Enrolled SB 48: Explanation

This bill, known as Enrolled SB 48, is an act that relates to the powers and duties of the Alaska Oil and Gas Conservation Commission. It also authorizes the Department of Natural Resources to lease land for carbon management purposes and establishes a carbon offset program for state land. Additionally, the bill enables the sale of carbon offset credits and the undertaking of carbon offset projects on legislatively designated state forests. The bill also addresses oil and gas lease expenditures.

Summary of the key provisions of the bill:

• The bill empowers the Alaska Oil and Gas Conservation Commission to acquire primary enforcement responsibility for the control of underground injection related to oil and gas recovery and production.
• The Department of Natural Resources is authorized to lease land for carbon management purposes.
• A carbon offset program is established for state land, enabling the sale of carbon offset credits.
• The Haines State Forest Resource Management Area can be utilized for a carbon offset project.
• Carbon offset projects can be undertaken on land in legislatively designated state forests.
• Expenditures for oil and gas leases are addressed.
• The bill specifies the effective date of the act.

Full Text of the Bill

Enrolled SB 48 LAWS OF ALASKA

2023

Source Chapter No.
CSSB 48(FIN) _______

AN ACT

Relating to the powers and duties of the Alaska Oil and Gas Conservation Commission; authorizing the Department of Natural Resources to lease land for carbon management purposes; establishing a carbon offset program for state land; authorizing the sale of carbon offset credits; authorizing the use of land and water within the Haines State Forest Resource Management Area for a carbon offset project; authorizing the undertaking of carbon offset projects on land in legislatively designated state forests; relating to oil and gas lease expenditures; and providing for an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:

THE ACT FOLLOWS ON PAGE 1

-1- Enrolled SB 48





AN ACT


Relating to the powers and duties of the Alaska Oil and Gas Conservation Commission; 1 authorizing the Department of Natural Resources to lease land for carbon management 2 purposes; establishing a carbon offset program for state land; authorizing the sale of carbon 3 offset credits; authorizing the use of land and water within the Haines State Forest Resource 4 Management Area for a carbon offset project; authorizing the undertaking of carbon offset 5 projects on land in legislatively designated state forests; relating to oil and gas lease 6 expenditures; and providing for an effective date. 7

_______________ 8
   * Section 1. AS 31.05.030(h) is amended to read: 9
(h) The commission may take all actions necessary to allow the state to 10 acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 11 300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f - 300j-26), for 12 the control of underground injection related to the recovery and production of oil and 13
Enrolled SB 48 -2-  natural gas and the control of underground injection in Class I 1 wells, as defined in 40 1 C.F.R. 144.6, as amended, and the control of underground injection in Class VI 2 wells, as defined in 40 C.F.R. 144.6, as amended. 3
   * Sec. 2. AS 36.30.850(b) is amended by adding a new paragraph to read: 4
(51)  contracts between a registry and the Department of Natural Resources under AS 38.95.400 - 38.95.499; in this paragraph, "registry" has the meaning given in AS 38.95.499. 7
   * Sec. 3. AS 37.05.146(c) is amended by adding a new paragraph to read: 8
(85)  revenue from the carbon offset program under AS 38.95.400 - 9 38.95.499. 10
   * Sec. 4. AS 38.05.075(a) is amended to read: 11
(a)  Except as provided in AS 38.05.035, 38.05.070, 38.05.073, 38.05.081, 12 38.05.082, 38.05.083, 38.05.087, 38.05.102, 38.05.565, 38.05.600, 38.05.810, and this 13 section, when competitive interest has been demonstrated or the commissioner 14 determines that it is in the state's best interests, leasing shall be made at public auction 15 or by sealed bid, at the discretion of the director, to the highest qualified bidder as 16 determined by the commissioner. A bidder may be represented by an attorney or agent 17 at a public auction. In the public notice of a lease to be offered at public auction or by 18 sealed bid, the commissioner shall specify a minimum acceptable bid and the lease 19 compensation method. The lease compensation method shall be designed to maximize 20 the return on the lease to the state and shall be a form of compensation set out in 21 AS 38.05.073(m). An aggrieved bidder may appeal to the commissioner within five 22 days for a review of the determination. The leasing shall be conducted by the 23 commissioner, and the successful bidder shall deposit at the public auction or with the 24 sealed bid the first year's rental or other lease compensation as specified by the 25 commissioner, or that portion of it that the commissioner requires in accordance with 26 the bid. The commissioner shall require, under AS 38.05.860, qualified bidders to 27 deposit a sum equal to any survey or appraisal costs reasonably incurred by another 28 qualified bidder acting in accordance with the regulations of the commissioner or 29 incurred by the department under AS 38.04.045 and AS 38.05.840. If a bidder making 30 a deposit of survey or appraisal costs is determined by the commissioner to be the 31 Enrolled SB 48 highest qualified bidder under this subsection, the deposit shall be paid to the 1 unsuccessful bidder who incurred those costs or to the department if the department 2 incurred the costs. All costs for survey and appraisal shall be approved in advance in 3 writing by the commissioner. The commissioner shall immediately issue a receipt 4 containing a description of the land or interest leased, the price bid, and the terms of 5 the lease to the successful qualified bidder. If the receipt is not accepted in writing by 6 the bidder under this subsection, the commissioner may offer the land for lease again 7 under this subsection. A lease, on a form approved by the attorney general, shall be 8 signed by the successful bidder and by the commissioner. 9   * Sec. 5. AS 38.05 is amended by adding a new section to read: 10 Sec. 38.05.081. Leases of state land for carbon management purposes. (a) 11 The commissioner may lease state land for carbon management purposes. A lease 12 agreement under this section must include land use restrictions and authorizations 13 consistent with the carbon management purpose of the lease. 14 (b)  A person may apply to lease land for a carbon management purpose by 15 submitting an application to the department. An application to lease land must include 16 (1)  the specific location, description, and amount of land the applicant 17 wants to lease; 18 (2)  a detailed summary of the proposed purpose the land will be used 19 for; and 20 (3)  additional information and requirements established by the 21 department in regulation, including any application fees. 22 (c)  Upon receiving an application, the department shall solicit competitive 23 interest by issuing a public notice in the manner prescribed in AS 38.05.945. The 24 notice must contain an announcement seeking competitive interest. If competing 25 carbon management applications are received following notice, the applications will 26 be awarded under (d) of this section.  27 (d)  If the director receives two or more applications for the same land, the director 28 shall consider reasonable factors in awarding the lease, including proposed 29 monetary consideration, the value to the state, the potential revenue to the state, and 30 the qualifications of the applicant, including whether the applicant has previous 31 Enrolled SB 48 experience with carbon management, the anticipated lease term, how the proposed use 1 would accommodate concurrent use of the land, consistency with existing state area or 2 management plans, and any additional requirement established by the department in 3 regulation. If one or more applicants have proposed different carbon management 4 purposes, the director shall consider each applicant's proposal and determine which 5 proposed use is more appropriate for the selected state land. An application for a lease 6 of state land under this section, including supporting documentation submitted to the 7 department for review, is a public record subject to AS 40.25.110 - 40.25.220. An 8 aggrieved applicant may appeal to the commissioner for a review of the director's 9 determination within 20 days after receiving notice of the determination. 10 (e)  A lease under this section may not exceed a period of 55 years. The lease 11 must contain terms and conditions for performance, including benchmarks, and must 12 require the lessee to make progress toward development or continual maintenance of 13 the leased land sufficient to meet the carbon management purpose of the lease. During 14 the term of the lease, the commissioner shall terminate the lease if 15 (1)  the commissioner determines that the land is not being used for the 16 carbon management purpose approved by the commissioner; or 17 (2)  the lessee fails to meet the requirements of the lease and, after 18 being given a reasonable opportunity by the commissioner to comply with the lease, 19 the commissioner determines that the lessee has still failed to comply with the lease. 20 (f)  A lessee under this section is not entitled to a preference right to purchase 21 the leased land. 22 (g)  Compensation for a lease under this section 23 (1)  shall be designed to maximize the return to the state and be a form 24 of compensation provided under AS 38.05.073(m); 25 (2)  shall be separately accounted for under AS 37.05.142; and 26 (3)  may be used by the legislature to make appropriations to the 27 department to carry out the purposes of this section. 28 (h)  The provisions of AS 38.05.070 and 38.05.095 concerning subleasing, 29 assignment, lease renewals, and lease extensions apply to leasing under this section. 30 (i)  Before entering into a lease of land under this section, the director must 31 Enrolled SB 48 (1)  evaluate information received during a solicitation of competitive 1 interest under (c) of this section; and 2 (2)  find under AS 38.05.035(e) that leasing the land for the proposed 3 carbon management purpose is in the best interests of the state; the findings must 4 include 5 (A)  reasonably foreseeable effects that a project may have on 6 the state or local economy, including potential effects on mining, timber, and 7 other resource development sectors;  8 (B)  anticipated annual revenue that the lease will yield to the 9 state;  10 (C)  an assessment and consideration of the known mineral 11 potential, including current claim status, within the project area;  12 (D)  the proposed monetary consideration under the agreement, 13 the value to the state, and the potential revenue to the state; and 14 (E)  a summary of public comments received in response to the 15 solicitation of competitive interest required under (c) of this section and the 16 department's response to those comments. 17 (j)  State land used for carbon management purposes must, to the extent 18 practicable, remain open to 19 (1)  the public for access, hunting, fishing, and other generally allowed 20 uses as determined by the department; and 21 (2)  other resource development, including mining. 22 (k)  Notwithstanding AS 38.05.300, state land used for carbon management 23 purposes must remain open to mineral exploration and development. A lease under 24 this section does not constitute an exception to the requirements of AS 38.05.300(a). 25 (l)  By February 1 of each year, the commissioner shall prepare a report on the 26 lease agreements entered into under this section, transmit the report to the senate 27 secretary and the chief clerk of the house of representatives, and notify the legislature 28 that the report is available. The report must contain the following information: 29 (1)  the number of total leases entered into each fiscal year from the 30 fiscal year ending June 30, 2024, until the present; 31 Enrolled SB 48 (2)  a complete list of lease information for each ongoing lease that 1 includes 2 (A)  a general description of the location of the lease; 3 (B)  the date the lease was executed; 4 (C)  the identity of each person on the lease; 5 (D)  a summary of the underlying carbon management purpose; 6 (E)  the current status of the leased land with regard to the 7 carbon management purpose; 8 (F)  the amount of carbon offset credits generated and sold 9 under the lease cumulatively and during the current fiscal year; 10 (G)  a summary of the compensation agreed on for the lease and 11 an explanation of how the amount was determined; and 12 (H)  the identity of each individual having an ownership interest 13 in an entity on the lease; 14 (3)  a complete list of leases that expired or were terminated during the 15 preceding or current fiscal year and the reason the lease expired or was terminated; 16 and 17 (4)  a description of the cumulative revenue received by the state from 18 leases, the revenue received by the state from leases during the preceding fiscal year, 19 and the anticipated revenue the state will receive from leases in the current fiscal year. 20 (m)  In this section, "carbon management" means a greenhouse gas mitigation 21 measure or nongeologic carbon sequestration project.
   * Sec. 6. AS 38.05.102 is amended to read: 10
Sec. 38.05.102. Lessee preference.  Except for a lease under AS 38.05.081, if 11
[IF] land within a leasehold created under AS 38.05.070 - 38.05.105 is offered for sale 12
or long-term lease at the termination of the existing leasehold, the director may, upon 13
a finding that it is in the best interest of the state, allow a [THE] holder in good 14
standing of the existing [THAT] leasehold to purchase or lease the land for its 15
appraised fair market value at the time of the sale or long-ter m lease.
   * Sec. 8. AS 38.95 is amended by adding new sections to read: 23
Article 8. Carbon Offset Program. 24
Sec. 38.95.400. Carbon offset program. (a) A carbon offset program is 25
established in the department to undertake carbon offset projects on state land.
(b) The commissioner shall adopt regulations to implement AS 38.95.400 - 26
38.95.499.
(c) Nothing in AS 38.95.400 - 38.95.499 may be construed to prevent a 27
private landowner from participating in a registry or exchange or to impose additional 28
legal requirements on a private landowner undertaking the landowner's own carbon 29
offset project.
Sec. 38.95.410. Carbon offset project criteria; evaluation; best interest 30
finding. (a) The commissioner shall adopt criteria for evaluation of a proposed carbon 31 Enrolled SB 48 offset project on state land. The evaluation criteria must include, if applicable, 1
(1) consideration of a project's baseline and predicted additionality;
(2) whether registry protocols are consistent with applicable state law;
(3) whether a project would be consistent with AS 38.95.400 -
38.95.499 and applicable regulations;
(4) an assessment and consideration of the known mineral potential,
including current claim status, within the project area;
(5) reasonably foreseeable effects that a project may have on the state
or local economy, including potential effects on mining, timber, and
other resource development sectors;
(6) consideration of the effect of the project on the state's timber
industry; and
(7) the proposed monetary consideration under the project, the value to
the state, and the potential revenue to the state.
(b) Except as otherwise provided in statute or regulation, state land shall be
available for carbon offset projects.
(c) Legislatively withdrawn land may not be used for a carbon offset project
without approval by the legislature or as otherwise provided by law. In this subsection,
"legislatively withdrawn land" means land set aside by the legislature under
AS 16.20.010 - 16.20.162, 16.20.300 - 16.20.360, AS 41.21, or AS 41.23.
(d) A carbon offset project may be undertaken on state land if the director,
with the consent of the commissioner, makes a written finding that the project will best
serve the interests of the state under AS 38.05.035(e).
(e) A carbon offset project term may not exceed 55 years.
(f) State land used for a carbon offset project must, to the extent practicable,
remain open to
(1) the public for access, hunting, fishing, and other generally allowed
uses as determined by the department; and
(2) other resource development, including mining.
(g) Notwithstanding AS 38.05.300, state land used for a carbon offset project
must remain open to mineral exploration and development. A carbon offset project
under AS 38.95.400 - 38.95.499 does not constitute an exception to the requirements
of AS 38.05.300(a).
(h) By February 1 of each year, the commissioner shall prepare a report on the
carbon offset program established in AS 38.95.400 - 38.95.499, transmit the report to
the senate secretary and the chief clerk of the house of representatives, and notify the
legislature that the report is available. The report must contain the following information:
(1) a list of all carbon offset projects that are generating or eligible to
generate carbon offset credits, or that are in development, that includes
  (A) a general description of each project location;
  (B) the date a contract for a project was executed and the
duration of the project;
  (C) the identity of each person who contracted with the state
for a project;
  (D) a summary of each carbon offset project;
  (E) the status of each carbon offset project;
  (F) the amount of carbon offset credits generated and sold
cumulatively and anticipated during the current fiscal year for each carbon
offset project;
  (G) for a project that is in development but is not yet generating
carbon offset credits, the anticipated timeline for when the project is expected
to generate credits;
  (H) a summary of the monetary compensation agreed on for a
contract or project and an explanation of how the amount was determined; and
  (I) the identity of each individual having an ownership interest
in an entity that has contracted with the state for a project;
(2) a complete list of projects that expired or were terminated during
the preceding or current fiscal year and the reason the project expired or was terminated;
and
(3) a description of revenue generated by program receipts from the
carbon offset program during the preceding fiscal year, cumulatively over the life of
the program, and the anticipated revenue that will be generated in program receipts in
the current fiscal year;
(4) a list of all other individuals or entities with an ongoing contract
with the state under AS 38.95.400 - 38.95.499 that includes, for each contract, the
term length of the contract, the compensation agreed on under the contract, and a
summary of the service or product provided under the contract.
Sec. 38.95.499. Definitions. In AS 38.95.400 - 38.95.499, unless the context
requires otherwise, 1
(1) "additionality" means the reduction in greenhouse gas emissions or 2
increase in carbon storage represented by a carbon offset project that is in addition to 3
the baseline;
(2) "baseline" means the anticipated amount of carbon sequestration 4
that would occur in the absence of a carbon offset project;
(3) "carbon offset credit" means a transferrable instrument that 5
represents an emission reduction of one metric ton of carbon dioxide or other 6
greenhouse gases;
(4) "carbon offset project" includes seaweed farming, afforestation, 7
reforestation, and similar land and resource management measures that mitigate 8
greenhouse gases by maintaining or increasing the carbon stock on state land;
(5) "commissioner" means the commissioner of natural resources; 9
(6) "department" means the Department of Natural Resources; 10
(7) "director" means the director of the division of lands; 11
(8) "greenhouse gas" includes carbon dioxide, methane, nitrous 12
oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other gases that
trap and emit radiant energy in the earth's atmosphere;
(9) "project term" means the duration of the commitment made by the 13
department for a carbon offset project, ending when the state has no continuing 14
obligation related to the project;
(10) "registry" means an organization or program that registers and 15
issues carbon offset credits for carbon offset projects;
(11) "shoreland" means land belonging to the state that is covered by 16
nontidal water and is navigable under the laws of the United States up to ordinary high 17
water mark as modified by accretion, erosion, or reliction;
(12) "state land" means all land, including shoreland, tideland, and 18
submerged land, or resources belonging to or acquired by the state;
(13) "submerged land" means land that is covered by tidal water 19
between the line of mean low water and seaward to a distance of three geographical 20
miles or farther as may be properly claimed by the state;
(14) "tideland" means land that is periodically covered by tidal water 21
between the elevation of mean high water and mean low water.
Sec. 8. AS 38.05.945(a) is amended to read: 24
(a) This section establishes the requirements for notice given by the 25
department for the following actions: 26
(1) classification or reclassification of state land under AS 38.05.300 27
and the closing of land to mineral leasing or entry under AS 38.05.185;  28
(2) zoning of land under applicable law; 29
(3) issuance of a  30
(A) preliminary written finding under AS 38.05.035(e)(5)(A) 31
regarding the sale, lease, or disposal of an interest in state land or resources for 1
oil and gas, or for gas only, subject to AS 38.05.180(b);
(B) written finding for the sale, lease, or disposal of an interest 2
in state land or resources under AS 38.05.035(e)(6), except a lease sale  3
described in AS 38.05.035(e)(6)(F) for which the director must provide 4
opportunity for public comment under the provisions of that sub paragraph;
(4) a competitive disposal of an interest in state land or resources after 5
final decision under AS 38.05.035(e);
(5) a preliminary finding under AS 38.05.035(e) concerning sites for 6
aquatic farms and related hatcheries;
(6) a decision under AS 38.05.132 - 38.05.134 regarding the sale, 7
lease, or disposal of an interest in state land or resources;
(7) an exchange of state land under AS 38.50;
(8) solicitation of competitive interest under AS 38.05.081(c).