HCR 18: Requesting the governor, the commissioner of natural resources, the commissioner of revenue, and TransCanada Alaska Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, to enter into a memorandum of understanding concerning the state's potential liability to the licensee under the Alaska Gasline Inducement Act should the state pursue the development of an intrastate gas pipeline.
00 HOUSE CONCURRENT RESOLUTION NO. 18 01 Requesting the governor, the commissioner of natural resources, the commissioner of 02 revenue, and TransCanada Alaska Company, LLC, and Foothills Pipe Lines Ltd., 03 jointly as licensee, to enter into a memorandum of understanding concerning the state's 04 potential liability to the licensee under the Alaska Gasline Inducement Act should the 05 state pursue the development of an intrastate gas pipeline. 06 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 WHEREAS the commissioner of revenue and the commissioner of natural resources, 08 acting jointly, have issued the license to TransCanada Alaska Company, LLC, and Foothills 09 Pipe Lines Ltd., jointly, under AS 43.90 (Alaska Gasline Inducement Act); and 10 WHEREAS, under AS 43.90.110, the state is obligated to pay to TransCanada Alaska 11 Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, matching contributions for 12 qualified expenditures incurred in the development of the natural gas pipeline up to a 13 maximum of $500,000,000; and 14 WHEREAS AS 43.90.440 entitles TransCanada Alaska Company, LLC, and 15 Foothills Pipe Lines Ltd., jointly as licensee, to a payment from the state of an amount equal
01 to three times the total amount of the expenditures incurred and paid by the licensee that are 02 qualified expenditures for the purposes of AS 43.90.110 that the licensee incurred in 03 developing the licensee's project if, before the commencement of commercial operations, 04 (1) the state extends to another person preferential royalty or tax treatment or 05 grant of state money for the purpose of facilitating the construction of a competing natural gas 06 pipeline project in this state; and 07 (2) the licensee is in compliance with the requirements of the license and with 08 the requirements of state and federal statutes and regulations relevant to the project; and 09 WHEREAS the people of the state have a present need for natural gas produced from 10 the North Slope and it may be in the best interests of the state to pursue a means for delivering 11 natural gas produced from the North Slope to the people of the state before the 12 commencement of commercial operations of the project proposed by TransCanada Alaska 13 Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee; and 14 WHEREAS the development of a project for the delivery of natural gas from the 15 North Slope before the commencement of commercial operations of the project proposed by 16 TransCanada Alaska Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, may 17 require the state to extend to another person preferential royalty or tax treatment or grant of 18 state money for the purpose of facilitating the construction of an intrastate natural gas 19 pipeline; and 20 WHEREAS current revenue projections for Alaska indicate that the state will be 21 facing a budget deficit in the years ahead, further jeopardizing the state's ability to pay treble 22 damages to the licensee should the state become liable to the licensee for violating the 23 assurance to the licensee in AS 43.90.440; and 24 WHEREAS the public has a right to know, and the administration has a fiduciary 25 duty to report periodically to the public and the legislature on, the risk to the state of incurring 26 treble damages if the state provides inducements to a competing intrastate gas pipeline; and 27 WHEREAS uncertainty regarding the extent of the risk of liability for damages to 28 TransCanada Alaska Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, under 29 AS 43.90 (Alaska Gasline Inducement Act), is an impediment to planning and going forward 30 with the development of an intrastate natural gas pipeline to meet the energy needs of the 31 people of the state; and
01 WHEREAS the state must consider the risk of potential liability to the licensee under 02 AS 43.90 (Alaska Gasline Inducement Act) when considering any incentives or preferential 03 tax treatment to facilitate the development of an intrastate natural gas pipeline for delivering 04 natural gas to the people of the state; and 05 WHEREAS the means for determining the amount of qualified expenditures that are 06 the basis for determining the payment for which the state could become liable under 07 AS 43.90.440 should be clearly understood by the state and TransCanada Alaska Company, 08 LLC, and Foothills Pipe Lines Ltd., jointly as licensee; and 09 WHEREAS an agreement between the state and TransCanada Alaska Company, 10 LLC, and Foothills Pipe Lines Ltd., jointly as licensee, concerning the factual situations under 11 which the state would become liable for the payment under AS 43.90.440 and the means by 12 which the amount of the payment would be determined would help the state determine the 13 best means for facilitating the development of an intrastate natural gas pipeline; 14 BE IT RESOLVED that the Alaska State Legislature requests the governor, 15 commissioner of natural resources, and commissioner of revenue, together with TransCanada 16 Alaska Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, to develop an 17 agreement and to incorporate the agreement into a memorandum of understanding or other 18 writing stating the circumstances under which the state would become liable for payment to 19 the licensee under AS 43.90.440 and the means by which the amount of the payment would 20 be determined; in particular, the memorandum should address whether the qualified 21 expenditures on which the payment under AS 43.90.440 is based are the net amounts 22 expended by the licensee after reimbursement by the state, whether preferential royalty or tax 23 treatment or expenditure of state money for facilitating the construction of a 24-inch diameter 24 intrastate gas pipeline capable of transporting more than 500,000,000 cubic feet of gas a day 25 would make the state liable for the payment under AS 43.90.440, and whether a generally 26 applicable modification of the tax applicable to the production of natural gas under AS 43.55 27 for the purpose of encouraging a natural gas producer to commit to any pipeline project in an 28 open season would trigger the liability for the payment under AS 43.90.440; and be it 29 FURTHER RESOLVED that the Alaska State Legislature requests the governor, 30 commissioner of natural resources, and commissioner of revenue to report to the legislature 31 on progress toward reaching the agreement on the state's liability to the licensee within 60
01 days after this resolution is passed by the legislature and within each 30-day period thereafter 02 until the agreement is signed by the state and TransCanada Alaska Company, LLC, and 03 Foothills Pipe Lines Ltd., jointly as licensee.