1. (a) The commissioner will approve a proposed unit agreement upon a written determination that the unit agreement is necessary or advisable to protect the public interest and that the agreement will

   1. (1) promote the maximum utilization of the state's land and resources for the purpose of carbon storage;
   2. (2) promote the prevention of economic and physical waste; and
   3. (3) provide for the protection of all parties of interest, including the state.

2. (b) In evaluating the criteria set out in (a) of this section, the commissioner will consider

   1. (1) the environmental costs and benefits of unitized development;
   2. (2) the geological and engineering characteristics of the potential carbon storage unit area;
   3. (3) the applicant's carbon storage facility permit or permits under AS 41.06.120;
   4. (4) the economic costs and benefits to the state and affected parties; and
   5. (5) other relevant factors, including measures to mitigate impacts identified above, that the commissioner determines necessary or advisable to protect the public interest.

3. (c) The commissioner will consider the criteria in (a) of this section when evaluating a requested authorization or approval for

   1. (1) a carbon storage unit agreement;
   2. (2) an extension or amendment of a unit agreement;
   3. (3) a plan of development, plan of operations, or amendment to a plan of development or plan of operations; or
   4. (4) a carbon injection allocation formula.
4. (d) For joint lands, lands with multiple interest ownership, or if more than one lease is being utilized for carbon storage, a unit agreement must be submitted on, or in a manner consistent with, a department unit agreement form and executed by all lessees with an interest in the unit, the operator of a permit issued under AS 41.06.120, and additional persons as required by the commissioner.

5. (e) The commissioner may require modification of the department unit agreement form or grant a request by the unit applicant for modification if

   1. (1) the modification is reasonably required to meet the needs and requirements of the unit, considering the facts and conditions found to exist with respect to that unit;
   2. (2) the proposed modification meets the criteria in (a) of this section; and

   3. (3) a request for modification by a unit applicant

      1. (A) is made in writing before the application for the unit under (a) of this section; and
      2. (B) includes an explanation of the proposed modification.
6. (f) The commissioner may expand or contract a unit area, including in response to a modification to a carbon storage facility permit granted under AS 41.06.120. Before expansion or contraction of a unit area, the commissioner will give the unit operator and each pore space owner reasonable notice and an opportunity to be heard.
7. (g) Failure to comply with the terms of an approved carbon storage unit agreement, including any plans of exploration, development, or operations that are a part of the unit agreement, is a default under the unit agreement. The commissioner will give notice of the default to a defaulting party. The notice will state the nature of the default and include a demand to cure the default by a specific date not less than 90 days after the date of the commissioner's notice of default. If default is not cured by the date indicated in the notice of default, the commissioner may, after giving reasonable notice and opportunity to be heard, terminate the unit agreement by mailing notice of termination to the defaulting party. Termination is effective upon giving the notice.

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

Authority: AS 38.05.700, AS 38.05.725