Alaska Land Use Bonds: A Comprehensive Guide

December  11th, 2020

This guide provides information for insurance agents to help customers on Alaska Land Use  bonds

At a Glance:

• Average Cost: 3%-5% of the bond amount per year, based on the business owner’s credit
• Bond Amount: 
  • Miscellaneous: $100,000
  • Performance: $10,000 minimum (determined by Division of Mining, Land and Water Commissioner)
• Who Needs It: All businesses seeking to use state land for commercial recreation, equipment storage, scientific research, or any number of other uses
• Purpose: To ensure the public does not suffer financial harm should any businesses adversely affect the land and its resources
• Who Regulates Land Use Permits in Alaska: The Alaska Department of Natural Resources (DNR)
  • Division of Oil and Gas – Miscellaneous
  • Division of Mining, Land and Water – Performance

Background

The Alaska Administrative Code Title 11 Chapter 96 states businesses seeking to utilize state land must obtain a Land Use Permit with the DNR. The Alaska legislature enacted permit laws and regulations to ensure that businesses engage in ethical business practices. In order to provide financial security for the enforcement of the permit law, businesses must purchase and maintain either a miscellaneous land use bond or land use performance guarantee bond to be eligible for a land use permit.

What is the Purpose of the Alaska Land Use Bond?

Alaska requires businesses to purchase either a Miscellaneous or Performance Land Use Surety Bond  as part of the application process for a  Land Use Permit. The land use bond ensures that the public will receive compensation for financial harm if the business fails to comply with the permit regulations. The bond is a type of insurance that is held by the state to protect the use of state land if the business fails to comply with permitting laws.

How Can an Insurance Agent Obtain an Alaska Land Use Surety Bond?

BondExchange makes obtaining an Alaska Land Use Bond easy. Simply login to your account and use our keyword search to find the “land” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Is a Credit Check Required for the an Alaska Land Use Bond?

Yes, Surety companies will run a credit check on the permit applicant to determine eligibility and pricing for the Alaska Land Use bond. Applicants with excellent credit and work experience can expect to receive the best rates. Applicants with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.

How Much Does an Alaska Land Use Bond Cost?

The Alaska Land Use surety bond can cost anywhere between 3% to 5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. We also offer easy interest-free financing for premiums over $500.

How Does Alaska Define “Land Use Activity”?

Alaska Statutes 11 96.250 defines land use activity as “any use of or entry on state land for any purpose, including but not limited to exploration, hunting, recreation, and access.”

How Do Businesses Apply for a Land Use Permit in Alaska?

Businesses in Alaska must navigate several steps to secure a Land Use Permit. Below are the general guidelines, but businesses should refer to the DNR’s Land Use Permit page for details on the process.

Permit Term – The permit can range in duration from one to five years

Step 1 – Determine the Permit Type

Alaska requires businesses to obtain specific permits corresponding to their intended use of state land. Below are the different types of the Alaska Land Use Permit.

• • Miscellaneous Land Use Permit  – For geophysical exploration
  • Modification Miscellaneous Land Use Permit – For geophysical exploration and modifications to the land
  • Land Use Performance Guarantee Permit – Authorize the temporary use of state land or resources
  • Land Use Performance Guarantee Permit with Supplemental Forms – Authorize the temporary use of state land or resources with questionnaire.

Step 2 – Determine if any Supplemental Forms are Needed

Applicants whose planned activities involve any of the below items must submit a supplemental questionnaire with their permit application. Below are different types of questionnaires that will accompany the application.

• • The use of the uplands and non marine waters
    • Uplands and/or Non Marine Waters Questionnaire
    • Site development diagram is required
  • Off-road travel
    •  Off-Road Travel Questionnaire
  • The use of tide and submerged lands
    • Use of Marine Waters Questionnaire
    • Site development diagram is required

**The questionnaire forms can be found here on pages 8-11**

All Site Development Diagrams must include:

• • Locations
  • Boundaries
  • Structures and Storage
  • Hazardous Substances

Step 3 – Purchase Insurance

The permit authority may require the applicant to purchase insurance prior to issuing a permit. Applicants should consult with the permit issuer on whether they are required to obtain insurance as a prerequisite to having their permit issued.

Step 4 – Purchase a Surety Bond or Deposit Cash

Contractors must deposit cash or purchase and maintain a land use surety bond in the following amounts:

• • $100,000 when applying for a Miscellaneous Land Use Permit
  • At least $10,000 when applying for  Performance Guarantee Permit

Step 5 – Complete the Permit Application

 All application forms must be completed and signed by the permit applicant.

5a. Land Use Performance Guarantee Permit Application –

Completed Land Use Performance Guarantee Permit Applications should be mailed to the following address:

Public Information Center
550 W. 7th Ave
Suite 1360
Anchorage, AK 99501

The permit application will require the following items:

• • Applicant Information
  • Duration of Project
  • Project Location
  • Project Description
  • Site Description
  • Site Access
  • Number of People
  • Environmental Risk/Hazardous Substances
  • Other Miscellaneous Items – items specified and required in supplemental questionnaires
  • Map – a  map of sufficient scale to show the location of the proposed activity.
  • Filing Fees – A non-refundable filing fee is required by regulation. Make checks payable to the “State of Alaska”.
  • Pre-Permit Issuance Requirements – In order to issue a permit an applicant must submit one of the below:
    • Use Fees
    • Performance Guarantee (Bond)
    • Insurance
    • Survey

5b. Miscellaneous Land Use Permit Application

Completed Miscellaneous Land Use Permit Applications should be mailed to the following address:

Public Information Center
550 W. 7th Ave
Suite 1360
Anchorage, AK 99501

The permit application will require the following items:

• • Applicant Information – Applicant and Applicant Contact
  • Third Party Information
  • Modification Application Date and Number
  • Modification Description
  • Sequence and Schedule of Operations
  • Land Status
  • Performance Guarantee
  • Glossary of Terms
  • Confidentiality
  • Appendix (if needed)

Do Companies Need to Renew Their Permits?

All Alaska Land Use permits will last for the 3 years from the date the permit is issued. Companies will not need to renew their permits, they will however need to apply for a permit every time they seek to use state land.

What Are the Insurance Requirements for Alaska Land Use Bonds?

Alaska may require companies to obtain insurance before being issued a land use permit. The DNR will set insurance requirements on a case by case basis for each permit application. A certificate of insurance must provide for a 30-day notice in the event of cancellation, nonrenewal, or material change of condition.

How Do Alaska Businesses File Their Miscellaneous Land Use Bond With The DNR?

The Miscellaneous Land Use bond requires signatures from both the surety company that issues the bond and the company. The bond will need to be mailed to the  following address:

Department of Natural Resources, Division of Oil & Gas
550 W. 7th Avenue, Suite 1100
Anchorage, AK 99501-3563

The surety company should include the following information on the miscellaneous land use bond form:

• Legal name of entity/individual(s) buying the bond

Instructions on how to complete the bond form can be at the bottom of the bond form.

How Do Alaska Businesses File Their Land Use Performance Guarantee Bond With The DOG?

The Land Use Performance Guarantee bond requires signatures from both the surety company that issues the bond and the company. The bond will need to mailed to the following address:

Public Information Center
550 W. 7th Ave
Suite 1360
Anchorage, AK 99501

 The surety company should include the following information on the land use performance guarantee bond form:

• Legal name of entity/individual(s) buying the bond
• Surety company’s name
• Acknowledgement of Principal
• Bond number
• Bond amount
• Date the bond is signed
• Date the bond goes into effect
• Bond type
• Date the bond expires
• Two witness signatures for the principal
• Approval and Acceptance by State of Alaska

What Can Permit Holders Do to Avoid Claims Against the Alaska Land Use Surety Bonds?

To avoid claims on the Land Use Surety Bond, permit holders must follow all  regulations in the state. Most importantly follow the specifications below.

• Pay their permitting fees on time and in full
• Follow all permit regulations

What Other Insurance Products Can Agents Offer Land Use Permit Holders in Alaska?

Alaska requires businesses to obtain liability insurance corresponding with the type of permit being applied for. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business.

How Can Insurance Agents Prospect for Land Use Permit Holders in Alaska?

Alaska unfortunately does not provide a list of permit holders to the public, we recommend contacting the DNR directly for a complete list of permit holders. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.