CSSB 104(RES): "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 CS FOR SENATE BILL NO. 104(RES) 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 the 12 state; 13 (2) promotes exploration and development of oil and gas resources on 14 the North Slope in the 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. (a) 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 (b) Nothing in this section precludes a person's pursuing a gas pipeline 11 independently from this chapter. 12 Sec. 43.90.110. Natural gas pipeline project construction inducement. 13 Subject to the limitations of this chapter, a license issued under this chapter entitles the 14 licensee or its designated affiliate to receive 15 (1) state matching contributions in an amount not to exceed 16 $500,000,000, paid in total to the licensee over a five-year period; the payment period 17 may be extended by the commissioners under an amendment or modification of the 18 project plan under AS 43.90.220; the payment period commences on the date of the 19 issuance of the license; payments under this paragraph shall be made according to the 20 following: 21 (A) on or before the close of the first binding open season, the 22 state shall match the licensee's qualified expenditures at the level specified in 23 the license; however, the state's matching contribution may not be more than 24 50 percent of the qualified expenditures incurred before the close of the first 25 binding open season; 26 (B) after the close of the first binding open season, the state 27 shall match the licensee's qualified expenditures at a level specified in the 28 license; however, the state's matching contribution may not be greater than 80 29 percent of the qualified expenditures incurred after the close of the first 30 binding open season; 31 (C) qualified expenditures are costs that are incurred after the
01 license is issued under this chapter by the licensee or the licensee's designated 02 affiliate, and are directly and reasonably related to obtaining a certificate of 03 public convenience and necessity from the Federal Energy Regulatory 04 Commission or the Regulatory Commission of Alaska, as appropriate, for 05 development of the project; in this subparagraph, "qualified expenditures" does 06 not include overhead costs, litigation costs, assets, or work product predating 07 the issuance of the license, or civil or criminal penalties or fines; and 08 (2) the benefit of an Alaska Gasline Inducement Act coordinator who 09 has the authority prescribed in AS 43.90.400. 10 Sec. 43.90.120. Abandonment of project. (a) If the commissioners and the 11 licensee agree that the project is uneconomic and should be abandoned, inducement 12 provided for in AS 43.90.110 terminates, and, except for requirements imposed on the 13 licensee under (d) of this section and AS 43.90.230, the state and the licensee no 14 longer have any obligations under this chapter with respect to the license. 15 (b) If the commissioners or the licensee independently determines that the 16 project is uneconomic and should be abandoned, but the other party does not agree, 17 the disagreement shall be settled by arbitration administered by the American 18 Arbitration Association under its Commercial Arbitration Rules, and judgment on the 19 award rendered by the arbitrators may be entered in any court having jurisdiction 20 thereof. In the event of arbitration, each party shall select an arbitrator, and the two 21 arbitrators shall appoint a third arbitrator from the American Arbitration Association's 22 National Roster who shall serve as the chair of the three-member arbitration panel. If 23 the arbitration panel determines that the project is 24 (1) uneconomic and should be abandoned, the state and the licensee no 25 longer have any obligations under this chapter with respect to the license, except for 26 requirements imposed on the licensee under (d) of this section and AS 43.90.230; 27 (2) not uneconomic and should not be abandoned, the project may not 28 be abandoned, and the obligations of the licensee and the state continue as provided 29 under this chapter and the license. 30 (c) If the state makes a payment to the licensee under AS 43.90.540, the 31 license is considered abandoned, and the state and the licensee no longer have any
01 obligations under this chapter with respect to the license, except that the licensee must 02 comply with the 03 (1) requirements imposed on the licensee under AS 43.90.230 04 regarding state money received by the licensee before the license was considered 05 abandoned; and 06 (2) requirements of AS 43.90.540. 07 (d) If the licensee and the state agree or if a licensee prevails in an arbitration 08 in establishing that the project is uneconomic and should be abandoned, the licensee 09 shall assign to the state or the state's designee all engineering designs, contracts, 10 permits, and other data related to the project that are acquired by the licensee during 11 the term of the license upon reimbursement by the state to the licensee of the licensee's 12 net costs. 13 Sec. 43.90.130. Request for applications for the license. (a) The 14 commissioners shall commence a public process to request applications for a license 15 under this chapter within three months after the effective date of this chapter. 16 (b) The commissioners may use independent contractors to assist in 17 developing the provisions for the application for a license and in evaluating 18 applications received under this chapter. 19 (c) The provisions of AS 36.30 do not apply to requests for applications under 20 this chapter, but the commissioners shall adopt regulations that provide protest and 21 appeal procedures relating to the solicitation of applications and award of a license 22 that are substantially similar to the procedures in AS 36.30.550 - 36.30.699. 23 Sec. 43.90.140. Application requirements. An application for a license must 24 be consistent with the terms of the request for applications under AS 43.90.130 and 25 must 26 (1) be filed by the deadline established by the commissioners in the 27 request for applications; 28 (2) provide a detailed description of a proposed natural gas pipeline 29 project for transporting natural gas from the North Slope of this state to market, 30 including 31 (A) the route proposed for the natural gas pipeline;
01 (B) receipt and delivery points and the size and design capacity 02 of the proposed natural gas pipeline at the proposed receipt and delivery points, 03 except that this information is not required for in-state delivery points unless 04 the application proposes specific in-state delivery points; 05 (C) an analysis demonstrating the project's economic and 06 technical viability as required in the request for applications; 07 (D) an economically and technically viable work plan, timeline, 08 and associated budget for developing the proposed project, including how the 09 applicant will perform field work, environmental studies, design, and 10 engineering, and how the applicant will comply with all applicable state, 11 federal, and international regulatory requirements that affect the proposed 12 project; the work plan must address the following: 13 (i) if the proposed project involves a pipeline into or 14 through Canada, a description in detail of the applicant's plan to obtain 15 necessary rights-of-way and authorizations in Canada; a description of 16 the transportation services to be provided and a description of rate- 17 making methodologies the applicant will propose to the regulatory 18 agencies; and an estimate of rates and charges for all services; 19 (ii) if the proposed project involves marine 20 transportation of liquefied natural gas, a description of the marine 21 transportation services to be provided and a description of proposed 22 rate-making methodologies; an estimate of rates and charges for all 23 services by third parties; a detailed description of all access and tariff 24 terms the applicant would propose for liquefaction services or, if third 25 parties would perform liquefaction services, identify the third parties 26 and the terms they would offer; a complete description of the proposed 27 ownership, control, and cost of liquefied natural gas tankers, the 28 management of shipping services, liquefied natural gas export, 29 destination, re-gasification facilities, and pipeline facilities needed for 30 transport to market destinations, and the entity or entities that would be 31 required to obtain necessary export permits or a certificate of public
01 convenience and necessity from the Federal Energy Regulatory 02 Commission for the transportation of liquefied natural gas in interstate 03 commerce if United States markets are proposed; and all rights-of-way 04 or authorizations required from a foreign country; 05 (3) commit that if the proposed project is within the jurisdiction of the 06 Federal Energy Regulatory Commission, the applicant will 07 (A) conclude, by a date certain that is not later than 36 months 08 after the date the license is issued, a binding open season that is consistent with 09 the requirements of Subpart B of 18 C.F.R. Part 157 (Open Seasons for Alaska 10 Natural Gas Transportation Projects) and 18 C.F.R. 157.30 - 157.39; 11 (B) apply for Federal Energy Regulatory Commission approval 12 to use the pre-filing procedures set out in 18 C.F.R. 157.21 by a date certain, 13 and use those procedures before filing an application for a certificate of public 14 convenience and necessity; and 15 (C) apply for a Federal Energy Regulatory Commission 16 certificate of public convenience and necessity to authorize the construction 17 and operation of the proposed project described in this section by a date 18 certain; 19 (4) commit that if the proposed project is within the jurisdiction of the 20 Regulatory Commission of Alaska, the applicant will 21 (A) conclude, by a date certain that is not later than 36 months 22 after the date the license is issued, a binding open season that is consistent with 23 the requirements of AS 42.06; and 24 (B) apply for a certificate of public convenience and necessity 25 to authorize the construction and operation of the proposed project by a date 26 certain; 27 (5) commit that after the first binding open season, the applicant will 28 assess the market demand for additional pipeline capacity at least every two years 29 through public nonbinding solicitations or similar means; 30 (6) commit to expand the proposed project in reasonable engineering 31 increments and on commercially reasonable terms that encourage exploration and
01 development of gas resources in this state; in this paragraph, 02 (A) "commercially reasonable terms" means that, subject to the 03 provisions of (7)(A) of this section, revenue from transportation contracts 04 covers the cost of the expansion, including increased fuel costs and a 05 reasonable return on capital as authorized by the Federal Energy Regulatory 06 Commission or the Regulatory Commission of Alaska, as applicable, and there 07 is no impairment of the proposed project's ability to recover the costs of 08 existing facilities; 09 (B) "reasonable engineering increments" means the amount of 10 additional capacity that could be added by compression or a pipe addition 11 using a compressor size or pipe size, as applicable, that is substantially similar 12 to the original compressor size and pipe size; 13 (7) commit that the applicant 14 (A) will propose and support recovery of mainline capacity 15 expansion costs from all mainline system users through rolled-in rates if the 16 recovery of all expansion costs through rolled-in rates would increase existing 17 shippers' rates by not more than 15 percent of the initial maximum recourse 18 rates from the North Slope to the proposed project's downstream terminus; if 19 rolled-in expansion costs would increase existing shippers' rates from the 20 North Slope to the project's downstream terminus by more than 15 percent, the 21 applicant will propose and support the partial roll-in of mainline expansion 22 costs from all mainline system users to the extent that existing shippers' rates 23 would not be increased by more than 15 percent of the initial maximum 24 recourse rates from the North Slope to the proposed project's downstream 25 terminus; in this subparagraph, "initial maximum recourse rates" means the 26 highest cost-based rates for any specific transportation service set by the 27 Federal Energy Regulatory Commission, the Regulatory Commission of 28 Alaska, or the National Energy Board of Canada, as appropriate, at the time of 29 the initial regulatory approval of the proposed project; 30 (B) may propose any combination of incremental or rolled-in 31 rates for recovery of costs of mainline capacity expansion that exceeds the 15
01 percent level described in (A) of this paragraph; 02 (C) agrees not to enter into negotiated rate agreements that 03 would preclude the applicant from collecting from any shipper, including 04 shippers with negotiated rate agreements, the rolled-in rates that are required to 05 be proposed and supported by the applicant under (A) of this paragraph; in this 06 subparagraph, "negotiated rate agreements" means transportation service 07 agreements that are subject to rates that vary from the otherwise applicable 08 cost-based rates, or recourse rates, set out in a gas pipeline's tariff approved by 09 the Federal Energy Regulatory Commission, the Regulatory Commission of 10 Alaska, or the National Energy Board of Canada, as appropriate; 11 (8) state how the applicant proposes to deal with a North Slope gas 12 treatment plant, regardless of whether that plant is part of the applicant's proposal, and, 13 to the extent that that plant will be owned entirely or in part by the applicant, commit 14 to seek certificate authority from the Federal Energy Regulatory Commission if the 15 proposed project is engaged in interstate commerce, or from the Regulatory 16 Commission of Alaska if the project is not engaged in interstate commerce, for a 17 North Slope gas treatment plant that will be owned entirely or in part by the applicant 18 and, for rate-making purposes, commit to value previously used assets that are part of 19 the gas treatment plant at net book value; describe the gas treatment plant, including 20 its design, engineering, construction, ownership, and plan of operation; the identity of 21 any third party that will participate in the ownership or operation of the gas treatment 22 plant; and the means by which the applicant will work to minimize the effect of the 23 costs of the facility on the tariff; 24 (9) propose a percentage and total dollar amount for the state's 25 matching contribution under AS 43.90.110(1)(A) and (B) to be specified in the 26 license; 27 (10) commit that the applicant will propose and support rates for the 28 proposed project and for any North Slope gas treatment plant that the applicant may 29 own, in whole or in part, that are based on a capital structure for rate-making that 30 consists of not less than 70 percent debt; 31 (11) describe the means by which the applicant plans to manage
01 overruns in costs of the proposed project, if any, and the measures that the applicant 02 proposes to mitigate the effects of any overruns; 03 (12) commit to provide for a minimum of five delivery points of 04 natural gas in this state; 05 (13) commit to offer firm transportation service to delivery points in 06 this state as part of the tariff regardless of whether any shippers bid successfully in a 07 binding open season for firm transportation service to delivery points in this state, and 08 commit to offer distance-sensitive rates to delivery points in this state consistent with 09 18 C.F.R. 157.34(c)(8); 10 (14) commit to establish a local headquarters in this state for the 11 proposed project; 12 (15) commit to hire qualified residents from throughout this state for 13 management, engineering, construction, operations, maintenance, and other positions 14 on the proposed project and to contract with businesses located in this state to the 15 extent permitted by law; 16 (16) commit to negotiate, before construction, a project labor 17 agreement, to ensure expedited construction and labor stability for the project by 18 qualified residents of the state; 19 (17) commit that the state matching contribution received by a licensee 20 may not be included in the applicant's rate base, and shall be used as a credit against 21 licensee's cost of service; and 22 (18) otherwise demonstrate that the applicant is ready and able to 23 perform the activities specified in the application, including the detailed work plan, 24 timeline, and associated budget. 25 Sec. 43.90.150. Initial application review; additional information requests; 26 complete applications. (a) The commissioners shall review each application 27 submitted under AS 43.90.130 to determine whether it is consistent with the terms of 28 the request for applications and meets the requirements of AS 43.90.140. The 29 commissioners shall reject any application that does not meet those terms and 30 requirements. 31 (b) To evaluate an application not rejected under (a) of this section, the
01 commissioners may request from an applicant additional information relating to the 02 application. 03 (c) If, within the time specified by the commissioners, an applicant fails to 04 provide the additional information requested under (b) of this section, or submits 05 additional information that is not responsive, the application will be rejected. 06 (d) For an application not rejected under (a) or (c) of this section, the 07 commissioners shall make a determination that the application, including any 08 requested additional information, is complete. 09 Sec. 43.90.160. Proprietary information and trade secrets. (a) At the 10 request of the applicant, information submitted under this chapter that the applicant 11 identifies and demonstrates is proprietary or is a trade secret is confidential and not 12 subject to public disclosure under AS 40.25, unless the applicant is granted a license 13 under this chapter. After a license is awarded, all information submitted by the 14 licensee shall be made public. 15 (b) If the commissioners determine that the information submitted by the 16 applicant is not proprietary or a trade secret, the commissioners shall notify the 17 applicant and return the information on request of the applicant. 18 (c) An applicant that challenges the award of a license or the process for 19 making the award shall be considered to have consented to the disclosure of all the 20 information submitted under this chapter by the applicant making the challenge, 21 including information held confidential under (a) of this section. 22 (d) In this section, "proprietary" means that the information is treated by the 23 applicant as confidential and the public disclosure of that information would adversely 24 affect the competitive position of the applicant or materially diminish the commercial 25 value of the information to the applicant. 26 Sec. 43.90.170. Notice, review, and comment. (a) The commissioners shall 27 publish notice and provide a 60-day period for public review and comment on all 28 applications determined complete under AS 43.90.150. 29 (b) Applications received under this chapter are not public records and are not 30 subject to public disclosure under AS 40.25 until the commissioners publish notice 31 under this section. However, information that the commissioners have determined is
01 confidential under AS 43.90.160 may not be made public even after the notice is 02 published under (a) of this section, except as otherwise provided by AS 43.90.160. If 03 information is held confidential under this subsection, the applicant shall provide a 04 summary that is satisfactory to the commissioners, and the commissioners shall make 05 the summary of the information available to the public. 06 Sec. 43.90.180. Application evaluation and ranking. (a) The commissioners 07 shall evaluate all applications determined to be complete under AS 43.90.150, 08 consider public comments received under AS 43.90.170(a), and rank each application 09 according to the net present value of the anticipated cash flow to the state from the 10 applicant's project proposal using the factors in (b) of this section and weighted by the 11 project's likelihood of success based on the commissioners' assessment of the factors 12 listed in (c) of this section. 13 (b) When evaluating the net present value of anticipated cash flow to the state 14 from the applicant's project proposal, the commissioners shall use an undiscounted 15 value and, at a minimum, discount rates of two, six, and eight percent, and consider 16 (1) how quickly the applicant proposes to begin construction of the 17 proposed project and how quickly the project will commence commercial operation; 18 (2) the net back value of the gas determined by the destination market 19 value of the gas and estimated transportation and treatment costs; 20 (3) the ability of the applicant to prevent or reduce project cost 21 overruns that would increase the tariff; 22 (4) the initial design capacity of the applicant's project and the extent 23 to which the design can accommodate low-cost expansion; and 24 (5) other factors found by the commissioners to be relevant to the 25 evaluation of the net present value of the anticipated cash flow to the state. 26 (c) When evaluating the project's likelihood of success, the commissioners 27 shall consider 28 (1) the reasonableness, specificity, and feasibility of the applicant's 29 work plan, timeline, and budget required to be submitted under AS 43.90.140, 30 including the applicant's plan to manage cost overruns, insulate shippers from the 31 effect of cost overruns, and encourage shippers to participate in the first binding open
01 season; 02 (2) the financial resources of the applicant; 03 (3) the ability of the applicant to comply with the proposed 04 performance schedule; 05 (4) the applicant's organization, experience, accounting and operational 06 controls, technical skills or the ability to obtain them, necessary equipment or the 07 ability to obtain the necessary equipment; 08 (5) the applicant's record of 09 (A) performance on projects not licensed under this chapter; 10 (B) integrity and good business ethics; and 11 (6) other evidence and factors found by the commissioners to be 12 relevant to the evaluation of the project's likelihood of success. 13 (d) In this section, "net present value" means the discounted value of a future 14 stream of cash flow. 15 Sec. 43.90.190. Notice to the legislature of intent to issue license; denial of 16 license. (a) If, after consideration of public comments received under AS 43.90.170 17 and evaluation of complete applications under AS 43.90.180, the commissioners 18 determine that an application would sufficiently maximize the benefits to the people of 19 this state and merits issuance of a license under this chapter, the commissioners shall 20 (1) issue a determination, with written findings addressing the basis for 21 the determination; the determination becomes a final agency action in accordance with 22 AS 43.90.200; 23 (2) publish notice of intent to issue a license under this chapter with 24 written findings addressing the basis for the determination; and 25 (3) forward the notice under (2) of this subsection, along with the 26 findings, supporting documentation, and determination under (1) of this subsection, to 27 the legislature for action as provided in AS 43.90.200. 28 (b) If, after evaluation of complete applications under AS 43.90.180, the 29 commissioners determine that no application sufficiently maximizes the benefits to the 30 people of this state and merits issuance of a license under this chapter, the 31 commissioners shall issue a written finding that addresses the basis for that
01 determination. 02 (c) The commissioners' determination under (b) of this section is a final 03 agency action for purposes of appeal to the court under the Alaska Rules of Appellate 04 Procedure. 05 Sec. 43.90.200. Legislative approval; issuance of license. (a) After receiving 06 a determination from the commissioners under AS 43.90.190, the legislature shall 07 introduce a resolution in their respective chambers that provides for the approval of 08 the license proposed to be issued by the commissioners. 09 (b) If a resolution approving the issuance of the license is approved by both 10 houses of the legislature within 60 calendar days immediately following the date 11 notice is received from the commissioners under AS 43.90.190(a), the commissioners 12 may issue the license as soon as practicable after the passage of the resolution. The 13 issuance of the license approved by the legislature is a final administrative action on 14 the date the license is issued for purposes of appeal to the superior court. 15 (c) If a resolution approving the issuance of the license does not pass both 16 houses of the legislature within the time specified in (b) of this section, the 17 commissioners may request new applications for a license under AS 43.90.130. 18 Sec. 43.90.210. Certification by regulatory authority and project sanction. 19 (a) A licensee that is awarded a certificate of public convenience and necessity for the 20 project by the Federal Energy Regulatory Commission if the project is engaged in 21 interstate commerce, or the Regulatory Commission of Alaska if the project is not 22 engaged in interstate commerce, shall accept the certificate when all rights of 23 administrative appeal relating to the certificate have expired. 24 (b) If the licensee has credit support sufficient to finance construction of the 25 project through ownership of rights to produce and market gas resources, firm 26 transportation commitments, or government financing, the licensee shall sanction the 27 project within one year after the effective date of the certificate of public convenience 28 and necessity issued by the Federal Energy Regulatory Commission or the Regulatory 29 Commission of Alaska, as applicable. 30 (c) If the licensee does not have credit support sufficient to finance 31 construction of the project through ownership of rights to produce and market gas
01 resources, firm transportation commitments, or government financing, the licensee 02 shall sanction the project within five years after the effective date of the certificate of 03 public convenience and necessity issued by the Federal Energy Regulatory 04 Commission or the Regulatory Commission of Alaska, as applicable. 05 (d) If the licensee fails to sanction the project timely as required under this 06 section, the licensee shall, upon request by the state, 07 (1) seek approval from the Federal Energy Regulatory Commission or 08 Regulatory Commission of Alaska, as appropriate, to abandon and transfer the 09 certificate to the state or the state's designee; and 10 (2) assign to the state's designee all engineering designs, contracts, 11 permits, and other data related to the project that are acquired by the licensee as of the 12 date of the abandonment or transfer. 13 (e) The transfer of any certificate or material as a result of failure to comply 14 with (a) or (b) of this section is at no cost to the state or the state's designee. A transfer 15 under (c) of this section is at the licensee's net cost. 16 (f) For purposes of this section, the effective date of the certificate of public 17 convenience and necessity issued by the Federal Energy Regulatory Commission or 18 the Regulatory Commission of Alaska is the date when all rights of administrative 19 appeal relating to the certificate have expired. 20 Sec. 43.90.220. Amendment of or modification to the project plan. Subject 21 to the approval of the commissioners, a licensee may amend or modify its project plan 22 if the amendments or modifications are necessary as a result of changed circumstances 23 outside the licensee's control and not reasonably foreseeable before the license was 24 issued. An amendment or modification approved under this section must be consistent 25 with the requirements of AS 43.90.140 and may not diminish the value to the state of 26 the project or the project's likelihood of success. 27 Sec. 43.90.230. Records, reports, conditions, and audit requirements. (a) A 28 licensee shall maintain complete and accurate records of all expenditures and 29 commitments of state money received under this chapter, including receipts and 30 records showing the payment or cost of purchased items and services, the names and 31 addresses of the sellers and service providers, and the dates of service or delivery.
01 (b) Upon reasonable notice, the commissioners may audit the records, books, 02 and files of the entity receiving the state money or making the expenditures and 03 commitments of money received from the state under this chapter. 04 (c) The commissioners may do the following with respect to information 05 relating to the project: conduct hearings or other investigative inquiries; compel the 06 attendance of witnesses and production of documents; and require the licensee to 07 furnish information in paper copy or electronic format. 08 (d) After a license has been issued and until commencement of commercial 09 operations of a natural gas pipeline, the licensee shall allow the commissioners to have 10 a representative present at all meetings of the licensee's governing body and equity 11 holders that relate to the project, to receive all relevant notices and information sent to 12 the governing body and equity holders, to receive the same access to information 13 about the licensee as the governing body members and equity owners receive, and to 14 receive additional relevant reports or information from the licensee that the 15 commissioners reasonably request. 16 (e) A licensee shall maintain the records and reports required under this 17 section for seven years from the date the licensee receives state money under this 18 chapter. 19 Sec. 43.90.240. License violations; damages. (a) A licensee is in violation of 20 the license if the commissioners determine that the licensee has 21 (1) committed state money received under this chapter for purposes 22 other than those set out in AS 43.90.110(1); 23 (2) substantially departed from the specifications set out in the 24 application without state approval of a project plan amendment or modification under 25 AS 43.90.220; 26 (3) violated any provision of this chapter or any other provision of 27 state or federal law material to the license; or 28 (4) otherwise violated a material term of the license. 29 (b) The commissioners shall provide written notice to the licensee identifying 30 a license violation. The commissioners and the licensee have 90 days after the date the 31 notice is issued to resolve the violation informally.
01 (c) The commissioners may suspend disbursement of state matching 02 contributions to the licensee beginning on the date that the notice of violation issued 03 under (b) of this section is sent to the licensee. The commissioners may resume 04 disbursement on the date that the commissioners determine that the violation is cured. 05 (d) If the commissioners and the licensee are unable to resolve the violation 06 within the time specified in (b) of this section, the commissioners shall, after providing 07 the licensee with notice and opportunity to be heard, make a written determination 08 regarding the violation. The written determination made under this subsection is the 09 final agency action for purposes of appeal to the court under the Alaska Rules of 10 Appellate Procedure. 11 (e) If the determination issued under (d) of this section finds an unresolved 12 violation, the commissioners may impose one or more of the following remedies: 13 (1) discontinuation of state matching contributions under this chapter; 14 (2) recoupment of state money that the licensee has received under this 15 chapter to date, with interest, regardless of whether the licensee has expended or 16 committed that money; 17 (3) license revocation; 18 (4) assignment to the state or the state's designee of all engineering 19 designs, contracts, permits, and other data related to the project that are acquired by 20 the licensee during the term of the license; and 21 (5) any other remedies provided by law or in equity. 22 Article 3. Resource Inducement; Alaska Gasline Inducement Act Coordinator. 23 Sec. 43.90.300. Qualification for resource inducement. Notwithstanding any 24 contrary provision of law, a lessee or other person that demonstrates to the 25 commissioners' satisfaction that the person has committed to acquire firm 26 transportation capacity in the first binding open season of the project is qualified to 27 receive the resource inducement set out in AS 43.90.310 and 43.90.320 for the gas 28 shipped in firm transportation capacity acquired in the first binding open season of the 29 project. The inducements set out in AS 43.90.310 and 43.90.320 are contractual. 30 Sec. 43.90.310. Royalty inducement. (a) Before the beginning of the first 31 binding open season to be conducted by the licensee, the commissioner of natural
01 resources shall adopt regulations to establish a method to determine the monthly value 02 of the state's royalty share of gas production and establish terms under which the state 03 will exercise its right to switch between taking its royalty in value or in kind for gas 04 committed for firm transportation in the first binding open season of the project. The 05 regulations must 06 (1) minimize retroactive adjustments to the monthly value of the state's 07 royalty share of gas production; 08 (2) contain provisions to establish a fair market value for each 09 component of the state's royalty gas that are based on pricing data from reliable and 10 widely available industry trade publications and use appropriate adjustments to reflect 11 (A) deductions for actual and reasonable transportation costs 12 for the state's royalty gas, including a fair share of the costs associated with 13 unused capacity commitments on pipelines from the North Slope of this state 14 to the first destination market with reasonable market liquidity; 15 (B) location differentials between the destination markets 16 where North Slope gas could be sold; 17 (C) reasonable and actual costs for gas processing; and 18 (D) deductions permitted under the 1980 Royalty Settlement 19 Agreement for Prudhoe Bay gas; and 20 (3) establish terms under which the state will exercise its authority to 21 switch between taking its royalty gas in value and in kind to ensure that the state's 22 actions do not unreasonably 23 (A) cause the lessee or other person to bear disproportionate 24 transportation costs with respect to the state's royalty gas; 25 (B) interfere with the lessee's or other person's long-term 26 marketing of its production. 27 (b) If a lessee or other person qualified for resource inducement under 28 AS 43.90.300 agrees under (c) of this section, the lessee or other person is entitled to 29 elect 30 (1) to calculate its gas royalty obligation under the regulations adopted 31 under (a) of this section for natural gas transported on a firm contract negotiated
01 during the project's first binding open season or under the methodology set out in the 02 existing leases from which the gas is produced, and 03 (A) upon the request of the lessee, the commissioner of natural 04 resources shall contractually amend the existing lease to reflect the election 05 under this paragraph and incorporate into the lease, the terms of the relevant 06 regulations as fixed contract terms; and 07 (B) the election under this subsection remains in effect until 08 new regulations are adopted as a result of a review under (d) of this section, at 09 which time, a lessee or other person qualified under AS 43.90.300 may change 10 its election under this paragraph; upon the request of the lessee, the 11 commissioner of natural resources shall contractually amend the lease to 12 incorporate as fixed contract terms the relevant revised regulatory provisions; 13 (2) to enter a contract with the state that amends the existing lease 14 terms by extending the required period of notice that the state must provide before 15 exercising the state's right to switch between taking its royalty in value or in kind for 16 gas committed for firm transportation in the first binding open season of the project. 17 (c) To claim the inducement under (b) of this section, a lessee or other 18 qualified person shall agree, on an application form provided by the Department of 19 Natural Resources, that the lessee or person, and the lessee's or person's affiliates, 20 successors, assigns, and agents, will not protest or appeal a filing by the licensee to 21 roll in expansion costs of the mainline up to a level that is required in AS 43.90.140(7) 22 if the Federal Energy Regulatory Commission does not have a rebuttable presumption 23 in effect that rolled-in rate treatment applies to the cost of the expansion of the project. 24 The agreement not to protest may not preclude the lessee or other qualified person, or 25 the lessee's or other person's affiliates, successors, assigns, and agents from protesting 26 a filing to roll in mainline expansion costs that licensee is not required to propose and 27 support under AS 43.90.140(7). 28 (d) The commissioner of natural resources shall provide for review of the 29 regulations adopted under (a) of this section at least every two years after the 30 commencement of commercial operations of the project to determine whether the 31 regulations continue to meet the requirements of (a)(1) of this section under current
01 conditions, and shall amend the regulations when the requirements are not being met. 02 (e) No provision of this chapter precludes the election set out in (b) of this 03 section, nor may the commissioner of natural resources assert any provision of any 04 existing lease or unit agreement as precluding the elections set out in (b) of this 05 section. 06 Sec. 43.90.320. Gas production tax exemption. (a) If a person qualified for 07 resource inducement under AS 43.90.300 agrees under (c) of this section, the person is 08 entitled to an annual exemption from the state's gas production tax in an amount equal 09 to the difference between the amount of the person's gas production tax obligation 10 calculated under the gas production tax in effect during that tax year and the amount of 11 the person's gas production tax obligation calculated under the gas production tax in 12 effect at the conclusion of the first binding open season held under this chapter. If the 13 difference is less than zero, the gas production tax exemption is zero. 14 (b) The commissioner of revenue shall issue the exemption under this section 15 in a certificate signed by the person and the commissioner, and the certificate 16 constitutes a contract between the person and the state; the certificated exemption may 17 be applied within 10 years immediately following commencement of commercial 18 operations of the project only to production taxes that are levied on North Slope gas 19 shipped through firm transportation capacity the person acquired during the first 20 binding open season. 21 (c) The exemption certificate issued under (b) of this section shall contain a 22 contractual commitment that the person, and the person's affiliates, successors, 23 assigns, and agents, will not protest or appeal a filing by the licensee to roll in 24 mainline expansion costs up to the level that the licensee is required to propose and 25 support under AS 43.90.140(7) if the Federal Energy Regulatory Commission does 26 not have a rebuttable presumption in effect that rolled-in rate treatment applies to the 27 cost of the expansion of the project. The contractual commitment required under this 28 subsection may not preclude the person, or the person's affiliates, successors, assigns, 29 and agents, from protesting a filing to roll in mainline expansion costs that the licensee 30 is not required to propose and support under AS 43.90.140(7). 31 Article 4. Alaska Gasline Inducement Act Coordinator; Expedited Agency Review;
01 Alaska Job Development Program. 02 Sec. 43.90.400. Alaska Gasline Inducement Act coordinator. (a) The 03 governor shall appoint, subject to legislative confirmation, an Alaska Gasline 04 Inducement Act coordinator. The Alaska Gasline Inducement Act coordinator 05 terminates one year after commencement of commercial operations of the project. 06 (b) The Alaska Gasline Inducement Act coordinator shall 07 (1) coordinate expeditious performance of all activities by state 08 agencies with respect to the project; 09 (2) ensure compliance by state agencies with the provisions of this 10 chapter; and 11 (3) coordinate with the federal coordinator for natural gas 12 transportation projects in this state. 13 Sec. 43.90.410. Expedited review and action by state agencies. (a) All 14 reviews conducted and actions taken by a state agency relating to a project shall be 15 expedited in a manner consistent with the completion of the necessary approvals in 16 accordance with this chapter. 17 (b) Notwithstanding any contrary provision of law, a state agency may not 18 include in any project certificate, right-of-way, permit, or other authorization issued to 19 the licensee any term or condition that is not required by law if the Alaska Gasline 20 Inducement Act coordinator determines that the term or condition would prevent or 21 impair in any significant respect the expeditious construction and operation or 22 expansion of the project. 23 (c) Unless required by law, a state agency may not add to, amend, or abrogate 24 any certificate, right-of-way, permit, or other authorization issued to a licensee if the 25 Alaska Gasline Inducement Act coordinator determines that the action would prevent 26 or impair in any significant respect the expeditious construction, operation, or 27 expansion of the project. 28 Sec. 43.90.420. State pipeline employment development. The commissioner 29 of labor and workforce development shall develop a job training program that will 30 provide training for Alaskans in gas pipeline project management, construction, 31 operations, maintenance, and other gas pipeline-related positions.
01 Article 5. Miscellaneous Provisions. 02 Sec. 43.90.500. Alaska Gasline Inducement Act matching contribution 03 fund; disbursements; audits. (a) There is established in the general fund an Alaska 04 Gasline Inducement Act matching contribution fund. The fund consists of money 05 appropriated to it by the legislature for disbursement to pay the state's matching 06 contributions under AS 43.90.110. Appropriations to the fund do not lapse under 07 AS 37.25.010, but remain in the fund for future disbursements. 08 (b) The Department of Revenue shall manage the fund, and may invest money 09 in the fund so as to yield competitive market rates as provided in AS 37.10.071. 10 Interest received on money in the fund shall be accounted for separately and may be 11 appropriated to the fund annually. 12 (c) The commissioners shall adopt regulations that provide for application to 13 receive matching contributions for qualified expenditures as provided under 14 AS 43.90.110, and that provide for periodic audits of the use of money disbursed as 15 matching contributions under this chapter. 16 (d) Within 10 days after the convening of each regular session of the 17 legislature, the commissioners shall submit to the legislature a report that lists all the 18 disbursements from the fund in the preceding year with a written justification of each 19 disbursement and the projected amount of money that will be needed for matching 20 contributions in each of the next three fiscal years. 21 Sec. 43.90.510. Regulations. The commissioners may jointly adopt 22 regulations for the purpose of implementing the provisions of this chapter. The 23 commissioner of revenue may change regulations adopted under existing authority in 24 this title as necessary to implement the provisions of this chapter. The commissioner 25 of natural resources may change regulations adopted under existing authority in AS 38 26 as necessary to implement the provisions of this chapter. 27 Sec. 43.90.520. Statute of limitations. A person may not bring a judicial 28 action challenging the constitutionality of this chapter or a license unless the action is 29 commenced in a court of proper jurisdiction in this state within 90 days after the date 30 that a license was issued. 31 Sec. 43.90.530. Interest. When a payment due to the state under this chapter
01 becomes delinquent, the payment bears interest in a calendar quarter at the annual rate 02 of five percentage points above the annual rate charged member banks for advances by 03 the 12th Federal Reserve District as of the first day of that calendar quarter, or at the 04 annual rate of 11 percent, whichever is greater, compounded quarterly as of the last 05 day of that quarter. 06 Sec. 43.90.540. Licensed project assurances. Except as otherwise provided in 07 this chapter, the state grants a licensee assurances that the licensee has exclusive 08 enjoyment of the inducement provided under this chapter before the commencement 09 of commercial operation of the project. If, before the commencement of commercial 10 operation of the project, the state extends to another person preferential royalty, tax, or 11 monetary treatment for the purpose of facilitating the construction of a competing 12 natural gas pipeline project in this state, and if the licensee is in compliance with the 13 requirements of the license and with the requirements of state and federal statutes and 14 regulations relevant to the project, the licensee is entitled to payment from the state of 15 an amount equal to three times the total of the reasonable costs that the licensee has 16 incurred in developing the licensee's project as of the date that the state first extended 17 preferential treatment to another person. Upon payment by the state of the amount 18 owed under this section, the licensee shall, at no cost to the state, assign to the state or 19 the state's designee all engineering designs, contracts, permits, and other data related 20 to the project that are acquired by the licensee during the term of the license. In this 21 section, "competing natural gas pipeline project" means a project designed to 22 accommodate throughput of more than 500,000,000 cubic feet a day of North Slope 23 gas. 24 Sec. 43.90.550. Assignments. (a) A licensee may transfer all or part of the 25 license, including the rights and obligations arising under the license, if 26 (1) the transfer is approved in writing in advance by the 27 commissioners; and 28 (2) the transfer does not increase or diminish the obligations created by 29 the license or diminish the likelihood of success of the project or the value of the 30 license to the state. 31 (b) Notwithstanding the commissioners' approval of a transfer of all or part of
01 a license under (a) of this section, the transferor of the license remains subject to the 02 requirements of AS 43.90.230 regarding all state money received by the licensee 03 before the effective date of the transfer. 04 (c) A person may transfer that person's rights to the royalty inducement under 05 AS 43.90.310 and the gas production tax exemption under AS 43.90.320 only in 06 connection with a sale or merger that results in transfer of all the person's assets in the 07 North Slope of this state, including the firm transportation capacity contracts in the 08 project. 09 Sec. 43.90.560. Conflicting laws. Nothing in this chapter shall be construed to 10 repeal or abrogate the administrative, regulatory, or statutory procedures and functions 11 of state and federal law governing the development and oversight of a project. 12 Sec. 43.90.570. Severability. Under AS 01.10.030, if any provision of this 13 chapter, or the application of it to any person or circumstance, is held invalid, the 14 remainder of this chapter and the application of it to other persons or circumstances 15 are not affected. 16 Article 6. General Provisions. 17 Sec. 43.90.900. Definitions. In this chapter, unless the context otherwise 18 requires, 19 (1) "affiliate" means another person that controls, is controlled by, or is 20 under common control with a person; "affiliate" includes a division that operates as a 21 functional unit; 22 (2) "Alaska Gasline Inducement Act coordinator" means the person 23 appointed under AS 43.90.400; 24 (3) "commencement of commercial operations" means the first flow of 25 gas in the project that generates revenue to the owners; 26 (4) "commissioners" means the commissioner of revenue and the 27 commissioner of natural resources, acting jointly; 28 (5) "control" means the possession of ownership interest or authority 29 sufficient to, directly or indirectly, and whether acting alone or in conjunction with 30 others, direct or cause the direction of the management or policies of a company, and 31 is rebuttably presumed if the voting interest held is 10 percent or more;
01 (6) "equity holder" means the 02 (A) stockholders of a corporation; 03 (B) members of a limited liability company; 04 (C) partners of a partnership; 05 (D) joint venturers of a joint venture; 06 (E) members of a governmental authority and similar persons; 07 or 08 (F) holders of any other entity or person; 09 (7) "gas processing" means post-production treatment of gas to extract 10 natural gas liquids; 11 (8) "governing body" means a corporation's board of directors, a 12 limited liability company's managing members, a partnership's general partners, a joint 13 venturer's joint venturers, a governmental authority's board or council members, and 14 similar entities; 15 (9) "lease" means an oil and gas, or gas, lease issued by this state; 16 (10) "lessee" means a person that holds a working interest in an oil and 17 gas, or gas, lease issued by this state; 18 (11) "license" means a license issued under this chapter; 19 (12) "licensee" means the holder of a license issued under this chapter 20 and all affiliates, successors, assigns, and agents of the holder; 21 (13) "North Slope" means the area of Alaska north of 68 degrees North 22 latitude; 23 (14) "project" means a natural gas pipeline project authorized under a 24 license issued under this chapter; 25 (15) "recourse rates" means cost-based rates with a minimum and 26 maximum range that are approved by the Federal Energy Regulatory Commission, the 27 Regulatory Commission of Alaska, or the National Energy Board of Canada, as 28 appropriate, and set out in the pipeline's tariff; "recourse rates" includes only those 29 rates that the pipeline must make available to all shippers; 30 (16) "sanction" means financial commitments to go forward with the 31 project as evidenced by entering into financial commitments of at least
01 $1,000,000,000 with third parties; 02 (17) "under common control with" has the meaning given "control" in 03 this section; 04 (18) "unit agreement" means an agreement executed by the working 05 interest owners and royalty owners creating the unit. 06 Sec. 43.90.990. Short title. This chapter may be cited as the Alaska Gasline 07 Inducement Act. 08 * Sec. 2. AS 36.30.850(b) is amended by adding a new paragraph to read: 09 (45) contracts for an arbitration panel to determine abandonment of a 10 project under AS 43.90.120, and contracts for the development of application 11 provisions for licensure and for the evaluation of those applications under AS 43.90. 12 * Sec. 3. AS 39.25.110 is amended by adding a new paragraph to read: 13 (41) the Alaska Gasline Inducement Act coordinator appointed under 14 AS 43.90.400. 15 * Sec. 4. AS 40.25.120(a) is amended to read: 16 (a) Every person has a right to inspect a public record in the state, including 17 public records in recorders' offices, except 18 (1) records of vital statistics and adoption proceedings, which shall be 19 treated in the manner required by AS 18.50; 20 (2) records pertaining to juveniles unless disclosure is authorized by 21 law; 22 (3) medical and related public health records; 23 (4) records required to be kept confidential by a federal law or 24 regulation or by state law; 25 (5) to the extent the records are required to be kept confidential under 26 20 U.S.C. 1232g and the regulations adopted under 20 U.S.C. 1232g in order to secure 27 or retain federal assistance; 28 (6) records or information compiled for law enforcement purposes, but 29 only to the extent that the production of the law enforcement records or information 30 (A) could reasonably be expected to interfere with enforcement 31 proceedings;
01 (B) would deprive a person of a right to a fair trial or an 02 impartial adjudication; 03 (C) could reasonably be expected to constitute an unwarranted 04 invasion of the personal privacy of a suspect, defendant, victim, or witness; 05 (D) could reasonably be expected to disclose the identity of a 06 confidential source; 07 (E) would disclose confidential techniques and procedures for 08 law enforcement investigations or prosecutions; 09 (F) would disclose guidelines for law enforcement 10 investigations or prosecutions if the disclosure could reasonably be expected to 11 risk circumvention of the law; or 12 (G) could reasonably be expected to endanger the life or 13 physical safety of an individual; 14 (7) names, addresses, and other information identifying a person as a 15 participant in the Alaska Higher Education Savings Trust under AS 14.40.802 or the 16 advance college tuition savings program under AS 14.40.803 - 14.40.817; 17 (8) public records containing information that would disclose or might 18 lead to the disclosure of a component in the process used to execute or adopt an 19 electronic signature if the disclosure would or might cause the electronic signature to 20 cease being under the sole control of the person using it; 21 (9) reports submitted under AS 05.25.030 concerning certain 22 collisions, accidents, or other casualties involving boats; 23 (10) records or information pertaining to a plan, program, or 24 procedures for establishing, maintaining, or restoring security in the state, or to a 25 detailed description or evaluation of systems, facilities, or infrastructure in the state, 26 but only to the extent that the production of the records or information 27 (A) could reasonably be expected to interfere with the 28 implementation or enforcement of the security plan, program, or procedures; 29 (B) would disclose confidential guidelines for investigations or 30 enforcement and the disclosure could reasonably be expected to risk 31 circumvention of the law; or
01 (C) could reasonably be expected to endanger the life or 02 physical safety of an individual or to present a real and substantial risk to the 03 public health and welfare; 04 (11) the written notification regarding a proposed regulation provided 05 under AS 24.20.105 to the Department of Law and the affected state agency and 06 communications between the Legislative Affairs Agency, the Department of Law, and 07 the affected state agency under AS 24.20.105; 08 (12) records that are 09 (A) proprietary or a trade secret in accordance with 10 AS 43.90.160; 11 (B) applications that are received under AS 43.90 until 12 notice is published under AS 43.90.170. 13 * Sec. 5. This Act takes effect immediately under AS 01.10.070(c).