HB 399: "An Act levying and collecting an ad valorem tax on North Slope natural gas in place; and providing for an effective date."
00HOUSE BILL NO. 399 01 "An Act levying and collecting an ad valorem tax on North Slope natural gas 02 in place; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new 05 section to read: 06 LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that 07 (1) art. VIII, sec. 1, Constitution of the State of Alaska, provides that it is the 08 policy of the state to encourage the settlement of its land and the development of its resources 09 by making them available for maximum use consistent with the public interest; 10 (2) art. VIII, sec. 2, Constitution of the State of Alaska, requires the legislature 11 to provide for the utilization, development, and conservation of all natural resources belonging 12 to the state, including land and waters, for the maximum benefit of its people; 13 (3) the production and sale of oil and gas from state land is an important 14 source of revenue to the state and of job opportunities for all the people of the state;
01 (4) natural gas located on the North Slope is a valuable resource to the state 02 that has not been produced for sale in the market place, nor made available for in-state 03 utilization by the people of the state; 04 (5) the in-state utilization of North Slope natural gas will provide a more 05 economic and environmentally acceptable source of energy for the people of Alaska; 06 (6) the amount of natural gas located on the North Slope is substantial and, if 07 sold, will generate significant revenue to the state and opportunities and benefits to its people 08 for many years; 09 (7) in order to facilitate the commercialization of North Slope natural gas, it 10 is necessary to provide an incentive to ensure that the cost to North Slope producers not to 11 commercialize, delay commercialization, or inhibit commercialization of North Slope natural 12 gas is prohibitive; and 13 (8) a policy of noncommercialization, delaying commercialization, or inhibiting 14 commercialization, when commercialization is economically feasible, is contrary to the spirit 15 and intent of art. VIII, secs. 1 and 2, Constitution of the State of Alaska. 16 (b) The intent of this Act is to 17 (1) provide the people of the state the maximum benefit possible through 18 extraction of natural resources, as required by the Constitution of the State of Alaska; 19 (2) foster and promote the long-term economic growth and development of the 20 state; 21 (3) establish a means by which the state can facilitate the availability for in- 22 state consumption and utilization of North Slope natural gas by the people of Alaska; 23 (4) establish a means by which the state can facilitate the commercialization 24 of North Slope natural gas. 25 * Sec. 2. AS 43.58 is amended by adding new sections to read: 26 Sec. 43.58.210. Ad valorem tax on certain proven gas reserves. (a) An 27 annual tax is levied each calendar year on the full and true value of taxable property 28 under this chapter. 29 (b) The annual rate of levy is the greater of 30 (1) 20 mills; or 31 (2) a millage rate that, when applied against the full and true value of
01 the taxable property described in AS 43.58.230 - 43.58.250, yields $1,000,000,000 02 during the tax year. 03 Sec. 43.58.220. Property subject to tax. The provisions of this chapter apply 04 to natural gas in place from all state leases on the North Slope having proven gas 05 reserves. 06 Sec. 43.58.230. Assessment; full and true value. (a) The department shall 07 assess taxable property under this chapter to the owner of it at its full and true value 08 as of January 1 of each year. 09 (b) The full and true value of taxable property under this chapter is the 10 estimated price that the taxable property would bring in an open market and under the 11 then prevailing market conditions in a sale between a willing seller and a willing buyer 12 both conversant with the property and with prevailing values. In determining the full 13 and true value of taxable property, the department shall consider all factors that may 14 be known by the department to affect the value of taxable property, including the 15 discounted present value of the expected future net income from the taxable property. 16 Sec. 43.58.240. Assessment roll. The department shall prepare annually the 17 assessment roll for taxation under this chapter. The roll must contain 18 (1) a description of all taxable property; 19 (2) the assessed value of all taxable property; and 20 (3) the names and addresses of persons owning or otherwise holding 21 an interest in taxable property. 22 Sec. 43.58.250. Assessment notice. On or before April 15 of each year, the 23 department shall send to every owner of taxable property subject to levy and collection 24 of taxes under this chapter named in the assessment roll a notice of assessment 25 showing the assessed value of the property. The notice of assessment is effective on 26 the date of its mailing. 27 Sec. 43.58.260. Appeal. (a) A person aggrieved by the action of the 28 department in making an assessment may appeal that action and obtain a hearing upon 29 its validity before the department by filing written objections to the assessment not 30 later than 20 days after the effective date of the assessment notice. 31 (b) The procedures for conduct of the hearing and preliminary activities to it
01 shall be in accordance with AS 44.62.350, 44.62.430, 44.62.450, 44.62.460, 44.62.480, 02 44.62.500 - 44.62.550, 44.62.590, and 44.62.610 - 44.62.640. For the purposes of this 03 section, the term "respondent" used in those sections shall be considered to include the 04 person aggrieved by action of the department. The department shall provide by 05 regulation for notices of hearing under this section to interested persons. At the 06 hearing, the appellant bears the burden of proof. In the absence of this proof, the 07 assessment is to be upheld by the department. If the department, after hearing, 08 determines that a correction of the assessment is warranted, the department shall 09 correct the assessment and the assessment roll. 10 (c) Within 30 days after the decision by the department following the hearing, 11 a person aggrieved by that decision may appeal to the superior court. 12 Sec. 43.58.270. Certification. On or before June 15 of each year, the 13 department shall certify the final assessment roll and mail to the owner, operator, or 14 other person filing a return and paying tax on the taxable property a statement of the 15 amount of tax due. 16 Sec. 43.58.280. Supplemental assessment rolls. The department shall include 17 property omitted from the assessment roll on a supplemental roll, using the procedures 18 set out in AS 43.58.230 - 43.58.250 and 43.58.290 - 43.58.300 for the original roll. 19 Sec. 43.58.290. Investigation. (a) The department may make an investigation 20 of property on which a return has been filed or on property for which a return has not 21 been filed. In either case, the department shall make its own valuation of the taxable 22 property, which is prima facie evidence of the property's full and true value. 23 (b) An employee or agent of the department may enter any premises necessary 24 for the investigation during reasonable hours and may examine property and other 25 appropriate records. The owner of taxable property, upon request, shall furnish to the 26 employee or agent of the department reasonable assistance required for the 27 investigation. If an employee or agent of the department seeking to enter any premises 28 necessary for an investigation under this section or to obtain reasonable assistance 29 required for an investigation under this section is refused entry or assistance, the 30 superior court may, after reasonable notice to and hearing of the owner, order the 31 owner to allow the entry or to furnish the assistance.
01 (c) For the purpose of the investigation of property, the owner, operator, or 02 other person filing a return and paying the tax on the taxable property or a 03 representative may be required to appear for examination under oath by the 04 department. 05 Sec. 43.58.300. Returns and payment of tax. (a) A return of taxable 06 property shall be submitted on or before February 1 on the form prescribed by the 07 department based on property values existing on January 1 of each calendar year, 08 except as otherwise provided in this chapter. The return shall be submitted by 09 (1) a person who is the owner of the property, or who controls that 10 property as agent, or on account of any other person; 11 (2) a guardian or other person who has charge of taxable property 12 belonging to a minor or other person; 13 (3) the trustee of a trust estate holding taxable property in trust for the 14 benefit of another person; 15 (4) the executor or administrator of a deceased person's estate that 16 includes taxable property; 17 (5) the receiver of a corporation who has its assets in hand. 18 (b) The person required to submit the return specified under (a)(1) of this 19 section is primarily liable for payment of the tax levied by this chapter. The persons 20 or estates specified in (a)(2) - (5) of this section in whose behalf the tax levied by this 21 chapter is to be paid are secondarily liable for payment of the tax. With the written 22 approval of the department, an operator or nonoperator of the lease or property may 23 submit returns or make payment of the tax levied under this chapter on behalf of the 24 operator or nonoperator and other persons as the department may approve. 25 (c) The tax levied under this chapter is payable to the department on or before 26 June 30 of each year or in installments at the times and under the conditions of the 27 department may by regulation require. 28 (d) With the prior written approval of the department, a person submitting 29 returns or making payments as required under this chapter for more than one taxable 30 property may regard the leases or properties as a single taxable property for purposes 31 of submitting those reports or making those payments.
01 (e) A person making payment of the tax levied under this chapter on behalf 02 of one or more other persons owning or otherwise holding an interest in a taxable 03 property may withhold a proportionate share of the payment from any proceeds or 04 other benefits from the taxable property owed to any person on whose behalf the 05 payment is made. Unless otherwise specifically provided by written contract or 06 agreement, the person so withholding a proportionate share of the tax levied under this 07 chapter incurs no liability to those from whom it is withheld by virtue of having made 08 the withholding. 09 (f) The department may, by written notice, require a person filing a return to 10 submit additional information to the department no later than 30 days after the notice. 11 Sec. 43.58.310. Remedy. The remedy of distraint on property set out in 12 AS 43.20.270 applies to the tax, penalty, and interest levied by this chapter. 13 Sec. 43.58.320. Regulations. The department may adopt regulations in 14 accordance with AS 44.62 (Administrative Procedure Act) as appropriate to administer 15 and enforce this chapter. 16 Sec. 43.58.395. Definitions. In this chapter, 17 (1) "gas" and "natural gas" have the meanings given to "gas" in 18 AS 43.55.900; 19 (2) "lease or property" means any right, title, or interest in or the right 20 to produce or recover gas, including 21 (A) a mineral interest; 22 (B) a leasehold interest; 23 (C) a working interest, a royalty interest, an overriding royalty 24 interest, production payment, net profit interest, or any other interest in a lease, 25 concession, joint venture, or other agreement for gas exploration, development, 26 or production; 27 (D) a working interest, a royalty interest, an overriding royalty 28 interest, production payment, net profit interest, or any other interest in an 29 agreement for unitization or pooling under provisions of 26 U.S.C. 614(b)(3) 30 (Internal Revenue Code); 31 (3) "North Slope" means the area of Alaska lying north of 68 degrees
01 North latitude; 02 (4) "operator" means the person conducting the exploration, 03 development, or production operation for a lease or property; 04 (5) "proven gas reserves" means the volume of gas in a known deposit 05 that geological and engineering information indicates is recoverable in the future under 06 prevailing economic conditions and technology. 07 * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 CONDITIONAL EFFECT OF SECTION 2 OF THIS ACT. Section 2 of this Act takes 10 effect under sec. 6 of this Act unless the commissioner of natural resources certifies, no later 11 than December 31, 2002, that not less than 500,000,000,000 cubic feet of North Slope natural 12 gas, as that term is defined in AS 43.58.395, added by sec. 2 of this Act, is annually 13 committed by contract for sale and timely delivery as commercially marketable gas for a 14 contract term of at least 20 years. 15 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section 16 to read: 17 CONDITIONAL EFFECT OF SECTION 2 OF THIS ACT. Section 2 of this Act takes 18 effect under sec. 7 of this Act 19 (1) if, under sec. 3 of this Act, the provisions of AS 43.58.210 - 43.58.395 did 20 not take effect; and 21 (2) unless the commissioner of labor and workforce development certifies, no 22 later than December 31, 2008, that the cubic feet of North Slope natural gas, as that term is 23 defined in AS 43.58.395, added by sec. 2 of this Act, that has been committed by contract for 24 sale and timely delivery as commercially marketable gas as required by sec. 3 of this Act is 25 deliverable as provided by the appropriate terms of the contract. 26 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section 27 to read: 28 CONDITIONAL DELETION OF REFERENCES TO MATERIAL ENACTED BY 29 SECTION 2 OF THIS ACT. If, before January 2, 2009, the provisions of AS 43.58.210 - 30 43.58.395 have not taken effect, the revisor of statutes shall delete from the Alaska Statutes 31 references to the following sections added by sec. 2 of this Act: AS 43.58.210, 43.58.220,
01 43.58.230, 43.58.240, 43.58.250, 43.58.260, 43.58.270, 43.58.280, 43.58.290, 43.58.300, 02 43.58.310, 43.58.320, and 43.58.395. 03 * Sec. 6. If, under sec. 3 of this Act, sec. 2 of this Act takes effect, it takes effect 04 January 1, 2003. 05 * Sec. 7. If, under sec. 4 of this Act, sec. 2 of this Act takes effect, it takes effect 06 January 1, 2009.