CSHB 246(FIN): "An Act creating the oil and gas infrastructure development program and the oil and gas infrastructure development fund in the Alaska Industrial Development and Export Authority; relating to the interest rates of the Alaska Industrial Development and Export Authority; relating to the sustainable energy transmission and supply development and Arctic infrastructure development programs of the Alaska Industrial Development and Export Authority; relating to dividends from the Alaska Industrial Development and Export Authority; and adding definitions for 'oil and gas development infrastructure' and 'proven reserves.'"
00 CS FOR HOUSE BILL NO. 246(FIN) 01 "An Act creating the oil and gas infrastructure development program and the oil and 02 gas infrastructure development fund in the Alaska Industrial Development and Export 03 Authority; relating to the interest rates of the Alaska Industrial Development and 04 Export Authority; relating to the sustainable energy transmission and supply 05 development and Arctic infrastructure development programs of the Alaska Industrial 06 Development and Export Authority; relating to dividends from the Alaska Industrial 07 Development and Export Authority; and adding definitions for 'oil and gas development 08 infrastructure' and 'proven reserves.'" 09 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 10 * Section 1. AS 44.88.088(a) is amended to read: 11 (a) The authority shall adopt a policy for payment of a dividend from the 12 revolving fund, the Alaska Industrial Development and Export Authority sustainable
01 energy transmission and supply development fund (AS 44.88.660), [AND] the Arctic 02 infrastructure development fund (AS 44.88.810), and the oil and gas infrastructure 03 development fund (AS 44.88.860) to the state each fiscal year. The dividends for a 04 fiscal year shall be made available by the authority before the end of that fiscal year. 05 The authority shall notify the commissioner of revenue when the dividends for a fiscal 06 year are available for appropriation. The amount of the dividend payable from the 07 (1) revolving fund for a fiscal year may not be less than 25 percent nor 08 more than 50 percent of the net income of the revolving fund for the base fiscal year; 09 however, in no event, may the dividend payable from the revolving fund for a fiscal 10 year exceed the total unrestricted net income of the revolving fund for the base year; 11 (2) Alaska Industrial Development and Export Authority sustainable 12 energy transmission and supply development fund (AS 44.88.660) for a fiscal year 13 may not be less than 25 percent nor more than 50 percent of the net income of the 14 Alaska Industrial Development and Export Authority sustainable energy transmission 15 and supply development fund for the base fiscal year; however, the dividend payable 16 from the Alaska Industrial Development and Export Authority sustainable energy 17 transmission and supply development fund for a fiscal year may not exceed the total 18 unrestricted net income of the Alaska Industrial Development and Export Authority 19 sustainable energy transmission and supply development fund for the base year; 20 (3) Arctic infrastructure development fund (AS 44.88.810) for a fiscal 21 year may not be less than 25 percent nor more than 50 percent of the net income of the 22 Arctic infrastructure development fund for the base fiscal year; however, the dividend 23 payable from the Arctic infrastructure development fund for a fiscal year may not 24 exceed the total unrestricted net income of the Arctic infrastructure development fund 25 for the base year; 26 (4) oil and gas infrastructure development fund (AS 44.88.860) for 27 a fiscal year may not be less than 25 percent nor more than 50 percent of the net 28 income of the oil and gas infrastructure development fund for the base fiscal 29 year; however, the dividend payable from the oil and gas infrastructure 30 development fund for a fiscal year may not exceed the total unrestricted net 31 income of the oil and gas infrastructure development fund for the base year.
01 * Sec. 2. AS 44.88.088(b)(2) is amended to read: 02 (2) "net income" means the change in net position, or the equivalent 03 term under generally accepted accounting principles, of the revolving fund, the change 04 in net position of the Alaska Industrial Development and Export Authority sustainable 05 energy transmission and supply development fund (AS 44.88.660), [OR] the change in 06 net position of the Arctic infrastructure development fund (AS 44.88.810), or the 07 change in net position of the oil and gas infrastructure development fund 08 (AS 44.88.860) as set out in the audited financial statements of the authority for the 09 base fiscal year, excluding amounts attributable to intergovernmental transfers, capital 10 contributions, grants, or impairment losses on development projects financed under 11 AS 44.88.172; 12 * Sec. 3. AS 44.88.088(b)(3) is amended to read: 13 (3) "unrestricted net income" means the unrestricted change in net 14 position, or the equivalent term under generally accepted accounting principles, of the 15 revolving fund, the Alaska Industrial Development and Export Authority sustainable 16 energy transmission and supply development fund (AS 44.88.660), [OR] the Arctic 17 infrastructure development fund (AS 44.88.810), or the oil and gas infrastructure 18 development fund (AS 44.88.860) as set out in the audited financial statements of the 19 authority for the base fiscal year, excluding amounts attributable to intergovernmental 20 transfers, capital contributions, grants, or impairment losses on development projects 21 financed under AS 44.88.172. 22 * Sec. 4. AS 44.88.159(a) is amended to read: 23 (a) The interest rate on a loan made with [PURCHASED FROM] the 24 proceeds of tax-exempt bonds secured by the Alaska Industrial Development and 25 Export Authority sustainable energy transmission and supply development fund 26 (AS 44.88.660) under AS 44.88.650 - 44.88.690, [OR BY] the Arctic infrastructure 27 development fund (AS 44.88.810) under AS 44.88.800 - 44.88.840, or the oil and gas 28 infrastructure development fund (AS 44.88.860) under AS 44.88.850 - 44.88.890 29 or a loan participation purchased from the proceeds of tax-exempt bonds or expected 30 by the authority to be purchased from the proceeds of tax-exempt bonds under 31 AS 44.88.155 shall be determined under the regulations adopted by the authority
01 under AS 44.88.085 [AS 44.88.085(g)(2)(C)] and shall be not less than the cost of 02 funds to the authority. In this subsection, "cost of funds" means the true interest cost 03 expressed as a rate on tax-exempt bonds of the authority plus an additional percentage 04 as determined by the authority to represent the allocable expenses of operation, costs 05 of issuance, and loan servicing costs. 06 * Sec. 5. AS 44.88.159(b) is amended to read: 07 (b) The interest rate on a loan made with [PURCHASED FROM] the 08 proceeds of taxable bonds secured by the (1) Alaska Industrial Development and 09 Export Authority sustainable energy transmission and supply development fund 10 (AS 44.88.660) under AS 44.88.650 - 44.88.690; (2) [OR BY THE] Arctic 11 infrastructure development fund (AS 44.88.810) under AS 44.88.800 - 44.88.840; or 12 (3) oil and gas infrastructure development fund (AS 44.88.860) under 13 AS 44.88.850 - 44.88.890 or a loan participation purchased from the proceeds of 14 taxable bonds under AS 44.88.155 or expected by the authority to be purchased from 15 the proceeds of taxable bonds under AS 44.88.155 shall be determined under the 16 regulations adopted by the authority under AS 44.88.085 [AS 44.88.085(g)(2)(C)] and 17 shall be not less than the cost of funds to the authority. In this subsection, "cost of 18 funds" means the true interest cost expressed as a rate on taxable bonds of the 19 authority, plus an additional percentage as determined by the authority to represent 20 the allocable expenses of operation, costs of issuance, and loan servicing costs. 21 * Sec. 6. AS 44.88.159(d) is amended to read: 22 (d) The provisions of this section apply only to a loan participation purchased 23 under AS 44.88.155 - 44.88.159 or to a loan made under AS 44.88.650 - 44.88.690, 24 [OR] 44.88.800 - 44.88.840, or 44.88.850 - 44.88.890. 25 * Sec. 7. AS 44.88.159(e) is amended to read: 26 (e) The interest rate on a loan made under AS 44.88.650 - 44.88.690, [OR] 27 44.88.800 - 44.88.840, or 44.88.850 - 44.88.890 or a loan participation purchased 28 directly from the assets of the authority shall be determined under the regulations 29 adopted by the authority under AS 44.88.085 [AS 44.88.085(g)(2)(C)] and shall be not 30 less than the total of a percentage as determined by the authority to represent the 31 allocable expenses of operation and costs of loan origination and servicing, plus the
01 cost of funds. In this subsection, 02 (1) "comparable financial security" means a type or category of 03 financial security the authority identifies in the regulations adopted by the authority 04 under AS 44.88.085 [AS 44.88.085(g)(2)(C)] that has a term and financial conditions 05 comparable to the term and financial conditions of a loan participation or a loan made 06 under AS 44.88.650 - 44.88.690, [OR] 44.88.800 - 44.88.840, or 44.88.850 - 07 44.88.890 and for which a regularly published, nationally recognized market index is 08 available; 09 (2) "cost of funds" means the earnings, expressed as an annual interest 10 rate, the authority would receive on a comparable financial security, and, for a loan 11 participation or a loan made under AS 44.88.650 - 44.88.690, [OR] 44.88.800 - 12 44.88.840, or 44.88.850 - 44.88.890 with a fixed interest rate, the cost of funds must 13 equal or exceed the minimum interest rate; 14 (3) "minimum interest rate" means the five-year return on investment 15 funds of the authority, expressed as an annual interest rate, achieved by all internal and 16 external investment managers of the authority combined. 17 * Sec. 8. AS 44.88.159(f) is amended to read: 18 (f) In determining an interest rate under the regulations adopted by the 19 authority under AS 44.88.085 [AS 44.88.085(g)(2)(C)], the authority may determine 20 to disregard the minimum interest rate required under (a), (b), or (e) of this section for 21 a loan participation purchased by the authority or a loan made under AS 44.88.650 - 22 44.88.690, [OR] 44.88.800 - 44.88.840, or 44.88.850 - 44.88.890 to resolve lending 23 limits or reserve restrictions imposed on the financial institution and may instead 24 determine to retain the interest rate existing at the time the authority makes the loan or 25 purchases the authority's loan participation. 26 * Sec. 9. AS 44.88.159 is amended by adding a new subsection to read: 27 (h) In regulations adopted under AS 44.88.085, the authority may establish 28 differing interest rates or methods for setting interest rates for each of its programs, 29 depending on the creditworthiness of the borrower, the risks of and security provided 30 for the financing provided under each program, comparable market rates, and other 31 factors the authority determines relevant in setting the interest rates for each program.
01 * Sec. 10. AS 44.88.690(a) is amended to read: 02 (a) Unless the authority has obtained legislative approval by law, the authority 03 may not use the Alaska Industrial Development and Export Authority sustainable 04 energy transmission and supply development fund established in AS 44.88.660 to 05 (1) make a loan for more than the lesser of 06 (A) 50 percent [ONE-THIRD] of the capital cost of qualified 07 energy development; or 08 (B) $100,000,000; 09 (2) make a loan guarantee if the amount of the guarantee exceeds 10 $25,000,000 [$20,000,000]; or 11 (3) purchase or acquire gas reserves or a gas lease or become a 12 working interest owner of a natural gas lease. 13 * Sec. 11. AS 44.88.840(a) is amended to read: 14 (a) Unless the authority has obtained legislative approval by law, the authority 15 may not use the Arctic infrastructure development fund established in AS 44.88.810 to 16 make 17 (1) a loan for more than the lesser of 18 (A) 50 percent [ONE-THIRD] of the capital cost of an Arctic 19 infrastructure development; or 20 (B) $100,000,000; or 21 (2) a loan guarantee if the amount of the guarantee exceeds 22 $25,000,000 [$20,000,000]. 23 * Sec. 12. AS 44.88 is amended by adding new sections to read: 24 Article 10A. Oil and Gas Infrastructure Development. 25 Sec. 44.88.850. Oil and gas infrastructure development program. The oil 26 and gas infrastructure development program is created in the authority to promote and 27 provide financing for oil and gas infrastructure development. 28 Sec. 44.88.860. Oil and gas infrastructure development fund. The oil and 29 gas infrastructure development fund is established in the authority. The fund consists 30 of appropriations made to the fund by the legislature and unrestricted loan repayments, 31 interest, or other income earned on loans, investments, or assets of the fund. The fund
01 is not an account in the revolving fund established in AS 44.88.060, and the authority 02 shall account for the fund separately from the revolving fund. The authority may 03 create additional accounts in the fund. Subject to agreements made with the holders of 04 the authority's bonds or with other persons, the authority may transfer amounts in an 05 account in the fund to another account in the fund. Amounts deposited in the fund may 06 be pledged to the payment of bonds of the authority or expended for the purposes of 07 AS 44.88.850 - 44.88.890. The authority has the powers and responsibilities 08 established in AS 37.10.071 with respect to the investment of amounts held in the 09 fund. 10 Sec. 44.88.870. Use of fund balance. Subject to the requirements of 11 AS 44.88.850 - 44.88.890, the authority may use money in the oil and gas 12 infrastructure development fund (AS 44.88.860) for oil and gas infrastructure 13 development under AS 48.88.880 and to pay dividends under AS 44.88.088. 14 Sec. 44.88.880. Oil and gas infrastructure development; powers and duties 15 of the authority. (a) Subject to the limitations of AS 44.88.890, for oil and gas 16 infrastructure development, the authority may 17 (1) use the oil and gas infrastructure development fund (AS 44.88.860) 18 to finance oil and gas infrastructure development, guarantee loans or bonds for oil and 19 gas infrastructure development, and establish reserves; 20 (2) acquire a lien or security interest on real or personal property with 21 respect to an oil and gas infrastructure development and, if necessary to protect the 22 authority's financial interest, acquire or foreclose on the real or personal property; 23 (3) defer principal payments or capitalize interest on financing 24 provided for oil and gas infrastructure development; 25 (4) contract for services with a professional advisor, including an 26 attorney, bond counsel, engineer, or other technical expert necessary to fulfill the 27 purposes of the program; and 28 (5) subject to AS 44.88.090, borrow money and issue bonds. 29 (b) The authority shall adopt regulations to implement AS 44.88.850 - 30 44.88.890, including 31 (1) a process for originating financing for an oil and gas infrastructure
01 development; 02 (2) a process for confirming the existence of proven reserves sufficient 03 to authorize financing; 04 (3) requirements and fees for financing oil and gas infrastructure 05 development; and 06 (4) fiscal controls and accounting procedures for the oil and gas 07 infrastructure development fund (AS 44.88.860). 08 Sec. 44.88.890. Limitations on financing. (a) Unless the authority has 09 obtained legislative approval by law, the authority may not use the oil and gas 10 infrastructure development fund established in AS 44.88.860 to 11 (1) provide financing that constitutes more than the lesser of 12 (A) 50 percent of the capital cost of an oil and gas 13 infrastructure development; or 14 (B) $100,000,000; or 15 (2) guarantee a loan for an oil and gas infrastructure development if the 16 amount of the guarantee exceeds $25,000,000. 17 (b) The authority may not provide financing for an oil and gas infrastructure 18 development unless all participants in the oil and gas field covenant with the authority 19 that 20 (1) the authority will not be responsible for costs incurred in 21 connection with dismantlement, removal, or remediation of the oil and gas 22 infrastructure development; and 23 (2) after the date of the authority's financing commitment, the 24 participants will not take, apply for, or accept a tax credit under AS 43.55.023 for 25 expenditures on the oil and gas infrastructure development financed under 26 AS 44.88.880. 27 (c) Financing under AS 44.88.880 is limited to the projected life of the oil and 28 gas infrastructure development, which may not be more than 30 years. 29 (d) The authority may not provide financing under AS 44.88.880 if the loan- 30 to-value ratio at the time of financing exceeds 75 percent; the value of proven reserves 31 that are included in the value must be calculated using the lesser of
01 (1) the average price of oil or gas actually paid during the 12-month 02 period immediately preceding the time of financing, reduced by 10 percent; or 03 (2) the price of oil or gas forecast by the Department of Revenue for 04 the 12-month period immediately following the time of financing, reduced by 10 05 percent. 06 * Sec. 13. AS 44.88.900 is amended by adding new paragraphs to read: 07 (20) "oil and gas infrastructure development" means the acquisition, 08 construction, or installation of and engineering for the construction or installation of a 09 road, pad, camp, processing facility, gathering system, or other on-site improvement 10 or equipment for an oil or gas field located in the state that has been explored and for 11 which proven reserves have been established; 12 (21) "proven reserves" means those quantities of petroleum, whether 13 developed or undeveloped, that, by analysis of geological and engineering data, can be 14 estimated with reasonable certainty to be commercially recoverable from a given date 15 forward, from known reservoirs, and under current economic conditions, operating 16 methods, and government regulations.