1. (a) Before issuance of a carbon storage exploration license and before operations may commence on a carbon storage lease, the licensee or lessee must furnish a bond in an amount to be determined by the commissioner to the department. The commissioner will determine the bond amount after assessing the qualifications of the licensee or lessee, the nature of the surface, the uses and improvements on or in the vicinity of the licensed or leased land, and the degree of risk involved in the types of operations proposed for the license or lease.

2. (b) A bond required under (a) of this section must be

   1. (1) a corporate surety bond from a surety company authorized to do business in this state; or

   2. (2) a personal bond accompanied by

      1. (A) an irrevocable letter of credit issued by a bank or other financial institution authorized to do business in the United States;
      2. (B) a certificate of deposit in the amount of the bond, issued in sole favor of the department by a bank or other financial institution authorized to do business in this state;
      3. (C) a cash deposit maintained in a depository account as directed by the commissioner; or
      4. (D) other security or financial assurance approved by the commissioner.
3. (c) Every bond or combination of bonds must be conditioned upon performance of each obligation or risk identified by the commissioner in (a) of this section.
4. (d) The principal on the bond or other surety must be the licensee or lessee of record unless the license or lease is subject to a unit agreement approved by the commissioner, in which case the unit operator may be the principal in place of the licensee or lessee of record.
5. (e) A bond must be furnished on a form provided by the department.
6. (f) If a party obligated to obtain a bond or other surety under this section is principal on a bond held to secure a storage facility permit under AS 41.06.120, the party may request that the commissioner offset the bonding required under this section to account for the existing surety. If the commissioner allows an offset for such bonding, the obligated party shall provide an annual report to the commissioner regarding the status of the existing bonding or other surety.
7. (g) Upon request by a lessee, or a determination by the commissioner, the commissioner may adjust the bonding amount required under this section to account for changed circumstances regarding the obligations and risks identified in (a) of this section.

8. (h) A bond required under (a) of this section may be released

   1. (1) for a carbon storage exploration license that does not convert to a carbon storage lease under 11 AAC 84.1035, following both expiration of the license and closure of any plan of operations;
   2. (2) for a carbon storage exploration license that converts to a carbon storage lease under 11 AAC 84.1035, following the posting of a required bond for the lease; or
   3. (3) for a carbon storage lease, following the commissioner's certification that the abandonment and restoration plan approved under 11 AAC 84.1085 is complete.

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

Authority: AS 38.05.020, AS 38.05.130, AS 38.05.850, AS 38.05.035, AS 38.05.700