THE LINK: OCTOBER 2023 39 meaning what areas will continue to be regulated and require Section 404 permits and what areas will be exempted. However, Boyle said a big win for Alaska is that it is now clear the EPA’s practice of gradually expanding the definition of “Waters of the United States” to include more lands and activities under the federal Clean Water Act has ended. “EPA was on a course that even a dry ditch would have been regulated,” Boyle said. Also, large areas of Alaska are also only seasonally wet, and under Sackett many of these could be excluded from the requirement for Section 404 permits. The Supreme Court ruled that federally-protected wetlands must be adjacent to “relatively permanent” waterways, or those “connected to traditional interstate navigable waters,” such as a river or ocean. The court was divided, however, over a “significant nexus” test, or wetlands that were still connected to streams that flow to navigable waters. The EPA emergency rule removed the nexus test, but there are still uncertainties over what lands are wet enough to require Section 404 permits. In some ways, there may not be significant changes in the way companies will plan projects, particularly on the North Slope. The Section 404 program still exists. Companies will still apply for permits and are likely to be required by the Corps to do wetlands determinations. Large projects will still require Environmental Impact Statements. Alaska’s departments of Law and Environmental Conservation are working out the state’s approach as to how lands will be classified on whether they are wet enough. Another priority for DNR is the implementation of new carbon credit programs by the state. The Legislature authorized carbon offset credits to be sold on forests on state lands in its 2023 session, and Boyle said DNR is drafting regulations for the new credit offset program after completing an initial scoping review. DNR expects to have draft rules later this year and given requirements for state attorneys’ review, the final regulations should be published in the first part of 2024, the commissioner said. A manager is also now designated to manage the program within DNR, so there is now a central point of contact. How the program will work is under review, but it will likely involve sales of credits in state forests, but may also allow individuals to lease state lands or commit private lands for carbon credit sales under the state program. Oil and gas producers are interested in the forest offset credit program as a way or showing they can achieve “net zero” in carbon emissions in their Alaska operations. Currently, Alaska Native corporation landowners are the only entities selling forest offset credits in Alaska and oil and gas companies have purchased some of these. A state-operated program will expand potential sources where the credits can be purchased. Revenues to the state are likely to be modest but should at least cover expenses of the program and help pay for forest restoration and improvement, Boyle said. On the underground carbon dioxide injection, which will affect industry more directly, state legislators granted authority this year for the Alaska Oil and Gas Conservation Commission to pursue approval of “Class VI” injection wells by the EPA, and this is now underway. So-called Class VI wells are those specially-designated, and designed, for injection of carbon dioxide, and they must be regulated by the EPA, or a state entity designated, which would be the Commission. Under this, since the state owns the unused “pore space” in underground oil and gas reservoirs in Cook Inlet and the North Slope it would lease space to companies for permanent sequestering, or storing, carbon dioxide resulting from petroleum production. Other states are pursuing similar initiatives and some, including Wyoming and North Dakota, are well along in developing underground carbon dioxide storage. Alaska has a key advantage, Boyle said, as the sole owner of underground reservoir space for storage. That’s because companies wishing to sequester carbon dioxide won’t have to deal with a number of private owners of underground rights, as in other states, but only one entity, the state of Alaska. This will simplify and speed transactions and will be a big selling point for Alaska, Boyle said. — Tim Bradner Boyle said a big win for Alaska is that it is now clear the EPA’s practice of gradually expanding the definition of “Waters of the United States” to include more lands and activities under the federal Clean Water Act has ended. “EPA was on a course that even a dry ditch would have been regulated,” Boyle said. BOYLE
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