CSHB 287(RLS): "An Act relating to the determination of the royalty received by the state on oil production refined or processed in the state; providing tax credits for qualified infrastructure expenditures for in-state refineries and hydrocarbon processing facilities; approving and ratifying the sale of royalty oil by the State of Alaska to Tesoro Corporation and Tesoro Refining and Marketing Company LLC; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 287(RLS) 01 "An Act relating to the determination of the royalty received by the state on oil 02 production refined or processed in the state; providing tax credits for qualified 03 infrastructure expenditures for in-state refineries and hydrocarbon processing facilities; 04 approving and ratifying the sale of royalty oil by the State of Alaska to Tesoro 05 Corporation and Tesoro Refining and Marketing Company LLC; and providing for an 06 effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 38.05.180(cc) is amended to read: 09 (cc) The provisions of (aa), [AND] (ee), and (hh) of this section do not 10 prohibit the commissioner from accepting any payment on a federal lease tendered by 11 the federal agency responsible for determination and transmittal of the payment to the 12 state under 30 U.S.C. 191 or otherwise due the state as the state's royalty share of gas 13 production or the state's royalty share of oil production irrespective of the state's
01 acceptance of an amount that is different than the amount due under the lease for 02 purposes of determining royalty share on oil and gas production under that subsection. 03 * Sec. 2. AS 38.05.180 is amended by adding new subsections to read: 04 (hh) Upon written request of a lessee of a lease issued under this section or of 05 a lessee of federal land from which the state is entitled to receive a share of the royalty 06 on oil production, the commissioner may enter into an agreement with the lessee to 07 accept, as a value for the state's royalty share of oil production sold to an in-state 08 refiner, an amount that is not less than the price established in a contract between the 09 lessee and the in-state refiner but not exceeding the amount that would otherwise be 10 due under the lease. This subsection applies to a contract entered into after 11 December 31, 2014. The commissioner shall respond to a request received under this 12 section within 90 days after the receipt of the request by the department. The 13 commissioner may enter into an agreement under this section if 14 (1) the commissioner issues a written finding that 15 (A) the agreement is in the best interest of the state; 16 (B) the parties to the contract between the lessee and the in- 17 state refiner are not affiliated under (2) of this subsection; and 18 (C) based on clear and convincing evidence, 19 (i) the contract price is not unreasonably low; and 20 (ii) the prospective reduction in royalty receipts will be 21 balanced by employment opportunities or other tangible benefits to the 22 state; and 23 (2) the primary function of the in-state refiner's contracting with the 24 lessee is to engage in the manufacture of refined petroleum products in the state, and 25 the in-state refiner is not affiliated with the lessee or with a subsequent purchaser of 26 more than 10 percent of the in-state refiner's product; the parties to a contract or 27 purchase are affiliated if, in the judgment of the commissioner, one of the parties to 28 the contract or purchase exercises substantial influence over the policies and actions of 29 the other as evidenced by a relationship based on common ownership or family 30 interest or by action taken in concert whether or not that influence is based on 31 stockholdings, stockholders, officers, or directors.
01 (ii) In (cc) and (hh) of this section, 02 (1) "in-state refiner" means a person engaged in the manufacture of 03 refined petroleum products in the state; 04 (2) "price established in the contract between the lessee and the in-state 05 refiner" includes tax reimbursement amounts, deliverability and other charges, and 06 other forms of consideration paid by the in-state refiner, as appropriate, under the 07 contract; 08 (3) "state's royalty share of oil production" includes payments on 09 federal leases made to the state under 30 U.S.C. 191. 10 * Sec. 3. AS 43.20 is amended by adding a new section to read: 11 Sec. 43.20.053. Qualified in-state oil refinery or hydrocarbon processing 12 facility infrastructure expenditures tax credit. (a) A taxpayer that owns an in-state 13 oil refinery or hydrocarbon processing facility whose primary function is the 14 manufacturing and sale of refined petroleum products or processed hydrocarbon 15 products to third parties in arm's length transactions may apply a credit against the tax 16 due under this chapter for a qualified infrastructure expenditure incurred in the state 17 for a tax year beginning after December 31, 2014, and before January 1, 2020. The 18 total amount of credit a taxpayer may receive under this section may not exceed the 19 lesser of 40 percent of qualified infrastructure expenditures incurred in the state during 20 the tax year or $10,000,000 for each in-state refinery or hydrocarbon processing 21 facility for which qualified expenditures are incurred. 22 (b) A taxpayer applying the credit under this section against a liability under 23 this chapter shall claim the credit on the taxpayer's return. A tax credit or portion of a 24 tax credit under this section may not be used to reduce the taxpayer's tax liability 25 under this chapter below zero. Any unused tax credit or portion of a tax credit under 26 this section may be carried forward to the five tax years immediately following the tax 27 year in which the qualified infrastructure expenditures were incurred. 28 (c) An expenditure that is the basis of the credit under this section may not be 29 the basis for 30 (1) a deduction against the tax levied under this chapter; 31 (2) a credit or deduction under another provision of this title; or
01 (3) any federal credit claimed under this title. 02 (d) A person entitled to a tax credit under this section that is greater than the 03 person's tax liability under this chapter may request a refund or payment in the amount 04 of the unused portion of the tax credit. 05 (e) The department may use money available in the oil and gas tax credit fund 06 established in AS 43.55.028 to make a refund or payment under (d) of this section in 07 whole or in part if the department finds that 08 (1) the claimant does not have an outstanding liability to the state for 09 unpaid delinquent taxes under this title; and 10 (2) after application of all available tax credits, the claimant's total tax 11 liability under this chapter for the calendar year in which the claim is made is zero. 12 (f) A refund under this section does not bear interest. 13 (g) The issuance of a refund under this section does not limit the department's 14 ability to later audit or adjust the claim as provided in AS 43.05 if the department 15 determines that the taxpayer claiming the credit was not entitled to the amount of the 16 credit. 17 (h) In this section, 18 (1) "processed hydrocarbon products" means separate marketable 19 elements, compounds, or mixtures of oil or natural gas in a liquid or gaseous form, 20 including gasoline, diesel, jet fuel, gas, oil, heating oil, kerosene, ammonia, and urea; 21 (2) "qualified infrastructure expenditure" means an expenditure 22 directly attributable to the in-state purchase, installation, modification, adjustment, or 23 other alteration of tangible personal property for the manufacture or transport of 24 refined petroleum products, petroleum-based feedstock, or processed hydrocarbon 25 products; 26 (3) "refined petroleum products" means separate marketable elements, 27 compounds, or mixtures of oil in liquid form, including gasoline, diesel, jet fuel, gas 28 oil, heating oil, and kerosene; 29 (4) "unpaid delinquent tax" means an amount of tax for which the 30 department has issued an assessment that has not been paid and, if contested, has not 31 been finally resolved in the taxpayer's favor.
01 * Sec. 4. AS 43.55.028(a) is amended to read: 02 (a) The oil and gas tax credit fund is established as a separate fund of the state. 03 The purpose of the fund is to purchase transferable tax credit certificates issued under 04 AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to 05 pay refunds and payments claimed under AS 43.20.046, [OR] 43.20.047, or 06 43.20.053. 07 * Sec. 5. AS 43.55.028(g) is amended to read: 08 (g) The department may adopt regulations to carry out the purposes of this 09 section, including standards and procedures to allocate available money among 10 applications for purchases under this chapter and claims for refunds and payments 11 under AS 43.20.046, [OR] 43.20.047, or 43.20.053 when the total amount of the 12 applications for purchase and claims for refund exceed the amount of available money 13 in the fund. The regulations adopted by the department may not, when allocating 14 available money in the fund under this section, distinguish an application for the 15 purchase of a credit certificate issued under former AS 43.55.023(m) or a claim for a 16 refund or payment under AS 43.20.046, [OR] 43.20.047, or 43.20.053. 17 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 ROYALTY OIL SALE CONTRACT WITH TESORO CORPORATION AND 20 TESORO REFINING AND MARKETING COMPANY LLC APPROVED AND 21 RATIFIED. In accordance with AS 38.06.055, the legislature approves and ratifies the 22 proposed Amendment to Agreement for the Sale of Royalty Oil attached as Exhibit 1 to the 23 final best interest finding and determination executed January 9, 2014, by the Department of 24 Natural Resources regarding the amendment of the Agreement for the Sale Of Royalty Oil 25 Between and Among the State of Alaska and Tesoro Corporation, a Delaware Corporation 26 and Tesoro Refining and Marketing Company LLC, a Delaware Limited Liability Company, 27 October 25, 2013. 28 * Sec. 7. Sections 1 - 5 of this Act take effect January 1, 2015. 29 * Sec. 8. Except as provided in sec. 7 of this Act, this Act takes effect immediately under 30 AS 01.10.070(c).