HCS CSSB 138(RES): "An Act relating to the Alaska Gasline Development Corporation; relating to an in-state natural gas pipeline, an Alaska liquefied natural gas project, and associated funds; requiring state agencies and other entities to expedite reviews and actions related to natural gas pipelines and projects; making certain contracts by the Department of Natural Resources and the Department of Law not subject to the State Procurement Code; relating to the authorities and duties of the commissioner of natural resources relating to a North Slope natural gas project, oil and gas and gas only leases, and royalty gas and other gas received by the state including gas received as payment for the production tax on gas; relating to a report and recommendations by the commissioner of natural resources regarding the delivery and availability of North Slope natural gas in the state, including the identification of risks and recommendations for mitigation; relating to the tax on oil and gas production, on oil production, and on gas production; relating to the duties of the commissioner of revenue relating to a North Slope natural gas project and gas received as payment for tax; relating to confidential information and public record status of information provided to or in the custody of the Department of Natural Resources and the Department of Revenue; relating to apportionment factors of the Alaska Net Income Tax Act; amending the definition of gross value at the 'point of production' for gas for purposes of the oil and gas production tax; clarifying that the exploration incentive credit, the oil or gas producer education credit, and the film production tax credit may not be taken against the gas production tax paid in gas; relating to the oil or gas producer education credit; requiring the commissioner of revenue to provide a report to the legislature on financing options for state ownership and participation in a North Slope natural gas project; requesting the governor to establish an interim advisory board to advise the governor on municipal involvement in a North Slope natural gas project; relating to the development of a plan by the Alaska Energy Authority for developing infrastructure to deliver affordable energy to areas of the state that will not have direct access to a North Slope natural gas pipeline and a recommendation of a funding source for energy infrastructure development; establishing the Alaska affordable energy fund; requiring the commissioner of revenue to develop a plan and suggest legislation for municipalities, regional corporations, and residents of the state to acquire ownership interests in a North Slope natural gas pipeline project; relating to the duties of the Oil and Gas Competitiveness Review Board; making conforming amendments; and providing for an effective date."
00 HOUSE CS FOR CS FOR SENATE BILL NO. 138(RES) 01 "An Act relating to the Alaska Gasline Development Corporation; relating to an in-state 02 natural gas pipeline, an Alaska liquefied natural gas project, and associated funds; 03 requiring state agencies and other entities to expedite reviews and actions related to 04 natural gas pipelines and projects; making certain contracts by the Department of 05 Natural Resources and the Department of Law not subject to the State Procurement 06 Code; relating to the authorities and duties of the commissioner of natural resources 07 relating to a North Slope natural gas project, oil and gas and gas only leases, and royalty 08 gas and other gas received by the state including gas received as payment for the 09 production tax on gas; relating to a report and recommendations by the commissioner 10 of natural resources regarding the delivery and availability of North Slope natural gas 11 in the state, including the identification of risks and recommendations for mitigation; 12 relating to the tax on oil and gas production, on oil production, and on gas production;
01 relating to the duties of the commissioner of revenue relating to a North Slope natural 02 gas project and gas received as payment for tax; relating to confidential information and 03 public record status of information provided to or in the custody of the Department of 04 Natural Resources and the Department of Revenue; relating to apportionment factors of 05 the Alaska Net Income Tax Act; amending the definition of gross value at the 'point of 06 production' for gas for purposes of the oil and gas production tax; clarifying that the 07 exploration incentive credit, the oil or gas producer education credit, and the film 08 production tax credit may not be taken against the gas production tax paid in gas; 09 relating to the oil or gas producer education credit; requiring the commissioner of 10 revenue to provide a report to the legislature on financing options for state ownership 11 and participation in a North Slope natural gas project; requesting the governor to 12 establish an interim advisory board to advise the governor on municipal involvement in 13 a North Slope natural gas project; relating to the development of a plan by the Alaska 14 Energy Authority for developing infrastructure to deliver affordable energy to areas of 15 the state that will not have direct access to a North Slope natural gas pipeline and a 16 recommendation of a funding source for energy infrastructure development; 17 establishing the Alaska affordable energy fund; requiring the commissioner of revenue 18 to develop a plan and suggest legislation for municipalities, regional corporations, and 19 residents of the state to acquire ownership interests in a North Slope natural gas pipeline 20 project; relating to the duties of the Oil and Gas Competitiveness Review Board; 21 making conforming amendments; and providing for an effective date." 22 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 23 * Section 1. AS 31.25.005 is amended to read: 24 Sec. 31.25.005. Purpose. The corporation shall, for the benefit of the state, to
01 the fullest extent possible, 02 (1) develop and have primary responsibility for developing natural 03 gas pipelines, an Alaska liquefied natural gas project, and other transportation 04 mechanisms to deliver natural gas in-state for the maximum benefit of the people 05 of the state; 06 (2) when developing natural gas pipelines, an Alaska liquefied 07 natural gas project, and other transportation mechanisms to deliver natural gas 08 in-state, provide economic benefits in the state, and revenue to the state; 09 (3) assist the Department of Natural Resources and the 10 Department of Revenue to maximize the value of the state's royalty natural gas, 11 natural gas delivered to the state as payment of tax, and other natural gas 12 received by the state; 13 (4) advance an in-state natural gas pipeline as described in the July 1, 14 2011, project plan prepared under former AS 38.34.040 by the corporation while a 15 subsidiary of the Alaska Housing Finance Corporation, with modifications determined 16 by the corporation to be appropriate to develop, finance, construct, and operate an in- 17 state natural gas pipeline in a safe, prudent, economical, and efficient manner, for the 18 purpose of making natural gas, including propane and other hydrocarbons associated 19 with natural gas other than oil, available to Fairbanks, the Southcentral region of the 20 state, and other communities in the state at the lowest rates possible; 21 (5) advance an Alaska liquefied natural gas project by developing 22 infrastructure and providing related services, including services related to 23 transportation, liquefaction, a marine terminal, marketing, and commercial 24 support; if the corporation provides a service under this paragraph to the state, a 25 public corporation or instrumentality of the state, a political subdivision of the 26 state, or another entity of the state, the corporation may not charge a fee for the 27 service in an amount greater than the amount necessary to reimburse the 28 corporation for the cost of the service; 29 (6) [(2)] endeavor to develop natural gas pipelines and other 30 transportation mechanisms to deliver natural gas, including propane and other 31 hydrocarbons associated with natural gas other than oil, to public utility and industrial
01 customers in areas of the state to which the natural gas, including propane and other 02 hydrocarbons associated with natural gas other than oil, may be delivered at 03 commercially reasonable rates; and 04 (7) [(3)] endeavor to develop natural gas pipelines and other 05 transportation mechanisms that offer commercially reasonable rates for shippers and 06 access for shippers who produce natural gas, including propane and other 07 hydrocarbons associated with natural gas other than oil, in the state. 08 * Sec. 2. AS 31.25.010 is amended to read: 09 Sec. 31.25.010. Structure. The Alaska Gasline Development Corporation is a 10 public corporation and government instrumentality acting in the best interest of the 11 state for the purposes required by AS 31.25.005, located for administrative 12 purposes in the Department of Commerce, Community, and Economic Development, 13 but having a legal existence independent of and separate from the state. The 14 corporation may not be terminated as long as it has bonds, notes, or other obligations 15 outstanding. The corporation may dissolve when no bonds, notes, or other obligations 16 of the corporation or a subsidiary of the corporation are outstanding and the 17 corporation or a subsidiary of the corporation is no longer engaged in the 18 development, financing, construction, or operation of an in-state natural gas pipeline 19 or an Alaska liquefied natural gas project. Upon termination of the corporation, its 20 rights and property pass to the state. 21 * Sec. 3. AS 31.25.020(a) is amended to read: 22 (a) The corporation shall be governed by a board of directors consisting of 23 (1) five public members; and 24 (2) two individuals designated by the governor that are each the head 25 of a principal department of the state, except that the commissioner of natural 26 resources and the commissioner of revenue may not be designated to serve on the 27 board [UNLESS THE PROJECT FOR WHICH A LICENSE IS ISSUED UNDER 28 AS 43.90 HAS BEEN ABANDONED OR IS NO LONGER RECEIVING THE 29 INDUCEMENTS IN AS 43.90.110(a) OR THE COMMISSIONER OF NATURAL 30 RESOURCES AND THE COMMISSIONER OF REVENUE ARE NO LONGER 31 SIGNATORIES ON A VALID CONTRACT UNDER AS 43.90].
01 * Sec. 4. AS 31.25.020 is amended by adding a new subsection to read: 02 (e) A public member appointed by the governor under (b) of this section shall 03 be a citizen of the United States. Notwithstanding AS 39.05.100, a person appointed 04 under (b) of this section is not required to be or have been a registered voter in the 05 state and is not required to reside in the state. 06 * Sec. 5. AS 31.25.040 is amended by adding new subsections to read: 07 (c) To the maximum extent practicable, the board shall 08 (1) maximize the efficient use of state resources; and 09 (2) establish appropriate separation within the corporation by 10 separating personnel and functions, and by other means to the extent that separation 11 may be required by contract or applicable law for the purpose of screening and 12 preventing the exchange of commercially sensitive information when developing an 13 in-state natural gas pipeline, an Alaska liquefied natural gas project, and other 14 transportation mechanisms to deliver natural gas in the state. 15 (d) The board may appoint a program director for an Alaska liquefied natural 16 gas project. The board may appoint a separate program director for an in-state natural 17 gas pipeline as described in the July 1, 2011, project plan prepared under former 18 AS 38.34.040 and defined in AS 31.25.390. A program director appointed under this 19 section shall 20 (1) serve at the pleasure of the board; and 21 (2) report to the executive director of the corporation. 22 * Sec. 6. AS 31.25.050 is amended to read: 23 Sec. 31.25.050. Legal counsel. Except as provided in (b) of this section, the 24 [THE] corporation shall retain legal counsel to advise the corporation in legal matters 25 and represent it in litigation. 26 * Sec. 7. AS 31.25.050 is amended by adding a new subsection to read: 27 (b) The attorney general shall 28 (1) be the legal counsel for the corporation for legal services related to 29 the development of contracts and agreements by the corporation that relate to an 30 Alaska liquefied natural gas project; and 31 (2) consult with the corporation when procuring outside counsel for
01 legal services for the corporation related to an Alaska liquefied natural gas project. 02 * Sec. 8. AS 31.25.080(a) is amended to read: 03 (a) In addition to other powers granted in this chapter, the corporation may 04 (1) determine the form of ownership and the operating structure of an 05 in-state natural gas pipeline developed by the corporation and may enter into 06 agreements with other persons for joint ownership, joint operation, or both of an in- 07 state natural gas pipeline or an Alaska liquefied natural gas project; 08 (2) plan, finance, construct, develop, acquire, maintain, and operate a 09 pipeline system and other transportation mechanism, including pipelines, compressors, 10 storage facilities, and other related facilities, equipment, and works of public 11 improvement, in the state to facilitate production, transportation, and delivery of 12 natural gas or other related natural resources to the point of consumption or to the 13 point of distribution for consumption; 14 (3) lease or rent facilities, structures, and properties; 15 (4) exercise the power of eminent domain and file a declaration of 16 taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 17 necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas 18 project; the exercise of powers by the corporation under this paragraph may not 19 exceed the permissible exercise of the powers by the state; 20 (5) acquire, by purchase, lease, or gift, land, structures, real or personal 21 property, an interest in property, a right-of-way, a franchise, an easement, or other 22 interest in land, or an interest in or right to capacity in a pipeline system determined to 23 be necessary or convenient for the development, financing, construction, or operation 24 of an in-state natural gas pipeline project or an Alaska liquefied natural gas project 25 or part of an in-state natural gas pipeline project or an Alaska liquefied natural gas 26 project; 27 (6) transfer or otherwise dispose of all or part of an in-state natural gas 28 pipeline project, an Alaska liquefied natural gas project, or [DEVELOPED BY 29 THE CORPORATION OR TRANSFER OR OTHERWISE DISPOSE OF] an interest 30 in an asset of the corporation; 31 (7) elect to provide transportation of natural gas as a contract carrier,
01 common carrier, or otherwise; 02 (8) provide light, water, security, and other services for property of the 03 corporation; 04 (9) conduct hearings to gather and develop data consistent with the 05 purpose and powers of the corporation; 06 (10) advocate for new pipeline capacity before the Federal Energy 07 Regulatory Commission; 08 (11) make and execute agreements, contracts, and other instruments 09 necessary or convenient in the exercise of the powers and functions of the corporation 10 under this chapter, including a contract with a person, firm, corporation, governmental 11 agency, or other entity; 12 (12) sue and be sued in its own name; 13 (13) adopt an official seal; 14 (14) adopt bylaws for the regulation of its affairs and the conduct of its 15 business and adopt regulations and policies in connection with the performance of its 16 functions and duties; 17 (15) employ fiscal consultants, engineers, attorneys, appraisers, and 18 other consultants and employees that may, in the judgment of the corporation, be 19 required and fix and pay their compensation from funds available to the corporation; 20 (16) procure insurance against a loss in connection with its operation; 21 (17) borrow money as provided in this chapter to carry out its 22 corporate purposes and issue its obligations as evidence of borrowing; 23 (18) include in a borrowing the amounts necessary to pay financing 24 charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 25 and legal fees, and other expenses that are necessary or incident to the borrowing; 26 (19) receive, administer, and comply with the conditions and 27 requirements of an appropriation, gift, grant, or donation of property or money; 28 (20) do all acts and things necessary, convenient, or desirable to carry 29 out the powers expressly granted or necessarily implied in this chapter; 30 (21) invest or reinvest, subject to its contracts with noteholders and 31 bondholders, money or funds held by the corporation, including funds in the in-state
01 natural gas pipeline fund (AS 31.25.100) and the Alaska liquefied natural gas 02 project fund (AS 31.25.110), in obligations or other securities or investments in 03 which banks or trust companies in the state may legally invest funds held in reserves 04 or sinking funds or funds not required for immediate disbursement, and in certificates 05 of deposit or time deposits secured by obligations of, or guaranteed by, the state or the 06 United States; 07 (22) enter into, as it determines to be necessary or appropriate, any 08 swap or hedge, cap, or other contract providing for payments based on levels of or 09 changes in interest rates or indices or in the cost or price of any commodity, supply, or 10 expense expected to be used or incurred in connection with the acquisition, 11 construction, or operation of any facility or property owned, leased, or operated by the 12 corporation, or an option with respect to any of the foregoing; 13 (23) except as provided in (g) of this section, acquire an ownership 14 or participation interest in an Alaska liquefied natural gas project, natural gas 15 treatment facilities, natural gas pipeline facilities, liquefaction facilities, marine 16 terminal facilities related to the infrastructure of an Alaska liquefied natural gas 17 project, an entity or joint venture that has an ownership interest in or is engaged 18 in the planning, financing, acquisition, maintenance, construction, and operation 19 of an Alaska liquefied natural gas project; 20 (24) after consultation with the commissioner of revenue and the 21 commissioner of natural resources, enter into contracts relating to an Alaska 22 liquefied natural gas project, including contracts for services related to 23 operation, marketing, transportation, gas treatment, marine terminal operation, 24 or liquefaction. 25 * Sec. 9. AS 31.25.080(e) is amended to read: 26 (e) If commitments to acquire firm transportation capacity for the in-state 27 natural gas pipeline are received in an open season conducted by the corporation, the 28 corporation shall, within 10 days after accepting and executing the written 29 commitments received during the open season, report the results of the open season to 30 the president of the senate and the speaker of the house of representatives and inform 31 the public of the results of the open season through publication on the Internet website
01 of the corporation and in a press release or other announcement to the media. The 02 results made public must include the name of each prospective shipper, the amount of 03 capacity allocated, and the period of the commitment. If the corporation determines 04 that the commitments received during the open season are not sufficient to permit the 05 corporation to continue the development or construction of the natural gas pipeline, 06 the corporation shall report that to the legislature within 30 days. 07 * Sec. 10. AS 31.25.080 is amended by adding a new subsection to read: 08 (g) The power in (a)(23) of this section may not be exercised by an entity or 09 subsidiary of the corporation that is advancing the development an in-state natural gas 10 pipeline. 11 * Sec. 11. AS 31.25.090 is amended by adding a new subsection to read: 12 (i) Subject to limitations on the disclosure of confidential information in (g) 13 and (h) of this section, the corporation shall provide to the commissioner of natural 14 resources and the commissioner of revenue access to information that is related to the 15 development of contracts under AS 38.05.020(b)(10) and (11). 16 * Sec. 12. AS 31.25.100 is amended to read: 17 Sec. 31.25.100. In-state natural gas pipeline fund. The in-state natural gas 18 pipeline fund is established in the corporation and consists of money appropriated to 19 it. The corporation shall determine fund management and may contract with the 20 Department of Revenue for fund management. Unless otherwise provided by law, 21 money appropriated to the fund lapses into the general fund on the day this section is 22 repealed. Interest and other income received on money in the fund shall be separately 23 accounted for and may be appropriated to the fund. The corporation may use money 24 appropriated to the fund without further appropriation for the cost of managing the 25 fund and for the planning, financing, development, acquisition, maintenance, 26 construction, and operation of the [AN] in-state natural gas pipeline described in 27 AS 31.25.005(4) and for the purposes in AS 31.25.005(4), (6), and (7). 28 * Sec. 13. AS 31.25 is amended by adding a new section to read: 29 Sec. 31.25.110. Alaska liquefied natural gas project fund. The Alaska 30 liquefied natural gas project fund is established in the corporation and consists of 31 money appropriated to it. The corporation shall determine fund management and may
01 contract with the Department of Revenue for fund management. If money is 02 appropriated to the fund to finance the cost of an Alaska liquefied natural gas project, 03 the corporation shall create an account in the fund for that purpose and hold the money 04 appropriated for that purpose in that account. Interest and other income received on 05 money in the fund shall be separately accounted for and may be appropriated to the 06 fund. The corporation may use money appropriated to the fund without further 07 appropriation for the purpose of managing the fund, for purposes related to an Alaska 08 liquefied natural gas project, and for the purpose of transferring net revenue received 09 by the corporation related to equity interest, contracts, and other activities to the 10 appropriate fund of the state as determined by the commissioner of revenue in 11 consultation with the commissioner of natural resources. 12 * Sec. 14. AS 31.25.120 is amended to read: 13 Sec. 31.25.120. Creation of subsidiaries. The corporation may create 14 subsidiary corporations for the purpose of developing, constructing, operating, and 15 financing in-state natural gas pipeline projects or other transportation mechanisms; for 16 the purpose of aiding in the development, construction, operation, and financing of in- 17 state natural gas pipeline projects; or for the purpose of acquiring [THE STATE'S 18 ROYALTY SHARE OF NATURAL GAS,] natural gas from the North Slope, and 19 natural gas from other regions of the state, including the state's outer continental shelf, 20 and making that natural gas available to markets in the state, including the delivery of 21 natural gas, including propane and other hydrocarbons associated with natural gas 22 other than oil, to coastal communities in the state, or for export. Subject to the 23 limitations for the use of money appropriated to the in-state natural gas pipeline 24 fund (AS 31.25.100) and the Alaska liquefied natural gas project fund 25 (AS 31.25.110), the [A SUBSIDIARY CORPORATION CREATED UNDER THIS 26 SECTION MAY BE INCORPORATED UNDER AS 10.20.146 - 10.20.166. THE] 27 corporation may transfer assets of the corporation to a subsidiary created under this 28 section. A subsidiary created under this section may borrow money and issue bonds as 29 evidence of that borrowing and has all the powers of the corporation that the 30 corporation grants to it. Unless otherwise provided by the corporation, the debts, 31 liabilities, and obligations of a subsidiary corporation created under this section are not
01 the debts, liabilities, or obligations of the corporation. 02 * Sec. 15. AS 31.25.140(c) is amended to read: 03 (c) To further ensure effective budgetary decision making by the legislature, 04 the board shall 05 (1) annually review the corporation's assets, including the assets of the 06 in-state natural gas pipeline fund under AS 31.25.100 and the Alaska liquefied 07 natural gas project fund under AS 31.25.110, to determine whether assets of the 08 corporation exceed an amount required to fulfill the purposes of the corporation as 09 defined in this chapter; in making its review, the board shall determine whether, and to 10 what extent, assets in excess of the amount required to fulfill the purposes of the 11 corporation during the next fiscal year are available without 12 (A) breaching an agreement entered into by the corporation; 13 (B) materially impairing the operations or financial integrity of 14 the corporation; or 15 (C) materially affecting the ability of the corporation to fulfill 16 the purposes of the corporation as defined in this chapter; 17 (2) specifically identify in the corporation's assets the amounts that the 18 board believes are necessary to meet the requirements of (1)(C) of this subsection; and 19 (3) present to the legislature by January 10 of each year a complete 20 accounting of all assets of the corporation, including assets of the in-state natural gas 21 pipeline fund under AS 31.25.100 and the Alaska liquefied natural gas project 22 fund under AS 31.25.110, and a report of the review and determination made under 23 (1) and (2) of this subsection; the accounting shall be audited by an independent 24 outside auditor. 25 * Sec. 16. AS 31.25.390 is amended by adding a new paragraph to read: 26 (7) "Alaska liquefied natural gas project" means a natural gas project 27 as described in AS 31.25.005(5) that includes collectively, the Prudhoe Bay unit gas 28 transmission line, the Point Thomson unit gas transmission line, a gas pipeline, the gas 29 treatment plant, a liquefied natural gas plant, and a marine terminal; in this paragraph, 30 (A) "gas pipeline" 31 (i) means the main natural gas pipeline from the outlet
01 flange of the gas treatment plant on the North Slope to the inlet flange 02 of the liquefied natural gas plant located in the Southcentral region of 03 the state, which shall have off-take points along the pipeline for 04 deliveries of gas in the state; 05 (ii) does not include any gas lines downstream of any 06 off-take point between the gas treatment plant and the liquefied natural 07 gas plant; 08 (B) "gas treatment plant" means those facilities and related 09 activities required to receive natural gas from the Prudhoe Bay unit gas 10 transmission line, the Point Thomson unit gas transmission line, and other 11 facilities, treat the natural gas to pipeline specifications, dispose of or deliver 12 by-products, deliver liquid products for further transportation, and deliver 13 treated natural gas for transportation through the gas pipeline; 14 (C) "liquefied natural gas plant" means the facility for 15 liquefying natural gas and includes structures, equipment, underlying land 16 rights, other associated systems, storage, and facilities for off-loading liquefied 17 natural gas; 18 (D) "marine terminal" means the terminal and those facilities 19 required to receive liquefied natural gas from the boundary of the liquefied 20 natural gas plant for marine transportation, including auxiliary vessels used in 21 the operation of the terminal; 22 (E) "Point Thomson unit gas transmission line" means a natural 23 gas transmission line from the outlet flange of the Point Thomson unit 24 production facility to the inlet flange of the gas treatment plant; and 25 (F) "Prudhoe Bay unit gas transmission line" means a natural 26 gas transmission line from the outlet flange of the Prudhoe Bay unit central gas 27 facility to the inlet flange of the gas treatment plant. 28 * Sec. 17. AS 36.30.850(b) is amended by adding new paragraphs to read: 29 (47) contracts for professional and technical services by the 30 Department of Natural Resources to support the development of agreements and 31 contracts under AS 38.05.020(b)(10) and (11);
01 (48) contracts of the Department of Law developed with client 02 participation for legal services related to an Alaska liquefied natural gas project as that 03 project is defined in AS 31.25.390, except that, to the extent practicable, the 04 Department of Law shall use the procurement process under AS 36.30.320 with the 05 participation of the client. 06 * Sec. 18. AS 37.05 is amended by adding a new section to article 6 to read: 07 Sec. 37.05.610. Alaska affordable energy fund. (a) The Alaska affordable 08 energy fund is created as a special account in the general fund. The fund consists of 09 the amount determined and deposited in the fund under (b) of this section and interest 10 earned on the fund balance. The purpose of the fund is to provide a source from which 11 the legislature may appropriate money to develop infrastructure to deliver energy to 12 areas of the state that are not expected to have or do not have direct access to a North 13 Slope natural gas pipeline. 14 (b) The amount to be deposited in (a) of this section is 20 percent of the 15 revenue received from the state's royalty gas transported in an Alaska liquefied natural 16 gas project that remains after the payment to the Alaska permanent fund under 17 AS 37.13.010. 18 (c) The legislature may make appropriations from the Alaska affordable 19 energy fund for the purpose described in (a) of this section. 20 (d) Nothing in this section creates a dedicated fund. 21 (e) In this section, 22 (1) "Alaska liquefied natural gas project" has the meaning given in 23 AS 31.25.390; 24 (2) "North Slope natural gas pipeline" has the meaning given in 25 AS 42.06.630. 26 * Sec. 19. AS 38.05.020(b) is amended to read: 27 (b) The commissioner may 28 (1) establish reasonable procedures and adopt reasonable regulations 29 necessary to carry out this chapter and, whenever necessary, issue directives or orders 30 to the director to carry out specific functions and duties; regulations adopted by the 31 commissioner shall be adopted under AS 44.62 (Administrative Procedure Act);
01 orders by the commissioner classifying land, issued after January 3, 1959, are not 02 required to be adopted under AS 44.62 (Administrative Procedure Act); 03 (2) enter into agreements considered necessary to carry out the 04 purposes of this chapter, including agreements with federal and state agencies; 05 (3) review any order or action of the director; 06 (4) exercise the powers and do the acts necessary to carry out the 07 provisions and objectives of this chapter; 08 (5) notwithstanding the provisions of any other section of this chapter, 09 grant an extension of the time within which payments due on any exploration license, 10 lease, or sale of state land, minerals, or materials may be made, including payment of 11 rental and royalties, on a finding that compliance with the requirements is or was 12 prevented by reason of war, riots, or acts of God; 13 (6) classify tracts for agricultural uses; 14 (7) after consulting with the Board of Agriculture and Conservation 15 (AS 03.09.010), waive, postpone, or otherwise modify the development requirements 16 of a contract for the sale of agricultural land if 17 (A) the land is inaccessible by road; or 18 (B) transportation, marketing, and development costs render 19 the required development uneconomic; 20 (8) reconvey or relinquish land or an interest in land to the federal 21 government if 22 (A) the land is described in an amended application for an 23 allotment under 43 U.S.C. 1617; and 24 (B) the reconveyance or relinquishment is 25 (i) for the purposes provided in 43 U.S.C. 1617; and 26 (ii) in the best interests of the state; 27 (9) lead and coordinate all matters relating to the state's review and 28 authorization of resource development projects; 29 (10) enter into commercial agreements with a duration of not more 30 than two years for project services related to a North Slope natural gas project; 31 (11) in consultation with the commissioner of revenue, participate
01 in the negotiation of agreements that include balancing, marketing, disposition of 02 natural gas, and offtake and contracts and development of terms for inclusion in 03 those proposed agreements and contracts associated with a North Slope natural 04 gas project; an agreement or contract negotiated under this paragraph to which 05 the state is a party is not effective unless the legislature authorizes the governor 06 to execute the agreement or contract; 07 (12) enter into confidentiality agreements to maintain the 08 confidentiality of information related to contract negotiations and contract 09 implementation associated with a North Slope natural gas project; information 10 under those confidentiality agreements is not subject to AS 40.25 (Alaska Public 11 Records Act), except that 12 (A) the terms of a proposed contract that the commissioner 13 presents to the legislature for the purpose of obtaining authorization for 14 the governor to execute are not confidential and must be made available to 15 the public at least 90 days before the proposed effective date for the terms; 16 and 17 (B) the commissioner may share confidential information 18 obtained under this paragraph with members of the legislature, their 19 agents, and contractors on request under confidentiality agreements, 20 either in committees held in executive session or with any member of the 21 legislature individually; 22 (13) consult with the Alaska Gasline Development Corporation in 23 the development of agreements or contracts under (10) or (11) of this subsection 24 for project services related to a gas treatment plant, pipeline, liquefaction facility, 25 marine terminal, or marine transportation services necessary to transport 26 natural gas to market; 27 (14) exercise the powers and do the acts necessary to carry out the 28 provisions and objectives of AS 43.90 that relate to this chapter. 29 * Sec. 20. AS 38.05.020(b), as amended by sec. 19 of this Act, is amended to read: 30 (b) The commissioner may 31 (1) establish reasonable procedures and adopt reasonable regulations
01 necessary to carry out this chapter and, whenever necessary, issue directives or orders 02 to the director to carry out specific functions and duties; regulations adopted by the 03 commissioner shall be adopted under AS 44.62 (Administrative Procedure Act); 04 orders by the commissioner classifying land, issued after January 3, 1959, are not 05 required to be adopted under AS 44.62 (Administrative Procedure Act); 06 (2) enter into agreements considered necessary to carry out the 07 purposes of this chapter, including agreements with federal and state agencies; 08 (3) review any order or action of the director; 09 (4) exercise the powers and do the acts necessary to carry out the 10 provisions and objectives of this chapter; 11 (5) notwithstanding the provisions of any other section of this chapter, 12 grant an extension of the time within which payments due on any exploration license, 13 lease, or sale of state land, minerals, or materials may be made, including payment of 14 rental and royalties, on a finding that compliance with the requirements is or was 15 prevented by reason of war, riots, or acts of God; 16 (6) classify tracts for agricultural uses; 17 (7) after consulting with the Board of Agriculture and Conservation 18 (AS 03.09.010), waive, postpone, or otherwise modify the development requirements 19 of a contract for the sale of agricultural land if 20 (A) the land is inaccessible by road; or 21 (B) transportation, marketing, and development costs render 22 the required development uneconomic; 23 (8) reconvey or relinquish land or an interest in land to the federal 24 government if 25 (A) the land is described in an amended application for an 26 allotment under 43 U.S.C. 1617; and 27 (B) the reconveyance or relinquishment is 28 (i) for the purposes provided in 43 U.S.C. 1617; and 29 (ii) in the best interests of the state; 30 (9) lead and coordinate all matters relating to the state's review and 31 authorization of resource development projects;
01 (10) enter into commercial agreements with a duration of not more 02 than two years for project services related to a North Slope natural gas project; 03 (11) in consultation with the commissioner of revenue, participate in 04 the negotiation of agreements that include balancing, marketing, disposition of natural 05 gas, and offtake and contracts and development of terms for inclusion in those 06 proposed agreements and contracts associated with a North Slope natural gas project; 07 an agreement or contract negotiated under this paragraph to which the state is a party 08 is not effective unless the legislature authorizes the governor to execute the agreement 09 or contract; 10 (12) enter into confidentiality agreements to maintain the 11 confidentiality of information related to contract negotiations and contract 12 implementation associated with a North Slope natural gas project; information under 13 those confidentiality agreements is not subject to AS 40.25 (Alaska Public Records 14 Act), except that 15 (A) the terms of a proposed contract that the commissioner 16 presents to the legislature for the purpose of obtaining authorization for the 17 governor to execute are not confidential and must be made available to the 18 public at least 90 days before the proposed effective date for the terms; and 19 (B) the commissioner may share confidential information 20 obtained under this paragraph with members of the legislature, their agents, 21 and contractors on request under confidentiality agreements, either in 22 committees held in executive session or with any member of the legislature 23 individually; 24 (13) consult with the Alaska Gasline Development Corporation in the 25 development of agreements or contracts under (10) or (11) of this subsection for 26 project services related to a gas treatment plant, pipeline, liquefaction facility, marine 27 terminal, or marine transportation services necessary to transport natural gas to 28 market; 29 (14) in consultation with the commissioner of revenue, take 30 custody of gas delivered to the state under AS 43.55.014(b) and manage the 31 project services and disposition and sale of that gas;
01 (15) exercise the powers and do the acts necessary to carry out the 02 provisions and objectives of AS 43.90 that relate to this chapter. 03 * Sec. 21. AS 38.05 is amended by adding a new section to read: 04 Sec. 38.05.023. Terms in an agreement or contract related to a North 05 Slope natural gas project. (a) An agreement or contract in which the state or an agent 06 of the state is a party that is negotiated under AS 38.05.020(b)(11) must include a 07 requirement that, if the commissioner determines that the North Slope natural gas 08 project is not making adequate progress toward a final investment decision, the state 09 shall have access to data developed under the agreement or contract in which the state 10 has directly participated financially. Access by the state to the data may not be on 11 terms that are more restrictive than the terms that are applicable for access by any 12 other party in the North Slope natural gas project. 13 (b) A proposed agreement or contract associated with a North Slope natural 14 gas project may not include a provision that changes a payment in lieu of property tax 15 on property that was previously taxable under AS 43.56. 16 * Sec. 22. AS 38.05.180(i) is amended to read: 17 (i) The commissioner may provide for the establishment of an exploration 18 incentive credit system under which a lessee of state land drilling an exploratory well 19 on that land may earn credits based on [UPON] the footage drilled and the region in 20 which the well is situated. The commissioner may also provide for credits to be earned 21 by persons performing geophysical work on state land, if that work is performed 22 during the two seasons immediately preceding an announced lease sale and on land 23 included within the sale area and the geophysical information is made public 24 following the sale. Credits may not exceed 50 percent of the cost of the drilling or 25 geophysical work. Credits may be used during a limited period established by the 26 commissioner and may be assigned during that period. Credits may be applied against 27 (1) royalty and rental payments for oil and gas or for gas only payable to the state or 28 (2) taxes payable under AS 43.55.011 [AS 43.55]. A credit may not exceed 50 percent 29 of the payment toward which it is being applied. Amounts due the Alaska permanent 30 fund (AS 37.13.010) shall be calculated before the application of credits under this 31 subsection.
01 * Sec. 23. AS 38.05.180 is amended by adding new subsections to read: 02 (hh) Notwithstanding (j) of this section, the commissioner may propose 03 modification to a lease from which a lessee has committed gas from that lease to a 04 North Slope natural gas project. A modification may be made under this subsection 05 only after the commissioner makes the written determination under (ii) of this section 06 that the lease may be modified. If a modification is made, the modification shall be in 07 effect during the initial project term that has acquired the major permits required for 08 the work plan and budget considered by the commissioner in the written determination 09 under (ii) of this section. A modification under this subsection may 10 (1) relate to switching between taking the state's royalty gas in value 11 and in-kind to ensure that the lessee, the state, or another person shall bear 12 proportionate costs for treatment, transportation, and liquefaction to the state's royalty 13 gas, and the state's actions do not unreasonably interfere with the long-term marketing 14 of natural gas by the lessee, the state, or another person; 15 (2) provide a method for establishing a fair market value for each 16 component of the state's royalty gas and appropriate adjustments to reflect fair market 17 deductions for reasonable costs for treatment, transportation, and liquefaction for the 18 state's royalty gas from the North Slope to the destination market; in this paragraph, 19 "reasonable costs for treatment, transportation, and liquefaction" may not be greater 20 than actual costs; 21 (3) modify net profit shares for oil and gas and sliding scale royalty 22 rates for gas by establishing fixed royalty rates that yield a value to the state that the 23 commissioner determines to be not less than the value the state would have received 24 under the terms of the lease before a modification under this subsection. 25 (ii) Before making a modification to a lease under (hh) of this section, the 26 commissioner shall make a written determination that the lease may be modified. The 27 determination by the commissioner must be based on a clear and convincing showing 28 by the lessee that 29 (1) the modification 30 (A) is in the best interests of the state; and 31 (B) will materially improve the likelihood of a successful North
01 Slope natural gas project; 02 (2) the North Slope natural gas project has sufficient 03 (A) financial commitment for a work plan and budget 04 necessary to support major permits and regulatory filings required by state and 05 federal agencies; and 06 (B) commitment of gas by lessees; and 07 (3) the lease will produce hydrocarbons that will be transported on the 08 North Slope natural gas project during the initial project term. 09 * Sec. 24. AS 38.05.180(hh), enacted by sec. 23 of this Act, is amended to read: 10 (hh) Notwithstanding (j) of this section, the commissioner may propose 11 modification to a lease from which a lessee has committed gas from that lease to a 12 North Slope natural gas project. A modification may be made under this subsection 13 only after the commissioner makes the written determination under (ii) of this section 14 that the lease may be modified. If a modification is made, the modification shall be in 15 effect during the initial project that has acquired the major permits required for the 16 work plan and budget considered by the commissioner in the written determination 17 under (ii) of this section. A modification under this subsection may 18 (1) relate to switching between taking the state's royalty gas in value 19 and in-kind to ensure that the lessee, the state, or another person shall bear 20 proportionate costs for treatment, transportation, and liquefaction to the state's royalty 21 gas or gas delivered to the state under AS 43.55.014, and the state's actions do not 22 unreasonably interfere with the long-term marketing of natural gas by the lessee, the 23 state, or another person; 24 (2) provide a method for establishing a fair market value for each 25 component of the state's royalty gas and appropriate adjustments to reflect fair market 26 deductions for reasonable costs for treatment, transportation, and liquefaction for the 27 state's royalty gas from the North Slope to the destination market; in this paragraph, 28 "reasonable costs for treatment, transportation, and liquefaction" may not be greater 29 than actual costs; 30 (3) modify net profit shares for oil and gas and sliding scale royalty 31 rates for gas by establishing fixed royalty rates that yield a value to the state that the
01 commissioner determines to be not less than the value the state would have received 02 under the terms of the lease before a modification under this subsection. 03 * Sec. 25. AS 38.05.182(a) is amended to read: 04 (a) Any royalty provided for in AS 38.05.135 - 38.05.181 may be taken in 05 kind rather than in money if the commissioner determines that the taking in kind 06 would be in the best interest of the state. However, royalties on oil and gas shall be 07 taken in kind unless the commissioner determines that the taking in money would be 08 in the best interest of the state. It is not in the best interest of the state to take 09 royalty on gas in money from a lessee transporting gas in the North Slope natural 10 gas project if the lessee has committed to dispose of or market the state's royalty 11 gas taken in kind on the same terms and conditions as the lessee markets or 12 disposes of the lessee's gas. 13 * Sec. 26. AS 38.05.183(a) is amended to read: 14 (a) The sale, exchange, or other disposal of a mineral obtained by the state as a 15 royalty under AS 38.05.182, [OR] the sale, exchange, or other disposal in whole or in 16 part of a right to receive future mineral production under a state lease under this 17 chapter, or the sale, exchange, or other disposal of gas delivered to the state under 18 AS 43.55.014(b) shall be by competitive bid and the sale, exchange, or other disposal 19 made to the highest responsible bidder, except that competitive bidding is not required 20 when the commissioner, after prior written notice to the Alaska Royalty Oil and Gas 21 Development Advisory Board under AS 38.06.050, determines that the best interest of 22 the state does not require it or that no competition exists. 23 * Sec. 27. AS 38.05.183(c) is amended to read: 24 (c) If the commissioner determines that a sale, exchange, or other disposal of a 25 mineral obtained by the state as a royalty under AS 38.05.182, [OR] of a right to 26 receive future mineral production under a state lease under this chapter, or of gas 27 delivered to the state under AS 43.55.014(b) shall be made otherwise than by 28 competitive bid, and the Alaska Royalty Oil and Gas Development Advisory Board 29 has been notified in writing of that determination, the commissioner shall make public 30 in writing the specific findings and conclusions on [UPON] which that determination 31 is based.
01 * Sec. 28. AS 38.05.183(d) is amended to read: 02 (d) Oil or gas taken in kind by the state as its royalty share or gas delivered to 03 the state under AS 43.55.014(b) may not be sold or otherwise disposed of for export 04 from the state until the commissioner determines that the [ROYALTY-IN-KIND] oil 05 or gas is surplus to the present and projected intrastate domestic and industrial needs. 06 The commissioner shall make public, in writing, the specific findings and reasons on 07 which the determination is based. 08 * Sec. 29. AS 38.05.183(e) is amended to read: 09 (e) When a sale, exchange, or other disposal of oil or gas taken in kind by the 10 state as its royalty share, or a sale, exchange, or other disposal in whole or in part of a 11 right to receive future royalty oil or gas, under a state lease under this chapter is made 12 other than by competitive bid, or when a sale, exchange, or other disposal of gas 13 delivered to the state under AS 43.55.014(b) is made other than by competitive 14 bid, the sale, exchange, or other disposal shall be awarded by the commissioner to the 15 prospective buyer whose proposal offers the maximum benefits to citizens of the state. 16 The commissioner shall consider 17 (1) the cash value offered; 18 (2) the projected effects of the sale, exchange, or other disposal on the 19 economy of the state; 20 (3) the projected benefits of refining or processing the oil or gas in the 21 state; 22 (4) the ability of the prospective buyer to provide refined products or 23 by-products for distribution and sale in the state with price or supply benefits to the 24 citizens of the state; and 25 (5) the criteria listed in AS 38.06.070(a). 26 * Sec. 30. AS 38.05.965 is amended by adding new paragraphs to read: 27 (26) "initial project term" means the duration sufficient to support an 28 investment decision by the sponsors of a North Slope natural gas project to permit 29 realization of a competitive economic return, to enable necessary financing, and to 30 support agreements for the sale of hydrocarbons transported on a North Slope natural 31 gas project;
01 (27) "North Slope natural gas project" means a project to produce 02 natural gas from state oil and gas and gas only leases that include land north of 68 03 degrees North latitude for transport in a gaseous state from the North Slope; 04 (28) "project services" means services provided by a gas treatment 05 plant, pipeline, liquefaction facility, or marine terminal, marine transportation 06 services, or other services necessary to transport natural gas to market. 07 * Sec. 31. AS 38.34.020(a) is amended to read: 08 (a) A state agency or entity conducting a review or taking action relating to a 09 project under AS 31.25 (Alaska Gasline Development Corporation) [THE IN- 10 STATE NATURAL GAS PIPELINE PROJECT UNDER THIS CHAPTER] shall 11 expedite the review or action in a manner consistent with the timely completion of the 12 project. 13 * Sec. 32. AS 38.34.020(b) is amended to read: 14 (b) Notwithstanding any contrary provision of law, a state agency or entity 15 may not include in any project certificate, right-of-way, permit, or other authorization 16 a term or condition that is not required by law if the in-state gasline project 17 coordinator determines that the term or condition would prevent or impair, in any 18 significant respect, the expeditious construction and operation or expansion of a 19 project under AS 31.25 (Alaska Gasline Development Corporation) [THE IN- 20 STATE NATURAL GAS PIPELINE PROJECT]. 21 * Sec. 33. AS 38.34.020(c) is amended to read: 22 (c) Unless required by law, a state agency or entity may not add to, amend, or 23 abrogate any certificate, right-of-way, permit, or other authorization if the in-state 24 gasline project coordinator determines that the action would prevent or impair, in any 25 significant respect, the expeditious construction, operation, or expansion of a project 26 under AS 31.25 (Alaska Gasline Development Corporation) [THE IN-STATE 27 NATURAL GAS PIPELINE PROJECT]. 28 * Sec. 34. AS 40.25.100(a) is amended to read: 29 (a) Information in the possession of the Department of Revenue that discloses 30 the particulars of the business or affairs of a taxpayer or other person, including 31 information under AS 38.05.020(b)(11) that is subject to a confidentiality
01 agreement under AS 38.05.020(b)(12), is not a matter of public record, except as 02 provided in AS 43.05.230(i) or for purposes of investigation and law enforcement. The 03 information shall be kept confidential except when its production is required in an 04 official investigation, administrative adjudication under AS 43.05.405 - 43.05.499, or 05 court proceeding. These restrictions do not prohibit the publication of statistics 06 presented in a manner that prevents the identification of particular reports and items, 07 prohibit the publication of tax lists showing the names of taxpayers who are delinquent 08 and relevant information that may assist in the collection of delinquent taxes, or 09 prohibit the publication of records, proceedings, and decisions under AS 43.05.405 - 10 43.05.499. 11 * Sec. 35. AS 40.25.100(a), as amended by sec. 34 of this Act, is amended to read: 12 (a) Information in the possession of the Department of Revenue that discloses 13 the particulars of the business or affairs of a taxpayer or other person, including 14 information under AS 38.05.020(b)(11) that is subject to a confidentiality agreement 15 under AS 38.05.020(b)(12), is not a matter of public record, except as provided in 16 AS 43.05.230(i) or (k) or for purposes of investigation and law enforcement. The 17 information shall be kept confidential except when its production is required in an 18 official investigation, administrative adjudication under AS 43.05.405 - 43.05.499, or 19 court proceeding. These restrictions do not prohibit the publication of statistics 20 presented in a manner that prevents the identification of particular reports and items, 21 prohibit the publication of tax lists showing the names of taxpayers who are delinquent 22 and relevant information that may assist in the collection of delinquent taxes, or 23 prohibit the publication of records, proceedings, and decisions under AS 43.05.405 - 24 43.05.499. 25 * Sec. 36. AS 40.25.120(a) is amended to read: 26 (a) Every person has a right to inspect a public record in the state, including 27 public records in recorders' offices, except 28 (1) records of vital statistics and adoption proceedings, which shall be 29 treated in the manner required by AS 18.50; 30 (2) records pertaining to juveniles unless disclosure is authorized by 31 law;
01 (3) medical and related public health records; 02 (4) records required to be kept confidential by a federal law or 03 regulation or by state law; 04 (5) to the extent the records are required to be kept confidential under 05 20 U.S.C. 1232g and the regulations adopted under 20 U.S.C. 1232g in order to secure 06 or retain federal assistance; 07 (6) records or information compiled for law enforcement purposes, but 08 only to the extent that the production of the law enforcement records or information 09 (A) could reasonably be expected to interfere with enforcement 10 proceedings; 11 (B) would deprive a person of a right to a fair trial or an 12 impartial adjudication; 13 (C) could reasonably be expected to constitute an unwarranted 14 invasion of the personal privacy of a suspect, defendant, victim, or witness; 15 (D) could reasonably be expected to disclose the identity of a 16 confidential source; 17 (E) would disclose confidential techniques and procedures for 18 law enforcement investigations or prosecutions; 19 (F) would disclose guidelines for law enforcement 20 investigations or prosecutions if the disclosure could reasonably be expected to 21 risk circumvention of the law; or 22 (G) could reasonably be expected to endanger the life or 23 physical safety of an individual; 24 (7) names, addresses, and other information identifying a person as a 25 participant in the Alaska Higher Education Savings Trust under AS 14.40.802 or the 26 advance college tuition savings program under AS 14.40.803 - 14.40.817; 27 (8) public records containing information that would disclose or might 28 lead to the disclosure of a component in the process used to execute or adopt an 29 electronic signature if the disclosure would or might cause the electronic signature to 30 cease being under the sole control of the person using it; 31 (9) reports submitted under AS 05.25.030 concerning certain
01 collisions, accidents, or other casualties involving boats; 02 (10) records or information pertaining to a plan, program, or 03 procedures for establishing, maintaining, or restoring security in the state, or to a 04 detailed description or evaluation of systems, facilities, or infrastructure in the state, 05 but only to the extent that the production of the records or information 06 (A) could reasonably be expected to interfere with the 07 implementation or enforcement of the security plan, program, or procedures; 08 (B) would disclose confidential guidelines for investigations or 09 enforcement and the disclosure could reasonably be expected to risk 10 circumvention of the law; or 11 (C) could reasonably be expected to endanger the life or 12 physical safety of an individual or to present a real and substantial risk to the 13 public health and welfare; 14 (11) the written notification regarding a proposed regulation provided 15 under AS 24.20.105 to the Department of Law and the affected state agency and 16 communications between the Legislative Affairs Agency, the Department of Law, and 17 the affected state agency under AS 24.20.105; 18 (12) records that are 19 (A) proprietary, privileged, or a trade secret in accordance with 20 AS 43.90.150 or 43.90.220(e); 21 (B) applications that are received under AS 43.90 until notice is 22 published under AS 43.90.160; 23 (13) information of the Alaska Gasline Development Corporation 24 created under AS 31.25.010 or a subsidiary of the Alaska Gasline Development 25 Corporation that is confidential by law or under a valid confidentiality agreement; 26 (14) information under AS 38.05.020(b)(11) that is subject to a 27 confidentiality agreement under AS 38.05.020(b)(12). 28 * Sec. 37. AS 43.05.010 is amended to read: 29 Sec. 43.05.010. Duties of commissioner. The commissioner of revenue shall 30 (1) exercise general supervision and direct the activities of the 31 Department of Revenue;
01 (2) supervise the fiscal affairs and responsibilities of the department; 02 (3) prescribe uniform rules for investigations and hearings; 03 (4) keep a record of all departmental proceedings, record and file all 04 bonds, and assume custody of returns, reports, papers, and documents of the 05 department; 06 (5) adopt a seal and affix it to each order, process, or certificate issued 07 by the commissioner; 08 (6) keep a record of each order, process, and certificate issued by the 09 commissioner, and keep the record open to public inspection at all reasonable times; 10 (7) hold hearings and investigations necessary for the administration of 11 state tax and revenue laws; 12 (8) except as provided in AS 43.05.405 - 43.05.499 and in 13 AS 44.64.030, hear and determine appeals of a matter within the jurisdiction of the 14 Department of Revenue and enter orders on the appeals that are final unless reversed 15 or modified by the courts; 16 (9) issue subpoenas to require the attendance of witnesses and the 17 production of necessary books, papers, documents, correspondence, and other things; 18 (10) order the taking of depositions before a person competent to 19 administer oaths; 20 (11) administer oaths and take acknowledgments; 21 (12) request the attorney general for rulings on the interpretation of the 22 tax and revenue laws administered by the department; 23 (13) call upon the attorney general to institute actions for recovery of 24 unpaid taxes, fees, excises, additions to tax, penalties, and interest; 25 (14) issue warrants for the collection of unpaid tax penalties and 26 interest and take all steps necessary and proper to enforce full and complete 27 compliance with the tax, license, excise, and other revenue laws of the state; 28 (15) report to the legislature before February 15 of each year the total 29 amount of contributions reported and the total amount of credit claimed during the 30 previous calendar year under AS 43.20.014, AS 43.55.019, AS 43.56.018, 31 AS 43.65.018, AS 43.75.018, and AS 43.77.045;
01 (16) consult with the commissioner of natural resources on 02 negotiation of contracts and development of terms for inclusion in proposed 03 contracts associated with a North Slope natural gas project. 04 * Sec. 38. AS 43.05.010, as amended by sec. 37 of this Act, is amended to read: 05 Sec. 43.05.010. Duties of commissioner. The commissioner of revenue shall 06 (1) exercise general supervision and direct the activities of the 07 Department of Revenue; 08 (2) supervise the fiscal affairs and responsibilities of the department; 09 (3) prescribe uniform rules for investigations and hearings; 10 (4) keep a record of all departmental proceedings, record and file all 11 bonds, and assume custody of returns, reports, papers, and documents of the 12 department; 13 (5) adopt a seal and affix it to each order, process, or certificate issued 14 by the commissioner; 15 (6) keep a record of each order, process, and certificate issued by the 16 commissioner, and keep the record open to public inspection at all reasonable times; 17 (7) hold hearings and investigations necessary for the administration of 18 state tax and revenue laws; 19 (8) except as provided in AS 43.05.405 - 43.05.499 and in 20 AS 44.64.030, hear and determine appeals of a matter within the jurisdiction of the 21 Department of Revenue and enter orders on the appeals that are final unless reversed 22 or modified by the courts; 23 (9) issue subpoenas to require the attendance of witnesses and the 24 production of necessary books, papers, documents, correspondence, and other things; 25 (10) order the taking of depositions before a person competent to 26 administer oaths; 27 (11) administer oaths and take acknowledgments; 28 (12) request the attorney general for rulings on the interpretation of the 29 tax and revenue laws administered by the department; 30 (13) call upon the attorney general to institute actions for recovery of 31 unpaid taxes, fees, excises, additions to tax, penalties, and interest;
01 (14) issue warrants for the collection of unpaid tax penalties and 02 interest and take all steps necessary and proper to enforce full and complete 03 compliance with the tax, license, excise, and other revenue laws of the state; 04 (15) report to the legislature before February 15 of each year the total 05 amount of contributions reported and the total amount of credit claimed during the 06 previous calendar year under AS 43.20.014, AS 43.55.019, AS 43.56.018, 07 AS 43.65.018, AS 43.75.018, and AS 43.77.045; 08 (16) consult with the commissioner of natural resources on negotiation 09 of contracts and development of terms for inclusion in proposed contracts associated 10 with a North Slope natural gas project; 11 (17) direct the disposition of revenue received from gas delivered 12 to the state under AS 43.55.014(b) by entering into agreements with the 13 commissioner of natural resources related to the management of the custody and 14 disposition of gas delivered to the state under AS 43.55.014(b). 15 * Sec. 39. AS 43.05.230 is amended by adding a new subsection to read: 16 (k) The name of each person that the department has allowed to make an 17 election under AS 43.55.014(a) and the amount of gas produced from each lease or 18 property to which an effective election under AS 43.55.014 applies is public 19 information. 20 * Sec. 40. AS 43.20.144(d) is amended to read: 21 (d) The sales factor of a taxpayer subject to this section is a fraction, 22 (1) the numerator of which is the sum of the following for the tax 23 period: 24 (A) the tariffs allowed and received by or for the taxpayer for 25 transporting oil or gas by pipeline in this state, regardless of whether the tariffs 26 are paid by third parties or by entities within the taxpayer's consolidated 27 business; and 28 (B) the total sales of the taxpayer in this state, determined in 29 accordance with AS 43.19 (Multistate Tax Compact), but excluding 30 (i) those sales already included in the tariffs described 31 in (A) of this paragraph;
01 (ii) constructive sales or deemed sales of natural gas 02 delivered to the state as payment of tax under an election made by 03 the taxpayer under AS 43.55.014; 04 (iii) fees, allowed and received, that are paid 05 between entities within the consolidated business of the taxpayer 06 for transporting the taxpayer's natural gas; and 07 (2) the denominator of which is the sum of the following for the tax 08 period: 09 (A) the tariffs allowed and received by or for the taxpayer's 10 consolidated business for transporting oil or gas by pipeline everywhere, 11 regardless of whether the tariffs are paid by third parties or by entities within 12 the taxpayer's consolidated business; and 13 (B) the total sales of the taxpayer's consolidated business 14 everywhere, determined in accordance with AS 43.19 (Multistate Tax 15 Compact), but excluding 16 (i) those sales already included in the tariffs described 17 in (A) of this paragraph; 18 (ii) constructive sales or deemed sales of natural gas 19 delivered to the state as payment of tax under an election made by 20 the taxpayer under AS 43.55.014 or delivered in another tax 21 jurisdiction under a law comparable to AS 43.55.014; 22 (iii) fees, allowed and received, that are paid 23 between entities within the consolidated business of the taxpayer 24 for transporting the taxpayer's natural gas. 25 * Sec. 41. AS 43.20.144(f) is amended to read: 26 (f) The extraction factor of a taxpayer subject to this section is a fraction, 27 (1) the numerator of which is the sum of the following for the tax 28 period: 29 (A) the number of barrels of the taxpayer's oil (net of royalty to 30 an unrelated party) produced from or allocated to leases or properties of the 31 taxpayer in this state; and
01 (B) one-sixth of the number of Mcf of the taxpayer's gas, 02 excluding reinjected gas but including gas subject to an election under 03 AS 43.55.014, (net of royalty to an unrelated party) produced from or allocated 04 to leases or properties of the taxpayer in this state [, EXCLUDING 05 REINJECTED GAS]; and 06 (2) the denominator of which is the sum of the following for the tax 07 period: 08 (A) the number of barrels of oil of the taxpayer's consolidated 09 business (net of royalty to an unrelated party) produced from or allocated to 10 leases or properties of the taxpayer's consolidated business everywhere; and 11 (B) one-sixth of the number of Mcf of gas, excluding 12 reinjected gas but including gas subject to an election under AS 43.55.014, 13 of the taxpayer's consolidated business (net of royalty to an unrelated party) 14 produced from or allocated to leases or properties of the taxpayer's 15 consolidated business everywhere [, EXCLUDING REINJECTED GAS]. 16 * Sec. 42. AS 43.55.011(e) is amended to read: 17 (e) There is levied on the producer of oil or gas a tax for all oil and gas 18 produced each calendar year from each lease or property in the state, less any oil and 19 gas the ownership or right to which is exempt from taxation or constitutes a 20 landowner's royalty interest or for which a tax is levied by AS 43.55.014. Except as 21 otherwise provided under (f), (j), (k), (o), and (p) of this section, for oil and gas 22 produced 23 (1) before January 1, 2014, the tax is equal to the sum of 24 (A) the annual production tax value of the taxable oil and gas 25 as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 26 (B) the sum, over all months of the calendar year, of the tax 27 amounts determined under (g) of this section; 28 (2) on and after January 1, 2014, and before January 1, 2022, the tax 29 is equal to the annual production tax value of the taxable oil and gas as calculated 30 under AS 43.55.160(a)(1) multiplied by 35 percent; 31 (3) on and after January 1, 2022, the tax for
01 (A) oil is equal to the annual production tax value of the 02 taxable oil as calculated under AS 43.55.160(h) multiplied by 35 percent; 03 (B) gas is equal to 13 percent of the gross value at the point 04 of production of the taxable gas; if the gross value at the point of 05 production of gas produced from a lease or property is less than zero, that 06 gross value at the point of production is considered zero for purposes of 07 this subparagraph. 08 * Sec. 43. AS 43.55.011(f) is amended to read: 09 (f) The levy of tax under (e) of this section for 10 (1) oil and gas produced before January 1, 2022, from leases or 11 properties that include land north of 68 degrees North latitude, other than [OIL 12 AND GAS PRODUCTION SUBJECT TO (i) OF THIS SECTION AND] gas subject 13 to (o) of this section, may not be less than 14 (A) [(1)] four percent of the gross value at the point of 15 production when the average price per barrel for Alaska North Slope crude oil 16 for sale on the United States West Coast during the calendar year for which the 17 tax is due is more than $25; 18 (B) [(2)] three percent of the gross value at the point of 19 production when the average price per barrel for Alaska North Slope crude oil 20 for sale on the United States West Coast during the calendar year for which the 21 tax is due is over $20 but not over $25; 22 (C) [(3)] two percent of the gross value at the point of 23 production when the average price per barrel for Alaska North Slope crude oil 24 for sale on the United States West Coast during the calendar year for which the 25 tax is due is over $17.50 but not over $20; 26 (D) [(4)] one percent of the gross value at the point of 27 production when the average price per barrel for Alaska North Slope crude oil 28 for sale on the United States West Coast during the calendar year for which the 29 tax is due is over $15 but not over $17.50; or 30 (E) [(5)] zero percent of the gross value at the point of 31 production when the average price per barrel for Alaska North Slope crude oil
01 for sale on the United States West Coast during the calendar year for which the 02 tax is due is $15 or less; and 03 (2) oil produced on and after January 1, 2022, from leases or 04 properties that include land north of 68 degrees North latitude, may not be less 05 than 06 (A) four percent of the gross value at the point of 07 production when the average price per barrel for Alaska North Slope 08 crude oil for sale on the United States West Coast during the calendar 09 year for which the tax is due is more than $25; 10 (B) three percent of the gross value at the point of 11 production when the average price per barrel for Alaska North Slope 12 crude oil for sale on the United States West Coast during the calendar 13 year for which the tax is due is over $20 but not over $25; 14 (C) two percent of the gross value at the point of production 15 when the average price per barrel for Alaska North Slope crude oil for 16 sale on the United States West Coast during the calendar year for which 17 the tax is due is over $17.50 but not over $20; 18 (D) one percent of the gross value at the point of production 19 when the average price per barrel for Alaska North Slope crude oil for 20 sale on the United States West Coast during the calendar year for which 21 the tax is due is over $15 but not over $17.50; or 22 (E) zero percent of the gross value at the point of 23 production when the average price per barrel for Alaska North Slope 24 crude oil for sale on the United States West Coast during the calendar 25 year for which the tax is due is $15 or less. 26 * Sec. 44. AS 43.55 is amended by adding a new section to read: 27 Sec. 43.55.014. Payment in gas of tax for gas. (a) For gas produced on and 28 after January 1, 2022, other than gas described in (e) of this section, the department 29 shall allow a producer to make an election, under regulations adopted by the 30 department, to pay in gas the production tax levied by this section in lieu of the tax 31 otherwise levied for the gas by AS 43.55.011(e). An election under this subsection
01 applies only to gas produced from oil and gas leases modified under AS 38.05.180(hh) 02 from which the commissioner of natural resources has determined to take royalty gas 03 in kind under AS 38.05.182. 04 (b) A production tax levied by this section is equal to 13 percent of the gas 05 otherwise taxable under AS 43.55.011(e)(3) produced from each oil and gas lease to 06 which an effective election under (a) of this section applies, when and as that gas is 07 produced. The producer shall pay the tax in gas by delivering that 13 percent of the 08 gas to the state at the point of production. 09 (c) The Department of Natural Resources shall manage under 10 AS 38.05.020(b)(14) the custody and disposition of gas delivered to the state under (b) 11 of this section. 12 (d) An assessment under AS 43.05.245 against a producer for an 13 underpayment of a tax levied by this section may be made in terms of an amount of 14 gas or an amount of money, as determined under regulations adopted by the 15 department. If the assessment is made in terms of money, the amount for a month of 16 production for an oil and gas lease subject to an effective election under (a) of this 17 section is the product of the number of units of gas by which the producer's delivery to 18 the state was less than the amount required by (b) of this section, multiplied by the 19 gross value at the point of production for each unit of the gas other than gas that was 20 not subject to tax or gas that was delivered to the state under (b) of this section. The 21 department may allow a credit or refund under AS 43.05.275 for an overpayment of a 22 tax levied by this section that may be issued in the form of gas or money, as 23 determined under regulations adopted by the department. If the refund is allowed in 24 terms of money, the amount of the credit or refund for a month of production for an oil 25 and gas lease subject to an effective election under (a) of this section is the product of 26 the number of units of gas by which the producer's delivery to the state was more than 27 the amount required under (b) of this section, multiplied by the gross value at the point 28 of production for each unit of the gas other than gas that was not subject to tax or gas 29 that was delivered to the state under (b) of this section. Interest that is determined as a 30 percentage of the amount of a tax underpayment or overpayment and a penalty that is 31 a percentage of the amount of a tax underpayment are calculated as a percentage of the
01 amount of money determined in this subsection. An amount of gas that was less than 02 the amount required to be delivered to the state under (b) of this section or an amount 03 of gas that was more than the amount required to be delivered to the state under (b) of 04 this section that is adjusted as provided by a gas balancing agreement to which the 05 state is a party under AS 38.05.020(b)(11) is not subject to assessment under 06 AS 43.05.245 or a credit or refund under AS 43.05.275. In this subsection, "unit" 07 means a unit of measurement for gas identified by the department under regulations 08 adopted by the department and may be expressed as 1,000 cubic feet, 1,000,000 09 British thermal units, or another appropriate unit of measurement specified by the 10 department under regulations adopted by the department. 11 (e) This section does not apply to gas 12 (1) flared, released, or allowed to escape and, under AS 43.55.020(e), 13 considered as gas produced from a lease or property for the purpose of AS 43.55.011 - 14 43.55.180; or 15 (2) used in the operation of a lease or property in the state in drilling 16 for or producing oil or gas, or for repressuring and, under AS 43.55.020(e), considered 17 as gas produced from a lease or property for the purpose of AS 43.55.011 - 43.55.180. 18 * Sec. 45. AS 43.55.019(a) is amended to read: 19 (a) A producer of oil or gas is allowed a credit against the tax levied by 20 AS 43.55.011(e) [DUE UNDER THIS CHAPTER] for cash contributions accepted for 21 (1) direct instruction, research, and educational support purposes, 22 including library and museum acquisitions, and contributions to endowment, by an 23 Alaska university foundation or by a nonprofit, public or private, Alaska two-year or 24 four-year college accredited by a regional accreditation association; 25 (2) secondary school level vocational education courses, programs, and 26 facilities by a school district in the state; 27 (3) vocational education courses, programs, equipment, and facilities 28 by a state-operated vocational technical education and training school, a nonprofit 29 regional training center recognized by the Department of Labor and Workforce 30 Development, and an apprenticeship program in the state that is registered with 31 the United States Department of Labor under 29 U.S.C. 50 - 50b (National
01 Apprenticeship Act); 02 (4) a facility or an annual intercollegiate sports tournament by a 03 nonprofit, public or private, Alaska two-year or four-year college accredited by a 04 regional accreditation association; 05 (5) Alaska Native cultural or heritage programs and educational 06 support, including mentoring and tutoring, provided by a nonprofit agency for public 07 school staff and for students who are in grades kindergarten through 12 in the state; 08 (6) education, research, rehabilitation, and facilities by an institution 09 that is located in the state and that qualifies as a coastal ecosystem learning center 10 under the Coastal America Partnership established by the federal government; and 11 (7) the Alaska higher education investment fund under AS 37.14.750. 12 * Sec. 46. AS 43.55.019(a), as amended by sec. 21, ch. 92, SLA 2010, sec. 14, ch. 7, 13 FSSLA 2011, sec. 17, ch. 74, SLA 2012, and sec. 45 of this Act, is amended to read: 14 (a) A producer of oil or gas is allowed a credit against the tax levied by 15 AS 43.55.011(e) due under this chapter for cash contributions accepted 16 (1) for direct instruction, research, and educational support purposes, 17 including library and museum acquisitions, and contributions to endowment, by an 18 Alaska university foundation or by a nonprofit, public or private, Alaska two-year or 19 four-year college accredited by a regional accreditation association; 20 (2) for secondary school level vocational education courses, programs, 21 and facilities by a school district in the state; 22 (3) for vocational education courses, programs, equipment, and 23 facilities by a state-operated vocational technical education and training school, a 24 nonprofit regional training center recognized by the Department of Labor and 25 Workforce Development, and an apprenticeship program in the state that is 26 registered with the United States Department of Labor under 29 U.S.C. 50 - 50b 27 (National Apprenticeship Act); and 28 (4) for the Alaska higher education investment fund under 29 AS 37.14.750. 30 * Sec. 47. AS 43.55.019(e) is amended to read: 31 (e) The credit under this section may not reduce a person's tax liability under
01 AS 43.55.011(e) [THIS CHAPTER] to below zero for any tax year. An unused credit 02 or portion of a credit not used under this section for a tax year may not be sold, traded, 03 transferred, or applied in a subsequent tax year. 04 * Sec. 48. AS 43.55.020(a) is amended to read: 05 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 06 the tax as follows: 07 (1) for oil and gas produced before January 1, 2014, an installment 08 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 09 as allowed by law, is due for each month of the calendar year on the last day of the 10 following month; except as otherwise provided under (2) of this subsection, the 11 amount of the installment payment is the sum of the following amounts, less 1/12 of 12 the tax credits that are allowed by law to be applied against the tax levied by 13 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 14 not be less than zero: 15 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 16 produced from leases or properties in the state outside the Cook Inlet 17 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 18 the greater of 19 (i) zero; or 20 (ii) the sum of 25 percent and the tax rate calculated for 21 the month under AS 43.55.011(g) multiplied by the remainder obtained 22 by subtracting 1/12 of the producer's adjusted lease expenditures for the 23 calendar year of production under AS 43.55.165 and 43.55.170 that are 24 deductible for the oil and gas under AS 43.55.160 from the gross value 25 at the point of production of the oil and gas produced from the leases or 26 properties during the month for which the installment payment is 27 calculated; 28 (B) for oil and gas produced from leases or properties subject 29 to AS 43.55.011(f), the greatest of 30 (i) zero; 31 (ii) zero percent, one percent, two percent, three
01 percent, or four percent, as applicable, of the gross value at the point of 02 production of the oil and gas produced from the leases or properties 03 during the month for which the installment payment is calculated; or 04 (iii) the sum of 25 percent and the tax rate calculated for 05 the month under AS 43.55.011(g) multiplied by the remainder obtained 06 by subtracting 1/12 of the producer's adjusted lease expenditures for the 07 calendar year of production under AS 43.55.165 and 43.55.170 that are 08 deductible for the oil and gas under AS 43.55.160 from the gross value 09 at the point of production of the oil and gas produced from those leases 10 or properties during the month for which the installment payment is 11 calculated; 12 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 13 each lease or property, the greater of 14 (i) zero; or 15 (ii) the sum of 25 percent and the tax rate calculated for 16 the month under AS 43.55.011(g) multiplied by the remainder obtained 17 by subtracting 1/12 of the producer's adjusted lease expenditures for the 18 calendar year of production under AS 43.55.165 and 43.55.170 that are 19 deductible under AS 43.55.160 for the oil or gas, respectively, 20 produced from the lease or property from the gross value at the point of 21 production of the oil or gas, respectively, produced from the lease or 22 property during the month for which the installment payment is 23 calculated; 24 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 25 (i) the sum of 25 percent and the tax rate calculated for 26 the month under AS 43.55.011(g) multiplied by the remainder obtained 27 by subtracting 1/12 of the producer's adjusted lease expenditures for the 28 calendar year of production under AS 43.55.165 and 43.55.170 that are 29 deductible for the oil and gas under AS 43.55.160 from the gross value 30 at the point of production of the oil and gas produced from the leases or 31 properties during the month for which the installment payment is
01 calculated, but not less than zero; or 02 (ii) four percent of the gross value at the point of 03 production of the oil and gas produced from the leases or properties 04 during the month, but not less than zero; 05 (2) an amount calculated under (1)(C) of this subsection for oil or gas 06 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 07 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 08 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 09 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 10 amount of taxable gas produced during the month for the amount of taxable gas 11 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 12 (2)(A), as applicable, the amount of taxable oil produced during the month for the 13 amount of taxable oil produced during the calendar year; 14 (3) an installment payment of the estimated tax levied by 15 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 16 on the last day of the following month; the amount of the installment payment is the 17 sum of 18 (A) the applicable tax rate for oil provided under 19 AS 43.55.011(i), multiplied by the gross value at the point of production of the 20 oil taxable under AS 43.55.011(i) and produced from the lease or property 21 during the month; and 22 (B) the applicable tax rate for gas provided under 23 AS 43.55.011(i), multiplied by the gross value at the point of production of the 24 gas taxable under AS 43.55.011(i) and produced from the lease or property 25 during the month; 26 (4) any amount of tax levied by AS 43.55.011, net of any credits 27 applied as allowed by law, that exceeds the total of the amounts due as installment 28 payments of estimated tax is due on March 31 of the year following the calendar year 29 of production; 30 (5) for oil and gas produced on and after January 1, 2014, and before 31 January 1, 2022, an installment payment of the estimated tax levied by
01 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 02 month of the calendar year on the last day of the following month; except as otherwise 03 provided under (6) of this subsection, the amount of the installment payment is the 04 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 05 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 06 of the installment payment may not be less than zero: 07 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 08 produced from leases or properties in the state outside the Cook Inlet 09 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 10 the greater of 11 (i) zero; or 12 (ii) 35 percent multiplied by the remainder obtained by 13 subtracting 1/12 of the producer's adjusted lease expenditures for the 14 calendar year of production under AS 43.55.165 and 43.55.170 that are 15 deductible for the oil and gas under AS 43.55.160 from the gross value 16 at the point of production of the oil and gas produced from the leases or 17 properties during the month for which the installment payment is 18 calculated; 19 (B) for oil and gas produced from leases or properties subject 20 to AS 43.55.011(f), the greatest of 21 (i) zero; 22 (ii) zero percent, one percent, two percent, three 23 percent, or four percent, as applicable, of the gross value at the point of 24 production of the oil and gas produced from the leases or properties 25 during the month for which the installment payment is calculated; or 26 (iii) 35 percent multiplied by the remainder obtained by 27 subtracting 1/12 of the producer's adjusted lease expenditures for the 28 calendar year of production under AS 43.55.165 and 43.55.170 that are 29 deductible for the oil and gas under AS 43.55.160 from the gross value 30 at the point of production of the oil and gas produced from those leases 31 or properties during the month for which the installment payment is
01 calculated, except that, for the purposes of this calculation, a reduction 02 from the gross value at the point of production may apply for oil and 03 gas subject to AS 43.55.160(f) or (g); 04 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 05 each lease or property, the greater of 06 (i) zero; or 07 (ii) 35 percent multiplied by the remainder obtained by 08 subtracting 1/12 of the producer's adjusted lease expenditures for the 09 calendar year of production under AS 43.55.165 and 43.55.170 that are 10 deductible under AS 43.55.160 for the oil or gas, respectively, 11 produced from the lease or property from the gross value at the point of 12 production of the oil or gas, respectively, produced from the lease or 13 property during the month for which the installment payment is 14 calculated; 15 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 16 (i) 35 percent multiplied by the remainder obtained by 17 subtracting 1/12 of the producer's adjusted lease expenditures for the 18 calendar year of production under AS 43.55.165 and 43.55.170 that are 19 deductible for the oil and gas under AS 43.55.160 from the gross value 20 at the point of production of the oil and gas produced from the leases or 21 properties during the month for which the installment payment is 22 calculated, but not less than zero; or 23 (ii) four percent of the gross value at the point of 24 production of the oil and gas produced from the leases or properties 25 during the month, but not less than zero; 26 (6) an amount calculated under (5)(C) of this subsection for oil or gas 27 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 28 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 29 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 30 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 31 amount of taxable gas produced during the month for the amount of taxable gas
01 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 02 (2)(A), as applicable, the amount of taxable oil produced during the month for the 03 amount of taxable oil produced during the calendar year; 04 (7) for oil and gas produced on or after January 1, 2022, an 05 installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax 06 credits applied as allowed by law, is due for each month of the calendar year on 07 the last day of the following month; the amount of the installment payment is the 08 sum of the following amounts, less 1/12 of the tax credits that are allowed by law 09 to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but 10 the amount of the installment payment may not be less than zero: 11 (A) for oil produced from leases or properties that include 12 land north of 68 degrees North latitude, the greatest of 13 (i) zero; 14 (ii) zero percent, one percent, two percent, three 15 percent, or four percent, as applicable, of the gross value at the 16 point of production of the oil produced from the leases or 17 properties during the month for which the installment payment is 18 calculated; or 19 (iii) 35 percent multiplied by the remainder obtained 20 by subtracting 1/12 of the producer's adjusted lease expenditures 21 for the calendar year of production under AS 43.55.165 and 22 43.55.170 that are deductible for the oil under AS 43.55.160(h)(1) 23 from the gross value at the point of production of the oil produced 24 from those leases or properties during the month for which the 25 installment payment is calculated, except that, for the purposes of 26 this calculation, a reduction from the gross value at the point of 27 production may apply for oil subject to AS 43.55.160(f) or 28 43.55.160(f) and (g); 29 (B) for oil produced before or during the last calendar year 30 under AS 43.55.024(b) for which the producer could take a tax credit 31 under AS 43.55.024(a), from leases or properties in the state outside the
01 Cook Inlet sedimentary basin, no part of which is north of 68 degrees 02 North latitude, other than leases or properties subject to AS 43.55.011(p), 03 the greater of 04 (i) zero; or 05 (ii) 35 percent multiplied by the remainder obtained 06 by subtracting 1/12 of the producer's adjusted lease expenditures 07 for the calendar year of production under AS 43.55.165 and 08 43.55.170 that are deductible for the oil under AS 43.55.160(h)(2) 09 from the gross value at the point of production of the oil produced 10 from the leases or properties during the month for which the 11 installment payment is calculated; 12 (C) for oil and gas produced from leases or properties 13 subject to AS 43.55.011(p), except as otherwise provided under (8) of this 14 subsection, the sum of 15 (i) 35 percent multiplied by the remainder obtained 16 by subtracting 1/12 of the producer's adjusted lease expenditures 17 for the calendar year of production under AS 43.55.165 and 18 43.55.170 that are deductible for the oil under AS 43.55.160(h)(3) 19 from the gross value at the point of production of the oil produced 20 from the leases or properties during the month for which the 21 installment payment is calculated, but not less than zero; and 22 (ii) 13 percent of the gross value at the point of 23 production of the gas produced from the leases or properties 24 during the month, but not less than zero; 25 (D) for oil produced from leases or properties in the state, 26 no part of which is north of 68 degrees North latitude, other than leases or 27 properties subject to (B) or (C) of this paragraph, the greater of 28 (i) zero; or 29 (ii) 35 percent multiplied by the remainder obtained 30 by subtracting 1/12 of the producer's adjusted lease expenditures 31 for the calendar year of production under AS 43.55.165 and
01 43.55.170 that are deductible for the oil under AS 43.55.160(h)(4) 02 from the gross value at the point of production of the oil produced 03 from the leases or properties during the month for which the 04 installment payment is calculated; 05 (E) for gas produced from each lease or property in the 06 state, other than a lease or property subject to AS 43.55.011(p), 13 percent 07 of the gross value at the point of production of the gas produced from the 08 lease or property during the month for which the installment payment is 09 calculated, but not less than zero; 10 (8) an amount calculated under (7)(C) of this subsection may not 11 exceed four percent of the gross value at the point of production of the oil and gas 12 produced from leases or properties subject to AS 43.55.011(p) during the month 13 for which the installment payment is calculated; 14 (9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and 15 (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the 16 point of production is determined under AS 43.55.011(f)(1) or (2) but substituting 17 the phrase "month for which the installment payment is calculated" in 18 AS 43.55.011(f)(1) and (2) for the phrase "calendar year for which the tax is 19 due." 20 * Sec. 49. AS 43.55.020(g) is amended to read: 21 (g) Notwithstanding any contrary provision of AS 43.05.225, 22 (1) before January 1, 2014, an unpaid amount of an installment 23 payment required under (a)(1) - (3) of this section that is not paid when due bears 24 interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal 25 Revenue Code), as amended, compounded daily, from the date the installment 26 payment is due until March 31 following the calendar year of production, and (B) as 27 provided for a delinquent tax under AS 43.05.225 after that March 31; interest accrued 28 under (A) of this paragraph that remains unpaid after that March 31 is treated as an 29 addition to tax that bears interest under (B) of this paragraph; an unpaid amount of tax 30 due under (a)(4) of this section that is not paid when due bears interest as provided for 31 a delinquent tax under AS 43.05.225;
01 (2) on and after January 1, 2014, an unpaid amount of an installment 02 payment required under (a)(3), (5), [OR] (6), or (7) of this section that is not paid 03 when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 04 6621 (Internal Revenue Code), as amended, compounded daily, from the date the 05 installment payment is due until March 31 following the calendar year of production, 06 and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; 07 interest accrued under (A) of this paragraph that remains unpaid after that March 31 is 08 treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid 09 amount of tax due under (a)(4) of this section that is not paid when due bears interest 10 as provided for a delinquent tax under AS 43.05.225. 11 * Sec. 50. AS 43.55.020(h) is amended to read: 12 (h) Notwithstanding any contrary provision of AS 43.05.280, 13 (1) an overpayment of an installment payment required under (a)(1), 14 (2), (3), (5), (6), or (7) [(a)(1) - (3), (5) OR (6)] of this section bears interest at the rate 15 provided for an overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as 16 amended, compounded daily, from the later of the date the installment payment is due 17 or the date the overpayment is made, until the earlier of 18 (A) the date it is refunded or is applied to an underpayment; or 19 (B) March 31 following the calendar year of production; 20 (2) except as provided under (1) of this subsection, interest with 21 respect to an overpayment is allowed only on any net overpayment of the payments 22 required under (a) of this section that remains after the later of March 31 following the 23 calendar year of production or the date that the statement required under 24 AS 43.55.030(a) is filed; 25 (3) interest is allowed under (2) of this subsection only from a date that 26 is 90 days after the later of March 31 following the calendar year of production or the 27 date that the statement required under AS 43.55.030(a) is filed; interest is not allowed 28 if the overpayment was refunded within the 90-day period; 29 (4) interest under (2) and (3) of this subsection is paid at the rate and in 30 the manner provided in AS 43.05.225(1). 31 * Sec. 51. AS 43.55.020(l) is amended to read:
01 (l) For oil and gas produced on [ON] and after January 1, 2014, and before 02 January 1, 2022, in making settlement with the royalty owner for oil and gas that is 03 taxable under AS 43.55.011, the producer may deduct the amount of the tax paid on 04 taxable royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in 05 value at the time the tax becomes due to the amount of the tax paid. If the total 06 deductions of installment payments of estimated tax for a calendar year exceed the 07 actual tax for that calendar year, the producer shall, before April 1 of the following 08 year, refund the excess to the royalty owner. Unless otherwise agreed between the 09 producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) on 10 taxable royalty oil and gas for a calendar year, other than oil and gas the ownership or 11 right to which constitutes a landowner's royalty interest, is considered to be the gross 12 value at the point of production of the taxable royalty oil and gas produced during the 13 calendar year multiplied by a figure that is a quotient, in which 14 (1) the numerator is the producer's total tax liability under 15 AS 43.55.011(e)(2) [AS 43.55.011(e)] for the calendar year of production; and 16 (2) the denominator is the total gross value at the point of production 17 of the oil and gas taxable under AS 43.55.011(e) produced by the producer from all 18 leases and properties in the state during the calendar year. 19 * Sec. 52. AS 43.55.020 is amended by adding a new subsection to read: 20 (m) For oil and gas produced on and after January 1, 2022, in making 21 settlement with the royalty owner for oil and gas that is taxable under AS 43.55.011, 22 the producer may deduct the amount of the tax paid on taxable royalty oil and gas, or 23 may deduct taxable royalty oil or gas equivalent in value at the time the tax becomes 24 due to the amount of the tax paid. If the total deductions of installment payments of 25 estimated tax for a calendar year exceed the actual tax for that calendar year, the 26 producer shall, before April 1 of the following year, refund the excess to the royalty 27 owner. In making settlement with the royalty owner for gas that is taxable under 28 AS 43.55.014, the producer may deduct the amount of the gas paid as in kind tax on 29 taxable royalty gas or may deduct the gross value at the point of production of the gas 30 paid as in-kind tax on taxable royalty gas. Unless otherwise agreed between the 31 producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) on
01 taxable royalty oil for a calendar year, other than oil the ownership or right to which 02 constitutes a landowner's royalty interest, is considered to be the gross value at the 03 point of production of the taxable royalty oil produced during the calendar year 04 multiplied by a figure that is a quotient, in which 05 (1) the numerator is the producer's total tax liability under 06 AS 43.55.011(e)(3)(A) for the calendar year of production; and 07 (2) the denominator is the total gross value at the point of production 08 of the oil taxable under AS 43.55.011(e) produced by the producer from all leases and 09 properties in the state during the calendar year. 10 * Sec. 53. AS 43.55.030(a) is amended to read: 11 (a) A producer that produces oil or gas from a lease or property in the state 12 during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) 13 for that oil or gas, shall file with the department on March 31 of the following year a 14 statement, under oath, in a form prescribed by the department, giving, with other 15 information required, the following: 16 (1) a description of each lease or property from which oil or gas was 17 produced, by name, legal description, lease number, or accounting codes assigned by 18 the department; 19 (2) the names of the producer and, if different, the person paying the 20 tax, if any; 21 (3) the gross amount of oil and the gross amount of gas produced from 22 each lease or property, separately identifying the gross amount of gas produced 23 from each oil and gas lease to which an effective election under AS 43.55.014(a) 24 applies, the amount of gas delivered to the state under AS 43.55.014(b), and the 25 percentage of the gross amount of oil and gas owned by the producer; 26 (4) the gross value at the point of production of the oil and of the gas 27 produced from each lease or property owned by the producer and the costs of 28 transportation of the oil and gas; 29 (5) the name of the first purchaser and the price received for the oil and 30 for the gas, unless relieved from this requirement in whole or in part by the 31 department;
01 (6) the producer's qualified capital expenditures, as defined in 02 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 03 payments or credits under AS 43.55.170; 04 (7) the production tax values of the oil and gas under AS 43.55.160(a) 05 or of the oil under AS 43.55.160(h), as applicable [AS 43.55.160]; 06 (8) any claims for tax credits to be applied; and 07 (9) calculations showing the amounts, if any, that were or are due 08 under AS 43.55.020(a) and interest on any underpayment or overpayment. 09 * Sec. 54. AS 43.55.160(a) is amended to read: 10 (a) For oil and gas produced before January 1, 2022, except [EXCEPT] as 11 provided in (b), (f), and (g) of this section, for the purposes of 12 (1) AS 43.55.011(e)(1) and (2) [AS 43.55.011(e)], the annual 13 production tax value of taxable oil, gas, or oil and gas produced during a calendar year 14 in a category for which a separate annual production tax value is required to be 15 calculated under this paragraph is the gross value at the point of production of that oil, 16 gas, or oil and gas taxable under AS 43.55.011(e), less the producer's lease 17 expenditures under AS 43.55.165 for the calendar year applicable to the oil, gas, or oil 18 and gas in that category produced by the producer during the calendar year, as 19 adjusted under AS 43.55.170; a separate annual production tax value shall be 20 calculated for 21 (A) oil and gas produced from leases or properties in the state 22 that include land north of 68 degrees North latitude, other than gas produced 23 before 2022 and used in the state; 24 (B) oil and gas produced from leases or properties in the state 25 outside the Cook Inlet sedimentary basin, no part of which is north of 68 26 degrees North latitude and that qualifies for a tax credit under AS 43.55.024(a) 27 and (b); this subparagraph does not apply to 28 (i) gas produced before 2022 and used in the state; or 29 (ii) oil and gas subject to AS 43.55.011(p); 30 (C) oil produced before 2022 from each lease or property in the 31 Cook Inlet sedimentary basin;
01 (D) gas produced before 2022 from each lease or property in 02 the Cook Inlet sedimentary basin; 03 (E) gas produced before 2022 from each lease or property in 04 the state outside the Cook Inlet sedimentary basin and used in the state, other 05 than gas subject to AS 43.55.011(p); 06 (F) oil and gas subject to AS 43.55.011(p) produced from 07 leases or properties in the state; 08 (G) oil and gas produced from leases or properties in the state 09 no part of which is north of 68 degrees North latitude, other than oil or gas 10 described in (B), (C), (D), (E), or (F) of this paragraph; 11 (2) AS 43.55.011(g), for oil and gas produced before January 1, 2014, 12 the monthly production tax value of the taxable 13 (A) oil and gas produced during a month from leases or 14 properties in the state that include land north of 68 degrees North latitude is the 15 gross value at the point of production of the oil and gas taxable under 16 AS 43.55.011(e) and produced by the producer from those leases or properties, 17 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 18 calendar year applicable to the oil and gas produced by the producer from 19 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 20 does not apply to gas subject to AS 43.55.011(o); 21 (B) oil and gas produced during a month from leases or 22 properties in the state outside the Cook Inlet sedimentary basin, no part of 23 which is north of 68 degrees North latitude, is the gross value at the point of 24 production of the oil and gas taxable under AS 43.55.011(e) and produced by 25 the producer from those leases or properties, less 1/12 of the producer's lease 26 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 27 gas produced by the producer from those leases or properties, as adjusted under 28 AS 43.55.170; this subparagraph does not apply to gas subject to 29 AS 43.55.011(o); 30 (C) oil produced during a month from a lease or property in the 31 Cook Inlet sedimentary basin is the gross value at the point of production of
01 the oil taxable under AS 43.55.011(e) and produced by the producer from that 02 lease or property, less 1/12 of the producer's lease expenditures under 03 AS 43.55.165 for the calendar year applicable to the oil produced by the 04 producer from that lease or property, as adjusted under AS 43.55.170; 05 (D) gas produced during a month from a lease or property in 06 the Cook Inlet sedimentary basin is the gross value at the point of production 07 of the gas taxable under AS 43.55.011(e) and produced by the producer from 08 that lease or property, less 1/12 of the producer's lease expenditures under 09 AS 43.55.165 for the calendar year applicable to the gas produced by the 10 producer from that lease or property, as adjusted under AS 43.55.170; 11 (E) gas produced during a month from a lease or property 12 outside the Cook Inlet sedimentary basin and used in the state is the gross 13 value at the point of production of that gas taxable under AS 43.55.011(e) and 14 produced by the producer from that lease or property, less 1/12 of the 15 producer's lease expenditures under AS 43.55.165 for the calendar year 16 applicable to that gas produced by the producer from that lease or property, as 17 adjusted under AS 43.55.170. 18 * Sec. 55. AS 43.55.160(e) is amended to read: 19 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 20 would otherwise be deductible by a producer in a calendar year but whose deduction 21 would cause an annual production tax value calculated under (a)(1) or (h) of this 22 section of taxable oil or gas produced during the calendar year to be less than zero 23 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 24 However, the department shall provide by regulation a method to ensure that, for a 25 period for which a producer's tax liability is limited by AS 43.55.011(j), (k), (o), or 26 (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would 27 otherwise be deductible by a producer for that period but whose deduction would 28 cause a production tax value calculated under (a)(1)(C), (D), (E), [OR] (F), or (h)(3) 29 of this section to be less than zero are accounted for as though the adjusted lease 30 expenditures had first been used as deductions in calculating the production tax values 31 of oil or gas subject to any of the limitations under AS 43.55.011(j), (k), (o), or (p) that
01 have positive production tax values so as to reduce the tax liability calculated without 02 regard to the limitation to the maximum amount provided for under the applicable 03 provision of AS 43.55.011(j), (k), (o), or (p). Only the amount of those adjusted lease 04 expenditures remaining after the accounting provided for under this subsection may be 05 used to establish a carried-forward annual loss under AS 43.55.023(b). In this 06 subsection, "producer" includes "explorer." 07 * Sec. 56. AS 43.55.160(f) is amended to read: 08 (f) On and after January 1, 2014, in the calculation of an annual production tax 09 value of a producer under (a)(1)(A) or (h)(1) [(a)(1)] of this section, the gross value at 10 the point of production of oil or gas produced from a lease or property north of 68 11 degrees North latitude meeting one or more of the following criteria is reduced by 20 12 percent: (1) the oil or gas is produced from a lease or property that does not contain a 13 lease that was within a unit on January 1, 2003; (2) the oil or gas is produced from a 14 participating area established after December 31, 2011, that is within a unit formed 15 under AS 38.05.180(p) before January 1, 2003, if the participating area does not 16 contain a reservoir that had previously been in a participating area established before 17 December 31, 2011; (3) the oil or gas is produced from acreage that was added to an 18 existing participating area by the Department of Natural Resources on and after 19 January 1, 2014, and the producer demonstrates to the department that the volume of 20 oil or gas produced is from acreage added to an existing participating area. This 21 subsection does not apply to gas produced before 2022 that is used in the state or to 22 gas produced on and after January 1, 2022. A reduction under this subsection may 23 not reduce the gross value at the point of production below zero. In this subsection, 24 "participating area" means a reservoir or portion of a reservoir producing or 25 contributing to production as approved by the Department of Natural Resources. 26 * Sec. 57. AS 43.55.160(g) is amended to read: 27 (g) On and after January 1, 2014, in addition to the reduction under (f) of this 28 section, in the calculation of an annual production tax value of a producer under 29 (a)(1)(A) or (h)(1) [(a)(1)] of this section, the gross value at the point of production of 30 oil or gas produced from a lease or property north of 68 degrees North latitude that 31 does not contain a lease that was within a unit on January 1, 2003, is reduced by 10
01 percent if the oil or gas is produced from a unit made up solely of leases that have a 02 royalty share of more than 12.5 percent in amount or value of the production removed 03 or sold from the lease as determined under AS 38.05.180(f). This subsection does not 04 apply if the royalty obligation for one or more of the leases in the unit has been 05 reduced to 12.5 percent or less under AS 38.05.180(j) for all or part of the calendar 06 year for which the annual production tax value is calculated. This subsection does not 07 apply to gas produced before 2022 that is used in the state or to gas produced on and 08 after January 1, 2022. A reduction under this subsection may not reduce the gross 09 value at the point of production below zero. 10 * Sec. 58. AS 43.55.160 is amended by adding a new subsection to read: 11 (h) For oil produced on and after January 1, 2022, except as provided in (b), 12 (f), and (g) of this section, for the purposes of AS 43.55.011(e)(3), the annual 13 production tax value of oil taxable under AS 43.55.011(e) produced by a producer 14 during a calendar year 15 (1) from leases or properties in the state that include land north of 68 16 degrees North latitude is the gross value at the point of production of that oil, less the 17 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 18 explore for, develop, or produce oil and gas deposits located in the state north of 68 19 degrees North latitude or located in leases or properties in the state that include land 20 north of 68 degrees North latitude, as adjusted under AS 43.55.170; 21 (2) before or during the last calendar year under AS 43.55.024(b) for 22 which the producer could take a tax credit under AS 43.55.024(a), from leases or 23 properties in the state outside the Cook Inlet sedimentary basin, no part of which is 24 north of 68 degrees North latitude, other than leases or properties subject to 25 AS 43.55.011(p), is the gross value at the point of production of that oil, less the 26 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 27 explore for, develop, or produce oil and gas deposits located in the state outside the 28 Cook Inlet sedimentary basin and south of 68 degrees North latitude, other than oil 29 and gas deposits located in a lease or property that includes land north of 68 degrees 30 North latitude or that is subject to AS 43.55.011(p) or, before January 1, 2027, from 31 which commercial production has not begun, as adjusted under AS 43.55.170;
01 (3) from leases or properties subject to AS 43.55.011(p) is the gross 02 value at the point of production of that oil, less the producer's lease expenditures under 03 AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and 04 gas deposits located in leases or properties subject to AS 43.55.011(p) or, before 05 January 1, 2027, located in leases or properties in the state outside the Cook Inlet 06 sedimentary basin, no part of which is north of 68 degrees North latitude from which 07 commercial production has not begun, as adjusted under AS 43.55.170; 08 (4) from leases or properties in the state no part of which is north of 68 09 degrees North latitude, other than leases or properties subject to (2) or (3) of this 10 subsection, is the gross value at the point of production of that oil less the producer's 11 lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, 12 develop, or produce oil and gas deposits located in the state south of 68 degrees North 13 latitude, other than oil and gas deposits located in a lease or property in the state that 14 includes land north of 68 degrees North latitude, and excluding lease expenditures that 15 are deductible under (2) or (3) of this subsection or would be deductible under (2) or 16 (3) of this subsection if not prohibited by (b) of this section, as adjusted under 17 AS 43.55.170. 18 * Sec. 59. AS 43.55.165(e) is amended to read: 19 (e) For purposes of this section, lease expenditures do not include 20 (1) depreciation, depletion, or amortization; 21 (2) oil or gas royalty payments, production payments, lease profit 22 shares, or other payments or distributions of a share of oil or gas production, profit, or 23 revenue, except that a producer's lease expenditures applicable to oil and gas produced 24 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 25 profit paid to the state under that lease; 26 (3) taxes based on or measured by net income; 27 (4) interest or other financing charges or costs of raising equity or debt 28 capital; 29 (5) acquisition costs for a lease or property or exploration license; 30 (6) costs arising from fraud, wilful misconduct, gross negligence, 31 violation of law, or failure to comply with an obligation under a lease, permit, or
01 license issued by the state or federal government; 02 (7) fines or penalties imposed by law; 03 (8) costs of arbitration, litigation, or other dispute resolution activities 04 that involve the state or concern the rights or obligations among owners of interests in, 05 or rights to production from, one or more leases or properties or a unit; 06 (9) costs incurred in organizing a partnership, joint venture, or other 07 business entity or arrangement; 08 (10) amounts paid to indemnify the state; the exclusion provided by 09 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 10 a third-party insurer or surety; 11 (11) surcharges levied under AS 43.55.201 or 43.55.300; 12 (12) an expenditure otherwise deductible under (b) of this section that 13 is a result of an internal transfer, a transaction with an affiliate, or a transaction 14 between related parties, or is otherwise not an arm's length transaction, unless the 15 producer establishes to the satisfaction of the department that the amount of the 16 expenditure does not exceed the fair market value of the expenditure; 17 (13) an expenditure incurred to purchase an interest in any corporation, 18 partnership, limited liability company, business trust, or any other business entity, 19 whether or not the transaction is treated as an asset sale for federal income tax 20 purposes; 21 (14) a tax levied under AS 43.55.011 or 43.55.014; 22 (15) costs incurred for dismantlement, removal, surrender, or 23 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 24 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 25 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 26 excluded under this paragraph if the dismantlement, removal, surrender, or 27 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 28 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 29 (16) costs incurred for containment, control, cleanup, or removal in 30 connection with any unpermitted release of oil or a hazardous substance and any 31 liability for damages imposed on the producer or explorer for that unpermitted release;
01 this paragraph does not apply to the cost of developing and maintaining an oil 02 discharge prevention and contingency plan under AS 46.04.030; 03 (17) costs incurred to satisfy a work commitment under an exploration 04 license under AS 38.05.132; 05 (18) that portion of expenditures, that would otherwise be qualified 06 capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 07 are less than the product of $0.30 multiplied by the total taxable production from each 08 lease or property, in BTU equivalent barrels, during that calendar year, except that, 09 when a portion of a calendar year is subject to this provision, the expenditures and 10 volumes shall be prorated within that calendar year; 11 (19) costs incurred for repair, replacement, or deferred maintenance of 12 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 13 undertaken in response to a failure, problem, or event that results in an unscheduled 14 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 15 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 16 equipment, other than a well, that is undertaken in response to, or is otherwise 17 associated with, an unpermitted release of a hazardous substance or of gas; however, 18 costs under this paragraph that would otherwise constitute lease expenditures under (a) 19 and (b) of this section may be treated as lease expenditures if the department 20 determines that the repair or replacement is solely necessitated by an act of war, by an 21 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 22 inevitable, and irresistible character, the effects of which could not have been 23 prevented or avoided by the exercise of due care or foresight, or by an intentional or 24 negligent act or omission of a third party, other than a party or its agents in privity of 25 contract with, or employed by, the producer or an operator acting for the producer, but 26 only if the producer or operator, as applicable, exercised due care in operating and 27 maintaining the facility, pipeline, structure, or equipment, and took reasonable 28 precautions against the act or omission of the third party and against the consequences 29 of the act or omission; in this paragraph, 30 (A) "costs incurred for repair, replacement, or deferred 31 maintenance of a facility, a pipeline, a structure, or equipment" includes costs
01 to dismantle and remove the facility, pipeline, structure, or equipment that is 02 being replaced; 03 (B) "hazardous substance" has the meaning given in 04 AS 46.03.826; 05 (C) "replacement" includes renovation or improvement; 06 (20) costs incurred to construct, acquire, or operate a refinery or crude 07 oil topping plant, regardless of whether the products of the refinery or topping plant 08 are used in oil or gas exploration, development, or production operations; however, if 09 a producer owns a refinery or crude oil topping plant that is located on or near the 10 premises of the producer's lease or property in the state and that processes the 11 producer's oil produced from that lease or property into a product that the producer 12 uses in the operation of the lease or property in drilling for or producing oil or gas, the 13 producer's lease expenditures include the amount calculated by subtracting from the 14 fair market value of the product used the prevailing value, as determined under 15 AS 43.55.020(f), of the oil that is processed; 16 (21) costs of lobbying, public relations, public relations advertising, or 17 policy advocacy. 18 * Sec. 60. AS 43.55.900(10) is amended to read: 19 (10) "gas processing plant" means a facility that 20 (A) extracts and recovers liquid hydrocarbons from a gaseous 21 mixture of hydrocarbons by gas processing; and 22 (B) is located upstream of the inlet of any pipeline 23 transporting gas to a gas treatment plant and upstream of the inlet of any gas 24 pipeline system transporting gas to a market; 25 * Sec. 61. AS 43.55.900(20) is amended to read: 26 (20) "point of production" means 27 (A) for oil, the automatic custody transfer meter or device 28 through which the oil enters into the facilities of a carrier pipeline or other 29 transportation carrier in a condition of pipeline quality; in the absence of an 30 automatic custody transfer meter or device, "point of production" means the 31 mechanism or device to measure the quantity of oil that has been approved by
01 the department for that purpose, through which the oil is tendered and accepted 02 in a condition of pipeline quality into the facilities of a carrier pipeline or other 03 transportation carrier or into a field topping plant; 04 (B) for gas [, OTHER THAN GAS DESCRIBED IN (C) OF 05 THIS PARAGRAPH,] that is 06 (i) not subjected to or recovered by mechanical 07 separation or run through a gas processing plant, the farthest upstream 08 of the first point where the gas is accurately metered, the inlet of any 09 pipeline transporting the gas to a gas treatment plant, or the inlet 10 of any gas pipeline system transporting the gas to a market; 11 (ii) subjected to or recovered by mechanical separation 12 but not run through a gas processing plant, the farthest upstream of 13 the first point where the gas is accurately metered after completion of 14 mechanical separation, the inlet of any pipeline transporting the gas 15 after completion of mechanical separation to a gas treatment plant, 16 or the inlet of any gas pipeline system transporting the gas after 17 mechanical separation to a market; 18 (iii) run through a gas processing plant, the farthest 19 upstream of the first point where the gas is accurately metered 20 downstream of the gas processing plant, the inlet of any pipeline 21 downstream of the gas processing plant transporting the gas to a 22 gas treatment plant, or the inlet of any gas pipeline system 23 downstream of the gas processing plant transporting the gas to a 24 market [; 25 (C) FOR GAS RUN THROUGH AN INTEGRATED GAS 26 PROCESSING PLANT AND GAS TREATMENT FACILITY THAT DOES 27 NOT ACCURATELY METER THE GAS AFTER THE GAS PROCESSING 28 AND BEFORE THE GAS TREATMENT, THE FIRST POINT WHERE GAS 29 PROCESSING IS COMPLETED OR WHERE GAS TREATMENT BEGINS, 30 WHICHEVER IS FURTHER UPSTREAM]; 31 * Sec. 62. AS 43.55.900 is amended by adding a new paragraph to read:
01 (25) "gas treatment plant" means a facility that performs gas treatment, 02 regardless of whether the facility also performs gas processing. 03 * Sec. 63. AS 43.90.900(18) is amended to read: 04 (18) "point of production" has the meaning given in AS 43.55.900 as 05 that section read on June 8, 2007; 06 * Sec. 64. AS 43.98.030(c) is amended to read: 07 (c) A taxpayer acquiring a transferable tax credit certificate may use the credit 08 or a portion of the credit to offset taxes imposed under AS 21.09.210, AS 21.66.110, 09 AS 43.20, AS 43.55.011 [AS 43.55], AS 43.56, AS 43.65, AS 43.75, and AS 43.77. 10 Except as provided in (e) of this section, any portion of the credit not used may be 11 used at a later period or transferred under (b) of this section. 12 * Sec. 65. AS 43.98.050 is amended to read: 13 Sec. 43.98.050. Duties. The duties of the board include the following: 14 (1) establish and maintain a salient collection of information related to 15 oil and gas exploration, development, and production in the state and related to tax 16 structures, rates, and credits in other regions with oil and gas resources; 17 (2) review historical, current, and potential levels of investment in the 18 state's oil and gas sector; 19 (3) identify factors that affect investment in oil and gas exploration, 20 development, and production in the state, including tax structure, rates, and credits; 21 royalty requirements; infrastructure; workforce availability; and regulatory 22 requirements; 23 (4) review the competitive position of the state to attract and maintain 24 investment in the oil and gas sector in the state as compared to the competitive 25 position of other regions with oil and gas resources; 26 (5) in order to facilitate the work of the board, establish procedures to 27 accept and keep confidential information that is beneficial to the work of the board, 28 including the creation of a secure data room and confidentiality agreements to be 29 signed by individuals having access to confidential information; 30 (6) make written findings and recommendations to the Alaska State 31 Legislature before
01 (A) January 31, 2015, or as soon thereafter as practicable, 02 regarding 03 (i) changes to the state's regulatory environment and 04 permitting structure that would be conducive to encouraging increased 05 investment while protecting the interests of the people of the state and 06 the environment; 07 (ii) the status of the oil and gas industry labor pool in 08 the state and the effectiveness of workforce development efforts by the 09 state; 10 (iii) the status of the oil-and-gas-related infrastructure 11 of the state, including a description of infrastructure deficiencies; and 12 (iv) the competitiveness of the state's fiscal oil and gas 13 tax regime when compared to other regions of the world; 14 (B) January 15, 2017, regarding 15 (i) the state's tax structure and rates on oil and gas 16 produced south of 68 degrees North latitude; 17 (ii) a tax structure that takes into account the unique 18 economic circumstances for each oil and gas producing area south 19 of 68 degrees North latitude; 20 (iii) a reduction in the gross value at the point of 21 production for oil and gas produced south of 68 degrees North 22 latitude that is similar to the reduction in gross value at the point of 23 production in AS 43.55.160(f) and (g); 24 (iv) other incentives for oil and gas production south 25 of 68 degrees North latitude; 26 (C) January 31, 2021, or as soon thereafter as practicable, 27 regarding 28 (i) changes to the state's fiscal regime that would be 29 conducive to increased and ongoing long-term investment in and 30 development of the state's oil and gas resources; 31 (ii) alternative means for increasing the state's ability to
01 attract and maintain investment in and development of the state's oil 02 and gas resources; and 03 (iii) a review of the current effectiveness and future 04 value of any provisions of the state's oil and gas tax laws that are 05 expiring in the next five years. 06 * Sec. 66. AS 31.25.080(f) is repealed. 07 * Sec. 67. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 REPORT AND RECOMMENDATIONS BY THE COMMISSIONER OF 10 NATURAL RESOURCES ON THE DELIVERY AND AVAILABILITY OF NORTH 11 SLOPE NATURAL GAS IN THE STATE; IDENTIFICATION OF RISKS AND 12 RECOMMENDATIONS FOR MITIGATION. (a) The commissioner of natural resources in 13 consultation with the Alaska Gasline Development Corporation shall prepare and make 14 available to the legislature a report on a plan and alternatives to make North Slope natural gas 15 available for delivery and use in the state. The report must address 16 (1) the means by which North Slope natural gas may be delivered for use in 17 the state; 18 (2) the anticipated benefits, risks, and liabilities to the state associated with the 19 sale by the state to utilities and other customers in the state of natural gas received by the state 20 as royalty in kind or as payment of tax; 21 (3) the effect and consequences, including the fiscal effect and liability to third 22 parties, of the state's transport of a reduced amount of natural gas south of an in-state delivery 23 point or underutilizing capacity in a liquefied natural gas plant; and 24 (4) other issues the commissioner of natural resources determines are relevant 25 to the delivery and use of North Slope natural gas in the state and should be considered by the 26 legislature. 27 (b) In conjunction with the report in (a) of this section, the commissioner of natural 28 resources shall recommend the means for eliminating or minimizing the risks and liabilities 29 identified in the report. 30 (c) The commissioner of natural resources shall make the report and 31 recommendations required by this section available to the legislature on or before the date a
01 firm transportation services agreement in a North Slope natural gas project to which the state 02 is a party is submitted to the legislature for approval. 03 (d) In this section, "North Slope natural gas project" has the meaning given in 04 AS 38.05.965, as amended by sec. 30 of this Act. 05 * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 REQUESTING THE GOVERNOR TO ESTABLISH AN INTERIM ADVISORY 08 BOARD. (a) The legislature requests the governor to establish an interim advisory board 09 under AS 44.19.028 to advise the governor on municipal involvement in a North Slope 10 natural gas project. Members of the advisory board may include representatives of 11 municipalities, the commissioner of natural resources, the commissioner of revenue, 12 representatives of oil and gas and gas only lessees on the North Slope, and representatives of 13 other persons expected to be directly involved in the development of a North Slope natural 14 gas project. 15 (b) The advisory board shall review available information, hold public meetings, and 16 provide annual reports by December 15 of each year to the governor that include 17 (1) the potential impact and benefits of new infrastructure for North Slope 18 natural gas development, whether designed to provide natural gas for in-state sale or for 19 export, or both, on communities in the state, including consideration of tax structure under 20 AS 29.45 and AS 43.56, and consideration of other payments before construction of new 21 infrastructure associated with North Slope natural gas development; 22 (2) recommendations for changes to the oil and gas exploration, production, 23 and pipeline transportation property taxes under AS 43.56 related to infrastructure for 24 commercialization of natural gas that would facilitate development of a major natural gas 25 project and mitigate financial impacts to communities affected by development of a North 26 Slope natural gas project; 27 (3) recommendations for changes to AS 29.45.080 related to the 28 commercialization of natural gas that would facilitate development of a North Slope natural 29 gas project and mitigate financial impacts to communities affected by a North Slope natural 30 gas project; 31 (4) recommendations for legislative or other options to minimize the financial
01 impact to communities in proximity to North Slope natural gas project infrastructure during 02 construction of a natural gas pipeline and associated infrastructure; and 03 (5) recommendations on the impact and benefits to communities not in 04 proximity to a North Slope natural gas project. 05 (c) In this section, "North Slope natural gas project" has the meaning given in 06 AS 38.05.965, as amended by sec. 30 of this Act. 07 * Sec. 69. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 PLAN AND RECOMMENDATIONS TO THE LEGISLATURE ON 10 INFRASTRUCTURE NEEDED TO DELIVER AFFORDABLE ENERGY TO AREAS IN 11 THE STATE THAT DO NOT HAVE DIRECT ACCESS TO A NORTH SLOPE NATURAL 12 GAS PIPELINE. (a) The Alaska Energy Authority, in consultation with the Alaska Gasline 13 Development Corporation, the Alaska Industrial Development and Export Authority, and the 14 Department of Revenue, shall develop a plan for developing infrastructure to deliver more 15 affordable energy to areas of the state that are not expected to have direct access to a North 16 Slope natural gas pipeline. The plan must identify ownership options, different energy 17 sources, including fossil fuels, hydro projects, tidal, and other alternative energy sources, and 18 describe and recommend the means for generating, delivering, receiving, and storing energy 19 in the most cost-efficient manner. For those citizens for whom there is no economically viable 20 infrastructure available, the plan must recommend the means for directly underwriting the 21 energy costs of the citizens to make their energy costs more affordable. The Alaska Energy 22 Authority may consider the development of regional energy systems that can receive and store 23 bulk fuel in quantity and distribute that fuel as needed within the region. 24 (b) The Alaska Energy Authority, in consultation with the Department of Revenue, 25 shall recommend a plan for funding the design, development, and construction of the required 26 infrastructure and may identify a source of rent, royalty, income, or tax received by the state 27 that may be appropriated by the legislature to implement the plan. 28 (c) The Alaska Energy Authority shall provide the plan and suggested legislation for 29 the design, development, construction, and financing of the required infrastructure to the 30 legislature before January 1, 2017. 31 * Sec. 70. The uncodified law of the State of Alaska is amended by adding a new section to
01 read: 02 DEVELOPMENT OF A PLAN FOR MUNICIPALITIES, REGIONAL 03 CORPORATIONS, AND RESIDENTS TO PARTICIPATE IN THE OWNERSHIP OF A 04 NORTH SLOPE NATURAL GAS PIPELINE; IDENTIFICATION OF AND REPORT ON 05 FINANCING OPTIONS FOR STATE OWNERSHIP AND PARTICIPATION IN A 06 NORTH SLOPE NATURAL GAS PROJECT. (a) The commissioner of revenue shall identify 07 and report to the legislature on a range of financing options for state acquisition of an 08 ownership interest and participation in a North Slope natural gas project. The report must 09 include a description of the risk associated with each option and the effect of each option on 10 the bonding capacity and bond rating of the state. In this subsection, "North Slope natural gas 11 project" has the meaning given in AS 38.05.965, as amended by sec. 30 of this Act. 12 (b) The commissioner shall make an interim draft of the report described in (a) of this 13 section available to the legislature on the first day of the First Regular Session of the Twenty- 14 Ninth Alaska State Legislature, and a final report at the time the commissioner of natural 15 resources submits the first agreement or contract to the legislature for approval under 16 AS 38.05.020(b)(11), enacted by sec. 19 of this Act. 17 (c) At the time the commissioner of natural resources submits the first agreement or 18 contract to the legislature for approval under AS 38.05.020(b)(11), enacted by sec. 19 of this 19 Act, the commissioner of revenue shall present a plan and suggested legislation to allow a 20 municipality, regional corporation, or resident of the state to participate as a co-owner in a 21 North Slope natural gas pipeline. The plan must include the recommendations and analysis by 22 the commissioner as to 23 (1) the means by which a municipality, regional corporation, or resident may 24 invest in the North Slope natural gas pipeline; for a resident, the means may include providing 25 an option to designate an amount of a permanent fund dividend to be deducted for the 26 investment; 27 (2) whether the ownership interest in a North Slope natural gas pipeline should 28 be acquired from the portion of a North Slope natural gas pipeline acquired by the state, 29 through the purchase of stock in a publicly traded corporation that invests in a North Slope 30 natural gas pipeline, or some other means; 31 (3) the means for providing notice to a municipality, regional corporation, or
01 resident receiving an ownership interest that explains the type of ownership interest and the 02 rights and obligations related to that ownership interest; 03 (4) whether the ownership interest received by a municipality, regional 04 corporation, or resident may be transferred or assigned to another person and the means for 05 transferring the interest; 06 (5) the means by which the proportional share of a dividend or other income 07 may be distributed to a municipality, regional corporation, resident, or transferee of an interest 08 if the municipality, regional corporation, or resident receives an ownership interest acquired 09 by the state in a North Slope natural gas pipeline and the state receives a dividend or other 10 income from its ownership interest, and whether the payment should be subject to interest if 11 not timely distributed; 12 (6) the means by which the commissioner may identify a publicly traded 13 corporation that has an ownership interest in a North Slope natural gas pipeline that is subject 14 to investment by a municipality, regional corporation, or a resident under the proposed plan; 15 (7) the means by which an individual may qualify as a resident for purposes of 16 investing in an ownership interest; 17 (8) whether the ownership interest held by a municipality, regional 18 corporation, or resident would be subject to project assessments; 19 (9) how cash calls for the project and the expansion of the project would be 20 managed; 21 (10) the income tax consequences to the holder of an ownership interest, 22 including the timing and recognition of income related to the ownership interest, including 23 differentiating income related to the ownership interest from the receipt of dividends or other 24 distributions; 25 (11) the risk that the receipt of a benefit from the project by a person other 26 than the state would make income received from the project by the state subject to federal 27 income tax; and 28 (12) constitutional issues that may be implicated by restricting ownership 29 interests under the plan to residents and municipalities in the state. 30 (d) In this section, 31 (1) "municipality" has the meaning given in AS 01.10.060;
01 (2) "North Slope natural gas pipeline" means a natural gas pipeline project that 02 transports natural gas produced in the state north of 68 degrees North latitude to a market in 03 the state or to tidewater for export from the state including a facility in the state for liquefying 04 natural gas for transport; 05 (3) "regional corporation" means a regional corporation organized under 43 06 U.S.C. 1606(a) as amended. 07 * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 LEGISLATIVE BRIEFINGS. Before the first flow of gas in a North Slope natural gas 10 project developed under the authority of this Act, the parties to the project shall, at least once 11 every four months, provide briefings to interested legislators, legislative staff, and legislative 12 consultants on the progress of a North Slope natural gas project developed under the authority 13 of this Act. A briefing under this section must be accompanied by a written report provided by 14 the Department of Natural Resources of the amount of money the state may be obligated to 15 pay a third party under an agreement or contract under AS 38.05.020(b)(10) or (11) if a North 16 Slope natural gas project is terminated before the first flow of gas in the project. 17 * Sec. 72. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 TRANSITION: REGULATIONS. The Department of Revenue and the Department of 20 Natural Resources may adopt regulations to implement this Act. The regulations take effect 21 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the 22 provisions of this Act being implemented. 23 * Sec. 73. Sections 1 - 19, 22, 23, 30 - 34, 36, 37, 45, 47, and 63 - 72 of this Act take effect 24 immediately under AS 01.10.070(c). 25 * Sec. 74. Section 46 of this Act takes effect January 1, 2021. 26 * Sec. 75. Except as provided in secs. 73 and 74 of this Act, this Act takes effect January 1, 27 2015.