HCS CSSB 138(FIN): "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 advisory planning group 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 Department of Transportation and Public Facilities to evaluate certain bridges and infrastructure related to an Alaska liquefied natural gas project; 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(FIN) 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 advisory planning group to advise the governor on municipal involvement 13 in 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 Department of 18 Transportation and Public Facilities to evaluate certain bridges and infrastructure 19 related to an Alaska liquefied natural gas project; requiring the commissioner of 20 revenue to develop a plan and suggest legislation for municipalities, regional 21 corporations, and residents of the state to acquire ownership interests in a North Slope 22 natural gas pipeline project; relating to the duties of the Oil and Gas Competitiveness 23 Review Board; making conforming amendments; and providing for an effective date."
01 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 02 * Section 1. AS 31.25.005 is amended to read: 03 Sec. 31.25.005. Purpose. The corporation shall, for the benefit of the state, to 04 the fullest extent possible, 05 (1) develop and have primary responsibility for developing natural 06 gas pipelines, an Alaska liquefied natural gas project, and other transportation 07 mechanisms to deliver natural gas in-state for the maximum benefit of the people 08 of the state; 09 (2) when developing natural gas pipelines, an Alaska liquefied 10 natural gas project, and other transportation mechanisms to deliver natural gas 11 in-state, provide economic benefits in the state, and revenue to the state; 12 (3) assist the Department of Natural Resources and the 13 Department of Revenue to maximize the value of the state's royalty natural gas, 14 natural gas delivered to the state as payment of tax, and other natural gas 15 received by the state; 16 (4) advance an in-state natural gas pipeline as described in the July 1, 17 2011, project plan prepared under former AS 38.34.040 by the corporation while a 18 subsidiary of the Alaska Housing Finance Corporation, with modifications determined 19 by the corporation to be appropriate to develop, finance, construct, and operate an in- 20 state natural gas pipeline in a safe, prudent, economical, and efficient manner, for the 21 purpose of making natural gas, including propane and other hydrocarbons associated 22 with natural gas other than oil, available to Fairbanks, the Southcentral region of the 23 state, and other communities in the state at the lowest rates possible; 24 (5) advance an Alaska liquefied natural gas project by developing 25 infrastructure and providing related services, including services related to 26 transportation, liquefaction, a marine terminal, marketing, and commercial 27 support; if the corporation provides a service under this paragraph to the state, a 28 public corporation or instrumentality of the state, a political subdivision of the 29 state, or another entity of the state, the corporation may not charge a fee for the 30 service in an amount greater than the amount necessary to reimburse the 31 corporation for the cost of the service;
01 (6) [(2)] endeavor to develop natural gas pipelines and other 02 transportation mechanisms to deliver natural gas, including propane and other 03 hydrocarbons associated with natural gas other than oil, to public utility and industrial 04 customers in areas of the state to which the natural gas, including propane and other 05 hydrocarbons associated with natural gas other than oil, may be delivered at 06 commercially reasonable rates; and 07 (7) [(3)] endeavor to develop natural gas pipelines and other 08 transportation mechanisms that offer commercially reasonable rates for shippers and 09 access for shippers who produce natural gas, including propane and other 10 hydrocarbons associated with natural gas other than oil, in the state. 11 * Sec. 2. AS 31.25.010 is amended to read: 12 Sec. 31.25.010. Structure. The Alaska Gasline Development Corporation is a 13 public corporation and government instrumentality acting in the best interest of the 14 state for the purposes required by AS 31.25.005, located for administrative 15 purposes in the Department of Commerce, Community, and Economic Development, 16 but having a legal existence independent of and separate from the state. The 17 corporation may not be terminated as long as it has bonds, notes, or other obligations 18 outstanding. The corporation may dissolve when no bonds, notes, or other obligations 19 of the corporation or a subsidiary of the corporation are outstanding and the 20 corporation or a subsidiary of the corporation is no longer engaged in the 21 development, financing, construction, or operation of an in-state natural gas pipeline 22 or an Alaska liquefied natural gas project. Upon termination of the corporation, its 23 rights and property pass to the state. 24 * Sec. 3. AS 31.25.020(a) is amended to read: 25 (a) The corporation shall be governed by a board of directors consisting of 26 (1) five public members; and 27 (2) two individuals designated by the governor that are each the head 28 of a principal department of the state, except that the commissioner of natural 29 resources and the commissioner of revenue may not be designated to serve on the 30 board [UNLESS THE PROJECT FOR WHICH A LICENSE IS ISSUED UNDER 31 AS 43.90 HAS BEEN ABANDONED OR IS NO LONGER RECEIVING THE
01 INDUCEMENTS IN AS 43.90.110(a) OR THE COMMISSIONER OF NATURAL 02 RESOURCES AND THE COMMISSIONER OF REVENUE ARE NO LONGER 03 SIGNATORIES ON A VALID CONTRACT UNDER AS 43.90]. 04 * Sec. 4. AS 31.25.040 is amended by adding new subsections to read: 05 (c) To the maximum extent practicable, the board shall 06 (1) maximize the efficient use of state resources; and 07 (2) establish appropriate separation within the corporation by 08 separating personnel and functions, and by other means to the extent that separation 09 may be required by contract or applicable law for the purpose of screening and 10 preventing the exchange of commercially sensitive information when developing an 11 in-state natural gas pipeline, an Alaska liquefied natural gas project, and other 12 transportation mechanisms to deliver natural gas in the state. 13 (d) The board may appoint a program director for an Alaska liquefied natural 14 gas project. The board may appoint a separate program director for an in-state natural 15 gas pipeline as described in the July 1, 2011, project plan prepared under former 16 AS 38.34.040 and defined in AS 31.25.390. A program director appointed under this 17 section shall 18 (1) serve at the pleasure of the board; and 19 (2) report to the executive director of the corporation. 20 * Sec. 5. AS 31.25.050 is amended to read: 21 Sec. 31.25.050. Legal counsel. Except as provided in (b) of this section, the 22 [THE] corporation shall retain legal counsel to advise the corporation in legal matters 23 and represent it in litigation. 24 * Sec. 6. AS 31.25.050 is amended by adding a new subsection to read: 25 (b) The attorney general shall 26 (1) be the legal counsel for the corporation for legal services related to 27 the development of contracts and agreements by the corporation that relate to an 28 Alaska liquefied natural gas project; and 29 (2) consult with the corporation when procuring outside counsel for 30 legal services for the corporation related to an Alaska liquefied natural gas project. 31 * Sec. 7. AS 31.25.080(a) is amended to read:
01 (a) In addition to other powers granted in this chapter, the corporation may 02 (1) determine the form of ownership and the operating structure of an 03 in-state natural gas pipeline developed by the corporation and may enter into 04 agreements with other persons for joint ownership, joint operation, or both of an in- 05 state natural gas pipeline or an Alaska liquefied natural gas project; 06 (2) plan, finance, construct, develop, acquire, maintain, and operate a 07 pipeline system and other transportation mechanism, including pipelines, compressors, 08 storage facilities, and other related facilities, equipment, and works of public 09 improvement, in the state to facilitate production, transportation, and delivery of 10 natural gas or other related natural resources to the point of consumption or to the 11 point of distribution for consumption; 12 (3) lease or rent facilities, structures, and properties; 13 (4) exercise the power of eminent domain and file a declaration of 14 taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 15 necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas 16 project; the exercise of powers by the corporation under this paragraph may not 17 exceed the permissible exercise of the powers by the state; 18 (5) acquire, by purchase, lease, or gift, land, structures, real or personal 19 property, an interest in property, a right-of-way, a franchise, an easement, or other 20 interest in land, or an interest in or right to capacity in a pipeline system determined to 21 be necessary or convenient for the development, financing, construction, or operation 22 of an in-state natural gas pipeline project or an Alaska liquefied natural gas project 23 or part of an in-state natural gas pipeline project or an Alaska liquefied natural gas 24 project; 25 (6) transfer or otherwise dispose of all or part of an in-state natural gas 26 pipeline project, an Alaska liquefied natural gas project, or [DEVELOPED BY 27 THE CORPORATION OR TRANSFER OR OTHERWISE DISPOSE OF] an interest 28 in an asset of the corporation; 29 (7) elect to provide transportation of natural gas as a contract carrier, 30 common carrier, or otherwise; 31 (8) provide light, water, security, and other services for property of the
01 corporation; 02 (9) conduct hearings to gather and develop data consistent with the 03 purpose and powers of the corporation; 04 (10) advocate for new pipeline capacity before the Federal Energy 05 Regulatory Commission; 06 (11) make and execute agreements, contracts, and other instruments 07 necessary or convenient in the exercise of the powers and functions of the corporation 08 under this chapter, including a contract with a person, firm, corporation, governmental 09 agency, or other entity; 10 (12) sue and be sued in its own name; 11 (13) adopt an official seal; 12 (14) adopt bylaws for the regulation of its affairs and the conduct of its 13 business and adopt regulations and policies in connection with the performance of its 14 functions and duties; 15 (15) employ fiscal consultants, engineers, attorneys, appraisers, and 16 other consultants and employees that may, in the judgment of the corporation, be 17 required and fix and pay their compensation from funds available to the corporation; 18 (16) procure insurance against a loss in connection with its operation; 19 (17) borrow money as provided in this chapter to carry out its 20 corporate purposes and issue its obligations as evidence of borrowing; 21 (18) include in a borrowing the amounts necessary to pay financing 22 charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 23 and legal fees, and other expenses that are necessary or incident to the borrowing; 24 (19) receive, administer, and comply with the conditions and 25 requirements of an appropriation, gift, grant, or donation of property or money; 26 (20) do all acts and things necessary, convenient, or desirable to carry 27 out the powers expressly granted or necessarily implied in this chapter; 28 (21) invest or reinvest, subject to its contracts with noteholders and 29 bondholders, money or funds held by the corporation, including funds in the in-state 30 natural gas pipeline fund (AS 31.25.100) and the Alaska liquefied natural gas 31 project fund (AS 31.25.110), in obligations or other securities or investments in
01 which banks or trust companies in the state may legally invest funds held in reserves 02 or sinking funds or funds not required for immediate disbursement, and in certificates 03 of deposit or time deposits secured by obligations of, or guaranteed by, the state or the 04 United States; 05 (22) enter into, as it determines to be necessary or appropriate, any 06 swap or hedge, cap, or other contract providing for payments based on levels of or 07 changes in interest rates or indices or in the cost or price of any commodity, supply, or 08 expense expected to be used or incurred in connection with the acquisition, 09 construction, or operation of any facility or property owned, leased, or operated by the 10 corporation, or an option with respect to any of the foregoing; 11 (23) except as provided in (g) of this section, acquire an ownership 12 or participation interest in an Alaska liquefied natural gas project, natural gas 13 treatment facilities, natural gas pipeline facilities, liquefaction facilities, marine 14 terminal facilities related to the infrastructure of an Alaska liquefied natural gas 15 project, an entity or joint venture that has an ownership interest in or is engaged 16 in the planning, financing, acquisition, maintenance, construction, and operation 17 of an Alaska liquefied natural gas project; 18 (24) after consultation with the commissioner of revenue and the 19 commissioner of natural resources, enter into contracts relating to an Alaska 20 liquefied natural gas project, including contracts for services related to 21 operation, marketing, transportation, gas treatment, marine terminal operation, 22 or liquefaction. 23 * Sec. 8. AS 31.25.080(e) is amended to read: 24 (e) If commitments to acquire firm transportation capacity for the in-state 25 natural gas pipeline are received in an open season conducted by the corporation, the 26 corporation shall, within 10 days after accepting and executing the written 27 commitments received during the open season, report the results of the open season to 28 the president of the senate and the speaker of the house of representatives and inform 29 the public of the results of the open season through publication on the Internet website 30 of the corporation and in a press release or other announcement to the media. The 31 results made public must include the name of each prospective shipper, the amount of
01 capacity allocated, and the period of the commitment. If the corporation determines 02 that the commitments received during the open season are not sufficient to permit the 03 corporation to continue the development or construction of the natural gas pipeline, 04 the corporation shall report that to the legislature within 30 days. 05 * Sec. 9. AS 31.25.080 is amended by adding a new subsection to read: 06 (g) The power in (a)(23) of this section may not be exercised by an entity or 07 subsidiary of the corporation that is advancing the development an in-state natural gas 08 pipeline. 09 * Sec. 10. AS 31.25.090 is amended by adding a new subsection to read: 10 (i) Subject to limitations on the disclosure of confidential information in (g) 11 and (h) of this section, the corporation shall provide to the commissioner of natural 12 resources and the commissioner of revenue access to information that is related to the 13 development of contracts under AS 38.05.020(b)(10) and (11). 14 * Sec. 11. AS 31.25.100 is amended to read: 15 Sec. 31.25.100. In-state natural gas pipeline fund. The in-state natural gas 16 pipeline fund is established in the corporation and consists of money appropriated to 17 it. The corporation shall determine fund management and may contract with the 18 Department of Revenue for fund management. Unless otherwise provided by law, 19 money appropriated to the fund lapses into the general fund on the day this section is 20 repealed. Interest and other income received on money in the fund shall be separately 21 accounted for and may be appropriated to the fund. The corporation may use money 22 appropriated to the fund without further appropriation for the cost of managing the 23 fund and for the planning, financing, development, acquisition, maintenance, 24 construction, and operation of the [AN] in-state natural gas pipeline described in 25 AS 31.25.005(4) and for the purposes in AS 31.25.005(4), (6), and (7). 26 * Sec. 12. AS 31.25 is amended by adding a new section to read: 27 Sec. 31.25.110. Alaska liquefied natural gas project fund. The Alaska 28 liquefied natural gas project fund is established in the corporation and consists of 29 money appropriated to it. The corporation shall determine fund management and may 30 contract with the Department of Revenue for fund management. If money is 31 appropriated to the fund to finance the cost of an Alaska liquefied natural gas project,
01 the corporation shall create an account in the fund for that purpose and hold the money 02 appropriated for that purpose in that account. Interest and other income received on 03 money in the fund shall be separately accounted for and may be appropriated to the 04 fund. The corporation may use money appropriated to the fund without further 05 appropriation for the purpose of managing the fund, for purposes related to an Alaska 06 liquefied natural gas project, and for the purpose of transferring net revenue received 07 by the corporation related to equity interest, contracts, and other activities to the 08 appropriate fund of the state as determined by the commissioner of revenue in 09 consultation with the commissioner of natural resources. 10 * Sec. 13. AS 31.25.120 is amended to read: 11 Sec. 31.25.120. Creation of subsidiaries. The corporation may create 12 subsidiary corporations for the purpose of developing, constructing, operating, and 13 financing in-state natural gas pipeline projects or other transportation mechanisms; for 14 the purpose of aiding in the development, construction, operation, and financing of in- 15 state natural gas pipeline projects; or for the purpose of acquiring [THE STATE'S 16 ROYALTY SHARE OF NATURAL GAS,] natural gas from the North Slope, and 17 natural gas from other regions of the state, including the state's outer continental shelf, 18 and making that natural gas available to markets in the state, including the delivery of 19 natural gas, including propane and other hydrocarbons associated with natural gas 20 other than oil, to coastal communities in the state, or for export. Subject to the 21 limitations for the use of money appropriated to the in-state natural gas pipeline 22 fund (AS 31.25.100) and the Alaska liquefied natural gas project fund 23 (AS 31.25.110), the [A SUBSIDIARY CORPORATION CREATED UNDER THIS 24 SECTION MAY BE INCORPORATED UNDER AS 10.20.146 - 10.20.166. THE] 25 corporation may transfer assets of the corporation to a subsidiary created under this 26 section. A subsidiary created under this section may borrow money and issue bonds as 27 evidence of that borrowing and has all the powers of the corporation that the 28 corporation grants to it. Unless otherwise provided by the corporation, the debts, 29 liabilities, and obligations of a subsidiary corporation created under this section are not 30 the debts, liabilities, or obligations of the corporation. 31 * Sec. 14. AS 31.25.140(c) is amended to read:
01 (c) To further ensure effective budgetary decision making by the legislature, 02 the board shall 03 (1) annually review the corporation's assets, including the assets of the 04 in-state natural gas pipeline fund under AS 31.25.100 and the Alaska liquefied 05 natural gas project fund under AS 31.25.110, to determine whether assets of the 06 corporation exceed an amount required to fulfill the purposes of the corporation as 07 defined in this chapter; in making its review, the board shall determine whether, and to 08 what extent, assets in excess of the amount required to fulfill the purposes of the 09 corporation during the next fiscal year are available without 10 (A) breaching an agreement entered into by the corporation; 11 (B) materially impairing the operations or financial integrity of 12 the corporation; or 13 (C) materially affecting the ability of the corporation to fulfill 14 the purposes of the corporation as defined in this chapter; 15 (2) specifically identify in the corporation's assets the amounts that the 16 board believes are necessary to meet the requirements of (1)(C) of this subsection; and 17 (3) present to the legislature by January 10 of each year a complete 18 accounting of all assets of the corporation, including assets of the in-state natural gas 19 pipeline fund under AS 31.25.100 and the Alaska liquefied natural gas project 20 fund under AS 31.25.110, and a report of the review and determination made under 21 (1) and (2) of this subsection; the accounting shall be audited by an independent 22 outside auditor. 23 * Sec. 15. AS 31.25.390 is amended by adding a new paragraph to read: 24 (7) "Alaska liquefied natural gas project" means a natural gas project 25 as described in AS 31.25.005(5) that includes collectively, the Prudhoe Bay unit gas 26 transmission line, the Point Thomson unit gas transmission line, a gas pipeline, the gas 27 treatment plant, a liquefied natural gas plant, and a marine terminal; in this paragraph, 28 (A) "gas pipeline" 29 (i) means the main natural gas pipeline from the outlet 30 flange of the gas treatment plant on the North Slope to the inlet flange 31 of the liquefied natural gas plant located in the Southcentral region of
01 the state, which shall have off-take points along the pipeline for 02 deliveries of gas in the state; 03 (ii) does not include any gas lines downstream of any 04 off-take point between the gas treatment plant and the liquefied natural 05 gas plant; 06 (B) "gas treatment plant" means those facilities and related 07 activities required to receive natural gas from the Prudhoe Bay unit gas 08 transmission line, the Point Thomson unit gas transmission line, and other 09 facilities, treat the natural gas to pipeline specifications, dispose of or deliver 10 by-products, deliver liquid products for further transportation, and deliver 11 treated natural gas for transportation through the gas pipeline; 12 (C) "liquefied natural gas plant" means the facility for 13 liquefying natural gas and includes structures, equipment, underlying land 14 rights, other associated systems, storage, and facilities for off-loading liquefied 15 natural gas; 16 (D) "marine terminal" means the terminal and those facilities 17 required to receive liquefied natural gas from the boundary of the liquefied 18 natural gas plant for marine transportation, including auxiliary vessels used in 19 the operation of the terminal; 20 (E) "Point Thomson unit gas transmission line" means a natural 21 gas transmission line from the outlet flange of the Point Thomson unit 22 production facility to the inlet flange of the gas treatment plant; and 23 (F) "Prudhoe Bay unit gas transmission line" means a natural 24 gas transmission line from the outlet flange of the Prudhoe Bay unit central gas 25 facility to the inlet flange of the gas treatment plant. 26 * Sec. 16. AS 36.30.850(b) is amended by adding new paragraphs to read: 27 (47) contracts for professional and technical services by the 28 Department of Natural Resources to support the development of agreements and 29 contracts under AS 38.05.020(b)(10) and (11); 30 (48) contracts of the Department of Law developed with client 31 participation for legal services related to an Alaska liquefied natural gas project as that
01 project is defined in AS 31.25.390, except that, to the extent practicable, the 02 Department of Law shall use the procurement process under AS 36.30.320 with the 03 participation of the client. 04 * Sec. 17. AS 37.05 is amended by adding a new section to article 6 to read: 05 Sec. 37.05.610. Alaska affordable energy fund. (a) The Alaska affordable 06 energy fund is created as a special account in the general fund. The fund consists of 07 the amount determined and deposited in the fund under (b) of this section and interest 08 earned on the fund balance. The purpose of the fund is to provide a source from which 09 the legislature may appropriate money to develop infrastructure to deliver energy to 10 areas of the state that are not expected to have or do not have direct access to a North 11 Slope natural gas pipeline. 12 (b) The amount to be deposited in (a) of this section is 20 percent of the 13 revenue received from the state's royalty gas transported in an Alaska liquefied natural 14 gas project that remains after the payment to the Alaska permanent fund under 15 AS 37.13.010. 16 (c) The legislature may make appropriations from the Alaska affordable 17 energy fund for the purpose described in (a) of this section. 18 (d) Nothing in this section creates a dedicated fund. 19 (e) In this section, 20 (1) "Alaska liquefied natural gas project" has the meaning given in 21 AS 31.25.390; 22 (2) "North Slope natural gas pipeline" has the meaning given in 23 AS 42.06.630. 24 * Sec. 18. AS 38.05.020(b) is amended to read: 25 (b) The commissioner may 26 (1) establish reasonable procedures and adopt reasonable regulations 27 necessary to carry out this chapter and, whenever necessary, issue directives or orders 28 to the director to carry out specific functions and duties; regulations adopted by the 29 commissioner shall be adopted under AS 44.62 (Administrative Procedure Act); 30 orders by the commissioner classifying land, issued after January 3, 1959, are not 31 required to be adopted under AS 44.62 (Administrative Procedure Act);
01 (2) enter into agreements considered necessary to carry out the 02 purposes of this chapter, including agreements with federal and state agencies; 03 (3) review any order or action of the director; 04 (4) exercise the powers and do the acts necessary to carry out the 05 provisions and objectives of this chapter; 06 (5) notwithstanding the provisions of any other section of this chapter, 07 grant an extension of the time within which payments due on any exploration license, 08 lease, or sale of state land, minerals, or materials may be made, including payment of 09 rental and royalties, on a finding that compliance with the requirements is or was 10 prevented by reason of war, riots, or acts of God; 11 (6) classify tracts for agricultural uses; 12 (7) after consulting with the Board of Agriculture and Conservation 13 (AS 03.09.010), waive, postpone, or otherwise modify the development requirements 14 of a contract for the sale of agricultural land if 15 (A) the land is inaccessible by road; or 16 (B) transportation, marketing, and development costs render 17 the required development uneconomic; 18 (8) reconvey or relinquish land or an interest in land to the federal 19 government if 20 (A) the land is described in an amended application for an 21 allotment under 43 U.S.C. 1617; and 22 (B) the reconveyance or relinquishment is 23 (i) for the purposes provided in 43 U.S.C. 1617; and 24 (ii) in the best interests of the state; 25 (9) lead and coordinate all matters relating to the state's review and 26 authorization of resource development projects; 27 (10) enter into commercial agreements with a duration of not more 28 than two years for project services related to a North Slope natural gas project; 29 (11) in consultation with the commissioner of revenue, participate 30 in the negotiation of agreements that include balancing, marketing, disposition of 31 natural gas, and offtake and contracts and development of terms for inclusion in
01 those proposed agreements and contracts associated with a North Slope natural 02 gas project; an agreement or contract negotiated under this paragraph to which 03 the state is a party is not effective unless the legislature authorizes the governor 04 to execute the agreement or contract; 05 (12) enter into confidentiality agreements to maintain the 06 confidentiality of information related to contract negotiations and contract 07 implementation associated with a North Slope natural gas project; information 08 under those confidentiality agreements is not subject to AS 40.25 (Alaska Public 09 Records Act), except that 10 (A) the terms of a proposed contract that the commissioner 11 presents to the legislature for the purpose of obtaining authorization for 12 the governor to execute are not confidential and must be made available to 13 the public at least 90 days before the proposed effective date for the terms; 14 and 15 (B) the commissioner may share confidential information 16 obtained under this paragraph with members of the legislature, their 17 agents, and contractors on request under confidentiality agreements, 18 either in committees held in executive session or individually; 19 (13) consult with the Alaska Gasline Development Corporation in 20 the development of agreements or contracts under (10) or (11) of this subsection 21 for project services related to a gas treatment plant, pipeline, liquefaction facility, 22 marine terminal, or marine transportation services necessary to transport 23 natural gas to market; 24 (14) exercise the powers and do the acts necessary to carry out the 25 provisions and objectives of AS 43.90 that relate to this chapter. 26 * Sec. 19. AS 38.05.020(b), as amended by sec. 18 of this Act, 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 in
01 the negotiation of agreements that include balancing, marketing, disposition of natural 02 gas, and offtake and contracts and development of terms for inclusion in those 03 proposed agreements and contracts associated with a North Slope natural gas project; 04 an agreement or contract negotiated under this paragraph to which the state is a party 05 is not effective unless the legislature authorizes the governor to execute the agreement 06 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 under 10 those confidentiality agreements is not subject to AS 40.25 (Alaska Public Records 11 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 the 14 governor to execute are not confidential and must be made available to the 15 public at least 90 days before the proposed effective date for the terms; and 16 (B) the commissioner may share confidential information 17 obtained under this paragraph with members of the legislature, their agents, 18 and contractors on request under confidentiality agreements, either in 19 committees held in executive session or individually; 20 (13) consult with the Alaska Gasline Development Corporation in the 21 development of agreements or contracts under (10) or (11) of this subsection for 22 project services related to a gas treatment plant, pipeline, liquefaction facility, marine 23 terminal, or marine transportation services necessary to transport natural gas to 24 market; 25 (14) in consultation with the commissioner of revenue, take 26 custody of gas delivered to the state under AS 43.55.014(b) and manage the 27 project services and disposition and sale of that gas; 28 (15) exercise the powers and do the acts necessary to carry out the 29 provisions and objectives of AS 43.90 that relate to this chapter. 30 * Sec. 20. AS 38.05 is amended by adding a new section to read: 31 Sec. 38.05.023. Terms in an agreement or contract related to a North
01 Slope natural gas project. (a) An agreement or contract to which the state or an 02 entity of the state is a party that is negotiated under AS 38.05.020(b)(11) must include 03 a requirement that the state or an entity of the state shall have access to data developed 04 under the agreement or contract in which the state or an entity of the state has directly 05 participated financially. Access by the state or an entity of the state to the data must be 06 on the same or substantially similar terms applicable to any other party in a North 07 Slope natural gas project. 08 (b) A proposed agreement or contract associated with a North Slope natural 09 gas project may not include a provision that changes the property tax on property that 10 was previously taxable under AS 43.56. 11 (c) A proposed agreement or contract associated with a North Slope natural gas 12 project must provide the means for allocating infrastructure costs between the state 13 and other parties in the project. The allocation must take into consideration the extent 14 to which infrastructure is used by the project and used by the public and the difference 15 between the normal expected or actual life-cycle costs for the infrastructure as used by 16 the project and the expected or actual life-cycle costs of the same infrastructure if 17 subject only to general public use. The proposed agreement or contract may not 18 require the state to pay infrastructure costs that are directly related to the project and 19 not designed for general public use in a proportionate amount that is greater than the 20 state's share of participation in the project. 21 (d) An agreement or contract to which the state or an entity of the state is a 22 party that is negotiated under AS 38.05.020(b)(11) must include principles based on 23 commercially reasonable terms for delivering natural gas to public utilities in the state 24 when the demand for natural gas by the utilities exceeds the amount of the state's 25 royalty natural gas and natural gas delivered to the state as payment of tax that is 26 available in a North Slope natural gas project. 27 * Sec. 21. AS 38.05.180(i) is amended to read: 28 (i) The commissioner may provide for the establishment of an exploration 29 incentive credit system under which a lessee of state land drilling an exploratory well 30 on that land may earn credits based on [UPON] the footage drilled and the region in 31 which the well is situated. The commissioner may also provide for credits to be earned
01 by persons performing geophysical work on state land, if that work is performed 02 during the two seasons immediately preceding an announced lease sale and on land 03 included within the sale area and the geophysical information is made public 04 following the sale. Credits may not exceed 50 percent of the cost of the drilling or 05 geophysical work. Credits may be used during a limited period established by the 06 commissioner and may be assigned during that period. Credits may be applied against 07 (1) royalty and rental payments for oil and gas or for gas only payable to the state or 08 (2) taxes payable under AS 43.55.011 [AS 43.55]. A credit may not exceed 50 percent 09 of the payment toward which it is being applied. Amounts due the Alaska permanent 10 fund (AS 37.13.010) shall be calculated before the application of credits under this 11 subsection. 12 * Sec. 22. AS 38.05.180 is amended by adding new subsections to read: 13 (hh) Notwithstanding (j) of this section, the commissioner may propose 14 modification to a lease from which a lessee has committed gas from that lease to a 15 North Slope natural gas project. A modification may be made under this subsection 16 only after the commissioner makes the written determination under (ii) of this section 17 that the lease may be modified. If a modification is made, the modification shall be in 18 effect during the initial project term that has acquired the major permits required for 19 the work plan and budget considered by the commissioner in the written determination 20 under (ii) of this section. A modification under this subsection may 21 (1) relate to switching between taking the state's royalty gas in value 22 and in-kind to ensure that the lessee, the state, or another person shall bear 23 proportionate costs for treatment, transportation, and liquefaction to the state's royalty 24 gas or gas delivered to the state under AS 43.55.014, and the state's actions do not 25 unreasonably interfere with the long-term marketing of natural gas by the lessee, the 26 state, or another person; 27 (2) provide a method for establishing a fair market value for each 28 component of the state's royalty gas and appropriate adjustments to reflect fair market 29 deductions for reasonable costs for treatment, transportation, and liquefaction for the 30 state's royalty gas from the North Slope to the destination market; in this paragraph, 31 "reasonable costs for treatment, transportation, and liquefaction" may not be greater
01 than actual costs; 02 (3) modify net profit shares for oil and gas and sliding scale royalty 03 rates for gas by establishing fixed royalty rates that yield a value to the state that the 04 commissioner determines to be not less than the value the state would have received 05 under the terms of the lease before a modification under this subsection. 06 (ii) Before making a modification to a lease under (hh) of this section, the 07 commissioner shall make a written determination that the lease may be modified. The 08 determination by the commissioner must be based on a clear and convincing showing 09 by the lessee that 10 (1) the modification 11 (A) is in the best interests of the state; and 12 (B) will materially improve the likelihood of a successful North 13 Slope natural gas project; 14 (2) a North Slope natural gas project has sufficient 15 (A) financial commitment for a work plan and budget 16 necessary to support major permits and regulatory filings required by state and 17 federal agencies; and 18 (B) commitment of gas by lessees; 19 (3) the lease will produce hydrocarbons that will be transported on a 20 North Slope natural gas project during the initial project term; and 21 (4) the lessee or an affiliate of the lessee has offered to purchase, 22 dispose of, or market the state's royalty gas taken in kind and gas delivered to the state 23 under AS 43.55.014 on the same or substantially similar terms as the lessee or an 24 affiliate of the lessee sells, disposes of, or markets the lessee's gas. 25 * Sec. 23. AS 38.05.183(a) is amended to read: 26 (a) The sale, exchange, or other disposal of a mineral obtained by the state as a 27 royalty under AS 38.05.182, [OR] the sale, exchange, or other disposal in whole or in 28 part of a right to receive future mineral production under a state lease under this 29 chapter, or the sale, exchange, or other disposal of gas delivered to the state under 30 AS 43.55.014(b) shall be by competitive bid and the sale, exchange, or other disposal 31 made to the highest responsible bidder, except that competitive bidding is not required
01 when the commissioner, after prior written notice to the Alaska Royalty Oil and Gas 02 Development Advisory Board under AS 38.06.050, determines that the best interest of 03 the state does not require it or that no competition exists. 04 * Sec. 24. AS 38.05.183(c) is amended to read: 05 (c) If the commissioner determines that a sale, exchange, or other disposal of a 06 mineral obtained by the state as a royalty under AS 38.05.182, [OR] of a right to 07 receive future mineral production under a state lease under this chapter, or of gas 08 delivered to the state under AS 43.55.014(b) shall be made otherwise than by 09 competitive bid, and the Alaska Royalty Oil and Gas Development Advisory Board 10 has been notified in writing of that determination, the commissioner shall make public 11 in writing the specific findings and conclusions on [UPON] which that determination 12 is based. 13 * Sec. 25. AS 38.05.183(d) is amended to read: 14 (d) Oil or gas taken in kind by the state as its royalty share or gas delivered to 15 the state under AS 43.55.014(b) may not be sold or otherwise disposed of for export 16 from the state until the commissioner determines that the [ROYALTY-IN-KIND] oil 17 or gas is surplus to the present and projected intrastate domestic and industrial needs. 18 The commissioner shall make public, in writing, the specific findings and reasons on 19 which the determination is based. 20 * Sec. 26. AS 38.05.183(e) is amended to read: 21 (e) When a sale, exchange, or other disposal of oil or gas taken in kind by the 22 state as its royalty share, or a sale, exchange, or other disposal in whole or in part of a 23 right to receive future royalty oil or gas, under a state lease under this chapter is made 24 other than by competitive bid, or when a sale, exchange, or other disposal of gas 25 delivered to the state under AS 43.55.014(b) is made other than by competitive 26 bid, the sale, exchange, or other disposal shall be awarded by the commissioner to the 27 prospective buyer whose proposal offers the maximum benefits to citizens of the state. 28 The commissioner shall consider 29 (1) the cash value offered; 30 (2) the projected effects of the sale, exchange, or other disposal on the 31 economy of the state;
01 (3) the projected benefits of refining or processing the oil or gas in the 02 state; 03 (4) the ability of the prospective buyer to provide refined products or 04 by-products for distribution and sale in the state with price or supply benefits to the 05 citizens of the state; and 06 (5) the criteria listed in AS 38.06.070(a). 07 * Sec. 27. AS 38.05.965 is amended by adding new paragraphs to read: 08 (26) "initial project term" means the duration sufficient to support an 09 investment decision by the sponsors of a North Slope natural gas project to permit 10 realization of a competitive economic return, to enable necessary financing, and to 11 support agreements for the sale of hydrocarbons transported on a North Slope natural 12 gas project; 13 (27) "North Slope natural gas project" means a project to produce or 14 transport natural gas from state oil and gas and gas only leases that include land north 15 of 68 degrees North latitude for transport in a gaseous state from the North Slope; 16 (28) "project services" means services provided by a gas treatment 17 plant, pipeline, liquefaction facility, or marine terminal, marine transportation 18 services, or other services necessary to transport natural gas to market. 19 * Sec. 28. AS 38.34.020(a) is amended to read: 20 (a) A state agency or entity conducting a review or taking action relating to a 21 project under AS 31.25 (Alaska Gasline Development Corporation) [THE IN- 22 STATE NATURAL GAS PIPELINE PROJECT UNDER THIS CHAPTER] shall 23 expedite the review or action in a manner consistent with the timely completion of the 24 project. 25 * Sec. 29. AS 38.34.020(b) is amended to read: 26 (b) Notwithstanding any contrary provision of law, a state agency or entity 27 may not include in any project certificate, right-of-way, permit, or other authorization 28 a term or condition that is not required by law if the in-state gasline project 29 coordinator determines that the term or condition would prevent or impair, in any 30 significant respect, the expeditious construction and operation or expansion of a 31 project under AS 31.25 (Alaska Gasline Development Corporation) [THE IN-
01 STATE NATURAL GAS PIPELINE PROJECT]. 02 * Sec. 30. AS 38.34.020(c) is amended to read: 03 (c) Unless required by law, a state agency or entity may not add to, amend, or 04 abrogate any certificate, right-of-way, permit, or other authorization if the in-state 05 gasline project coordinator determines that the action would prevent or impair, in any 06 significant respect, the expeditious construction, operation, or expansion of a project 07 under AS 31.25 (Alaska Gasline Development Corporation) [THE IN-STATE 08 NATURAL GAS PIPELINE PROJECT]. 09 * Sec. 31. AS 40.25.100(a) is amended to read: 10 (a) Information in the possession of the Department of Revenue that discloses 11 the particulars of the business or affairs of a taxpayer or other person, including 12 information under AS 38.05.020(b)(11) that is subject to a confidentiality 13 agreement under AS 38.05.020(b)(12), is not a matter of public record, except as 14 provided in AS 43.05.230(i) or for purposes of investigation and law enforcement. The 15 information shall be kept confidential except when its production is required in an 16 official investigation, administrative adjudication under AS 43.05.405 - 43.05.499, or 17 court proceeding. These restrictions do not prohibit the publication of statistics 18 presented in a manner that prevents the identification of particular reports and items, 19 prohibit the publication of tax lists showing the names of taxpayers who are delinquent 20 and relevant information that may assist in the collection of delinquent taxes, or 21 prohibit the publication of records, proceedings, and decisions under AS 43.05.405 - 22 43.05.499. 23 * Sec. 32. AS 40.25.100(a), as amended by sec. 31 of this Act, is amended to read: 24 (a) Information in the possession of the Department of Revenue that discloses 25 the particulars of the business or affairs of a taxpayer or other person, including 26 information under AS 38.05.020(b)(11) that is subject to a confidentiality agreement 27 under AS 38.05.020(b)(12), is not a matter of public record, except as provided in 28 AS 43.05.230(i) or (k) or for purposes of investigation and law enforcement. The 29 information shall be kept confidential except when its production is required in an 30 official investigation, administrative adjudication under AS 43.05.405 - 43.05.499, or 31 court proceeding. These restrictions do not prohibit the publication of statistics
01 presented in a manner that prevents the identification of particular reports and items, 02 prohibit the publication of tax lists showing the names of taxpayers who are delinquent 03 and relevant information that may assist in the collection of delinquent taxes, or 04 prohibit the publication of records, proceedings, and decisions under AS 43.05.405 - 05 43.05.499. 06 * Sec. 33. AS 40.25.120(a) is amended to read: 07 (a) Every person has a right to inspect a public record in the state, including 08 public records in recorders' offices, except 09 (1) records of vital statistics and adoption proceedings, which shall be 10 treated in the manner required by AS 18.50; 11 (2) records pertaining to juveniles unless disclosure is authorized by 12 law; 13 (3) medical and related public health records; 14 (4) records required to be kept confidential by a federal law or 15 regulation or by state law; 16 (5) to the extent the records are required to be kept confidential under 17 20 U.S.C. 1232g and the regulations adopted under 20 U.S.C. 1232g in order to secure 18 or retain federal assistance; 19 (6) records or information compiled for law enforcement purposes, but 20 only to the extent that the production of the law enforcement records or information 21 (A) could reasonably be expected to interfere with enforcement 22 proceedings; 23 (B) would deprive a person of a right to a fair trial or an 24 impartial adjudication; 25 (C) could reasonably be expected to constitute an unwarranted 26 invasion of the personal privacy of a suspect, defendant, victim, or witness; 27 (D) could reasonably be expected to disclose the identity of a 28 confidential source; 29 (E) would disclose confidential techniques and procedures for 30 law enforcement investigations or prosecutions; 31 (F) would disclose guidelines for law enforcement
01 investigations or prosecutions if the disclosure could reasonably be expected to 02 risk circumvention of the law; or 03 (G) could reasonably be expected to endanger the life or 04 physical safety of an individual; 05 (7) names, addresses, and other information identifying a person as a 06 participant in the Alaska Higher Education Savings Trust under AS 14.40.802 or the 07 advance college tuition savings program under AS 14.40.803 - 14.40.817; 08 (8) public records containing information that would disclose or might 09 lead to the disclosure of a component in the process used to execute or adopt an 10 electronic signature if the disclosure would or might cause the electronic signature to 11 cease being under the sole control of the person using it; 12 (9) reports submitted under AS 05.25.030 concerning certain 13 collisions, accidents, or other casualties involving boats; 14 (10) records or information pertaining to a plan, program, or 15 procedures for establishing, maintaining, or restoring security in the state, or to a 16 detailed description or evaluation of systems, facilities, or infrastructure in the state, 17 but only to the extent that the production of the records or information 18 (A) could reasonably be expected to interfere with the 19 implementation or enforcement of the security plan, program, or procedures; 20 (B) would disclose confidential guidelines for investigations or 21 enforcement and the disclosure could reasonably be expected to risk 22 circumvention of the law; or 23 (C) could reasonably be expected to endanger the life or 24 physical safety of an individual or to present a real and substantial risk to the 25 public health and welfare; 26 (11) the written notification regarding a proposed regulation provided 27 under AS 24.20.105 to the Department of Law and the affected state agency and 28 communications between the Legislative Affairs Agency, the Department of Law, and 29 the affected state agency under AS 24.20.105; 30 (12) records that are 31 (A) proprietary, privileged, or a trade secret in accordance with
01 AS 43.90.150 or 43.90.220(e); 02 (B) applications that are received under AS 43.90 until notice is 03 published under AS 43.90.160; 04 (13) information of the Alaska Gasline Development Corporation 05 created under AS 31.25.010 or a subsidiary of the Alaska Gasline Development 06 Corporation that is confidential by law or under a valid confidentiality agreement; 07 (14) information under AS 38.05.020(b)(11) that is subject to a 08 confidentiality agreement under AS 38.05.020(b)(12). 09 * Sec. 34. AS 43.05.010 is amended to read: 10 Sec. 43.05.010. Duties of commissioner. The commissioner of revenue shall 11 (1) exercise general supervision and direct the activities of the 12 Department of Revenue; 13 (2) supervise the fiscal affairs and responsibilities of the department; 14 (3) prescribe uniform rules for investigations and hearings; 15 (4) keep a record of all departmental proceedings, record and file all 16 bonds, and assume custody of returns, reports, papers, and documents of the 17 department; 18 (5) adopt a seal and affix it to each order, process, or certificate issued 19 by the commissioner; 20 (6) keep a record of each order, process, and certificate issued by the 21 commissioner, and keep the record open to public inspection at all reasonable times; 22 (7) hold hearings and investigations necessary for the administration of 23 state tax and revenue laws; 24 (8) except as provided in AS 43.05.405 - 43.05.499 and in 25 AS 44.64.030, hear and determine appeals of a matter within the jurisdiction of the 26 Department of Revenue and enter orders on the appeals that are final unless reversed 27 or modified by the courts; 28 (9) issue subpoenas to require the attendance of witnesses and the 29 production of necessary books, papers, documents, correspondence, and other things; 30 (10) order the taking of depositions before a person competent to 31 administer oaths;
01 (11) administer oaths and take acknowledgments; 02 (12) request the attorney general for rulings on the interpretation of the 03 tax and revenue laws administered by the department; 04 (13) call upon the attorney general to institute actions for recovery of 05 unpaid taxes, fees, excises, additions to tax, penalties, and interest; 06 (14) issue warrants for the collection of unpaid tax penalties and 07 interest and take all steps necessary and proper to enforce full and complete 08 compliance with the tax, license, excise, and other revenue laws of the state; 09 (15) report to the legislature before February 15 of each year the total 10 amount of contributions reported and the total amount of credit claimed during the 11 previous calendar year under AS 43.20.014, AS 43.55.019, AS 43.56.018, 12 AS 43.65.018, AS 43.75.018, and AS 43.77.045; 13 (16) consult with the commissioner of natural resources on 14 negotiation of contracts and development of terms for inclusion in proposed 15 contracts associated with a North Slope natural gas project. 16 * Sec. 35. AS 43.05.010, as amended by sec. 34 of this Act, is amended to read: 17 Sec. 43.05.010. Duties of commissioner. The commissioner of revenue shall 18 (1) exercise general supervision and direct the activities of the 19 Department of Revenue; 20 (2) supervise the fiscal affairs and responsibilities of the department; 21 (3) prescribe uniform rules for investigations and hearings; 22 (4) keep a record of all departmental proceedings, record and file all 23 bonds, and assume custody of returns, reports, papers, and documents of the 24 department; 25 (5) adopt a seal and affix it to each order, process, or certificate issued 26 by the commissioner; 27 (6) keep a record of each order, process, and certificate issued by the 28 commissioner, and keep the record open to public inspection at all reasonable times; 29 (7) hold hearings and investigations necessary for the administration of 30 state tax and revenue laws; 31 (8) except as provided in AS 43.05.405 - 43.05.499 and in
01 AS 44.64.030, hear and determine appeals of a matter within the jurisdiction of the 02 Department of Revenue and enter orders on the appeals that are final unless reversed 03 or modified by the courts; 04 (9) issue subpoenas to require the attendance of witnesses and the 05 production of necessary books, papers, documents, correspondence, and other things; 06 (10) order the taking of depositions before a person competent to 07 administer oaths; 08 (11) administer oaths and take acknowledgments; 09 (12) request the attorney general for rulings on the interpretation of the 10 tax and revenue laws administered by the department; 11 (13) call upon the attorney general to institute actions for recovery of 12 unpaid taxes, fees, excises, additions to tax, penalties, and interest; 13 (14) issue warrants for the collection of unpaid tax penalties and 14 interest and take all steps necessary and proper to enforce full and complete 15 compliance with the tax, license, excise, and other revenue laws of the state; 16 (15) report to the legislature before February 15 of each year the total 17 amount of contributions reported and the total amount of credit claimed during the 18 previous calendar year under AS 43.20.014, AS 43.55.019, AS 43.56.018, 19 AS 43.65.018, AS 43.75.018, and AS 43.77.045; 20 (16) consult with the commissioner of natural resources on negotiation 21 of contracts and development of terms for inclusion in proposed contracts associated 22 with a North Slope natural gas project; 23 (17) direct the disposition of revenue received from gas delivered 24 to the state under AS 43.55.014(b) by entering into agreements with the 25 commissioner of natural resources related to the management of the custody and 26 disposition of gas delivered to the state under AS 43.55.014(b). 27 * Sec. 36. AS 43.05.230 is amended by adding a new subsection to read: 28 (k) The name of each person that the department has allowed to make an 29 election under AS 43.55.014(a) and the amount of gas produced from each lease or 30 property to which an effective election under AS 43.55.014 applies is public 31 information.
01 * Sec. 37. AS 43.20.144(d) is amended to read: 02 (d) The sales factor of a taxpayer subject to this section is a fraction, 03 (1) the numerator of which is the sum of the following for the tax 04 period: 05 (A) the tariffs allowed and received by or for the taxpayer for 06 transporting oil or gas by pipeline in this state, regardless of whether the tariffs 07 are paid by third parties or by entities within the taxpayer's consolidated 08 business; and 09 (B) the total sales of the taxpayer in this state, determined in 10 accordance with AS 43.19 (Multistate Tax Compact), but excluding 11 (i) those sales already included in the tariffs described 12 in (A) of this paragraph; 13 (ii) constructive sales or deemed sales of natural gas 14 delivered to the state as payment of tax under an election made by 15 the taxpayer under AS 43.55.014; 16 (iii) fees, allowed and received, that are paid 17 between entities within the consolidated business of the taxpayer 18 for transporting the taxpayer's natural gas; and 19 (2) the denominator of which is the sum of the following for the tax 20 period: 21 (A) the tariffs allowed and received by or for the taxpayer's 22 consolidated business for transporting oil or gas by pipeline everywhere, 23 regardless of whether the tariffs are paid by third parties or by entities within 24 the taxpayer's consolidated business; and 25 (B) the total sales of the taxpayer's consolidated business 26 everywhere, determined in accordance with AS 43.19 (Multistate Tax 27 Compact), but excluding 28 (i) those sales already included in the tariffs described 29 in (A) of this paragraph; 30 (ii) constructive sales or deemed sales of natural gas 31 delivered to the state as payment of tax under an election made by
01 the taxpayer under AS 43.55.014 or delivered in another tax 02 jurisdiction under a law comparable to AS 43.55.014; 03 (iii) fees, allowed and received, that are paid 04 between entities within the consolidated business of the taxpayer 05 for transporting the taxpayer's natural gas. 06 * Sec. 38. AS 43.20.144(f) is amended to read: 07 (f) The extraction factor of a taxpayer subject to this section is a fraction, 08 (1) the numerator of which is the sum of the following for the tax 09 period: 10 (A) the number of barrels of the taxpayer's oil (net of royalty to 11 an unrelated party) produced from or allocated to leases or properties of the 12 taxpayer in this state; and 13 (B) one-sixth of the number of Mcf of the taxpayer's gas, 14 excluding reinjected gas but including gas subject to an election under 15 AS 43.55.014, (net of royalty to an unrelated party) produced from or allocated 16 to leases or properties of the taxpayer in this state [, EXCLUDING 17 REINJECTED GAS]; and 18 (2) the denominator of which is the sum of the following for the tax 19 period: 20 (A) the number of barrels of oil of the taxpayer's consolidated 21 business (net of royalty to an unrelated party) produced from or allocated to 22 leases or properties of the taxpayer's consolidated business everywhere; and 23 (B) one-sixth of the number of Mcf of gas, excluding 24 reinjected gas but including gas subject to an election under AS 43.55.014, 25 of the taxpayer's consolidated business (net of royalty to an unrelated party) 26 produced from or allocated to leases or properties of the taxpayer's 27 consolidated business everywhere [, EXCLUDING REINJECTED GAS]. 28 * Sec. 39. AS 43.55.011(e) is amended to read: 29 (e) There is levied on the producer of oil or gas a tax for all oil and gas 30 produced each calendar year from each lease or property in the state, less any oil and 31 gas the ownership or right to which is exempt from taxation or constitutes a
01 landowner's royalty interest or for which a tax is levied by AS 43.55.014. Except as 02 otherwise provided under (f), (j), (k), (o), and (p) of this section, for oil and gas 03 produced 04 (1) before January 1, 2014, the tax is equal to the sum of 05 (A) the annual production tax value of the taxable oil and gas 06 as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 07 (B) the sum, over all months of the calendar year, of the tax 08 amounts determined under (g) of this section; 09 (2) on and after January 1, 2014, and before January 1, 2022, the tax 10 is equal to the annual production tax value of the taxable oil and gas as calculated 11 under AS 43.55.160(a)(1) multiplied by 35 percent; 12 (3) on and after January 1, 2022, the tax for 13 (A) oil is equal to the annual production tax value of the 14 taxable oil as calculated under AS 43.55.160(h) multiplied by 35 percent; 15 (B) gas is equal to 13 percent of the gross value at the point 16 of production of the taxable gas; if the gross value at the point of 17 production of gas produced from a lease or property is less than zero, that 18 gross value at the point of production is considered zero for purposes of 19 this subparagraph. 20 * Sec. 40. AS 43.55.011(f) is amended to read: 21 (f) The levy of tax under (e) of this section for 22 (1) oil and gas produced before January 1, 2022, from leases or 23 properties that include land north of 68 degrees North latitude, other than [OIL 24 AND GAS PRODUCTION SUBJECT TO (i) OF THIS SECTION AND] gas subject 25 to (o) of this section, may not be less than 26 (A) [(1)] four 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 more than $25; 30 (B) [(2)] three 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 over $20 but not over $25; 03 (C) [(3)] two percent of the gross value at the point of 04 production when the average price per barrel for Alaska North Slope crude oil 05 for sale on the United States West Coast during the calendar year for which the 06 tax is due is over $17.50 but not over $20; 07 (D) [(4)] one percent of the gross value at the point of 08 production when the average price per barrel for Alaska North Slope crude oil 09 for sale on the United States West Coast during the calendar year for which the 10 tax is due is over $15 but not over $17.50; or 11 (E) [(5)] zero percent of the gross value at the point of 12 production when the average price per barrel for Alaska North Slope crude oil 13 for sale on the United States West Coast during the calendar year for which the 14 tax is due is $15 or less; and 15 (2) oil produced on and after January 1, 2022, from leases or 16 properties that include land north of 68 degrees North latitude, may not be less 17 than 18 (A) four percent of the gross value at the point of 19 production when the average price per barrel for Alaska North Slope 20 crude oil for sale on the United States West Coast during the calendar 21 year for which the tax is due is more than $25; 22 (B) three 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 over $20 but not over $25; 26 (C) two percent of the gross value at the point of production 27 when the average price per barrel for Alaska North Slope crude oil for 28 sale on the United States West Coast during the calendar year for which 29 the tax is due is over $17.50 but not over $20; 30 (D) one percent of the gross value at the point of production 31 when the average price per barrel for Alaska North Slope crude oil for
01 sale on the United States West Coast during the calendar year for which 02 the tax is due is over $15 but not over $17.50; or 03 (E) zero percent of the gross value at the point of 04 production when the average price per barrel for Alaska North Slope 05 crude oil for sale on the United States West Coast during the calendar 06 year for which the tax is due is $15 or less. 07 * Sec. 41. AS 43.55 is amended by adding a new section to read: 08 Sec. 43.55.014. Payment in gas of tax for gas. (a) For gas produced on and 09 after January 1, 2022, other than gas described in (e) of this section, the department 10 shall allow a producer to make an election, under regulations adopted by the 11 department, to pay in gas the production tax levied by this section in lieu of the tax 12 otherwise levied for the gas by AS 43.55.011(e). An election under this subsection 13 applies only to gas produced from oil and gas leases modified under AS 38.05.180(hh) 14 from which the commissioner of natural resources has determined to take royalty gas 15 in kind under AS 38.05.182. 16 (b) A production tax levied by this section is equal to 13 percent of the gas 17 otherwise taxable under AS 43.55.011(e)(3) produced from each oil and gas lease to 18 which an effective election under (a) of this section applies, when and as that gas is 19 produced. The producer shall pay the tax in gas by delivering that 13 percent of the 20 gas to the state at the point of production. 21 (c) The Department of Natural Resources shall manage under 22 AS 38.05.020(b)(14) the custody and disposition of gas delivered to the state under (b) 23 of this section. 24 (d) An assessment under AS 43.05.245 against a producer for an 25 underpayment of a tax levied by this section may be made in terms of an amount of 26 gas or an amount of money, as determined under regulations adopted by the 27 department. If the assessment is made in terms of money, the amount for a month of 28 production for an oil and gas lease subject to an effective election under (a) of this 29 section is the product of the number of units of gas by which the producer's delivery to 30 the state was less than the amount required by (b) of this section, multiplied by the 31 average gross value at the point of production for each unit of the gas produced by the
01 producer from the lease during the month other than gas that was not subject to tax or 02 gas that was delivered to the state under (b) of this section. The department may allow 03 a credit or refund under AS 43.05.275 for an overpayment of a tax levied by this 04 section that may be issued in the form of gas or money, as determined under 05 regulations adopted by the department. If the credit or refund is allowed in terms of 06 money, the amount of the credit or refund for a month of production for an oil and gas 07 lease subject to an effective election under (a) of this section is the product of the 08 number of units of gas by which the producer's delivery to the state was more than the 09 amount required under (b) of this section, multiplied by the average gross value at the 10 point of production for each unit of the gas produced by the producer from the lease 11 during the month other than gas that was not subject to tax or gas that was delivered to 12 the state under (b) of this section. Interest that is determined as a percentage of the 13 amount of a tax underpayment or overpayment and a penalty that is a percentage of 14 the amount of a tax underpayment are calculated as a percentage of the amount of 15 money determined in this subsection. An amount of gas that was less than the amount 16 required to be delivered to the state under (b) of this section or an amount of gas that 17 was more than the amount required to be delivered to the state under (b) of this section 18 that is adjusted as provided by a gas balancing agreement to which the state is a party 19 under AS 38.05.020(b)(11) is not subject to assessment under AS 43.05.245 or a credit 20 or refund under AS 43.05.275. In this subsection, "unit" means a unit of measurement 21 for gas identified by the department under regulations adopted by the department and 22 may be expressed as 1,000 cubic feet, 1,000,000 British thermal units, or another 23 appropriate unit of measurement specified by the department under regulations 24 adopted by the department. 25 (e) This section does not apply to gas that, under AS 43.55.020(e), is 26 considered as gas produced from a lease or property for the purpose of AS 43.55.011 - 27 43.55.180. 28 * Sec. 42. AS 43.55.019(a) is amended to read: 29 (a) A producer of oil or gas is allowed a credit against the tax levied by 30 AS 43.55.011(e) [DUE UNDER THIS CHAPTER] for cash contributions accepted for 31 (1) direct instruction, research, and educational support purposes,
01 including library and museum acquisitions, and contributions to endowment, by an 02 Alaska university foundation or by a nonprofit, public or private, Alaska two-year or 03 four-year college accredited by a regional accreditation association; 04 (2) secondary school level vocational education courses, programs, and 05 facilities by a school district in the state; 06 (3) vocational education courses, programs, equipment, and facilities 07 by a state-operated vocational technical education and training school, a nonprofit 08 regional training center recognized by the Department of Labor and Workforce 09 Development, and an apprenticeship program in the state that is registered with 10 the United States Department of Labor under 29 U.S.C. 50 - 50b (National 11 Apprenticeship Act); 12 (4) a facility or an annual intercollegiate sports tournament by a 13 nonprofit, public or private, Alaska two-year or four-year college accredited by a 14 regional accreditation association; 15 (5) Alaska Native cultural or heritage programs and educational 16 support, including mentoring and tutoring, provided by a nonprofit agency for public 17 school staff and for students who are in grades kindergarten through 12 in the state; 18 (6) education, research, rehabilitation, and facilities by an institution 19 that is located in the state and that qualifies as a coastal ecosystem learning center 20 under the Coastal America Partnership established by the federal government; and 21 (7) the Alaska higher education investment fund under AS 37.14.750. 22 * Sec. 43. AS 43.55.019(a), as amended by sec. 21, ch. 92, SLA 2010, sec. 14, ch. 7, 23 FSSLA 2011, sec. 17, ch. 74, SLA 2012, and sec. 42 of this Act, is amended to read: 24 (a) A producer of oil or gas is allowed a credit against the tax levied by 25 AS 43.55.011(e) for cash contributions accepted 26 (1) for direct instruction, research, and educational support purposes, 27 including library and museum acquisitions, and contributions to endowment, by an 28 Alaska university foundation or by a nonprofit, public or private, Alaska two-year or 29 four-year college accredited by a regional accreditation association; 30 (2) for secondary school level vocational education courses, programs, 31 and facilities by a school district in the state;
01 (3) for vocational education courses, programs, equipment, and 02 facilities by 03 (A) a [STATE-OPERATED] vocational technical education 04 and training school in the state that offers programs approved by the 05 United States Department of Veterans Affairs and the Alaska Commission 06 on Postsecondary Education; 07 (B) a nonprofit regional training center recognized by the 08 Department of Labor and Workforce Development; or 09 (C) an apprenticeship program in the state that is 10 registered with the United States Department of Labor under 29 U.S.C. 50 11 - 50b (National Apprenticeship Act); and 12 (4) for the Alaska higher education investment fund under 13 AS 37.14.750. 14 * Sec. 44. AS 43.55.019(e) is amended to read: 15 (e) The credit under this section may not reduce a person's tax liability under 16 AS 43.55.011(e) [THIS CHAPTER] to below zero for any tax year. An unused credit 17 or portion of a credit not used under this section for a tax year may not be sold, traded, 18 transferred, or applied in a subsequent tax year. 19 * Sec. 45. AS 43.55.020(a) is amended to read: 20 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 21 the tax as follows: 22 (1) for oil and gas produced before January 1, 2014, an installment 23 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 24 as allowed by law, is due for each month of the calendar year on the last day of the 25 following month; except as otherwise provided under (2) of this subsection, the 26 amount of the installment payment is the sum of the following amounts, less 1/12 of 27 the tax credits that are allowed by law to be applied against the tax levied by 28 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 29 not be less than zero: 30 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 31 produced from leases or properties in the state outside the Cook Inlet
01 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 02 the greater of 03 (i) zero; or 04 (ii) 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 the leases or 10 properties during the month for which the installment payment is 11 calculated; 12 (B) for oil and gas produced from leases or properties subject 13 to AS 43.55.011(f), the greatest of 14 (i) zero; 15 (ii) zero percent, one percent, two percent, three 16 percent, or four percent, as applicable, of the gross value at the point of 17 production of the oil and gas produced from the leases or properties 18 during the month for which the installment payment is calculated; or 19 (iii) the sum of 25 percent and the tax rate calculated for 20 the month under AS 43.55.011(g) multiplied by the remainder obtained 21 by subtracting 1/12 of the producer's adjusted lease expenditures for the 22 calendar year of production under AS 43.55.165 and 43.55.170 that are 23 deductible for the oil and gas under AS 43.55.160 from the gross value 24 at the point of production of the oil and gas produced from those leases 25 or properties during the month for which the installment payment is 26 calculated; 27 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 28 each lease or property, the greater of 29 (i) zero; or 30 (ii) the sum of 25 percent and the tax rate calculated for 31 the month under AS 43.55.011(g) multiplied by the remainder obtained
01 by subtracting 1/12 of the producer's adjusted lease expenditures for the 02 calendar year of production under AS 43.55.165 and 43.55.170 that are 03 deductible under AS 43.55.160 for the oil or gas, respectively, 04 produced from the lease or property from the gross value at the point of 05 production of the oil or gas, respectively, produced from the lease or 06 property during the month for which the installment payment is 07 calculated; 08 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 09 (i) the sum of 25 percent and the tax rate calculated for 10 the month under AS 43.55.011(g) multiplied by the remainder obtained 11 by subtracting 1/12 of the producer's adjusted lease expenditures for the 12 calendar year of production under AS 43.55.165 and 43.55.170 that are 13 deductible for the oil and gas under AS 43.55.160 from the gross value 14 at the point of production of the oil and gas produced from the leases or 15 properties during the month for which the installment payment is 16 calculated, but not less than zero; or 17 (ii) four percent of the gross value at the point of 18 production of the oil and gas produced from the leases or properties 19 during the month, but not less than zero; 20 (2) an amount calculated under (1)(C) of this subsection for oil or gas 21 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 22 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 23 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 24 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 25 amount of taxable gas produced during the month for the amount of taxable gas 26 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 27 (2)(A), as applicable, the amount of taxable oil produced during the month for the 28 amount of taxable oil produced during the calendar year; 29 (3) an installment payment of the estimated tax levied by 30 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 31 on the last day of the following month; the amount of the installment payment is the
01 sum of 02 (A) the applicable tax rate for oil provided under 03 AS 43.55.011(i), multiplied by the gross value at the point of production of the 04 oil taxable under AS 43.55.011(i) and produced from the lease or property 05 during the month; and 06 (B) the applicable tax rate for gas provided under 07 AS 43.55.011(i), multiplied by the gross value at the point of production of the 08 gas taxable under AS 43.55.011(i) and produced from the lease or property 09 during the month; 10 (4) any amount of tax levied by AS 43.55.011, net of any credits 11 applied as allowed by law, that exceeds the total of the amounts due as installment 12 payments of estimated tax is due on March 31 of the year following the calendar year 13 of production; 14 (5) for oil and gas produced on and after January 1, 2014, and before 15 January 1, 2022, an installment payment of the estimated tax levied by 16 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 17 month of the calendar year on the last day of the following month; except as otherwise 18 provided under (6) of this subsection, the amount of the installment payment is the 19 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 20 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 21 of the installment payment may not be less than zero: 22 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 23 produced from leases or properties in the state outside the Cook Inlet 24 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 25 the greater of 26 (i) zero; or 27 (ii) 35 percent multiplied by the remainder obtained by 28 subtracting 1/12 of the producer's adjusted lease expenditures for the 29 calendar year of production under AS 43.55.165 and 43.55.170 that are 30 deductible for the oil and gas under AS 43.55.160 from the gross value 31 at the point of production of the oil and gas produced from the leases or
01 properties during the month for which the installment payment is 02 calculated; 03 (B) for oil and gas produced from leases or properties subject 04 to AS 43.55.011(f), the greatest of 05 (i) zero; 06 (ii) zero percent, one percent, two percent, three 07 percent, or four percent, as applicable, of the gross value at the point of 08 production of the oil and gas produced from the leases or properties 09 during the month for which the installment payment is calculated; or 10 (iii) 35 percent multiplied by the remainder obtained by 11 subtracting 1/12 of the producer's adjusted lease expenditures for the 12 calendar year of production under AS 43.55.165 and 43.55.170 that are 13 deductible for the oil and gas under AS 43.55.160 from the gross value 14 at the point of production of the oil and gas produced from those leases 15 or properties during the month for which the installment payment is 16 calculated, except that, for the purposes of this calculation, a reduction 17 from the gross value at the point of production may apply for oil and 18 gas subject to AS 43.55.160(f) or (g); 19 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 20 each lease or property, the greater of 21 (i) zero; or 22 (ii) 35 percent multiplied by the remainder obtained by 23 subtracting 1/12 of the producer's adjusted lease expenditures for the 24 calendar year of production under AS 43.55.165 and 43.55.170 that are 25 deductible under AS 43.55.160 for the oil or gas, respectively, 26 produced from the lease or property from the gross value at the point of 27 production of the oil or gas, respectively, produced from the lease or 28 property during the month for which the installment payment is 29 calculated; 30 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 31 (i) 35 percent multiplied by the remainder obtained by
01 subtracting 1/12 of the producer's adjusted lease expenditures for the 02 calendar year of production under AS 43.55.165 and 43.55.170 that are 03 deductible for the oil and gas under AS 43.55.160 from the gross value 04 at the point of production of the oil and gas produced from the leases or 05 properties during the month for which the installment payment is 06 calculated, but not less than zero; or 07 (ii) four percent of the gross value at the point of 08 production of the oil and gas produced from the leases or properties 09 during the month, but not less than zero; 10 (6) an amount calculated under (5)(C) of this subsection for oil or gas 11 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 12 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 13 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 14 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 15 amount of taxable gas produced during the month for the amount of taxable gas 16 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 17 (2)(A), as applicable, the amount of taxable oil produced during the month for the 18 amount of taxable oil produced during the calendar year; 19 (7) for oil and gas produced on or after January 1, 2022, an 20 installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax 21 credits applied as allowed by law, is due for each month of the calendar year on 22 the last day of the following month; the amount of the installment payment is the 23 sum of the following amounts, less 1/12 of the tax credits that are allowed by law 24 to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but 25 the amount of the installment payment may not be less than zero: 26 (A) for oil produced from leases or properties that include 27 land north of 68 degrees North latitude, the greatest of 28 (i) zero; 29 (ii) zero percent, one percent, two percent, three 30 percent, or four percent, as applicable, of the gross value at the 31 point of production of the oil produced from the leases or
01 properties during the month for which the installment payment is 02 calculated; or 03 (iii) 35 percent multiplied by the remainder obtained 04 by subtracting 1/12 of the producer's adjusted lease expenditures 05 for the calendar year of production under AS 43.55.165 and 06 43.55.170 that are deductible for the oil under AS 43.55.160(h)(1) 07 from the gross value at the point of production of the oil produced 08 from those leases or properties during the month for which the 09 installment payment is calculated, except that, for the purposes of 10 this calculation, a reduction from the gross value at the point of 11 production may apply for oil subject to AS 43.55.160(f) or 12 43.55.160(f) and (g); 13 (B) for oil produced before or during the last calendar year 14 under AS 43.55.024(b) for which the producer could take a tax credit 15 under AS 43.55.024(a), from leases or properties in the state outside the 16 Cook Inlet sedimentary basin, no part of which is north of 68 degrees 17 North latitude, other than leases or properties subject to AS 43.55.011(p), 18 the greater of 19 (i) zero; or 20 (ii) 35 percent multiplied by the remainder obtained 21 by subtracting 1/12 of the producer's adjusted lease expenditures 22 for the calendar year of production under AS 43.55.165 and 23 43.55.170 that are deductible for the oil under AS 43.55.160(h)(2) 24 from the gross value at the point of production of the oil produced 25 from the leases or properties during the month for which the 26 installment payment is calculated; 27 (C) for oil and gas produced from leases or properties 28 subject to AS 43.55.011(p), except as otherwise provided under (8) of this 29 subsection, the sum of 30 (i) 35 percent multiplied by the remainder obtained 31 by subtracting 1/12 of the producer's adjusted lease expenditures
01 for the calendar year of production under AS 43.55.165 and 02 43.55.170 that are deductible for the oil under AS 43.55.160(h)(3) 03 from the gross value at the point of production of the oil produced 04 from the leases or properties during the month for which the 05 installment payment is calculated, but not less than zero; and 06 (ii) 13 percent of the gross value at the point of 07 production of the gas produced from the leases or properties 08 during the month, but not less than zero; 09 (D) for oil produced from leases or properties in the state, 10 no part of which is north of 68 degrees North latitude, other than leases or 11 properties subject to (B) or (C) of this paragraph, the greater of 12 (i) zero; or 13 (ii) 35 percent multiplied by the remainder obtained 14 by subtracting 1/12 of the producer's adjusted lease expenditures 15 for the calendar year of production under AS 43.55.165 and 16 43.55.170 that are deductible for the oil under AS 43.55.160(h)(4) 17 from the gross value at the point of production of the oil produced 18 from the leases or properties during the month for which the 19 installment payment is calculated; 20 (E) for gas produced from each lease or property in the 21 state, other than a lease or property subject to AS 43.55.011(p), 13 percent 22 of the gross value at the point of production of the gas produced from the 23 lease or property during the month for which the installment payment is 24 calculated, but not less than zero; 25 (8) an amount calculated under (7)(C) of this subsection may not 26 exceed four percent of the gross value at the point of production of the oil and gas 27 produced from leases or properties subject to AS 43.55.011(p) during the month 28 for which the installment payment is calculated; 29 (9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and 30 (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the 31 point of production is determined under AS 43.55.011(f)(1) or (2) but substituting
01 the phrase "month for which the installment payment is calculated" in 02 AS 43.55.011(f)(1) and (2) for the phrase "calendar year for which the tax is 03 due." 04 * Sec. 46. AS 43.55.020(g) is amended to read: 05 (g) Notwithstanding any contrary provision of AS 43.05.225, 06 (1) before January 1, 2014, an unpaid amount of an installment 07 payment required under (a)(1) - (3) of this section that is not paid when due bears 08 interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal 09 Revenue Code), as amended, compounded daily, from the date the installment 10 payment is due until March 31 following the calendar year of production, and (B) as 11 provided for a delinquent tax under AS 43.05.225 after that March 31; interest accrued 12 under (A) of this paragraph that remains unpaid after that March 31 is treated as an 13 addition to tax that bears interest under (B) of this paragraph; an unpaid amount of tax 14 due under (a)(4) of this section that is not paid when due bears interest as provided for 15 a delinquent tax under AS 43.05.225; 16 (2) on and after January 1, 2014, an unpaid amount of an installment 17 payment required under (a)(3), (5), [OR] (6), or (7) of this section that is not paid 18 when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 19 6621 (Internal Revenue Code), as amended, compounded daily, from the date the 20 installment payment is due until March 31 following the calendar year of production, 21 and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; 22 interest accrued under (A) of this paragraph that remains unpaid after that March 31 is 23 treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid 24 amount of tax due under (a)(4) of this section that is not paid when due bears interest 25 as provided for a delinquent tax under AS 43.05.225. 26 * Sec. 47. AS 43.55.020(h) is amended to read: 27 (h) Notwithstanding any contrary provision of AS 43.05.280, 28 (1) an overpayment of an installment payment required under (a)(1), 29 (2), (3), (5), (6), or (7) [(a)(1) - (3), (5) OR (6)] of this section bears interest at the rate 30 provided for an overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as 31 amended, compounded daily, from the later of the date the installment payment is due
01 or the date the overpayment is made, until the earlier of 02 (A) the date it is refunded or is applied to an underpayment; or 03 (B) March 31 following the calendar year of production; 04 (2) except as provided under (1) of this subsection, interest with 05 respect to an overpayment is allowed only on any net overpayment of the payments 06 required under (a) of this section that remains after the later of March 31 following the 07 calendar year of production or the date that the statement required under 08 AS 43.55.030(a) is filed; 09 (3) interest is allowed under (2) of this subsection only from a date that 10 is 90 days after the later of March 31 following the calendar year of production or the 11 date that the statement required under AS 43.55.030(a) is filed; interest is not allowed 12 if the overpayment was refunded within the 90-day period; 13 (4) interest under (2) and (3) of this subsection is paid at the rate and in 14 the manner provided in AS 43.05.225(1). 15 * Sec. 48. AS 43.55.020(l) is amended to read: 16 (l) For oil and gas produced on [ON] and after January 1, 2014, and before 17 January 1, 2022, in making settlement with the royalty owner for oil and gas that is 18 taxable under AS 43.55.011, the producer may deduct the amount of the tax paid on 19 taxable royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in 20 value at the time the tax becomes due to the amount of the tax paid. If the total 21 deductions of installment payments of estimated tax for a calendar year exceed the 22 actual tax for that calendar year, the producer shall, before April 1 of the following 23 year, refund the excess to the royalty owner. Unless otherwise agreed between the 24 producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) on 25 taxable royalty oil and gas for a calendar year, other than oil and gas the ownership or 26 right to which constitutes a landowner's royalty interest, is considered to be the gross 27 value at the point of production of the taxable royalty oil and gas produced during the 28 calendar year multiplied by a figure that is a quotient, in which 29 (1) the numerator is the producer's total tax liability under 30 AS 43.55.011(e)(2) [AS 43.55.011(e)] for the calendar year of production; and 31 (2) the denominator is the total gross value at the point of production
01 of the oil and gas taxable under AS 43.55.011(e) produced by the producer from all 02 leases and properties in the state during the calendar year. 03 * Sec. 49. AS 43.55.020 is amended by adding a new subsection to read: 04 (m) For oil and gas produced on and after January 1, 2022, in making 05 settlement with the royalty owner for oil and gas that is taxable under AS 43.55.011, 06 the producer may deduct the amount of the tax paid on taxable royalty oil and gas, or 07 may deduct taxable royalty oil or gas equivalent in value at the time the tax becomes 08 due to the amount of the tax paid. If the total deductions of installment payments of 09 estimated tax for a calendar year exceed the actual tax for that calendar year, the 10 producer shall, before April 1 of the following year, refund the excess to the royalty 11 owner. In making settlement with the royalty owner for gas that is taxable under 12 AS 43.55.014, the producer may deduct the amount of the gas paid as in kind tax on 13 taxable royalty gas or may deduct the gross value at the point of production of the gas 14 paid as in-kind tax on taxable royalty gas. Unless otherwise agreed between the 15 producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) on 16 taxable royalty oil for a calendar year, other than oil the ownership or right to which 17 constitutes a landowner's royalty interest, is considered to be the gross value at the 18 point of production of the taxable royalty oil produced during the calendar year 19 multiplied by a figure that is a quotient, in which 20 (1) the numerator is the producer's total tax liability under 21 AS 43.55.011(e)(3)(A) for the calendar year of production; and 22 (2) the denominator is the total gross value at the point of production 23 of the oil taxable under AS 43.55.011(e) produced by the producer from all leases and 24 properties in the state during the calendar year. 25 * Sec. 50. AS 43.55.030(a) is amended to read: 26 (a) A producer that produces oil or gas from a lease or property in the state 27 during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) 28 for that oil or gas, shall file with the department on March 31 of the following year a 29 statement, under oath, in a form prescribed by the department, giving, with other 30 information required, the following: 31 (1) a description of each lease or property from which oil or gas was
01 produced, by name, legal description, lease number, or accounting codes assigned by 02 the department; 03 (2) the names of the producer and, if different, the person paying the 04 tax, if any; 05 (3) the gross amount of oil and the gross amount of gas produced from 06 each lease or property, separately identifying the gross amount of gas produced 07 from each oil and gas lease to which an effective election under AS 43.55.014(a) 08 applies, the amount of gas delivered to the state under AS 43.55.014(b), and the 09 percentage of the gross amount of oil and gas owned by the producer; 10 (4) the gross value at the point of production of the oil and of the gas 11 produced from each lease or property owned by the producer and the costs of 12 transportation of the oil and gas; 13 (5) the name of the first purchaser and the price received for the oil and 14 for the gas, unless relieved from this requirement in whole or in part by the 15 department; 16 (6) the producer's qualified capital expenditures, as defined in 17 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 18 payments or credits under AS 43.55.170; 19 (7) the production tax values of the oil and gas under AS 43.55.160(a) 20 or of the oil under AS 43.55.160(h), as applicable [AS 43.55.160]; 21 (8) any claims for tax credits to be applied; and 22 (9) calculations showing the amounts, if any, that were or are due 23 under AS 43.55.020(a) and interest on any underpayment or overpayment. 24 * Sec. 51. AS 43.55.160(a) is amended to read: 25 (a) For oil and gas produced before January 1, 2022, except [EXCEPT] as 26 provided in (b), (f), and (g) of this section, for the purposes of 27 (1) AS 43.55.011(e)(1) and (2) [AS 43.55.011(e)], the annual 28 production tax value of taxable oil, gas, or oil and gas produced during a calendar year 29 in a category for which a separate annual production tax value is required to be 30 calculated under this paragraph is the gross value at the point of production of that oil, 31 gas, or oil and gas taxable under AS 43.55.011(e), less the producer's lease
01 expenditures under AS 43.55.165 for the calendar year applicable to the oil, gas, or oil 02 and gas in that category produced by the producer during the calendar year, as 03 adjusted under AS 43.55.170; a separate annual production tax value shall be 04 calculated for 05 (A) oil and gas produced from leases or properties in the state 06 that include land north of 68 degrees North latitude, other than gas produced 07 before 2022 and used in the state; 08 (B) oil and gas produced from leases or properties in the state 09 outside the Cook Inlet sedimentary basin, no part of which is north of 68 10 degrees North latitude and that qualifies for a tax credit under AS 43.55.024(a) 11 and (b); this subparagraph does not apply to 12 (i) gas produced before 2022 and used in the state; or 13 (ii) oil and gas subject to AS 43.55.011(p); 14 (C) oil produced before 2022 from each lease or property in the 15 Cook Inlet sedimentary basin; 16 (D) gas produced before 2022 from each lease or property in 17 the Cook Inlet sedimentary basin; 18 (E) gas produced before 2022 from each lease or property in 19 the state outside the Cook Inlet sedimentary basin and used in the state, other 20 than gas subject to AS 43.55.011(p); 21 (F) oil and gas subject to AS 43.55.011(p) produced from 22 leases or properties in the state; 23 (G) oil and gas produced from leases or properties in the state 24 no part of which is north of 68 degrees North latitude, other than oil or gas 25 described in (B), (C), (D), (E), or (F) of this paragraph; 26 (2) AS 43.55.011(g), for oil and gas produced before January 1, 2014, 27 the monthly production tax value of the taxable 28 (A) oil and gas produced during a month from leases or 29 properties in the state that include land north of 68 degrees North latitude is the 30 gross value at the point of production of the oil and gas taxable under 31 AS 43.55.011(e) and produced by the producer from those leases or properties,
01 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 02 calendar year applicable to the oil and gas produced by the producer from 03 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 04 does not apply to gas subject to AS 43.55.011(o); 05 (B) oil and gas produced during a month from leases or 06 properties in the state outside the Cook Inlet sedimentary basin, no part of 07 which is north of 68 degrees North latitude, is the gross value at the point of 08 production of the oil and gas taxable under AS 43.55.011(e) and produced by 09 the producer from those leases or properties, less 1/12 of the producer's lease 10 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 11 gas produced by the producer from those leases or properties, as adjusted under 12 AS 43.55.170; this subparagraph does not apply to gas subject to 13 AS 43.55.011(o); 14 (C) oil produced during a month from a lease or property in the 15 Cook Inlet sedimentary basin is the gross value at the point of production of 16 the oil taxable under AS 43.55.011(e) and produced by the producer from that 17 lease or property, less 1/12 of the producer's lease expenditures under 18 AS 43.55.165 for the calendar year applicable to the oil produced by the 19 producer from that lease or property, as adjusted under AS 43.55.170; 20 (D) gas produced during a month from a lease or property in 21 the Cook Inlet sedimentary basin is the gross value at the point of production 22 of the gas taxable under AS 43.55.011(e) and produced by the producer from 23 that lease or property, less 1/12 of the producer's lease expenditures under 24 AS 43.55.165 for the calendar year applicable to the gas produced by the 25 producer from that lease or property, as adjusted under AS 43.55.170; 26 (E) gas produced during a month from a lease or property 27 outside the Cook Inlet sedimentary basin and used in the state is the gross 28 value at the point of production of that gas taxable under AS 43.55.011(e) and 29 produced by the producer from that lease or property, less 1/12 of the 30 producer's lease expenditures under AS 43.55.165 for the calendar year 31 applicable to that gas produced by the producer from that lease or property, as
01 adjusted under AS 43.55.170. 02 * Sec. 52. AS 43.55.160(e) is amended to read: 03 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 04 would otherwise be deductible by a producer in a calendar year but whose deduction 05 would cause an annual production tax value calculated under (a)(1) or (h) of this 06 section of taxable oil or gas produced during the calendar year to be less than zero 07 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 08 However, the department shall provide by regulation a method to ensure that, for a 09 period for which a producer's tax liability is limited by AS 43.55.011(j), (k), (o), or 10 (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would 11 otherwise be deductible by a producer for that period but whose deduction would 12 cause a production tax value calculated under (a)(1)(C), (D), (E), [OR] (F), or (h)(3) 13 of this section to be less than zero are accounted for as though the adjusted lease 14 expenditures had first been used as deductions in calculating the production tax values 15 of oil or gas subject to any of the limitations under AS 43.55.011(j), (k), (o), or (p) that 16 have positive production tax values so as to reduce the tax liability calculated without 17 regard to the limitation to the maximum amount provided for under the applicable 18 provision of AS 43.55.011(j), (k), (o), or (p). Only the amount of those adjusted lease 19 expenditures remaining after the accounting provided for under this subsection may be 20 used to establish a carried-forward annual loss under AS 43.55.023(b). In this 21 subsection, "producer" includes "explorer." 22 * Sec. 53. AS 43.55.160(f) is amended to read: 23 (f) On and after January 1, 2014, in the calculation of an annual production tax 24 value of a producer under (a)(1)(A) or (h)(1) [(a)(1)] of this section, the gross value at 25 the point of production of oil or gas produced from a lease or property north of 68 26 degrees North latitude meeting one or more of the following criteria is reduced by 20 27 percent: (1) the oil or gas is produced from a lease or property that does not contain a 28 lease that was within a unit on January 1, 2003; (2) the oil or gas is produced from a 29 participating area established after December 31, 2011, that is within a unit formed 30 under AS 38.05.180(p) before January 1, 2003, if the participating area does not 31 contain a reservoir that had previously been in a participating area established before
01 December 31, 2011; (3) the oil or gas is produced from acreage that was added to an 02 existing participating area by the Department of Natural Resources on and after 03 January 1, 2014, and the producer demonstrates to the department that the volume of 04 oil or gas produced is from acreage added to an existing participating area. This 05 subsection does not apply to gas produced before 2022 that is used in the state or to 06 gas produced on and after January 1, 2022. A reduction under this subsection may 07 not reduce the gross value at the point of production below zero. In this subsection, 08 "participating area" means a reservoir or portion of a reservoir producing or 09 contributing to production as approved by the Department of Natural Resources. 10 * Sec. 54. AS 43.55.160(g) is amended to read: 11 (g) On and after January 1, 2014, in addition to the reduction under (f) of this 12 section, in the calculation of an annual production tax value of a producer under 13 (a)(1)(A) or (h)(1) [(a)(1)] of this section, the gross value at the point of production of 14 oil or gas produced from a lease or property north of 68 degrees North latitude that 15 does not contain a lease that was within a unit on January 1, 2003, is reduced by 10 16 percent if the oil or gas is produced from a unit made up solely of leases that have a 17 royalty share of more than 12.5 percent in amount or value of the production removed 18 or sold from the lease as determined under AS 38.05.180(f). This subsection does not 19 apply if the royalty obligation for one or more of the leases in the unit has been 20 reduced to 12.5 percent or less under AS 38.05.180(j) for all or part of the calendar 21 year for which the annual production tax value is calculated. This subsection does not 22 apply to gas produced before 2022 that is used in the state or to gas produced on and 23 after January 1, 2022. A reduction under this subsection may not reduce the gross 24 value at the point of production below zero. 25 * Sec. 55. AS 43.55.160 is amended by adding a new subsection to read: 26 (h) For oil produced on and after January 1, 2022, except as provided in (b), 27 (f), and (g) of this section, for the purposes of AS 43.55.011(e)(3), the annual 28 production tax value of oil taxable under AS 43.55.011(e) produced by a producer 29 during a calendar year 30 (1) from leases or properties in the state that include land north of 68 31 degrees North latitude is the gross value at the point of production of that oil, less the
01 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 02 explore for, develop, or produce oil and gas deposits located in the state north of 68 03 degrees North latitude or located in leases or properties in the state that include land 04 north of 68 degrees North latitude, as adjusted under AS 43.55.170; 05 (2) before or during the last calendar year under AS 43.55.024(b) for 06 which the producer could take a tax credit under AS 43.55.024(a), from leases or 07 properties in the state outside the Cook Inlet sedimentary basin, no part of which is 08 north of 68 degrees North latitude, other than leases or properties subject to 09 AS 43.55.011(p), is the gross value at the point of production of that oil, less the 10 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 11 explore for, develop, or produce oil and gas deposits located in the state outside the 12 Cook Inlet sedimentary basin and south of 68 degrees North latitude, other than oil 13 and gas deposits located in a lease or property that includes land north of 68 degrees 14 North latitude or that is subject to AS 43.55.011(p) or, before January 1, 2027, from 15 which commercial production has not begun, as adjusted under AS 43.55.170; 16 (3) from leases or properties subject to AS 43.55.011(p) is the gross 17 value at the point of production of that oil, less the producer's lease expenditures under 18 AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and 19 gas deposits located in leases or properties subject to AS 43.55.011(p) or, before 20 January 1, 2027, located in leases or properties in the state outside the Cook Inlet 21 sedimentary basin, no part of which is north of 68 degrees North latitude from which 22 commercial production has not begun, as adjusted under AS 43.55.170; 23 (4) from leases or properties in the state no part of which is north of 68 24 degrees North latitude, other than leases or properties subject to (2) or (3) of this 25 subsection, is the gross value at the point of production of that oil less the producer's 26 lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, 27 develop, or produce oil and gas deposits located in the state south of 68 degrees North 28 latitude, other than oil and gas deposits located in a lease or property in the state that 29 includes land north of 68 degrees North latitude, and excluding lease expenditures that 30 are deductible under (2) or (3) of this subsection or would be deductible under (2) or 31 (3) of this subsection if not prohibited by (b) of this section, as adjusted under
01 AS 43.55.170. 02 * Sec. 56. AS 43.55.165(e) is amended to read: 03 (e) For purposes of this section, lease expenditures do not include 04 (1) depreciation, depletion, or amortization; 05 (2) oil or gas royalty payments, production payments, lease profit 06 shares, or other payments or distributions of a share of oil or gas production, profit, or 07 revenue, except that a producer's lease expenditures applicable to oil and gas produced 08 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 09 profit paid to the state under that lease; 10 (3) taxes based on or measured by net income; 11 (4) interest or other financing charges or costs of raising equity or debt 12 capital; 13 (5) acquisition costs for a lease or property or exploration license; 14 (6) costs arising from fraud, wilful misconduct, gross negligence, 15 violation of law, or failure to comply with an obligation under a lease, permit, or 16 license issued by the state or federal government; 17 (7) fines or penalties imposed by law; 18 (8) costs of arbitration, litigation, or other dispute resolution activities 19 that involve the state or concern the rights or obligations among owners of interests in, 20 or rights to production from, one or more leases or properties or a unit; 21 (9) costs incurred in organizing a partnership, joint venture, or other 22 business entity or arrangement; 23 (10) amounts paid to indemnify the state; the exclusion provided by 24 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 25 a third-party insurer or surety; 26 (11) surcharges levied under AS 43.55.201 or 43.55.300; 27 (12) an expenditure otherwise deductible under (b) of this section that 28 is a result of an internal transfer, a transaction with an affiliate, or a transaction 29 between related parties, or is otherwise not an arm's length transaction, unless the 30 producer establishes to the satisfaction of the department that the amount of the 31 expenditure does not exceed the fair market value of the expenditure;
01 (13) an expenditure incurred to purchase an interest in any corporation, 02 partnership, limited liability company, business trust, or any other business entity, 03 whether or not the transaction is treated as an asset sale for federal income tax 04 purposes; 05 (14) a tax levied under AS 43.55.011 or 43.55.014; 06 (15) costs incurred for dismantlement, removal, surrender, or 07 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 08 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 09 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 10 excluded under this paragraph if the dismantlement, removal, surrender, or 11 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 12 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 13 (16) costs incurred for containment, control, cleanup, or removal in 14 connection with any unpermitted release of oil or a hazardous substance and any 15 liability for damages imposed on the producer or explorer for that unpermitted release; 16 this paragraph does not apply to the cost of developing and maintaining an oil 17 discharge prevention and contingency plan under AS 46.04.030; 18 (17) costs incurred to satisfy a work commitment under an exploration 19 license under AS 38.05.132; 20 (18) that portion of expenditures, that would otherwise be qualified 21 capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 22 are less than the product of $0.30 multiplied by the total taxable production from each 23 lease or property, in BTU equivalent barrels, during that calendar year, except that, 24 when a portion of a calendar year is subject to this provision, the expenditures and 25 volumes shall be prorated within that calendar year; 26 (19) costs incurred for repair, replacement, or deferred maintenance of 27 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 28 undertaken in response to a failure, problem, or event that results in an unscheduled 29 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 30 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 31 equipment, other than a well, that is undertaken in response to, or is otherwise
01 associated with, an unpermitted release of a hazardous substance or of gas; however, 02 costs under this paragraph that would otherwise constitute lease expenditures under (a) 03 and (b) of this section may be treated as lease expenditures if the department 04 determines that the repair or replacement is solely necessitated by an act of war, by an 05 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 06 inevitable, and irresistible character, the effects of which could not have been 07 prevented or avoided by the exercise of due care or foresight, or by an intentional or 08 negligent act or omission of a third party, other than a party or its agents in privity of 09 contract with, or employed by, the producer or an operator acting for the producer, but 10 only if the producer or operator, as applicable, exercised due care in operating and 11 maintaining the facility, pipeline, structure, or equipment, and took reasonable 12 precautions against the act or omission of the third party and against the consequences 13 of the act or omission; in this paragraph, 14 (A) "costs incurred for repair, replacement, or deferred 15 maintenance of a facility, a pipeline, a structure, or equipment" includes costs 16 to dismantle and remove the facility, pipeline, structure, or equipment that is 17 being replaced; 18 (B) "hazardous substance" has the meaning given in 19 AS 46.03.826; 20 (C) "replacement" includes renovation or improvement; 21 (20) costs incurred to construct, acquire, or operate a refinery or crude 22 oil topping plant, regardless of whether the products of the refinery or topping plant 23 are used in oil or gas exploration, development, or production operations; however, if 24 a producer owns a refinery or crude oil topping plant that is located on or near the 25 premises of the producer's lease or property in the state and that processes the 26 producer's oil produced from that lease or property into a product that the producer 27 uses in the operation of the lease or property in drilling for or producing oil or gas, the 28 producer's lease expenditures include the amount calculated by subtracting from the 29 fair market value of the product used the prevailing value, as determined under 30 AS 43.55.020(f), of the oil that is processed; 31 (21) costs of lobbying, public relations, public relations advertising, or
01 policy advocacy. 02 * Sec. 57. AS 43.55.900(10) is amended to read: 03 (10) "gas processing plant" means a facility that 04 (A) extracts and recovers liquid hydrocarbons from a gaseous 05 mixture of hydrocarbons by gas processing; and 06 (B) is located upstream of the inlet of any pipeline 07 transporting gas to a gas treatment plant and upstream of the inlet of any gas 08 pipeline system transporting gas to a market; 09 * Sec. 58. AS 43.55.900(20) is amended to read: 10 (20) "point of production" means 11 (A) for oil, the automatic custody transfer meter or device 12 through which the oil enters into the facilities of a carrier pipeline or other 13 transportation carrier in a condition of pipeline quality; in the absence of an 14 automatic custody transfer meter or device, "point of production" means the 15 mechanism or device to measure the quantity of oil that has been approved by 16 the department for that purpose, through which the oil is tendered and accepted 17 in a condition of pipeline quality into the facilities of a carrier pipeline or other 18 transportation carrier or into a field topping plant; 19 (B) for gas [, OTHER THAN GAS DESCRIBED IN (C) OF 20 THIS PARAGRAPH,] that is 21 (i) not subjected to or recovered by mechanical 22 separation or run through a gas processing plant, the farthest upstream 23 of the following locations: the first point where the gas is accurately 24 metered, the inlet of any pipeline transporting the gas to a gas 25 treatment plant, or the inlet of any gas pipeline system 26 transporting the gas to a market; 27 (ii) subjected to or recovered by mechanical separation 28 but not run through a gas processing plant, the farthest upstream of 29 the following locations: the first point where the gas is accurately 30 metered after completion of mechanical separation, the inlet of any 31 pipeline transporting the gas after completion of mechanical
01 separation to a gas treatment plant, or the inlet of any gas pipeline 02 system transporting the gas after completion of mechanical 03 separation to a market; 04 (iii) run through a gas processing plant, the farthest 05 upstream of the following locations: the first point where the gas is 06 accurately metered downstream of the gas processing plant, the inlet 07 of any pipeline downstream of the gas processing plant 08 transporting the gas to a gas treatment plant, or the inlet of any gas 09 pipeline system downstream of the gas processing plant 10 transporting the gas to a market [; 11 (C) FOR GAS RUN THROUGH AN INTEGRATED GAS 12 PROCESSING PLANT AND GAS TREATMENT FACILITY THAT DOES 13 NOT ACCURATELY METER THE GAS AFTER THE GAS PROCESSING 14 AND BEFORE THE GAS TREATMENT, THE FIRST POINT WHERE GAS 15 PROCESSING IS COMPLETED OR WHERE GAS TREATMENT BEGINS, 16 WHICHEVER IS FURTHER UPSTREAM]; 17 * Sec. 59. AS 43.55.900 is amended by adding a new paragraph to read: 18 (25) "gas treatment plant" means a facility that performs gas treatment, 19 regardless of whether the facility also performs gas processing. 20 * Sec. 60. AS 43.90.900(18) is amended to read: 21 (18) "point of production" has the meaning given in AS 43.55.900 as 22 that section read on June 8, 2007; 23 * Sec. 61. AS 43.98.030(c) is amended to read: 24 (c) A taxpayer acquiring a transferable tax credit certificate may use the credit 25 or a portion of the credit to offset taxes imposed under AS 21.09.210, AS 21.66.110, 26 AS 43.20, AS 43.55.011 [AS 43.55], AS 43.56, AS 43.65, AS 43.75, and AS 43.77. 27 Except as provided in (e) of this section, any portion of the credit not used may be 28 used at a later period or transferred under (b) of this section. 29 * Sec. 62. AS 43.98.050 is amended to read: 30 Sec. 43.98.050. Duties. The duties of the board include the following: 31 (1) establish and maintain a salient collection of information related to
01 oil and gas exploration, development, and production in the state and related to tax 02 structures, rates, and credits in other regions with oil and gas resources; 03 (2) review historical, current, and potential levels of investment in the 04 state's oil and gas sector; 05 (3) identify factors that affect investment in oil and gas exploration, 06 development, and production in the state, including tax structure, rates, and credits; 07 royalty requirements; infrastructure; workforce availability; and regulatory 08 requirements; 09 (4) review the competitive position of the state to attract and maintain 10 investment in the oil and gas sector in the state as compared to the competitive 11 position of other regions with oil and gas resources; 12 (5) in order to facilitate the work of the board, establish procedures to 13 accept and keep confidential information that is beneficial to the work of the board, 14 including the creation of a secure data room and confidentiality agreements to be 15 signed by individuals having access to confidential information; 16 (6) make written findings and recommendations to the Alaska State 17 Legislature before 18 (A) January 31, 2015, or as soon thereafter as practicable, 19 regarding 20 (i) changes to the state's regulatory environment and 21 permitting structure that would be conducive to encouraging increased 22 investment while protecting the interests of the people of the state and 23 the environment; 24 (ii) the status of the oil and gas industry labor pool in 25 the state and the effectiveness of workforce development efforts by the 26 state; 27 (iii) the status of the oil-and-gas-related infrastructure 28 of the state, including a description of infrastructure deficiencies; and 29 (iv) the competitiveness of the state's fiscal oil and gas 30 tax regime when compared to other regions of the world; 31 (B) January 15, 2017, regarding
01 (i) the state's tax structure and rates on oil and gas 02 produced south of 68 degrees North latitude; 03 (ii) a tax structure that takes into account the unique 04 economic circumstances for each oil and gas producing area south 05 of 68 degrees North latitude; 06 (iii) a reduction in the gross value at the point of 07 production for oil and gas produced south of 68 degrees North 08 latitude that is similar to the reduction in gross value at the point of 09 production in AS 43.55.160(f) and (g); 10 (iv) other incentives for oil and gas production south 11 of 68 degrees North latitude; 12 (C) January 31, 2021, or as soon thereafter as practicable, 13 regarding 14 (i) changes to the state's fiscal regime that would be 15 conducive to increased and ongoing long-term investment in and 16 development of the state's oil and gas resources; 17 (ii) alternative means for increasing the state's ability to 18 attract and maintain investment in and development of the state's oil 19 and gas resources; and 20 (iii) a review of the current effectiveness and future 21 value of any provisions of the state's oil and gas tax laws that are 22 expiring in the next five years. 23 * Sec. 63. Section 1(b), ch. 11, SLA 2013, is amended to read: 24 (b) It is the intent of the legislature that 25 (1) the Alaska Gasline Development Corporation, in its new placement 26 as an independent public corporation of the state, shall be treated for all purposes as 27 the transfer of a corporation within the state and not as the creation of a new entity by 28 the State of Alaska; 29 (2) the Board of Directors of the Alaska Gasline Development 30 Corporation commit to governing the Alaska Gasline Development Corporation so as 31 to affect positively as many Alaskans as possible, including those in rural and coastal
01 communities, and to extend opportunities for all Alaskans to benefit from the natural 02 gas resources of the state, including propane and associated gas-related hydrocarbons 03 other than oil; 04 (3) to the maximum extent permitted by law, in developing a natural 05 gas pipeline, the Alaska Gasline Development Corporation shall procure services, 06 labor, products, and natural resources from qualified businesses located in the state, 07 including organizations owned by Alaska Natives and municipal organizations directly 08 affected by the project, if those persons are competitive; 09 (4) the Alaska Gasline Development Corporation in its participation 10 in an Alaska liquefied natural gas project as defined in AS 31.25.390 or a natural 11 gas pipeline shall, to the maximum extent permitted by law, 12 (A) hire qualified residents from throughout the state for 13 management, engineering, construction, operations, maintenance, and other 14 positions for a natural gas pipeline project; 15 (B) establish hiring facilities in the state or use existing hiring 16 facilities in the state; and 17 (C) use, as far as practicable, the job centers and associated 18 services operated by the Department of Labor and Workforce Development 19 and an Internet-based labor exchange system operated by the state; and 20 (5) the Alaska Gasline Development Corporation and its subsidiaries 21 shall wind up and dissolve when no bonds, notes, or other obligations are outstanding 22 and the Alaska Gasline Development Corporation or a subsidiary of the Alaska 23 Gasline Development Corporation is no longer engaged in the development, financing, 24 construction, or operation of an in-state natural gas pipeline. 25 * Sec. 64. AS 31.25.080(f) is repealed. 26 * Sec. 65. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 INFRASTRUCTURE. (a) The Department of Transportation and Public Facilities 29 shall, in consultation with the Alaska Gasline Development Corporation, evaluate the design 30 and construction of a new, separate bridge across the Yukon River that would accommodate 31 both vehicular traffic and a gas pipeline resulting from an Alaska liquefied natural gas project.
01 (b) The Department of Transportation and Public Facilities shall, in consultation with 02 the Alaska Gasline Development Corporation and the Department of Natural Resources, 03 evaluate existing bridges and infrastructure and bridges and infrastructure constructed to 04 accommodate a gas pipeline resulting from an Alaska liquefied natural gas project and 05 determine whether the bridge or infrastructure could also be constructed for transportation 06 uses, including vehicular traffic. 07 * Sec. 66. 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; 24 (4) the costs, benefits, and risks associated with building a pipeline with a 25 mainline diameter larger than 42 inches, including the effect of the increased diameter on 26 compression, fuel, and other costs; the anticipated allocation of the cost of an increased 27 diameter among project participants and the options for and effects of the state or participants 28 in the project funding the increased diameter; a quantification of the potential benefits from 29 the increased diameter that may include increased exploration activity by parties and 30 nonparties to the project and increased royalties and taxes from additional production 31 transported in the increased capacity; and whether natural gas transported in the additional
01 capacity is likely to be produced from federal or state land; and 02 (5) other issues the commissioner of natural resources determines are relevant 03 to the delivery and use of North Slope natural gas in the state and should be considered by the 04 legislature. 05 (b) In conjunction with the report in (a) of this section, the commissioner of natural 06 resources shall recommend the means for eliminating or minimizing the risks and liabilities 07 identified in the report. 08 (c) The commissioner of natural resources shall make the report and 09 recommendations required by this section available to the legislature on or before the date a 10 firm transportation services agreement in a North Slope natural gas project to which the state 11 is a party is submitted to the legislature for approval. 12 (d) In this section, "North Slope natural gas project" has the meaning given in 13 AS 38.05.965, as amended by sec. 27 of this Act. 14 * Sec. 67. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 REQUESTING THE GOVERNOR TO ESTABLISH AN ADVISORY PLANNING 17 GROUP. (a) The legislature requests the governor to establish an advisory planning group 18 under AS 44.19.145 to advise the governor on municipal involvement in a North Slope 19 natural gas project. Members of the advisory planning group may include representatives of 20 municipalities, the commissioner of natural resources, the commissioner of revenue, 21 representatives of oil and gas and gas only lessees on the North Slope, and representatives of 22 other persons expected to be directly involved in the development of a North Slope natural 23 gas project. 24 (b) The advisory planning group shall review available information, hold public 25 meetings, and provide annual reports by December 15 of each year to the governor that 26 include 27 (1) the potential impact and benefits of new infrastructure for North Slope 28 natural gas development, whether designed to provide natural gas for in-state sale or for 29 export, or both, on communities in the state, including consideration of tax structure under 30 AS 29.45 and AS 43.56, and consideration of other payments before construction of new 31 infrastructure associated with North Slope natural gas development;
01 (2) recommendations for changes to the oil and gas exploration, production, 02 and pipeline transportation property taxes under AS 43.56 related to infrastructure for 03 commercialization of natural gas that would facilitate development of a major natural gas 04 project and mitigate financial impacts to communities affected by development of a North 05 Slope natural gas project; 06 (3) recommendations for changes to AS 29.45.080 related to the 07 commercialization of natural gas that would facilitate development of a North Slope natural 08 gas project and mitigate financial impacts to communities affected by a North Slope natural 09 gas project; 10 (4) recommendations for legislative or other options to minimize the financial 11 impact to communities in proximity to North Slope natural gas project infrastructure during 12 construction of a natural gas pipeline and associated infrastructure; and 13 (5) recommendations on the impact and benefits to communities not in 14 proximity to a North Slope natural gas project. 15 (c) In this section, "North Slope natural gas project" has the meaning given in 16 AS 38.05.965, as amended by sec. 27 of this Act. 17 * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 PLAN AND RECOMMENDATIONS TO THE LEGISLATURE ON 20 INFRASTRUCTURE NEEDED TO DELIVER AFFORDABLE ENERGY TO AREAS IN 21 THE STATE THAT DO NOT HAVE DIRECT ACCESS TO A NORTH SLOPE NATURAL 22 GAS PIPELINE. (a) The Alaska Energy Authority, in consultation with the Alaska Gasline 23 Development Corporation, the Alaska Industrial Development and Export Authority, and the 24 Department of Revenue, shall, after considering the state energy policy under AS 44.99.115 25 and sec. 1, ch. 82, SLA 2010, develop a plan for developing infrastructure to deliver more 26 affordable energy to areas of the state that are not expected to have direct access to a North 27 Slope natural gas pipeline. The plan must identify ownership options, different energy 28 sources, including fossil fuels, hydro projects, tidal, and other alternative energy sources, and 29 describe and recommend the means for generating, delivering, receiving, and storing energy 30 in the most cost-efficient manner. For those citizens for whom there is no economically viable 31 infrastructure available, the plan must recommend the means for directly underwriting the
01 energy costs of the citizens to make their energy costs more affordable. The Alaska Energy 02 Authority may consider the development of regional energy systems that can receive and store 03 bulk fuel in quantity and distribute that fuel as needed within the region. 04 (b) The Alaska Energy Authority, in consultation with the Department of Revenue, 05 shall recommend a plan for funding the design, development, and construction of the required 06 infrastructure and may identify a source of rent, royalty, income, or tax received by the state 07 that may be appropriated by the legislature to implement the plan. 08 (c) The Alaska Energy Authority shall provide the plan and suggested legislation for 09 the design, development, construction, and financing of the required infrastructure to the 10 legislature before January 1, 2017. 11 * Sec. 69. The uncodified law of the State of Alaska is amended by adding a new section to 12 read: 13 DEVELOPMENT OF A PLAN FOR MUNICIPALITIES, REGIONAL 14 CORPORATIONS, AND RESIDENTS TO PARTICIPATE IN THE OWNERSHIP OF A 15 NORTH SLOPE NATURAL GAS PIPELINE; IDENTIFICATION OF AND REPORT ON 16 FINANCING OPTIONS FOR STATE OWNERSHIP AND PARTICIPATION IN A 17 NORTH SLOPE NATURAL GAS PROJECT. (a) The commissioner of revenue shall identify 18 and report to the legislature on a range of financing options for state acquisition of an 19 ownership interest and participation in a North Slope natural gas project. The report must 20 include a description of the risk associated with each option and the effect of each option on 21 the bonding capacity and bond rating of the state. In this subsection, "North Slope natural gas 22 project" has the meaning given in AS 38.05.965, as amended by sec. 27 of this Act. 23 (b) The commissioner shall make an interim draft of the report described in (a) of this 24 section available to the legislature on the first day of the First Regular Session of the Twenty- 25 Ninth Alaska State Legislature, and a final report at the time the commissioner of natural 26 resources submits the first agreement or contract to the legislature for approval under 27 AS 38.05.020(b)(11), enacted by sec. 18 of this Act. 28 (c) At the time the commissioner of natural resources submits the first agreement or 29 contract to the legislature for approval under AS 38.05.020(b)(11), enacted by sec. 18 of this 30 Act, the commissioner of revenue shall present a plan and suggested legislation to allow a 31 municipality, regional corporation, or resident of the state to participate as a co-owner in a
01 North Slope natural gas pipeline. The plan must include the recommendations and analysis by 02 the commissioner as to 03 (1) the means by which a municipality, regional corporation, or resident may 04 invest in the North Slope natural gas pipeline; for a resident, the means may include providing 05 an option to designate an amount of a permanent fund dividend to be deducted for the 06 investment; 07 (2) whether the ownership interest in a North Slope natural gas pipeline should 08 be acquired from the portion of a North Slope natural gas pipeline acquired by the state, 09 through the purchase of stock in a publicly traded corporation that invests in a North Slope 10 natural gas pipeline, or some other means; 11 (3) the means for providing notice to a municipality, regional corporation, or 12 resident receiving an ownership interest that explains the type of ownership interest and the 13 rights and obligations related to that ownership interest; 14 (4) whether the ownership interest received by a municipality, regional 15 corporation, or resident may be transferred or assigned to another person and the means for 16 transferring the interest; 17 (5) the means by which the proportional share of a dividend or other income 18 may be distributed to a municipality, regional corporation, resident, or transferee of an interest 19 if the municipality, regional corporation, or resident receives an ownership interest acquired 20 by the state in a North Slope natural gas pipeline and the state receives a dividend or other 21 income from its ownership interest, and whether the payment should be subject to interest if 22 not timely distributed; 23 (6) the means by which the commissioner may identify a publicly traded 24 corporation that has an ownership interest in a North Slope natural gas pipeline that is subject 25 to investment by a municipality, regional corporation, or a resident under the proposed plan; 26 (7) the means by which an individual may qualify as a resident for purposes of 27 investing in an ownership interest; 28 (8) whether the ownership interest held by a municipality, regional 29 corporation, or resident would be subject to project assessments; 30 (9) how cash calls for the project and the expansion of the project would be 31 managed;
01 (10) the income tax consequences to the holder of an ownership interest, 02 including the timing and recognition of income related to the ownership interest, including 03 differentiating income related to the ownership interest from the receipt of dividends or other 04 distributions; 05 (11) the risk that the receipt of a benefit from the project by a person other 06 than the state would make income received from the project by the state subject to federal 07 income tax; and 08 (12) constitutional issues that may be implicated by restricting ownership 09 interests under the plan to residents and municipalities in the state. 10 (d) In this section, 11 (1) "municipality" has the meaning given in AS 01.10.060; 12 (2) "North Slope natural gas pipeline" means a natural gas pipeline project that 13 transports natural gas produced in the state north of 68 degrees North latitude to a market in 14 the state or to tidewater for export from the state including a facility in the state for liquefying 15 natural gas for transport; 16 (3) "regional corporation" means a regional corporation organized under 43 17 U.S.C. 1606(a) as amended. 18 * Sec. 70. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 LEGISLATIVE BRIEFINGS. Before the first flow of gas in a North Slope natural gas 21 project developed under the authority of this Act, the parties to the project shall, at least once 22 every four months, provide briefings to interested legislators, legislative staff, and legislative 23 consultants on the progress of a North Slope natural gas project developed under the authority 24 of this Act. A briefing under this section must be accompanied by a written report provided by 25 the Department of Natural Resources of the amount of money the state may be obligated to 26 pay a third party under an agreement or contract under AS 38.05.020(b)(10) or (11) if a North 27 Slope natural gas project is terminated before the first flow of gas in the project. 28 * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 TRANSITION: REGULATIONS. The Department of Revenue and the Department of 31 Natural Resources may adopt regulations to implement this Act. The regulations take effect
01 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the 02 provisions of this Act being implemented. 03 * Sec. 72. Sections 1 - 18, 21, 27 - 31, 33, 34, 42, 44, and 60 - 71 of this Act take effect 04 immediately under AS 01.10.070(c). 05 * Sec. 73. Section 43 of this Act takes effect January 1, 2021. 06 * Sec. 74. Except as provided in secs. 72 and 73 of this Act, this Act takes effect January 1, 07 2015.