AK
Alaska Senate Bill SB69

Alaska 2023-2024 Regular Session

Alaska Senate Bill SB69 Compare Versions

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2-SB0069B -1- CSSB 69(RES)
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10-CS FOR SENATE BILL NO. 69(RES)
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11+ SENATE BILL NO. 69
1112
1213 IN THE LEGISLATURE OF THE STATE OF ALASKA
1314
14-THIRTY-THIRD LEGISLATURE - SECOND SESSION
15+THIRTY-THIRD LEGISLATURE - FIRST SESSION
1516
16-BY THE SENATE RESOURCES COMMITTEE
17+BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
1718
18-Offered: 5/3/24
19-Referred: Finance
19+Introduced: 2/15/23
20+Referred: Resources, Finance
2021
21-Sponsor(s): SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
22+
2223 A BILL
2324
2425 FOR AN ACT ENTITLED
2526
26-"An Act relating to geothermal resources; and providing for an effective date." 1
27-BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 2
28- * Section 1. AS 38.05.181(a) is amended to read: 3
29-(a) The commissioner may, under regulations adopted by the commissioner, 4
30-grant prospecting licenses [PERMITS] and leases to a qualified person to explore for,
31-5
32-develop, or use geothermal resources. When title to the surface parcel is held by a 6
33-person other than the state, that person shall have a preferential right to a geothermal 7
34-prospecting license [PERMIT] or lease for the area underlying the surface parcel. The 8
35-surface owner must exercise the preference right within 30 days after receiving notice 9
36-of the application for a license [PERMIT], or by agreeing to meet the terms of a bid 10
37-within 60 days after receiving notice of the acceptance of the bid for a lease. 11
38- * Sec. 2. AS 38.05.181(c) is amended to read: 12
39-(c) On state land that has not been declared a competitive geothermal area or 13
40-withdrawn from geothermal prospecting, the commissioner may issue a prospecting 14 33-GS1618\R
41-CSSB 69(RES) -2- SB0069B
27+"An Act relating to geothermal resources; relating to the definition of 'geothermal 1
28+resources'; and providing for an effective date." 2
29+BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 3
30+ * Section 1. AS 31.05.030(h) is amended to read: 4
31+(h) The commission may take all actions necessary to allow the state to 5
32+acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 6
33+300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f - 300j-26), for 7
34+the control of underground injection related to the recovery and production of oil and 8
35+natural gas, [AND] the control of underground injection in Class I wells, and the
36+9
37+control of underground injection in Class V wells associated with the recovery of 10
38+geothermal energy for heating, aquaculture, and production of electric power for 11
39+commercial or industrial uses, as defined in 40 C.F.R. 144.6, as amended. 12
40+ * Sec. 2. AS 31.05.030(m) is amended to read: 13
41+(m) The commission has jurisdiction and authority over all persons and 14 33-GS1618\A
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44-license [PERMIT] to the first qualified applicant. The license [PERMIT] conveys an 1
45-exclusive right, for a period of five [TWO] years, to prospect for geothermal resources 2
46-on state land included under the license [PERMIT]. The commissioner has discretion 3
47-to renew the license [PERMIT] for an additional one-year term. A holder of a 4
48-prospecting license [PERMIT] has the right, after completion of an agreed-on work 5
49-commitment [UPON THE SHOWING OF A DISCOVERY OF GEOTHERMAL 6
50-RESOURCES IN COMMERCIAL QUANTITIES] and the submission of an 7
51-exploration [A DEVELOPMENT] plan acceptable to the commissioner, to convert 8
52-the license [PERMIT] to a noncompetitive lease at a royalty rate under (g) of this 9
53-section. The conversion privilege must be exercised not later than 30 days after the 10
54-expiration of the license [PERMIT]. If the land included within the license [PERMIT] 11
55-is designated a competitive geothermal area during the license [PERMIT] term, the 12
56-licensee [PERMITTEE] must apply for a noncompetitive lease within 30 days after 13
57-notification of the designation or forfeit the conversion privileges and the exclusive 14
58-right to prospect. 15
59- * Sec. 3. AS 38.05.181(d) is amended to read: 16
60-(d) On state land that is designated a competitive geothermal area and is not 17
61-subject to an existing prospecting license [PERMIT], the commissioner may issue 18
62-geothermal leases to the highest bidder by competitive bidding procedures established 19
63-by regulations adopted by the commissioner. At the discretion of the commissioner, 20
64-competitive lease sales may be by oral or sealed bid, on the basis of a cash bonus, 21
65-profit share, or royalty share. 22
66- * Sec. 4. AS 38.05.181(e) is amended to read: 23
67-(e) Prospecting licenses [PERMITS] and geothermal leases granted under this 24
68-section must [, EXCEPT IN THE CASE OF PARCELS SUBJECT TO A 25
69-PREFERENCE RIGHT UNDER (b) OF THIS SECTION,] be issued for at least 40 26
70-acres but not more than 2,560 acres. A person may not own, or hold an interest in, 27
71-geothermal leases covering more than 100,000 [51,200] acres. However, geothermal 28
72-leases in commercial production, individually or under a unit operation or well spacing 29
73-or pooling arrangement, do not count against the acreage limitation. All prospecting 30
74-licenses [PERMITS] and geothermal leases are subject to an annual rental fee 31 33-GS1618\R
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45+property, public and private, necessary to carry out the purposes and intent of 1
46+AS 41.06 [, EXCEPT FOR PROVISIONS IN AS 41.06 FOR WHICH THE 2
47+DEPARTMENT OF NATURAL RESOURCES HAS JURISDICTION]. 3
48+ * Sec. 3. AS 38.05.181(a) is amended to read: 4
49+(a) The commissioner may, under regulations adopted by the commissioner, 5
50+grant prospecting licenses [PERMITS] and leases to a qualified person to explore for, 6
51+develop, or use geothermal resources. A prospecting license or lease is not required 7
52+under this section to explore for, develop, or use geothermal resources if the 8
53+geothermal resource is intended for domestic, noncommercial, or small-scale 9
54+industrial use [WHEN TITLE TO THE SURFACE PARCEL IS HELD BY A 10
55+PERSON OTHER THAN THE STATE, THAT PERSON SHALL HAVE A 11
56+PREFERENTIAL RIGHT TO A GEOTHERMAL PROSPECTING PERMIT OR 12
57+LEASE FOR THE AREA UNDERLYING THE SURFACE PARCEL. THE 13
58+SURFACE OWNER MUST EXERCISE THE PREFERENCE RIGHT WITHIN 30 14
59+DAYS AFTER RECEIVING NOTICE OF THE APPLICATION FOR A PERMIT, 15
60+OR BY AGREEING TO MEET THE TERMS O F A BID WITHIN 60 DAYS AFTER 16
61+RECEIVING NOTICE OF THE ACCEPTANCE OF THE BID FOR A LEASE]. 17
62+ * Sec. 4. AS 38.05.181(c) is amended to read: 18
63+(c) On state land that has not been declared a competitive geothermal area or 19
64+withdrawn from geothermal prospecting, the commissioner may issue a prospecting 20
65+license [PERMIT] to the first qualified applicant. The license [PERMIT] conveys an 21
66+exclusive right, for a period of five [TWO] years, to prospect for geothermal resources 22
67+on state land included under the license [PERMIT]. The commissioner has discretion 23
68+to renew the license [PERMIT] for an additional one-year term. A holder of a 24
69+prospecting license [PERMIT] has the right, after completion of an agreed-upon 25
70+work commitment [UPON THE SHOWING OF A DISCOVERY OF 26
71+GEOTHERMAL RESOURCES IN COMMERCIAL QUANTITIES] and the 27
72+submission of an exploration [A DEVELOPMENT] plan acceptable to the 28
73+commissioner, to convert the license [PERMIT] to a noncompetitive lease at a royalty 29
74+rate under (g) of this section. The conversion privilege must be exercised not later than 30
75+30 days after the expiration of the license [PERMIT]. If the land included within the 31 33-GS1618\A
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78-established by the department in regulation and [,] payable in advance [, OF $3 1
79-PER ACRE]. The rental for a year shall be credited against royalties accruing for that 2
80-year. 3
81- * Sec. 5. AS 38.05.181(f) is amended to read: 4
82-(f) A geothermal lease shall be issued for a primary term of 10 years and may 5
83-be renewed for an additional term of five years if the lessee is actively engaged in 6
84-drilling operations. A geothermal lease is valid for the duration of commercial 7
85-production. [BEGINNING 20 YEARS AFTER THE INITIATION OF 8
86-COMMERCIAL PRODUCTION AND AT 10-YEAR INTERVALS THEREAFTER, 9
87-THE COMMISSIONER MAY RENEGOTIATE THE RENTALS AND 10
88-ROYALTIES DUE ON A GEOTHERMAL LEASE.] 11
89- * Sec. 6. AS 38.05.965(6) is amended to read: 12
90-(6) "geothermal resources" means the natural heat of the earth at 13
91-temperatures greater than 80 [120] degrees Celsius, measured at the point where the 14
92-highest-temperature resources encountered enter or contact a well or other resource 15
93-extraction device, and includes 16
94-(A) the energy, including pressure, in whatever form present in, 17
95-resulting from, created by, or that may be extracted from that natural heat; 18
96-(B) the material medium, including the geothermal fluid 19
97-naturally present, as well as substances artificially introduced to serve as a heat 20
98-transfer medium; and 21
99-(C) all dissolved or entrained minerals and gases that may be 22
100-obtained from the material medium, but excluding hydrocarbon substances and 23
101-helium; 24
102- * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 25
103-read: 26
104-TRANSITION: CONVERSION OF EXISTING PROSPECTING PERMIT 27
105-APPLICATIONS AND PROSPECTING PERMITS. (a) The commissioner of n atural 28
106-resources shall convert an application for a prospecting permit made under AS 38.05.181(c), 29
107-as that subsection read on the day before the effective date of sec. 2 of this Act, that is 30
108-pending with the Department of Natural Resources on the effective date of sec. 2 of this Act, 31 33-GS1618\R
109-CSSB 69(RES) -4- SB0069B
79+license [PERMIT] is designated a competitive geothermal area during the license 1
80+[PERMIT] term, the licensee [PERMITTEE] must apply for a noncompetitive lease 2
81+within 30 days after notification of the designation or forfeit the conversion privileges 3
82+and the exclusive right to prospect. 4
83+ * Sec. 5. AS 38.05.181(d) is amended to read: 5
84+(d) On state land that is designated a competitive geothermal area and is not 6
85+subject to an existing prospecting license [PERMIT], the commissioner may issue 7
86+geothermal leases to the highest bidder by competitive bidding procedures established 8
87+by regulations adopted by the commissioner. At the discretion of the commissioner, 9
88+competitive lease sales may be by oral or sealed bid, on the basis of a cash bonus, 10
89+profit share, or royalty share. 11
90+ * Sec. 6. AS 38.05.181(e) is amended to read: 12
91+(e) Prospecting licenses [PERMITS] and geothermal leases granted under this 13
92+section must [, EXCEPT IN THE CASE OF PARCELS SUBJECT TO A 14
93+PREFERENCE RIGHT UNDER (b) OF THIS SECTION,] be issued for at least 40 15
94+acres but not more than 2,560 acres. A person may not own, or hold an interest in, 16
95+geothermal leases covering more than 100,000 [51,200] acres. However, geothermal 17
96+leases in commercial production, individually or under a unit operation or well spacing 18
97+or pooling arrangement, do not count against the acreage limitation. All prospecting 19
98+licenses [PERMITS] and geothermal leases are subject to an annual rental fee 20
99+established by the department in regulation and [,] payable in advance [, OF $3 21
100+PER ACRE]. The rental for a year shall be credited against royalties accruing for that 22
101+year. 23
102+ * Sec. 7. AS 38.05.181(f) is amended to read: 24
103+(f) A geothermal lease shall be issued for a primary term of 10 years and may 25
104+be renewed for an additional term of five years if the lessee is actively engaged in 26
105+drilling operations. A geothermal lease is valid for the duration of commercial 27
106+production. [BEGINNING 20 YEARS AFTER THE INITIATION OF 28
107+COMMERCIAL PRODUCTION AND AT 10-YEAR INTERVALS THEREAFTER, 29
108+THE COMMISSIONER MAY RENEGOTIATE THE RENTALS AND 30
109+ROYALTIES DUE ON A GEOTHERMAL LEASE.] 31 33-GS1618\A
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112-to an application for a prospecting license under AS 38.05.181(c), as amended by sec. 2 of 1
113-this Act. 2
114-(b) A person with a valid permit issued under AS 38.05.181(c), as that subsection 3
115-read on the day before the effective date of sec. 2 of this Act, may request in writing that the 4
116-commissioner of natural resources convert the prospecting permit into a prospecting license 5
117-under AS 38.05.181, as amended by secs. 1 - 5 of this Act. The Department of Natural 6
118-Resources shall provide public notice of a request for the conversion of a prospecting permit 7
119-into a prospecting license under this section. 8
120-(c) Upon request of a person qualified under (b) of this section, the commissioner of 9
121-natural resources shall convert a prospecting permit issued under AS 38.05.181(c), as that 10
122-section read on the day before the effective date of sec. 2 of this Act, into a prospecting 11
123-license under AS 38.05.181, as amended by secs. 1 - 5 of this Act. Notwithstanding 12
124-AS 38.05.035(e), the director of the division of lands is not required to make a written finding 13
125-and the commissioner of natural resources is not required to expressly approve the conversion 14
126-of a prospecting permit into a prospecting license under this section. Notwithstanding 15
127-AS 38.05.181(c), as amended by sec. 2 of this Act, a prospecting permit converted into a 16
128-prospecting license under this section may not expire later than five years from the date the 17
129-permit was issued under AS 38.05.181(c), as that subsection read on the day before the 18
130-effective date of sec. 2 of this Act. 19
131- * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 20
132-read: 21
133-TRANSITION: REGULATIONS. The Department of Natural Resources may adopt 22
134-regulations to implement the changes made by this Act. The regulations take effect under 23
135-AS 44.62 (Administrative Procedure Act) but not before the effective date of the law 24
136-implemented by the regulation. 25
137- * Sec. 9. Section 8 of this Act takes effect immediately under AS 01.10.070(c). 26
138- * Sec. 10. Except as provided in sec. 9 of this Act, this Act takes effect July 1, 2024. 27
113+ * Sec. 8. AS 38.05.181 is amended by adding new subsections to read: 1
114+(i) The commissioner may require a lessee of a geothermal resource to operate 2
115+under a unit agreement that prescribes the conditions under which the lessee must 3
116+operate. A unit agreement must adequately protect all parties in interest, including the 4
117+state. Except as provided in (j) of this section, the commissioner may not reduce the 5
118+royalty on a geothermal lease issued under this section in, or in connection with, a unit 6
119+agreement. 7
120+(j) When determined by the commissioner to be in the public interest, the 8
121+commissioner may authorize a lessee and the lessee's representative, together with 9
122+each other or jointly or severally with another lessee, to collectively adopt or operate 10
123+under a unit agreement. The commissioner may, with the consent of the involved 11
124+lessees, establish, change, or revoke the drilling, producing, and royalty requirements 12
125+of the leases. 13
126+(k) A geothermal lease and a unit agreement approved under this section must 14
127+specify that the lease and unit agreement are subject to applicable statutes and 15
128+regulations in force at the time the lease or unit agreement is entered into and to future 16
129+amendments to those statutes and regulations. 17
130+ * Sec. 9. AS 38.05.965(6) is repealed and reenacted to read: 18
131+(6) "geothermal resources" means the natural heat of the earth and 19
132+energy, in whatever form, below the surface of the earth present in, resulting from, 20
133+created by, or that may be extracted from the natural heat, and all minerals in solution 21
134+or other products obtained from naturally heated fluids, brines, associated gases, and 22
135+steam, in whatever form, found below the surface of the earth that may be produced 23
136+for a commercial use; "geothermal resources" does not include oil, hydrocarbon gases, 24
137+or other hydrocarbon substances; 25
138+ * Sec. 10. AS 41.06.020(e) is amended to read: 26
139+(e) Nothing in this chapter limits the authority of the department 27
140+[(1)] over geothermal resources under AS 38.05.181, including the 28
141+authority [; OR 29
142+(2)] to approve and manage geothermal units or operations that include 30
143+state land. 31 33-GS1618\A
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147+ * Sec. 11. AS 41.06.020 is amended by adding a new subsection to read: 1
148+(f) The commission may, when consistent with the purpose and intent of this 2
149+chapter, exempt from this chapter a domestic, noncommercial, or small-scale 3
150+industrial use of geothermal resources. 4
151+ * Sec. 12. AS 41.06 is amended by adding a new section to read: 5
152+Sec. 41.06.057. Penalties. (a) In addition to the penalties in (b) - (d) of this 6
153+section, a person who violates a provision of this chapter, a regulation adopted under 7
154+this chapter, or an order, stipulation, or term of a permit issued by the commission is 8
155+liable for a civil penalty of not more than $100,000 for the initial violation and not 9
156+more than $10,000 for each day thereafter on which the violation continues. 10
157+(b) A person who knowingly commits an act specified in AS 11.46.630(a) for 11
158+the purpose of evading a provision of this chapter, a regulation adopted under this 12
159+chapter, or an order, stipulation, or term of a permit issued by the commission is guilty 13
160+of a class A misdemeanor. 14
161+(c) A person who knowingly aids or abets another person in the violation of a 15
162+provision of this chapter, a regulation adopted under this chapter, or an order, 16
163+stipulation, or term of a permit issued by the commission is subject to the same 17
164+penalty as that prescribed in this chapter for the violation by the other person. 18
165+(d) A person who knowingly violates a provision of this chapter, a regulation 19
166+adopted under this chapter, or an order, stipulation, or term of a permit issued by the 20
167+commission is guilty of a misdemeanor punishable by a fine of not more than $10,000 21
168+a day for each day of violation. 22
169+(e) The commission may assess the civil penalties provided in this section, 23
170+and, if not paid, the penalties are recoverable by suit filed by the attorney general in 24
171+the name and on behalf of the commission in the superior court. The payment of a 25
172+penalty does not relieve a person on whom the penalty is imposed from liability to any 26
173+other person for damages arising out of the violation. 27
174+(f) In determining the amount of a penalty assessed under (a) of this section, 28
175+the commission shall consider 29
176+(1) the extent to which the person committing the violation was acting 30
177+in good faith in attempting to comply; 31 33-GS1618\A
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181+(2) the extent to which the person committing the violation acted in a 1
182+wilful or knowing manner; 2
183+(3) the extent and seriousness of the violation and the actual or 3
184+potential threat to public health or the environment; 4
185+(4) the injury to the public resulting from the violation; 5
186+(5) the benefits derived by the person committing the violation from 6
187+the violation; 7
188+(6) the history of compliance or noncompliance by the person 8
189+committing the violation with the provisions of this chapter, the regulations adopted 9
190+under this chapter, and the orders, stipulations, or terms of permits issued by the 10
191+commission; 11
192+(7) the need to deter similar behavior by the person committing the 12
193+violation and others similarly situated at the time of the violation or in the future; 13
194+(8) the effort made by the person committing the violation to correct 14
195+the violation and prevent future violations; and 15
196+(9) other factors considered relevant to the assessment that are adopted 16
197+by the commission in regulation. 17
198+ * Sec. 13. AS 41.06.060(4) is amended to read: 18
199+(4) "geothermal fluid" means liquids, brines, water, gases, or [AND] 19
200+steam [AT TEMPERATURES GREA TER THAN 120 DEGREES CELSIUS OR 20
201+ANY COMMERCIAL USE OF LIQUIDS AND STEAM] naturally or artificially 21
202+present in a geothermal system that may be produced for a commercial use; 22
203+"geothermal fluid" does not include oil, hydrocarbon gases, or other 23
204+hydrocarbon substances [AT TEMPERATURES LESS THAN 120 DEGREES 24
205+CELSIUS]; 25
206+ * Sec. 14. AS 41.06.060(5)is repealed and reenacted to read: 26
207+(5) "geothermal resources" means the natural heat of the earth and 27
208+energy, in whatever form, below the surface of the earth present in, resulting from, 28
209+created by, or that may be extracted from the natural heat, and all minerals in solution 29
210+or other products obtained from naturally heated fluids, brines, associated gases, and 30
211+steam, in whatever form, found below the surface of the earth that may be produced 31 33-GS1618\A
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215+for a commercial use; "geothermal resources" does not include oil, hydrocarbon gases, 1
216+or other hydrocarbon substances; 2
217+ * Sec. 15. AS 41.06.005(b) and 41.06.030 are repealed. 3
218+ * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 4
219+read: 5
220+APPLICABILITY. (a) Except as provided in (b) of this section, this Act applies to a 6
221+license or lease for a geothermal resource granted or entered into on or after the effective date 7
222+of secs. 1 - 11 and 13 - 15 of this Act. 8
223+(b) An application made under AS 38.05.181(c), as that subsection read before the 9
224+effective date of sec. 4 of this Act, that is pending with the Department of Natural Resources 10
225+on the effective date of sec. 4 of this Act is considered to be an application under 11
226+AS 38.05.181(c), as amended by sec. 4 of this Act. 12
227+ * Sec. 17. The uncodified law of the State of Alaska is amended by adding a new section to 13
228+read: 14
229+TRANSITION: CONVERSION OF AN EXISTING PROSPECTING PERMIT TO A 15
230+PROSPECTING LICENSE. A permittee with a valid permit issued under AS 38.05.181(c), as 16
231+that subsection read before the effective date of sec. 4 of this Act, may request in writing that 17
232+the commissioner of natural resources convert the prospecting permit into a prospecting 18
233+license under AS 38.05.181, as amended by this Act. The Department of Natural Resources 19
234+shall give public notice of a request for conversion under this section. In this section, the 20
235+legislature finds that conversion of a prospecting permit under this section into a prospecting 21
236+license under AS 38.05.181, as amended by this Act, will best serve the interests of the state. 22
237+The commissioner of natural resources is not required to make a written finding under 23
238+AS 38.05.035 to approve a request to convert a prospecting permit into a prospecting license. 24
239+The expiration date of a prospecting license converted under this section may not be later than 25
240+five years from the date the prospecting permit was issued under AS 38.05.181(c), as that 26
241+subsection read before the effective date of sec. 4 of this Act. 27
242+ * Sec. 18. The uncodified law of the State of Alaska is amended by adding a new section to 28
243+read: 29
244+TRANSITION: REGULATIONS. The Department of Natural Resources and the 30
245+Alaska Oil and Gas Conservation Commission may adopt regulations to implement the 31 33-GS1618\A
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249+changes made by this Act. The regulations take effect under AS 44.62 (Administrative 1
250+Procedure Act) but not before the effective date of the law implemented by the regulation. 2
251+ * Sec. 19. Section 18 of this Act takes effect immediately under AS 01.10.070(c). 3
252+ * Sec. 20. Except as provided in sec. 19 of this Act, this Act takes effect July 1, 2023. 4