1. (a) If a lessee fails to comply with any term of a carbon storage lease, the lessee is in default under the lease agreement.
2. (b) In the event of default by a lessee, the commissioner will give notice of default to the lessee. The notice will state the nature of the default and include a demand to cure the default by a specific date. In the case of a failure to pay rent or fees, the due date to cure default will be determined by the commissioner. For any other event of default, the date required to cure default will be no less than 90 days after the date of the commissioner's notice of default.
3. (c) If a default occurs with respect to a carbon storage lease on which there is no carbon storage injection well and the default is not cured by the date indicated in the notice of default, the commissioner will terminate the lease by providing notice of termination to the lessee after giving the defaulting party and any unit operator, if other than the defaulting party, reasonable notice and opportunity to be heard. Termination is effective upon giving the notice.

4. (d) If a default occurs with respect to a carbon storage lease on which there is a carbon storage injection well, and default is not cured by the date indicated in the notice, the commissioner may consult with an agency that issued the defaulting party a permit, if applicable, and

   1. (1) terminate the carbon storage lease; or
   2. (2) pursue judicial or other remedies to enforce the lease.

5. (e) All rights in the land held under a carbon storage lease, including a subdivision of the land subject to the lease, may be surrendered by the lessee of record by filing an application for voluntary surrender with the department. A surrender is not effective unless approved by the commissioner. A voluntary surrender request

   1. (1) must be filed in accordance with 11 AAC 88.105, but a filing fee is not required;

   2. (2) must be accompanied by evidence satisfactory to the commissioner that the Alaska Oil and Gas Conservation Commission has

      1. (A) a certification of completion under AS 41.06.170 covering the lease; or
      2. (B) if carbon injection has not occurred, issued an order terminating the carbon storage facility permit; and
   3. (3) if approved, will take effect on the date of commissioner's approval or the date of the order from the Alaska Oil and Gas Conservation Commission, whichever occurs later.
6. (f) After termination or surrender of a carbon storage lease under this section, the lessee remains obligated to make all accrued payments and to comply with the requirements under AS 38.05.740, and shall promptly file an abandonment and restoration plan under 11 AAC 84.1085.

(Eff. 2/16/2025, Register 253)

Authority: AS 38.05.020, AS 38.05.705, AS 38.05.740, AS 38.05.700, AS 38.05.720