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SB 153: "An Act relating to a gas storage facility; relating to the tax credit for a gas storage facility; relating to the powers and duties of the Alaska Oil and Gas Conservation Commission; relating to the regulation of natural 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 gas storage facility on state land; and providing for an effective date."

00                             SENATE BILL NO. 153                                                                         
01 "An Act relating to a gas storage facility; relating to the tax credit for a gas storage                                
02 facility; relating to the powers and duties of the Alaska Oil and Gas Conservation                                      
03 Commission; relating to the regulation of natural gas storage as a utility; relating to the                             
04 powers and duties of the director of the division of lands and to lease fees for a 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 31.05.032(b) is amended to read:                                                                   
08            (b)  Within six months after receiving an application under (a) of this section,                             
09       the commission shall determine and certify                                                                        
10                 (1)  the working gas storage capacity of the facility on the date the                                   
11       facility commences commercial operation rounded to the nearest                                                    
12                      (A)  500,000,000 cubic feet for nontank storage; or                                        
13                      (B)  1,000,000 gallons for tank storage;                                                       
01                 (2)  whether the gas storage facility is capable of withdrawing a                                       
02       minimum of 10,000,000 cubic feet of gas a day; and                                                                
03                 (3)  that the facility qualifies as a gas storage facility for the purposes of                          
04       this section.                                                                                                     
05    * Sec. 2. AS 38.05 is amended by adding a new section to read:                                                     
06            Sec. 38.05.096. Exemption from rental payments on land leased for certain                                  
07       gas storage facilities. (a) A person leasing state land for a gas storage facility other                        
08       than a gas storage facility subject to AS 38.05.180(u) may request an exemption from                              
09       lease payments as provided in this section. The exemption is applicable for the periods                           
10       described in (b) of this section.                                                                                 
11            (b)  The exemption is available for the calendar year in which the gas storage                               
12       facility commences commercial operation and for each of the nine calendar years                                   
13       immediately following the first year of commercial operation. However, an exemption                               
14       is not applicable for the calendar year after the facility ceases commercial operation or                         
15       for any subsequent calendar year.                                                                                 
16            (c)  The lessee shall provide the director with any information the director                                 
17       requests to determine whether the lessee qualifies for the exemption.                                             
18            (d)  Information related to state land leased for a gas storage facility qualifying                          
19       for the exemption in this section is public information and may be furnished to the                               
20       Regulatory Commission of Alaska. On request, the director shall provide the name of                               
21       each person using state land leased for a gas storage facility, the years for which an                            
22       exemption was granted, and the amount of the exemption.                                                           
23            (e)  A person receiving an exemption for a payment under this section that                                   
24       contracts to store gas for a utility regulated under AS 42.05 shall reduce the storage                            
25       price to reflect the value of the exemption.                                                                      
26            (f)  In this section, "ceases commercial operation," "commences commercial                                   
27       operation," and "gas storage facility" have the meanings given in AS 31.05.032.                                   
28    * Sec. 3. AS 42.05.990(3) is amended to read:                                                                      
29                 (3)  "natural gas storage facility" means a facility that receives natural                              
30       gas volumes from customers, holds the gas volumes in a reservoir, tank, or depleted                           
31       or nearly depleted pool, and delivers the gas volumes to the customer; in this                                
01       paragraph, "facility" includes                                                                                    
02                      (A)  all parts of the facility from the point at which the natural                                 
03            gas volumes are received by the facility from the customer to the point at                                   
04            which the natural gas volumes are delivered by the facility to the customer;                                 
05            and                                                                                                      
06                      (B) [A FACILITY CONSISTING OF A RESERVOIR,                                                         
07            EITHER UNDERGROUND OR ABOVEGROUND, AND] one or more of the                                                   
08            following components of the facility:                                                                        
09                           (i)  pipe;                                                                                    
10                           (ii)  compressor stations;                                                                    
11                           (iii)  station equipment;                                                                     
12                           (iv)  injection and extraction wells;                                                         
13                           (v)  on-site or remote monitoring, supervision, and                                           
14                 control facilities;                                                                                     
15                           (vi)  gas processing plants and gas treatment plants, but                                     
16                 not including a liquefied natural gas or manufacturing plant or facility;                               
17                           (vii)  other equipment necessary to receive, place into                                       
18                 storage [THE RESERVOIR], monitor, remove from storage [THE                                      
19                 RESERVOIR, PROCESS], and deliver natural gas;                                                           
20    * Sec. 4. AS 43.20.046(a) is amended to read:                                                                      
21            (a)  A person that is an owner of a gas storage facility described in (b) of this                            
22       section that commences commercial operation after December 31, 2010, and before                                   
23       January 1, 2016, may apply a [REFUNDABLE] credit against a tax liability that may                                 
24       be imposed on the person under this chapter for the taxable year in which the gas                                 
25       storage facility commences commercial operation. The tax credit under this section                                
26       shall be an amount equal to $1.50 for each 1,000 cubic feet of working gas storage                                
27       capacity that is certified under AS 31.05.032 less any amount of credit received under                            
28       this section taken in earlier tax years for that capacity. The total amount of the credit                         
29       that may be received for a single gas storage facility under this section may not exceed                          
30       [THE LESSER OF] $15,000,000 [OR 25 PERCENT OF THE COSTS INCURRED                                                  
31       TO ESTABLISH THE GAS STORAGE FACILITY]. The tax credit in this section is                                         
01       in addition to any other credit under this chapter for which the person is eligible.                              
02    * Sec. 5. AS 43.20.046(b) is amended to read:                                                                      
03            (b)  A gas storage facility qualifying for the credit in this section                                        
04                 (1)  must have a working gas storage capacity of at least                                               
05                      (A)  500,000,000 cubic feet of gas other than cushion gas for                              
06            nontank storage; or                                                                                      
07                      (B)  1,000,000 gallons for tank storage;                                                       
08                 (2)  must have a minimum withdrawal capability of 10,000,000 cubic                                      
09       feet a day as certified by the Alaska Oil and Gas Conservation Commission under                                   
10       AS 31.05.032;                                                                                                     
11                 (3)  may not have been in operation as a gas storage facility before                                    
12       January 1, 2011;                                                                                                  
13                 (4)  must be regulated under AS 42.05 as a utility and be available to                                  
14       furnish the service of natural gas storage to the public for compensation; in this                                
15       paragraph, "service of natural gas storage" has the meaning given in AS 42.05.990;                                
16       and                                                                                                               
17                 (5)  if located on state land and leased or subject to a lease under AS 38                          
18       [AS 38.05.180], must be in compliance with the terms of the lease.                                                
19    * Sec. 6. AS 43.20.046(d) is amended to read:                                                                      
20            (d)  A person entitled to a tax credit under this section that is greater than the                           
21       person's tax liability under this chapter may request a refund or payment in the                              
22       amount of the unused portion of the tax credit.                                                                   
23    * Sec. 7. AS 43.20.046(e) is amended to read:                                                                      
24            (e)  The department may use available money in the oil and gas tax credit fund                               
25       established in AS 43.55.028 to make the refund or payment applied for under (d) of                            
26       this section in whole or in part if the department finds that (1) the claimant does not                           
27       have an outstanding liability to the state for unpaid delinquent taxes under this title;                          
28       and (2) after application of all available tax credits, the claimant's total tax liability                        
29       under this chapter for the calendar year in which the claim is made is zero. In this                              
30       subsection, "unpaid delinquent tax" means an amount of tax for which the department                               
31       has issued an assessment that has not been paid and, if contested, has not been finally                           
01       resolved in the taxpayer's favor.                                                                                 
02    * Sec. 8. AS 43.20.046(h) is amended to read:                                                                      
03            (h)  If the gas storage facility for which a credit was received under this section                          
04       ceases commercial operation during the nine calendar years immediately following the                              
05       calendar year in which the gas storage facility commences commercial operation, the                               
06       tax liability under this chapter of the person who claimed the credit shall be increased,                     
07       and a person not subject to the tax under this chapter that received a payment                                
08       under (d) of this section shall be liable to the state in the amount determined in                            
09       this subsection. The amount of the increase in tax liability or liability to the state                    
10                 (1)  for a person subject to the tax under this chapter, shall be                                   
11       determined and assessed for the taxable year in which the gas storage facility ceases                             
12       commercial operation, regardless of whether the gas storage facility subsequently                                 
13       resumes commercial operation; [AND]                                                                               
14                 (2)  for a person not subject to the tax due under this chapter, shall                              
15       be determined and assessed as of December 31 of the calendar year in which the                                
16       gas storage facility ceases commercial operation, regardless of whether the gas                               
17       storage facility subsequently resumes commercial operation; and                                               
18                 (3)  is equal to the total amount of the credit taken or received as a                          
19       payment under (d) of this section, as applicable, multiplied by a fraction, the                               
20       numerator of which is the difference between 10 and the number of calendar years for                              
21       which the gas storage facility was eligible for a tax credit under this section and the                           
22       denominator of which is 10.                                                                                       
23    * Sec. 9. AS 43.20.046(i) is amended to read:                                                                      
24            (i)  The issuance of a refund or payment under this section does not limit the                           
25       department's ability to later audit or adjust the claim if the department determines, as a                        
26       result of the audit, that the person that claimed the credit was not entitled to the                              
27       amount of the credit. The tax liability of the person receiving the credit under this                             
28       chapter and that is subject to the tax imposed under this chapter is increased by                             
29       the amount of the credit that exceeds that to which the person was entitled; a person                         
30       that receives the credit and that is not subject to the tax imposed under this                                
31       chapter is liable to the state for the amount of the credit that exceeds that to                              
01       which the person was entitled. If the tax liability is increased or a person not                          
02       subject to the tax imposed under this chapter is liable to the state under this                               
03       subsection, the increase in tax liability or the liability to the state bears interest                        
04       under AS 43.05.225 from the date the refund or payment was issued.                                            
05    * Sec. 10. AS 43.20.046(j) is amended to read:                                                                     
06            (j)  A person taking a tax credit under this section or receiving a payment                              
07       under (d) of [CLAIMING A TAX CREDIT UNDER] this section for a gas storage                                     
08       facility that ceases commercial operation within nine calendar years immediately                                  
09       following the calendar year in which the gas storage facility commences commercial                                
10       operation shall notify the department in writing of the date the gas storage facility                             
11       ceased commercial operation. The notice must be filed with the return for the taxable                             
12       year in which the gas storage facility ceases commercial operation.                                               
13    * Sec. 11. AS 43.20.046(k) is amended to read:                                                                     
14            (k)  A refund or payment under this section does not bear interest.                                      
15    * Sec. 12. AS 43.55.028(a) is amended to read:                                                                     
16            (a)  The oil and gas tax credit fund is established as a separate fund of the state.                         
17       The purpose of the fund is to purchase transferable tax credit certificates issued under                          
18       AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to                              
19       pay refunds and payments claimed under AS 43.20.046.                                                          
20    * Sec. 13. AS 43.55.028(g) is amended to read:                                                                     
21            (g)  The department may adopt regulations to carry out the purposes of this                                  
22       section, including standards and procedures to allocate available money among                                     
23       applications for purchases under this chapter and claims for refunds and payments                             
24       under AS 43.20.046 when the total amount of the applications for purchase and claims                              
25       for refund exceed the amount of available money in the fund. The regulations adopted                              
26       by the department may not, when allocating available money in the fund under this                                 
27       section, distinguish an application for the purchase of a credit certificate issued under                         
28       AS 43.55.023(m) or a claim for refund under AS 43.20.046.                                                         
29    * Sec. 14. This Act takes effect immediately under AS 01.10.070(c).