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HB 177: "An Act relating to the Alaska Gasline Inducement Act; establishing the Alaska Gasline Inducement Act matching contribution fund; providing for an Alaska Gasline Inducement Act coordinator; making conforming amendments; and providing for an effective date."

00                             HOUSE BILL NO. 177                                                                          
01 "An Act relating to the Alaska Gasline Inducement Act; establishing the Alaska Gasline                                  
02 Inducement Act matching contribution fund; providing for an Alaska Gasline                                              
03 Inducement Act coordinator; making conforming amendments; and providing for an                                          
04 effective date."                                                                                                        
05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
06    * Section 1.  AS 43 is amended by adding a new chapter to read:                                                    
07                  Chapter 90. Alaska Gasline Inducement Act.                                                           
08      Article 1. Inducement to Construction of a Natural Gas Pipeline in this State.                                   
09            Sec. 43.90.010. Purpose. The purpose of this chapter is to encourage                                       
10       expedited construction of a natural gas pipeline that                                                             
11                 (1)  facilitates commercialization of North Slope gas resources in this                                 
12       state;                                                                                                            
13                 (2)  promotes exploration and development of oil and gas resources on                                   
14       the North Slope in this state;                                                                                    
01                 (3)  maximizes benefits to the people of this state of development of oil                               
02       and gas resources in this state; and                                                                              
03                 (4)  encourages state oil and gas lessees and other persons to commit                                   
04       natural gas from the North Slope of this state to a gas pipeline system for                                       
05       transportation to markets in this state or elsewhere.                                                             
06                Article 2. Alaska Gasline Inducement Act License.                                                      
07            Sec. 43.90.100. Gas project. The commissioners may award an Alaska                                         
08       Gasline Inducement Act license as provided in this chapter. The person awarded a                                  
09       license under this chapter is entitled to the inducement set out in AS 43.90.110.                                 
10            Sec 43.90.110. Natural gas pipeline project construction inducement.                                       
11       Subject to the limitations of this chapter, a license issued under this chapter entitles the                      
12       licensee or its designated affiliate to receive                                                                   
13                 (1)  state matching contributions in an amount not to exceed                                            
14       $500,000,000, paid in total to the licensee over a five-year period; the payment period                           
15       may be extended by the commissioners under an amendment or modification of the                                    
16       project plan under AS 43.90.220; the payment period commences on the date of the                                  
17       issuance of the license; payments under this paragraph shall be made according to the                             
18       following:                                                                                                        
19                      (A)  on or before the close of the first binding open season, the                                  
20            state shall match equally the licensee's qualified expenditures;                                             
21                      (B)  after the close of the first binding open season, the state                                   
22            shall match the licensee's qualified expenditures at a level specified in the                                
23            license; however, the state's matching contribution may not be greater than 80                               
24            percent of the qualified expenditures incurred after the close of the first                                  
25            binding open season;                                                                                         
26                      (C)  qualified expenditures are costs that occurred after the                                      
27            license was issued under this chapter, were incurred by the licensee or the                                  
28            licensee's designated affiliate, and are directly and reasonably related to                                  
29            obtaining a certificate of public necessity and convenience from the Federal                                 
30            Energy Regulatory Commission or the Regulatory Commission of Alaska, as                                      
31            appropriate, for development of the project; in this subparagraph, "qualified                                
01            expenditures" do not include overhead costs, litigation costs, assets or work                                
02            product predating the issuance of the license, or civil or criminal penalties or                             
03            fines;                                                                                                       
04                 (2)  the benefit of an Alaska Gasline Inducement Act coordinator who                                    
05       has the authority prescribed in AS 43.90.330; and                                                                 
06                 (3)  the benefits of a state program that provides training for                                         
07       employment in gas pipeline project management, construction, operations,                                          
08       maintenance, and other gas pipeline-related positions.                                                            
09            Sec. 43.90.120. Abandonment of project. (a) If the commissioners and the                                   
10       licensee agree that the project is uneconomic and should be abandoned, inducement                                 
11       provided for in AS 43.90.110 terminates and, except for requirements imposed on the                               
12       licensee under AS 43.90.230, the state and the licensee no longer have any obligations                            
13       under this chapter with respect to the license.                                                                   
14            (b)  If the commissioners or the licensee independently determine that the                                   
15       project is uneconomic and should be abandoned, but the other party does not agree,                                
16       the commissioners or the licensee may request that an impartial third party take                                  
17       evidence and hear arguments of the commissioners and the licensee and make a final                                
18       determination of the matter. The commissioners and the licensee shall select the                                  
19       impartial third party by mutual agreement. If the impartial third party determines that                           
20       the project is uneconomic and should be abandoned, the state and the licensee no                                  
21       longer have any obligations under this chapter with respect to the license, except for                            
22       requirements imposed on the licensee under AS 43.90.230.                                                          
23            (c)  If the state makes a payment to the licensee under AS 43.90.440, the                                    
24       license is deemed abandoned and the state and the licensee no longer have any                                     
25       obligations under this chapter with respect to the license except that the licensee must                          
26       comply with the                                                                                                   
27                 (1)  requirements imposed on the licensee under AS 43.90.230                                            
28       regarding state money received by the licensee before the license was deemed                                      
29       abandoned; and                                                                                                    
30                 (2)  requirements of AS 43.90.440.                                                                      
31            (d)  The commissioners shall establish by regulation the procedures governing                                
01       the impartial third-party process authorized under this section.                                                  
02            Sec. 43.90.130. Request for applications for the license. (a) The                                          
03       commissioners shall commence a public process to request applications for a license                               
04       under this chapter within three months of the effective date of this chapter.                                     
05            (b)  The commissioners may use independent contractors to assist in                                          
06       developing the provisions for the application for a license and in evaluating                                     
07       applications received under this chapter.                                                                         
08            (c)  Requests for applications under this chapter are not subject to AS 36.30                                
09       (State Procurement Code).                                                                                         
10            Sec 43.90.140. Application requirements. An application for a license must                                 
11       be consistent with the terms of the request for applications under AS 43.90.130 and                               
12       must                                                                                                              
13                 (1)  be filed by the deadline established by the commissioners in the                                   
14       request for applications;                                                                                         
15                 (2)  provide a detailed description of a proposed natural gas pipeline                                  
16       project for transporting natural gas from the North Slope of this state to market,                                
17       including                                                                                                         
18                      (A)  the route proposed for the natural gas pipeline;                                              
19                      (B)  receipt and delivery points and the size and design capacity                                  
20            of the proposed natural gas pipeline at the proposed receipt and delivery                                    
21            points;                                                                                                      
22                      (C)  an analysis demonstrating the project's economic and                                          
23            technical viability as required in the request for applications;                                             
24                      (D)  an economically and technically viable work plan, timeline,                                   
25            and associated budget for developing the proposed project, including how the                                 
26            applicant will perform field work, environmental studies, design, and                                        
27            engineering, and how the applicant will comply with all applicable state,                                    
28            federal, and international regulatory requirements that affect the proposed                                  
29            project; the work plan must address the following:                                                           
30                           (i)  if the proposed project involves a pipeline into or                                      
31                 through Canada, a description in detail of the applicant's proposal to                                  
01                 obtain necessary rights-of-way and authorizations in Canada;                                            
02                           (ii)  if the proposed project involves marine                                                 
03                 transportation of liquefied natural gas, a description of the pipeline                                  
04                 route, system, and capacity proposed to bring North Slope gas to                                        
05                 tidewater, including a description of proposed transportation services to                               
06                 be provided by third parties and an estimate of rates and charges for all                               
07                 services; a detailed description of all access and tariff terms the                                     
08                 applicant would propose for liquefaction services or, if third parties                                  
09                 would perform liquefaction services, identify the third parties and the                                 
10                 terms they would offer; and a complete description of the proposed                                      
11                 ownership and control of liquefied natural gas tankers, the management                                  
12                 of shipping services, and the entity or entities that would be required to                              
13                 obtain necessary export permits or a certificate of public convenience                                  
14                 and necessity from the Federal Energy Regulatory Commission for the                                     
15                 transportation of liquefied natural gas in interstate commerce if United                                
16                 States markets are proposed;                                                                            
17                 (3)  commit that if the proposed project is within the jurisdiction of the                              
18       Federal Energy Regulatory Commission, the applicant will                                                          
19                      (A)  conclude, by a date certain that is not later than 36 months                                  
20            after the date the license is issued, a binding open season that is consistent with                          
21            the requirements of Subpart B of 18 C.F.R. Part 157 (Open Seasons for Alaska                                 
22            Natural Gas Transportation Projects) and 18 C.F.R. 157.30 - 157.39;                                          
23                      (B)  apply for Federal Energy Regulatory Commission approval                                       
24            to use the pre-filing procedures set out in 18 C.F.R. 157.21 by a date certain,                              
25            and use those procedures before filing an application for a certificate of public                            
26            convenience and necessity; and                                                                               
27                      (C)  apply for a Federal Energy Regulatory Commission                                              
28            certificate of public convenience and necessity to authorize the construction                                
29            and operation of the proposed project described in this section by a date                                    
30            certain;                                                                                                     
31                 (4)  commit that if the proposed project is within the jurisdiction of the                              
01       Regulatory Commission of Alaska, the applicant will                                                               
02                      (A)  conclude, by a date certain that is not later than 36 months                                  
03            after the date the license is issued, a binding open season that is consistent with                          
04            the requirements of AS 42.06; and                                                                            
05                      (B)  apply for a certificate of public convenience and necessity                                   
06            to authorize the construction and operation of the proposed project by a date                                
07            certain;                                                                                                     
08                 (5)  commit that after the first binding open season, the applicant will                                
09       assess the market demand for additional pipeline capacity at least every two years                                
10       through public non-binding solicitations or similar means;                                                        
11                 (6)  commit to expand the proposed project in reasonable engineering                                    
12       increments and on commercially reasonable terms that encourage exploration and                                    
13       development of gas resources in this state; in this paragraph                                                     
14                      (A)  "commercially reasonable terms" means that, subject to the                                    
15            provisions of (7)(A) of this section, revenue from expansion contracts covers                                
16            the cost of the expansion and there is no impairment of the proposed project's                               
17            ability to recover the costs of existing facilities;                                                         
18                      (B)  "reasonable engineering increments" means the amount of                                       
19            additional capacity that could be added by a pipe addition or compression                                    
20            using a pipe size or compressor size, as applicable, that is substantially similar                           
21            to the original pipe size and compressor size;                                                               
22                 (7)  commit that the applicant                                                                          
23                      (A)  will propose and support recovery of mainline capacity                                        
24            expansion costs from all mainline system users through rolled-in rates if the                                
25            recovery of all expansion costs through rolled-in rates would increase existing                              
26            shippers' rates by no more than 15 percent of the initial maximum recourse                                   
27            rates from the North Slope to the proposed project's downstream terminus; if                                 
28            rolled-in expansion costs would increase existing shippers' rates from the                                   
29            North Slope to the project's downstream terminus by more than 15 percent, the                                
30            applicant will propose and support the partial roll-in of mainline expansion                                 
31            costs from all mainline system users to the extent that existing shippers' rates                             
01            would not be increased by more than 15 percent of the initial maximum                                        
02            recourse rates from the North Slope to the proposed project's downstream                                     
03            terminus; in this subparagraph, "initial maximum recourse rates" means                                       
04            highest cost-based rates for any specific transportation service set by the                                  
05            Federal Energy Regulatory Commission, the Regulatory Commission of                                           
06            Alaska, or the National Energy Board of Canada, as appropriate, at the time of                               
07            the initial regulatory approval of the proposed project;                                                     
08                      (B)  may propose any combination of incremental or rolled-in                                       
09            rates for recovery of costs of mainline capacity expansion that exceeds the 15                               
10            percent level described in (A) of this paragraph;                                                            
11                      (C)  agrees not to enter into negotiated rate agreements that                                      
12            would preclude the applicant from collecting from any shipper, including                                     
13            shippers with negotiated rate agreements, the roll-in rates that are required to                             
14            be proposed and supported by the applicant under (A) of this paragraph; in this                              
15            subparagraph, "negotiated rate agreements" means transportation service                                      
16            agreements that are subject to rates that vary from the otherwise applicable                                 
17            cost-based rates, or recourse rates, set out in a gas pipeline's tariff approved by                          
18            the Federal Energy Regulatory Commission, the Regulatory Commission of                                       
19            Alaska, or the National Energy Board of Canada, as appropriate;                                              
20                 (8)  commit to seek certificate authority from the Federal Energy                                       
21       Regulatory Commission if the proposed project is engaged in interstate commerce, or                               
22       from the Regulatory Commission of Alaska if the project is not engaged in interstate                              
23       commerce, for any North Slope gas treatment plant that will be owned entirely or in                               
24       part by the applicant and, for rate-making purposes, commit to value previously used                              
25       assets that are part of the gas treatment plant at net book value;                                                
26                 (9)  propose a percentage, to be specified in the license, that will define                             
27       the level of the state's matching contribution under AS 43.90.110(1)(B);                                          
28                 (10)  commit that the applicant will propose and support rates for the                                  
29       proposed project and for any North Slope gas treatment plant that the applicant may                               
30       own, in whole or in part, that are based on a capital structure for rate-making that                              
31       consists of no less than 70 percent debt;                                                                         
01                 (11)  describe the means by which the applicant plans to manage                                         
02       overruns in costs of the proposed project, if any, and the measures that the applicant                            
03       proposes to mitigate the impacts of any overruns;                                                                 
04                 (12)  commit to provide for a minimum of five delivery points of                                        
05       natural gas in this state;                                                                                        
06                 (13)  commit to offer firm transportation service to delivery points in                                 
07       this state as part of the tariff regardless of whether any shippers bid successfully in a                         
08       binding open season for firm transportation service to delivery points in this state, and                         
09       commit to offer distance sensitive rates to delivery points in this state consistent with                         
10       18 C.F.R. 157.34(c)(8);                                                                                           
11                 (14)  commit to establish a local headquarters in this state for the                                    
12       proposed project;                                                                                                 
13                 (15)  commit to hire qualified residents from throughout this state for                                 
14       management, engineering, construction, operations, maintenance, and other positions                               
15       on the proposed project and contract with businesses located in this state to the extent                          
16       permitted by law; and                                                                                             
17                 (16)  otherwise demonstrate that the applicant is ready and able to                                     
18       perform the activities specified in the application, including the detailed work plan,                            
19       timeline, and associated budget.                                                                                  
20            Sec. 43.90.150. Initial application review; additional information requests;                               
21       complete applications. (a) The commissioners shall review each application                                      
22       submitted under AS 43.90.130 to determine whether it is consistent with the terms of                              
23       the request for applications and meets the requirements of AS 43.90.140. The                                      
24       commissioners shall reject any application that does not meet those terms and                                     
25       requirements.                                                                                                     
26            (b)  To evaluate an application not rejected under (a) of this section, the                                  
27       commissioners may request from an applicant additional information.                                               
28            (c)  If, within the time specified by the commissioners, an applicant fails to                               
29       provide the additional information requested under (b) of this section, or submits                                
30       additional information that is not responsive, the application will be rejected.                                  
31            (d)  For an application not rejected under (a) or (c) of this section, the                                   
01       commissioners shall make a determination that the application, including any                                      
02       requested additional information, is complete.                                                                    
03            Sec. 43.90.160. Proprietary information and trade secrets. At the request of                               
04       the applicant, information submitted under this chapter that the applicant identifies and                         
05       demonstrates is proprietary or is a trade secret is confidential and not subject to public                        
06       disclosure under AS 40.25.                                                                                        
07            Sec. 43.90.170. Application evaluation criteria. The commissioners shall                                   
08       evaluate all applications determined complete under AS 43.90.150 based upon                                       
09                 (1)  the timing of the applicant's proposed actions specified in the                                    
10       application;                                                                                                      
11                 (2)  how the applicant plans to manage overruns in costs of the                                         
12       proposed project;                                                                                                 
13                 (3)  the extent to which the applicant will provide low transportation                                  
14       rates, including the applicant's ability to prevent or reduce overruns in costs of the                            
15       proposed project and will offer tariff provisions that minimize the rate impact of                                
16       overruns in costs that may occur;                                                                                 
17                 (4)  the initial design capacity of the proposed project and the extent to                              
18       which the design can accommodate low cost expansion;                                                              
19                 (5)  the percentage of the state's matching contribution proposed under                                 
20       AS 43.90.140(9);                                                                                                  
21                 (6)  the reasonableness, specificity, and feasibility of the work plan,                                 
22       timeline, and budget required by AS 43.90.140; and                                                                
23                 (7)  the applicant's financial resources; ability to comply with the                                    
24       proposed performance schedule; record of performance on other projects not licensed                               
25       under this chapter; record of integrity and business ethics; organization; experience;                            
26       accounting and operational controls and technical skills, or ability to obtain them; and                          
27       possession of necessary equipment or ability to obtain it.                                                        
28            Sec. 43.90.180. Notice, review, and comment. (a) The commissioners shall                                   
29       publish notice and provide a 60-day period for public review and comment on all                                   
30       applications determined complete under AS 43.90.150.                                                              
31            (b)  Applications received under this chapter are not public records and are not                             
01       subject to public disclosure under AS 40.25 until the commissioners publish notice                                
02       under this section. However, information that the commissioners have determined is                                
03       confidential under AS 43.90.160 may not be made public even after the notice is                                   
04       published under (a) of this section. If information is held confidential under this                               
05       subsection, the commissioners shall make available to the public a summary of the                                 
06       information.                                                                                                      
07            Sec. 43.90.190. Notice to the legislature of intent to issue license; denial of                            
08       license. (a) If, after evaluation of complete applications under AS 43.90.170 and                               
09       consideration of public comments received under AS 43.90.180, the commissioners                                   
10       determine that an application would sufficiently maximize the benefits to the people of                           
11       this state and merits issuance of a license under this chapter, the commissioners shall                           
12                 (1)  issue a determination, with written findings addressing the basis for                              
13       the determination; the determination becomes a final agency action in accordance with                             
14       AS 43.90.200;                                                                                                     
15                 (2)  publish notice of intent to issue a license under this chapter with                                
16       written findings addressing the basis for the determination; and                                                  
17                 (3)  forward the notice under (2) of this subsection, along with the                                    
18       findings, supporting documentation, and the determination under (1) of this                                       
19       subsection, to the legislature for action as provided in AS 43.90.200.                                            
20            (b)  If, after evaluation of complete applications under AS 43.90.170, the                                   
21       commissioners determine that no application sufficiently maximizes the benefits to the                            
22       people of this state and merits issuance of a license under this chapter, the                                     
23       commissioners shall issue a written finding that addresses the basis for that                                     
24       determination.                                                                                                    
25            (c)  The commissioners' determination under this (b) of this section is a final                              
26       agency action for purposes of appeal to the court under the Alaska Rules of Appellate                             
27       Procedure.                                                                                                        
28            Sec. 43.90.200. Legislative action; issuance of license. (a) A determination                               
29       and notice of intent to issue a license under AS 43.90.190 is a final agency action,                              
30       effective under this chapter on the 30th legislative day after the date of referral to the                        
31       legislature, unless the notice of intent is disapproved by joint resolution of the                                
01       legislature. After the determination and notice of intent are effective under this                                
02       subsection, the commissioners may issue the license under this chapter.                                           
03            (b)  If the legislature disapproves the notice of intent to issue a license before                           
04       the 30th legislative day after referral, the commissioners may commence another                                   
05       public process under AS 43.90.130 to request applications.                                                        
06            (c)  Upon becoming effective under (a) of this section, the commissioners'                                   
07       notice of intent is appealable to the court under the Alaska Rules of Appellate                                   
08       Procedure.                                                                                                        
09            Sec. 43.90.210. Certification by regulatory authority and project sanction.                                
10       (a) A licensee that is awarded a certificate of public convenience and necessity for the                          
11       project shall accept a certificate issued by the Federal Energy Regulatory Commission                             
12       if the project is engaged in interstate commerce, or the Regulatory Commission of                                 
13       Alaska if the project is not engaged in interstate commerce.                                                      
14            (b)  If the licensee has credit support sufficient to finance construction of the                            
15       project through ownership of rights to produce and market gas resources, firm                                     
16       transportation commitments, or government financing, the licensee shall sanction the                              
17       project within one year after the effective date of the certificate of public convenience                         
18       and necessity issued by the Federal Energy Regulatory Commission, or the Regulatory                               
19       Commission of Alaska, as applicable.                                                                              
20            (c)  If the licensee does not have credit support sufficient to finance                                      
21       construction of the project through ownership of rights to produce and market gas                                 
22       resources, firm transportation commitments, or government financing, the licensee                                 
23       shall sanction the project within five years after the effective date of the certificate of                       
24       public convenience and necessity issued by the Federal Energy Regulatory                                          
25       Commission, or the Regulatory Commission of Alaska, as applicable.                                                
26            (d)  If the licensee fails to sanction the project timely as required under this                             
27       section, the licensee shall, upon request by the state,                                                           
28                 (1)  seek approval from the Federal Energy Regulatory Commission or                                     
29       Regulatory Commission of Alaska, as appropriate, to abandon and transfer the                                      
30       certificate to the state or the state's designee; and                                                             
31                 (2)  assign to the state's designee all project data, engineering designs,                              
01       contracts, and permits owned or acquired by the licensee as of the date of the                                    
02       abandonment or transfer.                                                                                          
03            (e)  The transfer of any certificate or material as a result of failure to comply                            
04       with (a) or (b) of this section is at no cost to the state or the state's designee. A transfer                    
05       under (c) of this section is at the licensee's net cost.                                                          
06            Sec. 43.90.220. Amendment of or modification to the project plan. Subject                                  
07       to the approval of the commissioners, a licensee may amend or modify its project plan                             
08       if the amendments or modifications are necessary as a result of changed circumstances                             
09       outside the licensee's control and not reasonably foreseeable before the license was                              
10       issued. An amendment or modification approved under this section must be consistent                               
11       with the requirements of AS 43.90.140 and may not diminish the value to the state of                              
12       the project.                                                                                                      
13            Sec. 43.90.230. Records, reports, conditions, and audit requirements. (a) A                                
14       licensee shall maintain complete and accurate records of all expenditures and                                     
15       commitments of state money received under this chapter, including receipts and                                    
16       records showing the payment or cost of purchased items and services, the names and                                
17       addresses of the sellers and service providers, and dates of service or delivery.                                 
18            (b)  Upon reasonable notice, the commissioners may audit the records of a                                    
19       licensee relating to the licensee's expenditures and commitments of money received                                
20       from the state under this chapter, and may                                                                        
21                 (1)  examine all books, records, and files of the licensee;                                             
22                 (2)  conduct hearings or other investigative inquiries, and complete the                                
23       attendance of witnesses and documents; and                                                                        
24                 (3)  require the licensee to furnish information in paper copy or                                       
25       electronic format.                                                                                                
26            (c)  After a license has been issued, and until commencement of commercial                                   
27       operations of a natural gas pipeline, the licensee shall allow the commissioners to have                          
28       a representative present at all meetings of the licensee's governing body and equity                              
29       holders that relate to the project, to receive all relevant notices and information sent to                       
30       the governing body and equity holders, to receive the same access to information                                  
31       about the licensee as the governing body members and equity owners receive, and to                                
01       receive additional relevant reports or information from the licensee that the                                     
02       commissioners reasonably request.                                                                                 
03            (d)  A licensee shall maintain the records and reports required under this                                   
04       section for seven years from the date the licensee received state money under this                                
05       chapter.                                                                                                          
06            Sec. 43.90.240. License violations; damages. (a) A licensee is in violation of                             
07       the license if the commissioners determine that the licensee                                                      
08                 (1)  has committed state money received under this chapter for                                          
09       purposes other than those set out in AS 43.90.110(1);                                                             
10                 (2)  has substantially departed from the specifications set out in the                                  
11       application without state approval of a project plan amendment or modification under                              
12       AS 43.90.220;                                                                                                     
13                 (3)  has violated any provision of this chapter or any other provision of                               
14       state or federal law material to the license; or                                                                  
15                 (4)  has otherwise violated a material term of the license.                                             
16            (b)  The commissioners shall provide written notice to the licensee identifying                              
17       a license violation. The commissioners and the licensee have 90 days after the date the                           
18       notice is issued to informally resolve the violation.                                                             
19            (c)  The commissioners may suspend disbursement of state matching                                            
20       contributions to the licensee beginning on the date that the notice of violation issued                           
21       under (b) of this section is sent to the licensee. The commissioners may resume                                   
22       disbursement on the date that the commissioners determine that the violation is cured.                            
23            (d)  If the commissioners and the licensee are unable to resolve the violation                               
24       within the time specified in (b) of this section, the commissioners shall, after providing                        
25       the licensee with notice and opportunity to be heard, make a written determination                                
26       regarding the violation. The written determination made under this subsection is the                              
27       final agency action for purposes of appeal to the court under the Alaska Rules of                                 
28       Appellate Procedure.                                                                                              
29            (e)  If the determination issued under (d) of the section finds an unresolved                                
30       violation, the commissioners may impose one or more of the following remedies:                                    
31                 (1)  discontinuation of state matching contributions under this chapter;                                
01                 (2)  recoupment of state money that the licensee has received under this                                
02       chapter to date, with interest, regardless of whether the licensee has expended or                                
03       committed that money;                                                                                             
04                 (3)  license revocation;                                                                                
05                 (4)  any other remedies provided by law or in equity.                                                   
06      Article 3. Resource Inducement; Alaska Gasline Inducement Act Coordinator.                                     
07            Sec. 43.90.300. Qualification for resource inducement. Notwithstanding any                                 
08       contrary provision of law, a person that demonstrates to the commissioners'                                       
09       satisfaction that the person has committed to acquire firm transportation capacity in                             
10       the first binding open season of the project is qualified to receive the resource                                 
11       inducement set out in AS 43.90.310 and 43.90.320 for the gas shipped in firm                                      
12       transportation capacity acquired in the first binding open season of the project.                                 
13            Sec. 43.90.310. Royalty inducement. (a) Before the beginning of the first                                  
14       binding open season to be conducted by the licensee, the commissioner of natural                                  
15       resources shall adopt regulations to establish a method to determine the monthly value                            
16       of the state's royalty share of gas production and establish terms under which the state                          
17       will exercise its right to switch between taking its royalty in value or in kind for gas                          
18       committed for firm transportation in the first binding open season of the project.                                
19            (b)  The regulations must                                                                                    
20                 (1)  minimize retroactive adjustments to the monthly value of the state's                               
21       royalty share of gas production;                                                                                  
22                 (2)  contain provisions to establish a fair market value for each                                       
23       component of the state's royalty gas that are based on pricing data from reliable and                             
24       widely available industry trade publications and use appropriate adjustments to reflect                           
25                      (A)  deductions for actual and reasonable transportation costs                                     
26            for the state's royalty gas, including a fair share of the costs associated with                             
27            unused capacity commitments on pipelines from the North Slope of this state                                  
28            to the first destination market with reasonable market liquidity;                                            
29                      (B)  location differentials between the destination markets                                        
30            where North Slope gas could be sold;                                                                         
31                      (C)  reasonable and actual costs for gas processing; and                                           
01                      (D)  deductions permitted under the 1980 Royalty Settlement                                        
02            Agreement for Prudhoe Bay gas;                                                                               
03                 (3)  establish terms under which the state will exercise its authority to                               
04       switch between taking its royalty gas in value and in kind to ensure that the state's                             
05       actions do not unreasonably                                                                                       
06                      (A)  cause the lessee to bear disproportionate transportation                                      
07            costs with respect to the state's royalty gas;                                                               
08                      (B)  interfere with the lessee's long-term marketing of its                                        
09            production; and                                                                                              
10                 (4)  require that in order to exercise an election under this section, a                                
11       person shall agree, on an application form provided by the Department of Revenue,                                 
12       that the person, and the person's affiliates, successors, assigns, and agents, will not                           
13       protest or appeal a filing by the licensee to roll in expansion costs of the mainline up to                       
14       a level that is required in AS 43.90.140(7); the agreement not to protest may not                                 
15       preclude the person, or the person's affiliates, from protesting a filing to roll in                              
16       mainline expansion costs that licensee is not required to propose and support under                               
17       AS 43.90.140(7).                                                                                                  
18            (c)  The commissioner of natural resources shall provide for review of the                                   
19       regulations adopted under this section at least every two years after the                                         
20       commencement of commercial operations of the project to determine whether the                                     
21       regulations continue to meet the requirements of this section under current conditions;                           
22       the commissioner shall amend the regulations as necessary.                                                        
23            (d)  If new regulations are adopted as a result of the review required under (c)                             
24       of this section, a state oil and gas lessee qualified under AS 43.90.300 may change its                           
25       election to calculate its gas royalty obligation, as provided by regulation, for natural                          
26       gas transported on a firm contract negotiated during the project's first binding open                             
27       season or the methodology set out in the lessee's existing leases or unit agreements.                             
28       The election remains in effect until the regulations are amended.                                                 
29            (e)  No provision of this chapter precludes the election set out in (d) of this                              
30       section, nor may the commissioner of natural resources assert any provision of any                                
31       existing lease or unit agreement as precluding that election.                                                     
01            Sec. 43.90.320. Gas production tax exemption. (a) If a person qualified for                                
02       resource inducement under AS 43.90.300 agrees under (c) of this section, the person is                            
03       entitled to an annual exemption from the state's gas production tax in an amount equal                            
04       to the difference between the amount of the person's gas production tax obligation                                
05       calculated under the gas production tax in effect during that tax year and the amount of                          
06       the person's gas production tax obligation calculated under the gas production tax in                             
07       effect at the conclusion of the first binding open season held under this chapter. If the                         
08       difference is less than zero, the gas production tax exemption is zero.                                           
09            (b)  The exemption under this section may be applied within 10 years                                         
10       immediately following commencement of commercial operations of the project only                                   
11       to production taxes that are levied on North Slope gas shipped through firm                                       
12       transportation capacity the person acquired during the first binding open season.                                 
13            (c)  To claim the exemption under this section, a person shall agree, on an                                  
14       application form provided by the Department of Revenue, that the person, and the                                  
15       person's affiliates, successors, assigns, and agents, will not protest or appeal a filing by                      
16       the licensee to roll in mainline expansion costs up to the level that the licensee is                             
17       required to propose and support under AS 43.90.140(7); the agreement under this                                   
18       subsection may not preclude the person, or the person' affiliates, successors, assigns,                           
19       and agents, from protesting a filing to roll in mainline expansion costs that the licensee                        
20       is not required to propose and support under AS 43.90.140(7).                                                     
21            Sec. 43.90.330. Alaska Gasline Inducement Act coordinator. (a) The                                       
22       governor shall appoint, subject to legislative confirmation, an Alaska Gasline                                    
23       Inducement Act coordinator. The person appointed as the Alaska Gasline Inducement                                 
24       Act coordinator shall serve in that position until one year after commencement of                                 
25       commercial operations of the project.                                                                             
26            (b)  The Alaska Gasline Inducement Act coordinator shall                                                     
27                 (1)  coordinate expeditious performance of all activities by state                                      
28       agencies with respect to the project;                                                                             
29                 (2)  ensure compliance by state agencies with the provisions of this                                    
30       chapter; and                                                                                                      
31                 (3)  coordinate with the federal coordinator for natural gas                                            
01       transportation projects in this state.                                                                            
02            Sec. 43.90.340. Expedited review and action by state agencies. (a) All                                     
03       reviews conducted and actions taken by a state agency relating to a project shall be                              
04       expedited in a manner consistent with the completion of the necessary approvals in                                
05       accordance with this chapter.                                                                                     
06            (b)  Notwithstanding any contrary provision of law, a state agency may not                                   
07       include in any project certificate, right-of-way, permit, or other authorization issued to                        
08       the licensee any term or condition that is not required by law if the Alaska Gasline                              
09       Inducement Act coordinator determines that the term or condition would prevent or                                 
10       impair in any significant respect the expeditious construction and operation or                                   
11       expansion of the project.                                                                                         
12            (c)  Unless required by law, a state agency may not add to, amend, or abrogate                               
13       any certificate, right-of-way, permit, or other authorization issued to a licensee if the                         
14       Alaska Gasline Inducement Act coordinator determines that the action would prevent                                
15       or impair in any significant respect the expeditious construction, operation, or                                  
16       expansion of the project.                                                                                         
17                     Article 4. Miscellaneous Provisions.                                                              
18            Sec. 43.90.400. Alaska Gasline Inducement Act matching contribution                                        
19       fund; disbursements; audits. (a) There is established in the general fund an Alaska                             
20       Gasline Inducement Act matching contribution fund. The fund consists of money                                     
21       appropriated to it by the legislature for disbursement to pay the state's matching                                
22       contributions under AS 43.90.110. Appropriations to the fund do not lapse under                                   
23       AS 37.25.010, but remain in the fund for future disbursements.                                                    
24            (b)  The Department of Revenue shall manage the fund, and may invest money                                   
25       in the fund so as to yield competitive market rates as provided in AS 37.10.071.                                  
26       Interest received on money in the fund shall be accounted for separately and may be                               
27       appropriated to the fund annually.                                                                                
28            (c)  The commissioners shall adopt regulations that provide for application to                               
29       receive matching contributions for qualified expenditures as provided under                                       
30       AS 43.90.110, and that provide for periodic audits of the use of money disbursed as                               
31       matching contributions under this chapter.                                                                        
01            (d)  Within 10 days after the convening of each regular session of the                                       
02       legislature, the commissioners shall submit to the legislature a report that lists all the                        
03       disbursements from the fund in the preceding year with a written justification of each                            
04       disbursement and the projected amount of money that will be needed for matching                                   
05       contributions in each of the next three fiscal years.                                                             
06            Sec. 43.90.410. Regulations. The commissioners may jointly adopt                                           
07       regulations for the purpose of implementing the provisions of this chapter. The                                   
08       commissioner of revenue may change regulations adopted under existing authority in                                
09       this title as necessary to implement the provisions of this chapter. The commissioner                             
10       of natural resources may change regulations adopted under existing authority in AS 38                             
11       as necessary to implement the provisions of this chapter.                                                         
12            Sec. 43.90.420. Statute of limitations. A person may not bring a judicial                                  
13       action challenging the constitutionality of this chapter or a license unless the action is                        
14       commenced in a court of proper jurisdiction in this state within 90 days from the date                            
15       that a license was issued.                                                                                        
16            Sec. 43.90.430. Interest. When a payment due to the state under this chapter                               
17       becomes delinquent, the payment bears interest in a calendar quarter at the annual rate                           
18       of five percentage points above the annual rate charged member banks for advances by                              
19       the 12th Federal Reserve District as of the first day of that calendar quarter, or at the                         
20       annual rate of 11 percent, whichever is greater, compounded quarterly as of the last                              
21       day of that quarter.                                                                                              
22            Sec. 43.90.440. Licensed project assurances. Except as otherwise provided in                               
23       this chapter, the state grants a licensee assurances that the licensee has exclusive                              
24       enjoyment of the inducement provided under this chapter. If the state extends to                                  
25       another person preferential royalty, tax, or monetary treatment for the purpose of                                
26       facilitating the construction of a competing natural gas pipeline project in this state,                          
27       and if the licensee is in compliance with the requirements of the license and with the                            
28       requirements of state and federal statutes and regulations relevant to the project, the                           
29       licensee is entitled to payment from the state of an amount equal to three times the                              
30       total of the reasonable costs that the licensee has incurred in developing the licensee's                         
31       project as of the date that the state first extended preferential treatment to another                            
01       person. Upon payment by the state of the amount owed under this section, the licensee                             
02       shall, at no cost to the state, assign to the state all project data, engineering designs,                        
03       contracts, and permits related to the project that are owned or were acquired by the                              
04       licensee.                                                                                                         
05            Sec. 43.90.450. Assignments. (a) A licensee may transfer all or part of the                                
06       license, including the rights and obligations arising under the license, if                                       
07                 (1)  the transfer is approved in writing in advance by the                                              
08       commissioners; and                                                                                                
09                 (2)  the transfer does not increase or diminish the obligations created by                              
10       the license or diminish the value of the license to the state.                                                    
11            (b)  Notwithstanding the commissioners' approval of a transfer of all or part of                             
12       a license under (a) of this section, the transferor of the license remains subject to the                         
13       requirements of AS 43.90.230 regarding all state money received by the licensee                                   
14       before the effective date of the transfer.                                                                        
15            (c)  A person may transfer that person's rights to the royalty inducement under                              
16       AS 43.90.310 and the gas production tax exemption under AS 43.90.320 only in                                      
17       connection with a sale or merger that results in transfer of all the person's assets in the                       
18       North Slope of this state, include the firm transportation capacity contracts in the                              
19       project.                                                                                                          
20            Sec. 43.90.460. Conflicting laws. Nothing in this chapter shall be construed to                            
21       repeal or abrogate the administrative, regulatory, or statutory procedures and functions                          
22       of state and federal law governing the development and oversight of a project.                                    
23                       Article 5. General Provisions.                                                                  
24            Sec. 43.90.900. Definitions. In this chapter, unless the context otherwise                                 
25       requires,                                                                                                         
26                 (1)  "affiliate" means another person that controls, is controlled by, or is                            
27       under common control with, a person; "affiliate" includes a division that operates as a                           
28       functional unit;                                                                                                  
29                 (2)  "Alaska Gasline Inducement Act coordinator" means the person                                       
30       appointed under AS 43.90.330;                                                                                     
31                 (3)  "commencement of commercial operations" means the first flow of                                    
01       gas in the project that generates revenue to the owners;                                                          
02                 (4)  "commissioners" means the commissioner of revenue and the                                          
03       commissioner of natural resources, acting jointly;                                                                
04                 (5)  "control" and "controlling" means the possession of ownership                                      
05       interest or authority sufficient to, directly or indirectly, and whether acting alone or in                       
06       conjunction with others, direct or cause the direction of the management or policies of                           
07       a company, and is rebuttably presumed if the voting interest held is 10 percent or                                
08       more;                                                                                                             
09                 (6)  "equity holder" means the                                                                          
10                      (A)  stock holders of a corporation;                                                               
11                      (B)  members of a limited liability company;                                                       
12                      (C)  partners of a partnership;                                                                    
13                      (D)  joint venturers of a joint venture;                                                           
14                      (E)  members of a governmental authority and similar persons;                                      
15            or                                                                                                           
16                      (F)  holders of any other entity or person;                                                        
17                 (7)  "gas processing" means post-production treatment of gas to extract                                 
18       natural gas liquids;                                                                                              
19                 (8)  "governing body" means a corporation's board of directors, a                                       
20       limited liability company's managing members, a partnership's general partners, a joint                           
21       venturer's joint venturers, a governmental authority's board or council members, and                              
22       similar entities;                                                                                                 
23                 (9)  "lease" means an oil and gas, or gas, lease issued by this state;                                  
24                 (10)  "lessee" means a person that holds a working interest in an oil and                               
25       gas, or gas, lease issued by this state;                                                                          
26                 (11)  "license" means a license issued under this chapter;                                              
27                 (12)  "licensee" means the holder of a license issued under this chapter                                
28       and all affiliates, successors, assigns, and agents of the holder;                                                
29                 (13)  "project" means a natural gas pipeline project authorized under a                                 
30       license issued under this chapter;                                                                                
31                 (14)  "recourse rates" means cost-based rates with a minimum and                                        
01       maximum range that are approved by the Federal Energy Regulatory Commission, the                                  
02       Regulatory Commission of Alaska, or the National Energy Board of Canada, as                                       
03       appropriate, and set out in the pipeline's tariff; "recourse rates" includes only those                           
04       rates that the pipeline must make available to all shippers;                                                      
05                 (15)  "sanction" means procurement commitments to go forward with                                       
06       the project as evidenced by entering into procurement commitments of at least                                     
07       $1,000,000,000 with third parties;                                                                                
08                 (16)  "under common control with" has the meaning given "control" in                                    
09       this section;                                                                                                     
10                 (17)  "unit agreement" means an agreement executed by the working                                       
11       interest owners and royalty owners creating the unit.                                                             
12            Sec. 43.90.990. Short title. This chapter may be cited as the Alaska Gasline                               
13       Inducement Act.                                                                                                   
14    * Sec. 2. AS 36.30.850(b) is amended by adding a new paragraph to read:                                            
15                 (45)  contracts for an impartial third party to determine abandonment of                                
16       a project under AS 43.90.120, and contracts for the development of application                                    
17       provisions for licensure under AS 43.90 and for the evaluation of those applications.                             
18    * Sec. 3. AS 39.25.110 is amended by adding a new paragraph to read:                                               
19                 (41)  the Alaska Gasline Inducement Act coordinator appointed under                                     
20       AS 43.90.330.                                                                                                     
21    * Sec. 4. AS 40.25.120(a) is amended by adding a new paragraph to read                                             
22                 (12)  records that are                                                                                  
23                      (A)  proprietary or a trade secret in accordance with                                              
24            AS 43.90.160;                                                                                                
25                      (B)  applications that are received under AS 43.90 until                                           
26            AS 43.90.180.                                                                                                
27    * Sec. 5. This Act takes effect immediately under AS 01.10.070(c).