in the area may 17
266	266	submit a competing proposal under the process established by the commissioner in 18
267	267	regulation. The regulations must require that a competing proposal be submitted not 19
268	268	later than 90 days after the commissioner's written notice is published. 20
269	269	(d) After the deadline for submission of a competing proposal has passed, the 21
270	270	commissioner shall issue a written finding determining whether the state's best 22
271	271	interests are served through issuing a carbon storage exploration license. If the 23
272	272	commissioner determines that issuance of a carbon storage exploration license is in the 24
273	273	best interests of the state, the finding must 25
274	274	(1) describe the limitations, stipulations, conditions, or changes from 26
275	275	the initiating proposal or competing proposals that are required to make the issuance 27
276	276	of the exploration license conform to the best interests of the state; 28
277	277	(2) set out the commercial terms required for the eventual conversion 29
278	278	of the exploration license into a carbon storage lease; 30
279	279	(3) if there are competing proposals from multiple applicants, identify 31 33-GS1567\A
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283	283	which applicants are qualified for the issuance of the exploration license and include 1
284	284	information for the competitive bid process as set out in (f) of this section; and 2
285	285	(4) include a copy of the exploration license to be issued and the form 3
286	286	of lease that will be used for any portion of the exploration license area subsequently 4
287	287	converted to a lease under AS 38.05.720. 5
288	288	(e) If the commissioner concludes that issuance of a carbon storage 6
289	289	exploration license is in the best interests of the state, and that only one applicant is 7
290	290	qualified to be issued the license, the applicant may accept or reject the exploration 8
291	291	license, as limited or conditioned by the terms of the finding and in the form attached 9
292	292	to the finding, not later than 30 days after the finding's date of publication. The 10
293	293	applicant shall accept or reject the issuance of the carbon storage exploration license in 11
294	294	writing. The commissioner shall consider an applicant's failure to respond in the 30-12
295	295	day period as a rejection of the license. 13
296	296	(f) If the commissioner concludes that issuance of the carbon storage 14
297	297	exploration license is in the best interests of the state, and that more than one applicant 15
298	298	is qualified to be issued the license, the commissioner shall issue a request for 16
299	299	competitive sealed bids, under procedures adopted by regulation, to determine which 17
300	300	qualified applicants will be issued the license. If the commissioner determines that a 18
301	301	competitive bid process is necessary, the best interest finding must include notice that 19
302	302	the commissioner intends to request competitive bids. 20
303	303	(g) The commissioner shall establish in regulation the criteria for the 21
304	304	assessment of competitive bids under (f) of this section and for the determination of a 22
305	305	successful bidder. 23
306	306	(h) If a lessee under AS 38.05.135 - 38.05.181 in the area covered by a 24
307	307	proposed carbon storage exploration license participates in a competitive bid process 25
308	308	under (f) of this section and is not the successful bidder, before issuing the license, the 26
309	309	commissioner shall provide the lessee an opportunity to match the successful bid. If 27
310	310	the lessee matches the successful bid, the commissioner shall issue a carbon storage 28
311	311	exploration license to the lessee. 29
312	312	(i) A carbon storage exploration license issued under this section and a carbon 30
313	313	storage lease under AS 38.05.720 or 38.05.725 must include 31 33-GS1567\A
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317	317	(1) a covenant from the licensee not to unreasonably interfere with the 1
318	318	rights of a lessee under AS 38.05.135 - 38.05.181; and 2
319	319	(2) a clause by which the licensee indemnifies the state for any 3
320	320	unreasonable interference the licensee might cause to the rights of a lessee under 4
321	321	AS 38.05.135 - 38.05.181. 5
322	322	(j) When notice is required under this section, the department shall follow the 6
323	323	requirements for notice under AS 38.05.945(b) and (c). 7
324	324	Sec. 38.05.720. Conversion to lease by licensee. (a) The commissioner may 8
325	325	convert a carbon storage exploration license to a carbon storage lease if the licensee 9
326	326	satisfies the requirements of AS 38.05.710(b) and complies with (b) of this section. 10
327	327	(b) To convert a carbon storage exploration license to a carbon storage lease, a 11
328	328	licensee shall provide a copy of the permit obtained under AS 41.06.105 - 41.06.210 12
329	329	to the commissioner. After receiving a copy of the permit, if the licensee is in 13
330	330	compliance with AS 38.05.710(b), the commissioner shall issue a carbon storage lease 14
331	331	for those areas of the exploration license approved for carbon storage by the permit. A 15
332	332	lease issued under this section must include 16
333	333	(1) commercial terms for the lease as set out in the commissioner's 17
334	334	finding under AS 38.05.715(d); 18
335	335	(2) the agreements required under AS 38.05.715(i); and 19
336	336	(3) any other condition or obligation deemed necessary by the 20
337	337	commissioner or required by regulation. 21
338	338	Sec. 38.05.725. Concurrent carbon storage leasing. (a) A lessee under 22
339	339	AS 38.05.180 injecting under a Class II well permit shall apply for a carbon storage 23
340	340	lease from the department before engaging in injection operations that may require a 24
341	341	Class VI injection permit from the United States Environmental Protection Agency or 25
342	342	a storage facility permit under AS 41.06.125. 26
343	343	(b) The issuance of a carbon storage lease under (a) of this section is vested 27
344	344	solely in the commissioner's discretion. The commissioner may consider the 28
345	345	qualifications and abilities of the lessee to meet the commercial requirements of a 29
346	346	carbon storage lease and whether issuance of the lease is in the best interests of the 30
347	347	state. 31 33-GS1567\A
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351	351	(c) A carbon storage lease issued under this section must include 1
352	352	(1) the minimum commercial terms described in AS 38.05.710(c)(2); 2
353	353	(2) the agreements required under AS 38.05.715(i); 3
354	354	(3) if the carbon storage lessee is not the same entity as the responsible 4
355	355	party under the existing lease, an assumption by the carbon storage lessee of any 5
356	356	dismantlement, removal, and restoration obligations set out in the oil and gas lease; 6
357	357	and 7
358	358	(4) any other conditions and obligations deemed necessary by the 8
359	359	commissioner or required by regulation. 9
360	360	Sec. 38.05.730. Plan of development and operations; unitization. (a) The 10
361	361	commissioner shall require the filing and approval of a plan of development and 11
362	362	operation for a carbon storage lease. 12
363	363	(b) To prevent or assist in preventing waste, and to protect the correlative 13
364	364	rights of persons owning interests in the tracts of lands affected, with the approval of 14
365	365	the commissioner, lessees may validly integrate their interests to provide for the 15
366	366	unitized management, development, and operation of the tracts of land as a unit. The 16
367	367	commissioner may suspend or modify a development plan approved under (a) of this 17
368	368	section in accordance with the unit agreement. 18
369	369	(c) A lease operated under a plan approved or prescribed by the commissioner 19
370	370	is excepted from determining holdings or control under AS 38.05.140. The provisions 20
371	371	of this section concerning cooperative or unit plans are in addition to and do not affect 21
372	372	AS 31.05 and AS 41.06. 22
373	373	Sec. 38.05.735. Payments from carbon storage exploration licenses and 23
374	374	carbon storage leases. Except as otherwise provided under art. IX, sec. 15, 24
375	375	Constitution of the State of Alaska, the department shall deposit in the general fund 25
376	376	the money it collects under AS 38.05.700 - 38.05.795. 26
377	377	Sec. 38.05.795. Definitions. In AS 38.05.700 - 38.05.795, unless the context 27
378	378	requires otherwise, 28
379	379	(1) "carbon dioxide" means carbon dioxide of a quality that 29
380	380	(A) will not compromise the safety of geologic storage; and 30
381	381	(B) will not compromise the properties of a storage reservoir 31 33-GS1567\A
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385	385	that allow the reservoir to effectively enclose and contain a stored gas or stored 1
386	386	supercritical fluid; 2
387	387	(2) "carbon storage" means the permanent or short-term underground 3
388	388	storage of carbon dioxide in a geologic storage reservoir; 4
389	389	(3) "geologic storage" has the meaning given in AS 41.06.210; 5
390	390	(4) "pore space" means a geologic storage reservoir, cavity, or void in 6
391	391	a subsurface sedimentary stratum; 7
392	392	(5) "reservoir" has the meaning given in AS 41.06.210; 8
393	393	(6) "supercritical fluid" means a substance at or above its critical 9
394	394	temperature and critical pressure that is neither a liquid nor a gas but that has 10
395	395	properties of both. 11
396	396	* Sec. 15. AS 38.35.020(a) is amended to read: 12
397	397	(a) Rights-of-way on state land including rights-of-way over, under, along, 13
398	398	across, or upon the right-of-way of a public road or highway or the right-of-way of a 14
399	399	railroad or other public utility, or across, upon, over, or under a river or other body of 15
400	400	water or land belonging to or administered by the state may be granted by 16
401	401	noncompetitive lease by the commissioner for pipeline purposes for the transportation 17
402	402	of oil, products, carbon dioxide, or natural gas under those conditions prescribed by 18
403	403	law or by administrative regulation. Except to the extent authorized by an oil and gas 19
404	404	lease, a gas only lease, carbon storage lease, or an oil and gas or gas only or carbon 20
405	405	storage unit agreement approved by the state, no person may engage in any 21
406	406	construction or operation of any part of an oil, products, carbon dioxide, or natural 22
407	407	gas pipeline, which in whole or in part is or is proposed to be on state land unless that 23
408	408	person has obtained from the commissioner a right-of-way lease of the land under this 24
409	409	chapter. 25
410	410	* Sec. 16. AS 38.35.020(b) is amended to read: 26
411	411	(b) The commissioner may by regulation exempt the construction or operation 27
412	412	(1) of field gathering lines or any reasonable classification of them 28
413	413	from the requirement of a right-of-way lease under this chapter; and 29
414	414	(2) of a pipeline transporting carbon dioxide within a field for the 30
415	415	purpose of an enhanced oil recovery project or field pressurization measures 31 33-GS1567\A
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418	418
419	419	within that same field from the requirement of a right-of-way lease under this 1
420	420	chapter. 2
421	421	* Sec. 17. AS 38.35.122 is amended to read: 3
422	422	Sec. 38.35.122. Products pipeline and carbon dioxide transportation 4
423	423	pipeline leases. The commissioner has discretion to include any or all of the terms set 5
424	424	out in AS 38.35.120 in leases of state land for products pipeline right-of-way purposes 6
425	425	or carbon dioxide transportation pipeline right-of-way purposes. 7
426	426	* Sec. 18. AS 38.35.230(3) is amended to read: 8
427	427	(3) "lease" means the instrument or extension of an instrument issued 9
428	428	under this chapter granting a leasehold interest in state land for pipeline right-of-way 10
429	429	purposes to a person and authorizing the construction or operation of, or 11
430	430	transportation, service or sale by a pipeline for crude oil, natural gas, carbon dioxide, 12
431	431	or products; 13
432	432	* Sec. 19. AS 38.35.230(7) is amended to read: 14
433	433	(7) "pipeline" or "pipeline facility" means all the facilities of a total 15
434	434	system of pipe, whether owned or operated under a contract, agreement, or lease, used 16
435	435	by a carrier for transportation of crude oil, natural gas, carbon dioxide, or products for 17
436	436	delivery, for storage, or for further transportation, and including all pipe, pump or 18
437	437	compressor stations, station equipment, tanks, valves, access roads, bridges, airfields, 19
438	438	terminals and terminal facilities, including docks and tanker loading facilities, 20
439	439	operations control center for both the upstream part of the pipeline and the terminal, 21
440	440	tanker ballast treatment facilities, and fire protection system, communication system, 22
441	441	and all other facilities used or necessary for an integral line of pipe, taken as a whole, 23
442	442	to effectuate transportation, including an extension or enlargement of the line; 24
443	443	* Sec. 20. AS 38.35.230(10) is amended to read: 25
444	444	(10) "transportation" means the shipment or carriage by a pipeline of 26
445	445	crude oil, natural gas, carbon dioxide, or products from an upstream terminus in one 27
446	446	or more fields or points of production or supply of the minerals to a downstream 28
447	447	terminus in one or more points for delivery of the minerals to a purchaser or 29
448	448	consignee, for storage, or for further carriage or shipment, including shipment or 30
449	449	carriage within the state that may be classified as interstate or foreign transportation to 31 33-GS1567\A
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452	452
453	453	the extent that the transportation may constitutionally be subjected to the provisions of 1
454	454	this chapter, as well as all services necessary to effectuate shipment or carriage, 2
455	455	including, among other things, the receipt, storage, processing, handling, transfer in 3
456	456	transit, forwarding, and delivery of the minerals. 4
457	457	* Sec. 21. AS 38.35.230 is amended by adding a new paragraph to read: 5
458	458	(11) "carbon dioxide" has the meaning given in AS 38.05.795. 6
459	459	* Sec. 22. AS 41.06.005 is amended to read: 7
460	460	Sec. 41.06.005. Jurisdiction over geothermal resources. (a) The commission 8
461	461	has jurisdiction under AS 41.06.005 - 41.06.060 [THIS CHAPTER] over geothermal 9
462	462	wells to prevent waste, to protect correlative rights, and to ensure public safety. 10
463	463	(b) The Department of Natural Resources has jurisdiction under AS 41.06.005 11
464	464	- 41.06.060 [THIS CHAPTER] over management of geothermal leases and units in the 12
465	465	public interest and to effect development. 13
466	466	* Sec. 23. AS 41.06.020 is amended to read: 14
467	467	Sec. 41.06.020. Authority of commission; application. (a) The commission 15
468	468	has jurisdiction over all persons and property, public and private, necessary to carry 16
469	469	out the purposes and intent of AS 41.06.005 - 41.06.060 [THIS CHAPTER]. 17
470	470	(b) The authority of the commission applies to all land in the state lawfully 18
471	471	subject to the police power of the state, including private land, municipal land, state 19
472	472	land, land of the United States, and land subject to the jurisdiction of the United 20
473	473	States, and to all land included in a voluntary cooperative or unit plan of development 21
474	474	or operation entered into in accordance with AS 38.05.181. When land that is subject 22
475	475	to the commission's authority is committed to a unit agreement involving land subject 23
476	476	to federal jurisdiction, the operation of AS 41.06.005 - 41.06.060 [THIS CHAPTER] 24
477	477	or a part of AS 41.06.005 - 41.06.060 [THIS CHAPTER] may be suspended if 25
478	478	(1) the unit operations are regulated by the United States; and 26
479	479	(2) the conservation of geothermal resources is accomplished under the 27
480	480	unit agreement. 28
481	481	(c) The provisions of AS 41.06.005 - 41.06.060 apply [THIS CHAPTER 29
482	482	APPLIES] 30
483	483	(1) to wells drilled in search of, in support of, or for the recovery or 31 33-GS1567\A
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485	485	New Text Underlined [DELETED TEXT BRACKETED]
486	486
487	487	production of geothermal resources; 1
488	488	(2) when a person engaged in drilling activity not otherwise subject to 2
489	489	the provisions of AS 41.06.005 - 41.06.060 [THIS CHAPTER] encounters geothermal 3
490	490	resources, fluid, or water of sufficient heat or pressure to constitute a threat to human 4
491	491	life or health unless the drilling operation is subject to oil and gas drilling regulation 5
492	492	under AS 31.05; 6
493	493	(3) in areas and under conditions in which the commission determines 7
494	494	that drilling may encounter geothermal resources, fluid, or water of sufficient heat or 8
495	495	pressure to constitute a threat to human life or health. 9
496	496	(d) To the extent the provisions of AS 31.05 do not conflict with the 10
497	497	provisions of AS 41.06.005 - 41.06.060 [THIS CHAPTER], the provisions of 11
498	498	AS 31.05 are applicable to wells drilled in search of, in support of, or for the recovery 12
499	499	or production of geothermal resources. 13
500	500	(e) Nothing in AS 41.06.005 - 41.06.060 [THIS CHAPTER] limits the 14
501	501	authority of the department 15
502	502	(1) over geothermal resources under AS 38.05.181; or 16
503	503	(2) to approve and manage geothermal units or operations that include 17
504	504	state land. 18
505	505	* Sec. 24. AS 41.06.030(e) is amended to read: 19
506	506	(e) The commissioner may adopt regulations under AS 44.62 to carry out the 20
507	507	purposes and intent of AS 41.06.005 - 41.06.060 [THIS CHAPTER] for duties 21
508	508	assigned to the department, including the promotion of maximum economic recovery. 22
509	509	* Sec. 25. AS 41.06.035(b) is amended to read: 23
510	510	(b) The commission may adopt regulations under AS 44.62 and issue orders 24
511	511	appropriate to carry out the purposes and intent of AS 41.06.005 - 41.06.060 [THIS 25
512	512	CHAPTER] for duties assigned to the commission, including orders regarding the 26
513	513	establishment of drilling units for pools as set out in AS 31.05.100 and orders 27
514	514	regarding unitized operation and integration of interests as set out in AS 31.05.110. 28
515	515	* Sec. 26. AS 41.06.040(a) is amended to read: 29
516	516	(a) The commission shall adopt regulations under AS 44.62 (Administrative 30
517	517	Procedure Act), issue orders, and take other appropriate action to carry out the 31 33-GS1567\A
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521	521	purposes and intent of AS 41.06.005 - 41.06.060 [THIS CHAPTER], including 1
522	522	adopting regulations to prevent 2
523	523	(1) geothermal resources, water or other fluids, and gases from 3
524	524	escaping into strata other than that in which they are found, unless in accordance with 4
525	525	an approved reinjection program; 5
526	526	(2) contamination of surface and groundwater; 6
527	527	(3) premature degradation of a geothermal system by water 7
528	528	encroachment or otherwise; 8
529	529	(4) blowouts, cavings, and seepage; and 9
530	530	(5) unreasonable disturbance or injury to neighboring properties, prior 10
531	531	water rights, prior oil or gas rights, human life, health, and the natural environment. 11
532	532	* Sec. 27. AS 41.06.050(e) is amended to read: 12
533	533	(e) In making the determination under (d) of this section, the commission shall 13
534	534	consider whether the 14
535	535	(1) proposed well will significantly interfere with or substantially 15
536	536	impair a prior water, oil, or gas right; 16
537	537	(2) proposed well is contrary to a provision of AS 41.06.005 - 17
538	538	41.06.060 [THIS CHAPTER], a regulation adopted by the commission, another law, 18
539	539	or an order, stipulation, or term of a permit issued by the commission; and 19
540	540	(3) applicant is in violation of a provision of AS 41.06.005 - 41.06.060 20
541	541	[THIS CHAPTER], a regulation adopted by the commission, another law, or an order, 21
542	542	stipulation, or term of a permit issued by the commission; the commission shall 22
543	543	consider the magnitude of the violation. 23
544	544	* Sec. 28. AS 41.06.055(c) is amended to read: 24
545	545	(c) The commission shall determine the regulatory cost charges levied under 25
546	546	this section so that the total amount to be collected approximately equals the 26
547	547	appropriations made for the operating costs of the commission that have been incurred 27
548	548	under AS 41.06.005 - 41.06.060 [THIS CHAPTER] for the fiscal year. 28
549	549	* Sec. 29. AS 41.06.055(d) is amended to read: 29
550	550	(d) The commission shall collect the regulatory cost charges imposed under 30
551	551	this section. The Department of Administration shall identify the amount of 31 33-GS1567\A
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553	553	New Text Underlined [DELETED TEXT BRACKETED]
554	554
555	555	appropriations made for the operating costs of the commission under AS 41.06.005 - 1
556	556	41.06.060 [THIS CHAPTER] that lapse into the general fund each year. The 2
557	557	legislature may appropriate an amount that is at least equal to the lapsed amount to the 3
558	558	commission for its operating costs under AS 41.06.005 - 41.06.060 [THIS 4
559	559	CHAPTER] for the next fiscal year. If the legislature makes an appropriation to the 5
560	560	commission under this subsection that is equal to or greater than the lapsed amount, 6
561	561	the commission shall reduce the total regulatory cost charge collected for that fiscal 7
562	562	year by a comparable amount. 8
563	563	* Sec. 30. AS 41.06.060 is amended to read: 9
564	564	Sec. 41.06.060. Definitions. In AS 41.06.005 - 41.06.060 [THIS CHAPTER], 10
565	565	unless the context otherwise requires, 11
566	566	(1) "commercial use" means the sale of heat or power to a third party; 12
567	567	(2) "commission" means the Alaska Oil and Gas Conservation 13
568	568	Commission created under AS 31.05.005; 14
569	569	(3) "correlative rights" means the right of an owner of each property in 15
570	570	a geothermal system to produce without waste the owner's just and equitable share of 16
571	571	the geothermal resources in the geothermal system; a just and reasonable share is an 17
572	572	amount, so far as can be practically determined and so far as can be practically 18
573	573	produced without waste, that is substantially in proportion to the quantity of 19
574	574	recoverable geothermal resources under the owner's property relative to the total 20
575	575	recoverable geothermal resources in the geothermal system; 21
576	576	(4) "geothermal fluid" means liquids and steam at temperatures greater 22
577	577	than 120 degrees Celsius or any commercial use of liquids and steam naturally present 23
578	578	in a geothermal system at temperatures less than 120 degrees Celsius; 24
579	579	(5) "geothermal resources" 25
580	580	(A) means the natural heat of the earth at temperatures greater 26
581	581	than 120 degrees Celsius, or any use of that heat for commercial purposes, 27
582	582	measured at the point where the highest-temperature resources encountered 28
583	583	enter or contact a well or other resource extraction device or any commercial 29
584	584	use of the natural heat of the earth; 30
585	585	(B) includes 31 33-GS1567\A
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589	589	(i) the energy, including pressure, in whatever form 1
590	590	present in, resulting from, created by, or that may be extracted from 2
591	591	that natural heat; 3
592	592	(ii) the material medium, including steam and other 4
593	593	gases, hot water, and hot brines constituting the geothermal fluid 5
594	594	naturally present, as well as substances artificially introduced to serve 6
595	595	as a heat transfer medium; and 7
596	596	(iii) all dissolved or entrained minerals and gases that 8
597	597	may be obtained from the material medium, but excluding hydrocarbon 9
598	598	substances and helium; 10
599	599	(6) "geothermal system" means a stratum, pool, reservoir, or other 11
600	600	geologic formation containing geothermal resources; 12
601	601	(7) "operator" means a person drilling, maintaining, operating, 13
602	602	producing, or in control of a well; 14
603	603	(8) "owner" means the person who has the right to drill into or produce 15
604	604	from a geothermal system and to appropriate the geothermal resources produced from 16
605	605	a geothermal system for that person and others; 17
606	606	(9) "waste" means, in addition to its ordinary meaning, physical waste, 18
607	607	and includes an inefficient, excessive, or improper production, use, or dissipation of 19
608	608	geothermal resources, including 20
609	609	(A) drilling, transporting, or storage methods that cause or tend 21
610	610	to cause unnecessary surface loss of geothermal resources; 22
611	611	(B) locating, spacing, drilling, equipping, operating, producing, 23
612	612	or venting of a well in a manner that results or tends to result in reducing the 24
613	613	ultimate economic recovery of geothermal resources; 25
614	614	(10) "well" means a well drilled, converted, or reactivated for the 26
615	615	discovery, testing, production, or subsurface injection of geothermal resources. 27
616	616	* Sec. 31. AS 41.06 is amended by adding new sections to read: 28
617	617	Article 2. Carbon Dioxide Injection and Storage. 29
618	618	Sec. 41.06.105. Policy on carbon dioxide storage. For the purposes of 30
619	619	protecting health, safety, and property in the state, it is in the public interest that to the 31 33-GS1567\A
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622	622
623	623	extent economically and technologically feasible, carbon dioxide be injected into and 1
624	624	stored in oil and gas reservoirs and other geologic formations in a manner protective 2
625	625	of waters and reservoir integrity. The state recognizes that geologic storage of carbon 3
626	626	dioxide may require the cooperation of mineral interest holders and that, when 4
627	627	cooperation is not achieved, regulatory procedures that promote cooperative 5
628	628	management for protection and maximization of resources are necessary. 6
629	629	Sec. 41.06.110. Jurisdiction over storage facilities. The commission has 7
630	630	jurisdiction under AS 41.06.105 - 41.06.210 over storage facilities to prevent waste, 8
631	631	protect correlative rights, and ensure public health and safety. 9
632	632	Sec. 41.06.115. Authority of the commission. (a) The authority of the 10
633	633	commission applies to all land in the state lawfully subject to the police power of the 11
634	634	state, including private land, municipal land, state land, federal land, and land subject 12
635	635	to the jurisdiction of the United States, and to all land included in a voluntary 13
636	636	cooperative or unit plan of development or operation entered into in accordance with 14
637	637	AS 38.05.730. 15
638	638	(b) When land that is subject to the commission's authority is committed to a 16
639	639	unit agreement involving land subject to federal jurisdiction, the operation of 17
640	640	AS 41.06.105 - 41.06.210 may be suspended if 18
641	641	(1) the unit operations are regulated by the United States; and 19
642	642	(2) conservation of resources in the reservoir or pool is accomplished 20
643	643	in the agreement. 21
644	644	(c) The commission has the authority to 22
645	645	(1) regulate activities related to a storage facility, including 23
646	646	construction, operation, and closure; 24
647	647	(2) require that storage operators provide assurance, including bonds, 25
648	648	that money is available to fulfill the storage operator's duties; 26
649	649	(3) enter, at a reasonable time and manner, a storage facility to 27
650	650	(A) inspect equipment and facilities; 28
651	651	(B) observe, monitor, and investigate operation; and 29
652	652	(C) inspect records required to be maintained at the facility;
653	653	30
654	654	(4) exercise continuing jurisdiction over storage operators and storage 31 33-GS1567\A
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657	657
658	658	facilities, including the authority, after notice and hearing, to amend provisions in a 1
659	659	permit and to revoke a permit; 2
660	660	(5) dissolve or change the boundaries of any commission-established 3
661	661	oil or gas field or unit that is within or near a storage reservoir's boundaries; and 4
662	662	(6) grant, for good cause, exceptions to the requirements and 5
663	663	implementing rules of AS 41.06.105 - 41.06.210. 6
664	664	(d) To the extent AS 31.05 does not conflict with AS 41.06.105 - 41.06.210, 7
665	665	the provisions of AS 31.05 are applicable to wells drilled in search of, in support of, 8
666	666	and for carbon dioxide storage. 9
667	667	(e) Nothing in AS 41.06.105 - 41.06.210 limits the authority of the 10
668	668	Department of Natural Resources under AS 38.05.700 - 38.05.795. 11
669	669	Sec. 41.06.120. Waste prohibited; investigation. Waste in a storage facility 12
670	670	or reservoir in the state is prohibited. The commission may investigate to determine 13
671	671	whether waste exists or is imminent, or whether other facts exist that justify or require 14
672	672	action by the commission to prohibit waste. The injection of carbon dioxide and 15
673	673	substances commonly associated with carbon dioxide injection is not considered 16
674	674	waste. 17
675	675	Sec. 41.06.125. Storage facility permit. (a) A prospective storage operator is 18
676	676	required to obtain a permit from the commission. 19
677	677	(b) A permit may not be transferred unless the commission consents. 20
678	678	(c) A person applying for a permit shall 21
679	679	(1) request a pre-application meeting with the commission staff; 22
680	680	(2) comply with application requirements; 23
681	681	(3) pay a fee in an amount determined by the commission; and 24
682	682	(4) pay the commission the cost the commission incurs in reviewing an 25
683	683	application, publishing notices for hearings, and holding hearings on permit 26
684	684	applications. 27
685	685	(d) A permit application must include sufficient information to enable the 28
686	686	commission to determine whether the storage facility will interfere with or impair an 29
687	687	existing water, oil, gas, or other mineral interest. 30
688	688	(e) The amount of the fee in (c)(3) of this section must be based on the 31 33-GS1567\A
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691	691
692	692	commission's anticipated cost of processing applications, including any preliminary 1
693	693	work in advance of receipt of an application. The commission may enter into an 2
694	694	agreement with a prospective applicant that requires the applicant to reimburse the 3
695	695	commission for reasonable costs of work incurred in preparing for activities before 4
696	696	receipt of an application. 5
697	697	(f) A fee the commission receives under this section must be deposited into the 6
698	698	carbon dioxide storage facility administrative fund established in AS 41.06.165. 7
699	699	Sec. 41.06.130. Hearing on permit application. (a) Before issuing a permit 8
700	700	for a storage facility, the commission shall hold a public hearing. 9
701	701	(b) The commission shall provide notice of a public hearing under this section. 10
702	702	The notice must be provided in the same manner as a notice under AS 31.05.050(b) 11
703	703	and be provided to 12
704	704	(1) each mineral lessee, mineral owner, and mineral right owner of 13
705	705	record within the storage reservoir and within one-half mile of the storage reservoir's 14
706	706	boundaries; 15
707	707	(2) each surface owner of land overlying the storage reservoir and 16
708	708	within one-half mile of the reservoir's boundaries; and 17
709	709	(3) any additional persons that the commission requires. 18
710	710	(c) A hearing notice required by this section must comply with deadlines set 19
711	711	by the commission. 20
712	712	Sec. 41.06.135. Permit requirements. (a) The commission shall consult with 21
713	713	the Department of Environmental Conservation and the Department of Natural 22
714	714	Resources before issuing a permit under AS 41.06.125. 23
715	715	(b) Before the commission may approve a permit applied for under 24
716	716	AS 41.06.125, the commission shall find 25
717	717	(1) that the storage operator has complied with all requirements set by 26
718	718	the commission; 27
719	719	(2) that the proposed storage facility is suitable and feasible for carbon 28
720	720	dioxide injection and storage; 29
721	721	(3) that the carbon dioxide to be stored is of a quality that allows it to 30
722	722	be safely and efficiently stored in the storage reservoir; 31 33-GS1567\A
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726	726	(4) that the storage operator has made a good-faith effort to get the 1
727	727	consent of all persons with an ownership interest in the reservoir and surface owners 2
728	728	of land overlying the proposed storage reservoir; 3
729	729	(5) if the proposed storage facility contains commercially valuable 4
730	730	minerals, that the interests of the mineral owners or mineral lessees will not be 5
731	731	adversely affected or have been addressed in an arrangement entered into by the 6
732	732	mineral owners or mineral lessees and the storage operator; 7
733	733	(6) that the proposed storage facility will not adversely affect surface 8
734	734	waters or formations containing fresh water; 9
735	735	(7) that carbon dioxide is not reasonably anticipated to escape from the 10
736	736	storage reservoir; 11
737	737	(8) that substances that compromise the objectives of AS 41.06.105 - 12
738	738	41.06.210 or the integrity of a storage reservoir will not enter a storage reservoir; 13
739	739	(9) that the proposed storage facility will not endanger human health or 14
740	740	unduly endanger the environment; 15
741	741	(10) that the proposed storage facility is in the public interest; 16
742	742	(11) that the horizontal and vertical boundaries of the proposed storage 17
743	743	reservoir are defined and the boundaries include buffer areas to ensure that the storage 18
744	744	facility is operated safely and as contemplated; 19
745	745	(12) that the storage operator will establish monitoring facilities and 20
746	746	protocols to assess the location and migration of carbon dioxide injected for storage 21
747	747	and to ensure compliance with all permit, statutory, and administrative requirements; 22
748	748	(13) that all nonconsenting land owners or holders of mineral rights are 23
749	749	or will be equitably compensated; and 24
750	750	(14) that the storage operator is not in violation of a provision of 25
751	751	AS 41.06.105 - 41.06.210 or regulations adopted by the commission. 26
752	752	Sec. 41.06.140. Permit provisions. The commission may include in a permit 27
753	753	or order any parameters necessary to carry out the objectives of AS 41.06.105 - 28
754	754	41.06.210 and to protect and adjust the respective rights and obligations of persons 29
755	755	affected by geologic storage. 30
756	756	Sec. 41.06.145. Amalgamating property interests. If a storage operator does 31 33-GS1567\A
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759	759
760	760	not obtain the consent of all persons with an ownership interest in the storage 1
761	761	reservoir, the commission may order that the mineral rights of nonconsenting owners 2
762	762	be included in a storage facility and subject to geologic storage. Before the 3
763	763	commission may issue an order effectuating an amalgamation under this section, the 4
764	764	commission must provide public notice and hold a hearing. 5
765	765	Sec. 41.06.150. Certificate. When the commission issues a permit under 6
766	766	AS 41.06.125, the commission shall also issue a certificate that states the permit has 7
767	767	been issued, describes the area covered, and contains information the commission 8
768	768	deems appropriate. The storage operator may file a copy of the certificate with the 9
769	769	office of the recorder in the district the facility is located. 10
770	770	Sec. 41.06.155. Environmental protection; reservoir integrity. (a) The 11
771	771	commission shall take action to ensure that 12
772	772	(1) substances that compromise the integrity of a storage reservoir do 13
773	773	not enter a storage reservoir; and 14
774	774	(2) carbon dioxide does not escape from a storage facility. 15
775	775	(b) For the purposes of this section and in the application of other laws, carbon 16
776	776	dioxide that is stored and remains in storage under a permit is not a pollutant and does 17
777	777	not constitute a nuisance. 18
778	778	(c) The commission's authority under (a) of this section does not limit the 19
779	779	jurisdiction of the Department of Environmental Conservation. 20
780	780	Sec. 41.06.160. Preservation of rights. Nothing in AS 41.06.105 - 41.06.210 21
781	781	(1) prejudices the rights of those with property interests within a 22
782	782	storage facility to exercise rights that have not been committed to a storage facility; or 23
783	783	(2) prevents a mineral owner or mineral lessee from drilling through or 24
784	784	near a storage reservoir to explore for and develop minerals, provided the drilling, 25
785	785	production, and related activities comply with commission requirements that preserve 26
786	786	the storage facility's integrity and protect the objectives of AS 41.06.105 - 41.06.210. 27
787	787	Sec. 41.06.165. Fees; carbon dioxide storage facility administrative fund. 28
788	788	(a) A storage operator shall pay the commission a fee on each ton of carbon dioxide 29
789	789	injected for geologic storage. The fee must be in the amount set by the commission.
790	790	30
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794	794
795	795	in regulating storage facilities during their construction, operational, and pre-closure 1
796	796	phases. The fee shall be deposited in the carbon dioxide storage facility administrative 2
797	797	fund established in (b) of this section. 3
798	798	(b) The carbon dioxide storage facility administrative fund is established in 4
799	799	the general fund. The fund consists of 5
800	800	(1) fees received under (a) of this section; 6
801	801	(2) fees received under AS 41.06.125 and 41.06.200; and 7
802	802	(3) interest earned on the fund. 8
803	803	(c) Expenditure from the fund is subject to appropriation. The appropriation 9
804	804	may be made by general appropriation of program receipts conditioned on compliance 10
805	805	with the program review provisions of AS 37.07.080(h). The commission, however, 11
806	806	through a cooperative agreement with another state agency, may use the fund to 12
807	807	compensate the cooperating agency for expenses the cooperating agency incurs in 13
808	808	carrying out regulatory responsibilities that the agency may have over a storage 14
809	809	facility. 15
810	810	Sec. 41.06.170. Title to carbon dioxide. The storage operator has title to the 16
811	811	carbon dioxide injected into and stored in a storage reservoir and holds title until the 17
812	812	commission issues a certificate of completion under AS 41.06.175. While the storage 18
813	813	operator holds title, the operator is liable for any damage the carbon dioxide may 19
814	814	cause, including damage caused by carbon dioxide that escapes from the storage 20
815	815	facility. 21
816	816	Sec. 41.06.175. Certificate of completion, release, and transfer of title and 22
817	817	custody. (a) After carbon dioxide injections into a reservoir end and upon application 23
818	818	by the storage operator, the commission shall consider issuing a certificate of 24
819	819	completion. The certificate may only be issued after public notice and hearing. The 25
820	820	commission shall establish notice requirements for the hearing. The certificate may 26
821	821	only be issued after the commission has consulted with the Department of 27
822	822	Environmental Conservation, the Department of Natural Resources, and all persons 28
823	823	with an ownership interest in the storage reservoir. The certificate may not be issued 29
824	824	until at least 10 years after carbon dioxide injections end. 30
825	825	(b) A certificate of completion may only be issued if the storage operator 31 33-GS1567\A
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828	828
829	829	(1) is in full compliance with all laws governing the storage facility; 1
830	830	(2) shows that the operator has addressed all pending claims regarding 2
831	831	the storage facility's operation; 3
832	832	(3) shows that the underground place or pore space where the carbon 4
833	833	dioxide was injected or stored is expected to no longer expand vertically or 5
834	834	horizontally and is expected to pose no threat to human health, human safety, the 6
835	835	environment, or underground sources of drinking water; 7
836	836	(4) shows that the stored or injected carbon dioxide is unlikely to cross 8
837	837	any underground or pore space boundary and is not expected to endanger any 9
838	838	underground source of drinking water or otherwise endanger human health, human 10
839	839	safety, or the environment; 11
840	840	(5) shows that all wells, equipment, and facilities to be used in the 12
841	841	post-closure period are in good condition and retain mechanical integrity; 13
842	842	(6) shows that the operator has plugged wells, removed equipment and 14
843	843	facilities, and completed reclamation work as required by the commission; 15
844	844	(7) has paid all fees and surcharges for the facility; and 16
845	845	(8) meets any other regulatory requirements established by the state. 17
846	846	(c) Once a certificate of completion is issued, title to the storage facility and to 18
847	847	the stored carbon dioxide transfers, without payment of any compensation, to the state 19
848	848	under management of the Department of Natural Resources. Title acquired by the state 20
849	849	includes all rights and interests in, and all responsibilities associated with, the stored 21
850	850	carbon dioxide. The storage operator and all persons who generated any injected 22
851	851	carbon dioxide are released from liability to the state associated with the storage 23
852	852	facility, provided that the liability to the state shall not result in the payment of any 24
853	853	damages in excess of the balance of the carbon storage closure trust fund established 25
854	854	in AS 37.14.850. Any bonds posted by the storage operator must be released. 26
855	855	Sec. 41.06.180. Carbon storage facility injection surcharge. A storage 27
856	856	operators shall pay the commission a surcharge on each ton of carbon dioxide injected 28
857	857	for storage. The surcharge must be in the amount set by the commission. The amount 29
858	858	must be based on anticipated expenses that the state will incur in regulating storage 30
859	859	facilities during post-closure phases. The surcharge shall be deposited in the carbon 31 33-GS1567\A
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862	862
863	863	storage closure trust fund established in AS 37.14.850. 1
864	864	Sec. 41.06.185. Penalties. (a) In addition to the penalties in (b) - (d) of this 2
865	865	section, a person who violates a provision of AS 41.06.105 - 41.06.210 or a 3
866	866	commission regulation, order, or term of a permit issued under AS 41.06.105 - 4
867	867	41.06.210, is liable for a civil penalty of not more than $100,000 for the initial 5
868	868	violation and not more than $10,000 for each day after that on which the violation 6
869	869	continues. 7
870	870	(b) A person who knowingly commits an act specified in AS 11.46.630(a) for 8
871	871	the purpose of evading a provision of this chapter, a regulation adopted under this 9
872	872	chapter, or an order, stipulation, or term of a permit issued by the commission is guilty 10
873	873	of a class A misdemeanor. 11
874	874	(c) A person who knowingly aids or abets another person in the violation of a 12
875	875	provision of this chapter, a regulation adopted under this chapter, or an order, 13
876	876	stipulation, or term of a permit issued by the commission is subject to the same 14
877	877	penalty as that prescribed in this chapter for the violation by the other person. 15
878	878	(d) A person who knowingly violates a provision of this chapter, a regulation 16
879	879	adopted under this chapter, or an order, stipulation, or term of a permit issued by the 17
880	880	commission is guilty of a misdemeanor punishable by a fine of not more than $10,000 18
881	881	a day for each day of violation. 19
882	882	(e) The commission may assess the civil penalties provided in this section, 20
883	883	and, if not paid, the penalties are recoverable by suit filed by the attorney general in 21
884	884	the name and on behalf of the commission in the superior court. The payment of a 22
885	885	penalty does not relieve a person on whom the penalty is imposed from liability to any 23
886	886	other person for damages arising out of the violation. 24
887	887	(f) In determining the amount of a penalty assessed under (a) of this section, 25
888	888	the commission shall consider 26
889	889	(1) the extent to which the person committing the violation was acting 27
890	890	in good faith in attempting to comply; 28
891	891	(2) the extent to which the person committing the violation acted in a 29
892	892	wilful or knowing manner; 30
893	893	(3) the extent and seriousness of the violation and the actual or 31 33-GS1567\A
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896	896
897	897	potential threat to public health or the environment; 1
898	898	(4) the economic or environmental harm, or injury to the public, 2
899	899	caused by the violation; 3
900	900	(5) the economic value or other benefits derived by the person 4
901	901	committing the violation from the violation; 5
902	902	(6) any history of previous violations by the person committing the 6
903	903	violation; 7
904	904	(7) the need to deter similar behavior by the person committing the 8
905	905	violation and others similarly situated at the time of the violation or in the future; 9
906	906	(8) the effort made by the person committing the violation to correct 10
907	907	the violation and prevent future violations; and 11
908	908	(9) other matters justice requires. 12
909	909	Sec. 41.06.190. Enhanced oil recovery. (a) Except as provided in (b) of this 13
910	910	section, the provisions of AS 41.06.105 - 41.06.210 do not apply to applications filed 14
911	911	with the commission proposing to use carbon dioxide for enhanced oil or gas 15
912	912	recovery. 16
913	913	(b) The commission may adopt regulations that allow enhanced oil or gas 17
914	914	recovery and related well activities to be converted to a storage facility. If adopted, the 18
915	915	regulations must require that in considering whether to approve a conversion, and 19
916	916	upon conversion, AS 41.06.105 - 41.06.210 and its implementing rules apply. The 20
917	917	regulations may impose additional requirements to, or waive the requirements of, 21
918	918	AS 41.06.105 - 41.06.210 for good cause and to ensure that the objectives of 22
919	919	AS 41.06.105 - 41.06.210 are met. 23
920	920	Sec. 41.06.195. Cooperative agreements and contracts. (a) The commission 24
921	921	may enter into agreements with other governments, government entities, and state 25
922	922	agencies for the purpose of carrying out the objectives of AS 41.06.105 - 41.06.210. 26
923	923	(b) The commission may enter into contracts with private persons to assist in 27
924	924	carrying out the objectives of AS 41.06.105 - 41.06.210. If an emergency exists, the 28
925	925	commission may enter into contracts without public notice and without competitive 29
926	926	bidding. 30
927	927	Sec. 41.06.200. Determining storage amounts; carbon credits; fees. (a) The 31 33-GS1567\A
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930	930
931	931	commission, under procedures and criteria the commission may adopt, may determine 1
932	932	the amount of carbon dioxide that may be injected and stored in a reservoir, including 2
933	933	for enhanced oil or gas recovery. 3
934	934	(b) The purpose of determining storage amounts is to facilitate using the 4
935	935	stored carbon dioxide for matters including carbon credits, allowances, trading, 5
936	936	emissions allocations, and offsets. The commission may charge a reasonable fee to a 6
937	937	person requesting a storage determination. The commission shall set the fee by 7
938	938	regulation. A fee the commission receives for a storage determination must be 8
939	939	deposited into the carbon dioxide storage facility administrative fund established in 9
940	940	AS 41.06.165. 10
941	941	Sec. 41.06.210. Definitions. In AS 41.06.105 - 41.06.210, unless the context 11
942	942	requires otherwise, 12
943	943	(1) "carbon dioxide" means carbon dioxide of a quality that 13
944	944	(A) will not compromise the safety of geologic storage; and 14
945	945	(B) will not compromise the properties of a storage reservoir 15
946	946	that allow the reservoir to effectively enclose and contain a stored gas or stored 16
947	947	supercritical fluid; 17
948	948	(2) "commission" means the Alaska Oil and Gas Conservation 18
949	949	Commission created under AS 31.05.005; 19
950	950	(3) "geologic storage" means the permanent or short-term underground 20
951	951	storage of carbon dioxide in a storage reservoir; 21
952	952	(4) "permit" means a permit issued by the commission allowing a 22
953	953	person to operate a storage facility; 23
954	954	(5) "pore space" means a cavity or void in a subsurface sedimentary 24
955	955	stratum; 25
956	956	(6) "reservoir" means a subsurface sedimentary stratum, formation, 26
957	957	aquifer, cavity, or void, including pore space, oil and gas reservoirs, saline formations, 27
958	958	and coal seams suitable for or capable of being made suitable for injecting and storing 28
959	959	carbon dioxide; 29
960	960	(7) "storage facility" means the storage reservoir, underground 30
961	961	equipment, well, and surface facilities and equipment used or proposed to be used in 31 33-GS1567\A
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965	965	accordance with a permit; "storage facility" does not include pipelines, compressors, 1
966	966	surface facilities, and equipment used to transport carbon dioxide to the storage 2
967	967	facility that are unrelated to well safety and metering; 3
968	968	(8) "storage operator" means a person holding or applying for a permit; 4
969	969	(9) "storage reservoir" means a reservoir proposed, authorized, or used 5
970	970	for storing carbon dioxide; 6
971	971	(10) "supercritical fluid" means a substance at or above its critical 7
972	972	temperature and critical pressure that is neither a liquid nor a gas but that has 8
973	973	properties of both; 9
974	974	(11) "waste" means, in addition to its ordinary meaning, physical 10
975	975	waste, and includes inefficient, excessive, or improper operation of a storage facility 11
976	976	or well; 12
977	977	(12) "well" means a well that is drilled, converted, or reactivated for 13
978	978	discovery, testing, or subsurface injection into a reservoir. 14
979	979	* Sec. 32. AS 41.21.167(a) is amended to read: 15
980	980	(a) The land and water areas described in AS 41.21.161 are not open to 16
981	981	mineral entry under AS 38.05.135 - 38.05.275 and 38.05.700 - 38.05.795. 17
982	982	* Sec. 33. AS 41.21.491(d) is amended to read: 18
983	983	(d) Except for oil and gas leasing under AS 38.05.180 and carbon storage 19
984	984	licensing and leasing under AS 38.05.700 - 38.05.795, the mineral estate in the state-20
985	985	owned land and water described in (a) of this section is closed to mineral entry under 21
986	986	AS 38.05.181 - 38.05.275. 22
987	987	* Sec. 34. AS 41.21.502(c) is amended to read: 23
988	988	(c) The mineral estate in the state-owned land and water described in (a) of 24
989	989	this section is open to oil and gas leasing under AS 38.05.180 and carbon storage 25
990	990	licensing and leasing under AS 38.05.700 - 38.05.795. The mineral estate in the 26
991	991	state-owned land and water described in (a) of this section is closed to mineral entry 27
992	992	under AS 38.05.181 - 38.05.275. 28
993	993	* Sec. 35. AS 41.21.617 is amended to read: 29
994	994	Sec. 41.21.617. Other uses generally. The state land and water described in 30
995	995	AS 41.21.611(b) is closed to mineral entry under AS 38.05.135 - 38.05.275 and 31 33-GS1567\A
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999	999	38.05.700 - 38.05.795, to commercial harvest of timber, and to sale under state land 1
1000	1000	disposal laws. The commissioner may lease the land described in AS 41.21.611(b) 2
1001	1001	under AS 38.05.070 - 38.05.105 for a purpose consistent with AS 41.21.610(a) and 3
1002	1002	(b). A municipality may select land within the Alaska Chilkat Bald Eagle Preserve 4
1003	1003	under law. 5
1004	1004	* Sec. 36. AS 44.37.020 is amended by adding a new subsection to read: 6
1005	1005	(d) The Department of Natural Resources shall administer storage facilities 7
1006	1006	and stored carbon transferred to the state under AS 41.06.175. 8
1007	1007	* Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 9
1008	1008	read: 10
1009	1009	TRANSITION: REGULATIONS. The Department of Natural Resources and the 11
1010	1010	Alaska Oil and Gas Conservation Commission may adopt regulations necessary to implement 12
1011	1011	the changes made by this Act. The regulations take effect under AS 44.62 (Administrative 13
1012	1012	Procedure Act), but not before the effective date of the law implemented by the regulation. 14
1013	1013	* Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 15
1014	1014	read: 16
1015	1015	REVISOR'S INSTRUCTION. The revisor of statutes is requested to change the 17
1016	1016	chapter heading for AS 41.06 from "Geothermal Resources" to "Geothermal Resources and 18
1017	1017	Carbon Storage." 19
1018	1018	* Sec. 39. Section 37 of this Act takes effect immediately under AS 01.10.070(c). 20