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CSHB 289(RES): "An Act relating to an above-ground liquefied natural gas storage facility; relating to the tax credit for an investment in an above-ground liquefied natural gas storage facility; relating to the regulation of gas storage as a utility; relating to the powers and duties of the director of the division of lands and to lease fees for a liquefied natural gas storage facility on state land; and providing for an effective date."

00                       CS FOR HOUSE BILL NO. 289(RES)                                                                    
01 "An Act relating to an above-ground liquefied natural gas storage facility; relating to                                 
02 the tax credit for an investment in an above-ground liquefied natural gas storage                                       
03 facility; relating to the regulation of gas storage as a utility; relating to the powers and                            
04 duties of the director of the division of lands and to lease fees for a liquefied natural gas                           
05 storage facility on state land; and providing for an effective date."                                                   
06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
07    * Section 1. AS 38.05 is amended by adding a new section to read:                                                  
08            Sec. 38.05.096. Exemption from rental payments on land leased for certain                                  
09       liquefied natural gas storage facilities. (a) A person leasing state land for a liquefied                       
10       natural gas storage facility other than a gas storage facility subject to AS 38.05.180(u)                         
11       may request an exemption from lease payments as provided in this section. The                                     
12       exemption is applicable for the periods described in (b) of this section.                                         
13            (b)  The exemption is available for the calendar year in which the liquefied                                 
01       natural gas storage facility commences commercial operation and for each of the nine                              
02       calendar years immediately following the first year of commercial operation.                                      
03       However, an exemption is not applicable for the calendar year after the facility ceases                           
04       commercial operation or for any subsequent calendar year.                                                         
05            (c)  The lessee shall provide the director with any information the director                                 
06       requests to determine whether the lessee qualifies for the exemption.                                             
07            (d)  Information related to state land leased for a liquefied natural gas storage                            
08       facility qualifying for the exemption in this section is public information and may be                            
09       furnished to the Regulatory Commission of Alaska. On request, the director shall                                  
10       provide the name of each person using state land leased for a liquefied natural gas                               
11       storage facility, the years for which an exemption was granted, and the amount of the                             
12       exemption.                                                                                                        
13            (e)  A person receiving an exemption for a payment under this section that                                   
14       contracts to store liquefied natural gas for a utility regulated under AS 42.05 shall                             
15       reduce the storage price to reflect the value of the exemption.                                                   
16            (f)  In this section,                                                                                        
17                 (1)  "ceases commercial operation" and "commences commercial                                            
18       operation" have the meanings given in AS 31.05.032;                                                               
19                 (2)  "liquefied natural gas storage facility" means a tank that is                                      
20       available for the storage of liquefied natural gas.                                                               
21    * Sec. 2. AS 42.05.990(3) is amended to read:                                                                      
22                 (3)  "natural gas storage facility" means a facility that receives natural                              
23       gas volumes either as gas or liquefied natural gas from customers, holds the gas                              
24       volumes in a reservoir, tank, depleted or nearly depleted pool, or other above-                               
25       ground containment structure, and delivers the gas volumes to the customer; in this                           
26       paragraph, "facility" includes                                                                                    
27                      (A)  all parts of the facility from the point at which the natural                                 
28            gas volumes are received by the facility from the customer to the point at                                   
29            which the natural gas volumes are delivered by the facility to the customer;                                 
30            and                                                                                                      
31                      (B)  [A FACILITY CONSISTING OF A RESERVOIR,                                                        
01            EITHER UNDERGROUND OR ABOVEGROUND, AND] one or more of the                                                   
02            following components of the facility:                                                                        
03                           (i)  pipe;                                                                                    
04                           (ii)  compressor stations;                                                                    
05                           (iii)  station equipment;                                                                     
06                           (iv)  injection and extraction wells;                                                         
07                           (v)  on-site or remote monitoring, supervision, and                                           
08                 control facilities;                                                                                     
09                           (vi)  gas processing plants and gas treatment plants, but                                     
10                 not including a liquefied natural gas or manufacturing plant or facility;                               
11                           (vii)  other equipment necessary to receive, place into                                       
12                 storage [THE RESERVOIR], monitor, remove from storage [THE                                      
13                 RESERVOIR], process, and deliver natural gas;                                                           
14    * Sec. 3. AS 43.20 is amended by adding a new section to article 1 to read:                                        
15            Sec. 43.20.047. Above-ground liquefied natural gas storage facility tax                                    
16       credit. (a) A person that is an owner of an above-ground liquefied natural gas storage                          
17       facility described in (b) of this section that commences commercial operation before                              
18       January 1, 2020, may apply a refundable credit against a tax liability that may be                                
19       imposed on the person under this chapter or receive the amount of the credit in the                               
20       form of a payment for the taxable year in which the liquefied natural gas storage                                 
21       facility commences commercial operation. The tax credit or payment under this                                     
22       section may not exceed the lesser of $15,000,000 or 50 percent of the costs incurred to                           
23       establish or expand the above-ground liquefied natural gas storage facility. The tax                              
24       credit in this section is in addition to any other credit under this chapter for which the                        
25       person is eligible.                                                                                               
26            (b)  To qualify for the credit in this section, an above-ground liquefied natural                            
27       gas storage facility                                                                                              
28                 (1)  must have a liquefied natural gas storage volume of not less than                                  
29       25,000 gallons of liquefied natural gas, or, if the credit is claimed for an expansion, the                       
30       expansion must have increased the capacity of an existing above-ground liquefied                                  
31       natural gas storage facility by more than 25,000 gallons;                                                         
01                 (2)  may not have been in operation as an above-ground liquefied                                        
02       natural gas storage facility before January 1, 2011, unless the tax credit in this section                        
03       is based on the expansion of the above-ground liquefied natural gas storage facility                              
04       after December 31, 2011;                                                                                          
05                 (3)  must be regulated under AS 42.05 as a utility and be available to                                  
06       furnish the service of natural gas storage to customers, utilities, or industrial facilities;                     
07       in this paragraph, "service of natural gas storage" has the meaning given in AS                                   
08       42.05.990, except that, in this paragraph, the natural gas storage is limited to the                              
09       service of liquefied natural gas storage;                                                                         
10                 (4)  if located on state land and leased or subject to a lease under AS                                 
11       38.05, must be in compliance with the terms of the lease; and                                                     
12                 (5)  must have commenced commercial operation on or before the date                                     
13       the person takes a credit under (a) of this section or applies for a payment under (a) of                         
14       this section.                                                                                                     
15            (c)  To claim the credit or request a payment, a person shall submit to the                                  
16       department a certification of the capacity of the above-ground liquefied natural gas                              
17       storage facility measured in gallons or the capacity of an expansion to an existing                               
18       above-ground liquefied natural gas storage facility measured in gallons, the date that                            
19       the liquefied natural gas storage facility commenced commercial operation, the date                               
20       that any expansion to the facility commenced commercial operation, and other                                      
21       information required by the department.                                                                           
22            (d)  A person applying the credit under this section against a liability under this                          
23       chapter shall claim the credit on the person's return. A person entitled to a tax credit                          
24       under this section that is greater than the person's tax liability under this chapter may                         
25       request a refund or payment in the amount of the unused portion of the tax credit.                                
26            (e)  The department may use money available in the oil and gas tax credit fund                               
27       established in AS 43.55.028 to make a refund or payment under (d) of this section in                              
28       whole or in part if the department finds that (1) the claimant does not have an                                   
29       outstanding liability to the state for unpaid delinquent taxes under this title; and (2)                          
30       after application of all available tax credits, the claimant's total tax liability under this                     
31       chapter for the calendar year in which the claim is made is zero. In this subsection,                             
01       "unpaid delinquent tax" means an amount of tax for which the department has issued                                
02       an assessment that has not been paid and, if contested, has not been finally resolved in                          
03       the taxpayer's favor.                                                                                             
04            (f)  For the purpose of determining the amount of the credit under this section,                             
05       the costs incurred to establish an above-ground liquefied natural gas storage facility or                         
06       to expand an above-ground liquefied natural gas storage facility shall be submitted to                            
07       the department with verification by an independent certified public accountant,                                   
08       licensed in the state. The volume of working liquefied natural gas storage or volume of                           
09       the expansion to an existing above-ground liquefied natural gas storage facility shall                            
10       be verified by a professional engineer licensed in the state with relevant experience.                            
11            (g)  A person may not receive a credit under this section for the acquisition of                             
12       an above-ground liquefied natural gas storage facility for which a credit has been                                
13       taken under this section.                                                                                         
14            (h)  If the above-ground liquefied natural gas storage facility for which a credit                           
15       was received under this section ceases commercial operation during the nine calendar                              
16       years immediately following the calendar year in which the liquefied natural gas                                  
17       storage facility commences commercial operation, the tax liability under this chapter                             
18       of the person who claimed the credit shall be increased, and a person not subject to the                          
19       tax under this chapter that received a payment under (d) and (e) of this section shall be                         
20       liable to the state in the amount determined in this subsection. The amount of the                                
21       increase in tax liability or liability to the state                                                               
22                 (1)  for a person subject to the tax under this chapter, shall be                                       
23       determined and assessed for the taxable year in which the liquefied natural gas storage                           
24       facility ceases commercial operation, regardless of whether the liquefied natural gas                             
25       storage facility subsequently resumes commercial operation;                                                       
26                 (2)  for a person not subject to the tax due under this chapter, shall be                               
27       determined and assessed as of December 31 of the calendar year in which the liquefied                             
28       natural gas storage facility ceases commercial operation, regardless of whether the                               
29       liquefied natural gas storage facility subsequently resumes commercial operation; and                             
30                 (3)  is equal to the total amount of the credit taken or received as a                                  
31       payment under (d) of this section, as applicable, multiplied by a fraction, the                                   
01       numerator of which is the difference between 10 and the number of calendar years for                              
02       which the liquefied natural gas storage facility was eligible for a tax credit under this                         
03       section and the denominator of which is 10.                                                                       
04            (i)  The issuance of a refund under this section does not limit the department's                             
05       ability to later audit or adjust the claim if the department determines, as a result of the                       
06       audit, that the person that claimed the credit was not entitled to the amount of the                              
07       credit. The tax liability of the person receiving the credit under this chapter is                                
08       increased by the amount of the credit that exceeds that to which the person was                                   
09       entitled. If the tax liability is increased under this subsection, the increase bears                             
10       interest at the rate set by AS 43.05.225 from the date the refund was issued.                                     
11            (j)  A person claiming a tax credit under this section for a liquefied natural gas                           
12       storage facility that ceases commercial operation within nine calendar years                                      
13       immediately following the calendar year in which the liquefied natural gas storage                                
14       facility commences commercial operation shall notify the department in writing of the                             
15       date the liquefied natural gas storage facility ceased commercial operation. The notice                           
16       must be filed with the return for the taxable year in which the liquefied natural gas                             
17       storage facility ceases commercial operation.                                                                     
18            (k)  A refund under this section does not bear interest.                                                     
19            (l)  In this section,                                                                                        
20                 (1)  "ceases commercial operation" means that the above-ground                                          
21       liquefied natural gas storage facility fails to add or withdraw 20 percent or more of its                         
22       working capacity of liquefied natural gas during a calendar year after the calendar year                          
23       in which the above-ground liquefied natural gas storage facility commences                                        
24       commercial operation;                                                                                             
25                 (2)  "commences commercial operation" means the first input of                                          
26       liquefied natural gas into a liquefied natural gas storage facility for purposes other than                       
27       testing;                                                                                                          
28                 (3)  "liquefied natural gas storage facility" means a gas storage facility                              
29       in which liquefied natural gas is stored in a tank or other above-ground containment                              
30       structure.                                                                                                        
31    * Sec. 4. AS 43.55.028(a) is amended to read:                                                                      
01            (a)  The oil and gas tax credit fund is established as a separate fund of the state.                         
02       The purpose of the fund is to purchase transferable tax credit certificates issued under                          
03       AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to                              
04       pay refunds and payments claimed under AS 43.20.046 or 43.20.047.                                         
05    * Sec. 5. AS 43.55.028(g) is amended to read:                                                                      
06            (g)  The department may adopt regulations to carry out the purposes of this                                  
07       section, including standards and procedures to allocate available money among                                     
08       applications for purchases under this chapter and claims for refunds and payments                             
09       under AS 43.20.046 or 43.20.047 when the total amount of the applications for                                 
10       purchase and claims for refund exceed the amount of available money in the fund. The                              
11       regulations adopted by the department may not, when allocating available money in                                 
12       the fund under this section, distinguish an application for the purchase of a credit                              
13       certificate issued under AS 43.55.023(m) or a claim for refund under AS 43.20.046 or                          
14       AS 43.20.047.                                                                                                 
15    * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).