CSHB 116(RES): "An Act directing the commissioner of natural resources to accept, under certain circumstances, the contract price agreed to between a lessee of federal land and a gas or electric utility as the value of the federal government's royalty share from natural gas production on federal land from which the state is entitled under applicable federal law to receive a share of the royalty on gas production; and providing for an effective date."
00CS FOR HOUSE BILL NO. 116(RES) 01 "An Act directing the commissioner of natural resources to accept, under certain 02 circumstances, the contract price agreed to between a lessee of federal land and 03 a gas or electric utility as the value of the federal government's royalty share 04 from natural gas production on federal land from which the state is entitled 05 under applicable federal law to receive a share of the royalty on gas production; 06 and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 38.05.180(aa) is amended to read: 09 (aa) Within 90 days after the written request of a lessee of a lease issued under 10 this section or of a lessee of federal land from which the state is entitled under 11 applicable federal law to receive a share of the royalty on gas production, the 12 commissioner shall enter into an agreement with the lessee to use or accept the price 13 for the gas established in the contract between the lessee and a gas or electric utility 14 as the value of the state's royalty share of gas production sold by the lessee under the
01 contract unless the commissioner makes a written finding, based on clear and 02 convincing evidence, that 03 (1) the contract price is unreasonably low; 04 (2) the prospective reduction in royalty receipts would not be balanced 05 by increased benefits to in-state gas and electric consumers; 06 (3) the lessee and the utility are related in management, ownership, or 07 other aspect; and 08 (4) the contract price is not in the best interest of the state. 09 * Sec. 2. AS 38.05.180(bb) is amended to read: 10 (bb) In (aa) of this section, 11 (1) "gas or electric utility" includes an electric cooperative organized 12 under AS 10.25, a municipal utility, and a gas or electric utility regulated under 13 AS 42.05; provided that if the contract gas is transmitted to consumers through a 14 pipeline and the gas utility either owns the pipeline or is related in ownership to the 15 owner of the pipeline, then the gas utility qualifies as a "gas or electric utility" within 16 the meaning of this paragraph only if it is bound or agrees to be bound by the 17 covenants set out in AS 38.35.120; 18 (2) "price for the gas established in the contract" includes tax 19 reimbursement amounts, deliverability and other charges, and other forms of 20 consideration paid by the gas or electric utility under the contract; 21 (3) "state's royalty share of gas production" 22 (A) includes payments on federal leases made to the state 23 under 30 U.S.C. 191; 24 (B) does not include the state's royalty share of gas production 25 from land patented to the state under 26 (i) [(A)] P.L. 84-830, 70 Stat. 709 (Alaska Mental 27 Health Enabling Act); 28 (ii) [(B)] 38 Stat. 1214 (Act of March 4, 1915); or 29 (iii) [(C)] 43 U.S.C. 1635 in settlement of the claims of 30 the state under 38 Stat. 1214. 31 * Sec. 3. APPLICATION TO ROYALTY FROM EXISTING FEDERAL LEASES. (a)
01 Notwithstanding AS 38.05.180(aa) and 38.05.180(bb), the provisions of this section apply to 02 the state's share of royalty production of gas produced after January 2, 1959, and before the 03 effective date of this section from a lease of oil or gas rights entered into under applicable 04 federal law. 05 (b) If a lessee of a lease for federal land from which the state is entitled under 06 applicable federal law to receive a share of the royalty on gas production makes a written 07 request within 90 days of the effective date of this section, the commissioner shall enter into 08 an agreement with the lessee to accept the price for the gas established in the contract between 09 the lessee and a gas or electric utility as the value of the state's royalty share of gas 10 production sold by the lessee under the contract unless the commissioner makes a written 11 finding, based on clear and convincing evidence, that 12 (1) the contract price is unreasonably low; 13 (2) the reduction in royalty receipts is not balanced by increased benefits to 14 in-state gas and electric consumers; 15 (3) the lessee and the utility are related in management, ownership, or other 16 aspect; and 17 (4) the contract price is not in the best interest of the state. 18 (c) In this section, 19 (1) "gas or electric utility" includes an electric cooperative organized under 20 AS 10.25, a municipal utility, and a gas or electric utility regulated under AS 42.05; however, 21 if the contract gas is transmitted to consumers through a pipeline and the gas utility either 22 owns the pipeline or is related in ownership to the owner of the pipeline, then the gas utility 23 qualifies as a "gas or electric utility" within the meaning of this paragraph only if the gas 24 utility is bound or agrees to be bound by the covenants set out in AS 38.35.120; 25 (2) "price for the gas established in the contract" includes tax reimbursement 26 amounts, deliverability and other charges, and other forms of consideration paid by the gas 27 or electric utility under the contract; 28 (3) "state's royalty share of gas production" includes payments on federal 29 leases made to the state under 30 U.S.C. 191. 30 * Sec. 4. RETROSPECTIVE EFFECT OF SECTION 3. Section 3 of this Act is 31 retroactive to January 3, 1959, and applies to the federal government's royalty share from
01 natural gas production due the state after January 2, 1959. 02 * Sec. 5. This Act takes effect immediately under AS 01.10.070(c).