HB 381: "An Act relating to the taxation of certain natural gas pipeline property; relating to municipal taxation limitations; establishing an alternative volumetric tax on natural gas throughput; relating to the allocation of revenue from the alternative volumetric tax; and providing for an effective date."
00 HOUSE BILL NO. 381 01 "An Act relating to the taxation of certain natural gas pipeline property; relating to 02 municipal taxation limitations; establishing an alternative volumetric tax on natural gas 03 throughput; relating to the allocation of revenue from the alternative volumetric tax; 04 and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 14.17.510 is amended by adding a new subsection to read: 07 (d) In this section, the full and true value of the taxable real and personal 08 property does not include a qualified property as defined in AS 43.56.027. 09 * Sec. 2. AS 14.17.990(6) is amended to read: 10 (6) "local contribution" means appropriations and the value of in-kind 11 services made by a district; "local contribution" does not include revenue received 12 by a municipality under AS 43.56.023; 13 * Sec. 3. AS 29.45.080(c) is amended to read: 14 (c) A municipality may levy and collect a tax on the full and true value of that
01 portion of taxable property taxable under AS 43.56 as assessed by the Department of 02 Revenue which value, when combined with the value of property otherwise taxable by 03 the municipality, does not exceed the product of the percentage determined in (f) of 04 this section of the average per capita assessed full and true value of property in the 05 state multiplied by the number of residents of the taxing municipality. A calculation 06 made under this subsection shall exclude the amount of a tax levied under 07 AS 43.56.022. 08 * Sec. 4. AS 29.45.080 is amended by adding a new subsection to read: 09 (g) Notwithstanding any other provision of this section, AS 29.45.090, or the 10 authority granted to a municipality under AS 29.45.050 to exempt or defer taxation, a 11 municipality may not levy a tax under this section on property that is a qualified 12 property as defined in AS 43.56.027. 13 * Sec. 5. AS 43.56.010(a) is amended to read: 14 (a) Except as provided in AS 43.56.021 and 43.56.022, an [AN] annual tax 15 of 20 mills is levied each tax year beginning January 1, 1974, on the full and true 16 value of taxable property taxable under this chapter. 17 * Sec. 6. AS 43.56.010(b) is amended to read: 18 (b) Except as provided in AS 29.45.080(g), a [A] municipality may levy and 19 collect a tax under AS 29.45.080 at the rate of taxation that applies to other property 20 taxed by the municipality. The tax shall be levied at a rate no higher than the rate 21 applicable to other property taxable by the municipality. A municipality may not 22 exempt from taxation property authorized to be taxed under this chapter. Exemptions 23 shall be limited to those in AS 29.45.030, 29.45.050, and AS 43.56.020. 24 * Sec. 7. AS 43.56.020(d) is amended to read: 25 (d) Taxable property of a major component of a natural gas pipeline project 26 that is a qualified property as defined in AS 43.56.027 [owned or financed by THE 27 ALASKA GASLINE DEVELOPMENT CORPORATION or a joint venture, 28 partnership, or other entity that included THE ALASKA GASLINE DEVELOPMENT 29 CORPORATION] is exempt from state taxes levied or authorized under 30 AS 43.56.010(a) and municipal taxes levied or authorized under AS 43.56.010(b) 31 before the commencement of commercial operations of that major component of the
01 natural gas pipeline project. The exemption under this subsection applies to real 02 and personal property used or committed by contract or other agreement for the 03 construction, operation, or maintenance of the qualified property. In this 04 subsection, 05 (1) "commencement of commercial operations" means the first flow of 06 natural gas in the qualified property that generates revenue to the owners of a major 07 component of the natural gas pipeline project; 08 (2) "major component of a natural gas pipeline project" means 09 each part of an Alaska liquefied natural gas project as defined in AS 31.25.390, 10 an in-state natural gas pipeline as defined in AS 31.25.390, and integrated carbon 11 capture, utilization, and storage infrastructure, including a carbon dioxide 12 storage facility under AS 41.06; 13 (3) "taxable property" has the meaning given in AS 43.56.027. 14 * Sec. 8. AS 43.56 is amended by adding new sections to read: 15 Sec. 43.56.021. Temporary abatement. (a) Taxable property of a qualified 16 property and any real or personal property used or committed by contract or other 17 agreement for the construction, operation, or maintenance of the qualified property is 18 not subject to the tax levied under AS 43.56.010(a) or a municipal tax levied under 19 AS 29.45.080 during the ramp-up period. For purposes of this subsection, the ramp-up 20 period begins on the date of commencement of commercial operations, as defined in 21 AS 43.56.020(d), and ends on the earlier of 22 (1) the day after the qualified property achieves a throughput of 23 1,000,000,000 cubic feet of natural gas per day, calculated as a rolling average over a 24 consecutive 30-day period; or 25 (2) 10 years after the date of commencement of commercial 26 operations. 27 (b) During the ramp-up period described in (a) of this section, the owner of a 28 qualified property shall submit quarterly reports to the department detailing the daily 29 volume of natural gas throughput. Upon verification that the throughput threshold has 30 been met and the ramp-up period has ended, the commissioner shall issue a written 31 determination to the owner and to any municipality within which the qualified
01 property is located. The abatement provided in (a) of this section expires permanently 02 upon the issuance of the written determination and does not resume if the daily gas 03 volume subsequently decreases below the throughput threshold. 04 (c) The provisions of this section do not apply to a spur line. In this 05 subsection, "spur line" means a natural gas transmission line or lateral line that 06 branches from the main natural gas pipeline project to deliver natural gas to a local 07 community or utility distribution system, including a line described in 08 AS 31.25.005(4) and 31.25.390 or similar infrastructure not serving as the primary 09 export or mainline transmission facility and not defined as a major component under 10 AS 43.56.020(d). Taxable property associated with a spur line remains subject to 11 taxation under AS 43.56.010 without the benefit of the abatement in (a) of this section. 12 Sec. 43.56.022. Imposition of alternative volumetric tax. (a) The owner of a 13 qualified property shall pay an alternative tax on the throughput of the qualified 14 property. The volumetric tax applies beginning on the day after the expiration of the 15 ramp-up period described in AS 43.56.021. 16 (b) The rate of tax is $0.06 per 1,000 cubic feet of natural gas throughput. The 17 rate in this subsection increases by one percent of the rate imposed during the prior 18 year on January 1 of each year following the first year of imposition. 19 (c) The tax levied under this section is in place of 20 (1) all taxes levied on taxable property, including property used or 21 committed by contract or other agreement for use in the qualified property; 22 (2) taxes levied under AS 43.56.010; 23 (3) ad valorem taxes levied under AS 29.45.080; and 24 (4) during the construction, operation, or maintenance of the qualified 25 property, any municipal sales or use tax levied under AS 29.45.650 or 29.45.700, 26 municipal taxes on or measured by gross or net income, or any municipal license, 27 excise, fee charge, or other tax on or pertaining to the purchase, use, consumption, or 28 ownership of property or services. 29 (d) A return shall be filed with the department and to each municipality that 30 taxes qualified property under this section on or before the last day of each month for 31 the preceding month's throughput. The tax shall be paid to the department with the
01 return. 02 (e) A payment is considered late if not received by the last day of the month in 03 which the return is due. 04 (f) The provisions of AS 43.56.090, 43.56.100, 43.56.135, 43.56.140, and 05 43.56.150 do not apply to the alternative volumetric tax levied under this section. 06 (g) When the tax levied in this section becomes delinquent, a penalty of 10 07 percent shall be added. Interest on the delinquent taxes, exclusive of penalty, shall be 08 assessed at the rate specified in AS 43.05.225. 09 (h) The remedy of distraint of property set out in AS 43.20.270 applies to the 10 tax levied in this section. However, only the qualified property may be distrained. 11 Sec. 43.56.023. Allocation of alternative tax. (a) A municipality shall levy 12 and collect the alternative volumetric tax on the portion of the qualified property 13 located within the municipality. The state shall levy and collect the alternative 14 volumetric tax on the portion of the qualified property located in the unorganized 15 borough. 16 (b) Revenue collected by the state under (a) of this section shall be deposited in 17 the general fund. 18 (c) The department shall adopt regulations providing for a methodology to 19 determine the amount that each municipality and the state may levy based on the 20 original cost of the portion of the qualified property located within each municipality 21 and the unorganized borough. If a portion of the qualified property is located within 22 both a borough and a city within that borough, the department shall develop a 23 methodology by regulation to allocate the tax revenue between the taxing 24 jurisdictions. 25 (d) The assessment of the tax levied on qualified property for purposes of this 26 section is legally vested in the department. Any dispute regarding the assessment, 27 including the allocation or jurisdiction of the tax, shall be treated as an administrative 28 decision under AS 43.56.024. 29 Sec. 43.56.024. Administrative appeals. (a) Notwithstanding AS 43.56.120, a 30 decision by the department regarding the imposition or calculation of the tax levied 31 under AS 43.56.022 may be appealed to the department for an informal conference
01 under AS 43.05.240, and a final decision may be appealed to the office of 02 administrative hearings under AS 43.05.405. 03 (b) The State Assessment Review Board established under AS 43.56.040 does 04 not have jurisdiction over a qualified property. 05 Sec. 43.56.025. Termination of status. The benefits and alternative tax status 06 provided for a qualified property under AS 43.56.021 and 43.56.022 terminate on 07 January 1, 2040, if the qualified property has not commenced commercial operations, 08 as defined in AS 43.56.020(d), on or before that date. 09 Sec. 43.56.026. Regulations. The department shall adopt regulations under 10 AS 44.62 (Administrative Procedure Act) to implement AS 43.56.021 - 43.56.027, 11 including procedures for throughput reporting, the determination of original cost for 12 allocation purposes, and the calculation of the rolling average. Regulations adopted 13 under this section shall further define throughput for the purposes of AS 43.56.021 - 14 43.56.027. 15 Sec. 43.56.027. Definitions. In AS 43.56.021 - 43.56.027, 16 (1) "qualified property" means an Alaska liquified natural gas project 17 as defined in AS 31.25.390 and any other facilities or sub-projects attendant or related 18 to the project or integrated carbon capture, utilization, and storage infrastructure, that, 19 at the commencement of construction of the first major component of the project, was 20 owned or financed by an instrumentality of the state or a joint venture, partnership, or 21 other affiliated entity that included an instrumentality of the state that commenced 22 construction on or after January 1, 2026; 23 (2) "taxable property" has the meaning given in AS 43.56.210, except 24 it includes property used for the liquefaction of natural gas and carbon capture, 25 utilization, and storage infrastructure integrated with a natural gas pipeline project, 26 including a carbon dioxide storage facility under AS 41.06; "taxable property" 27 includes real and personal property used or committed by contract or other agreement 28 for the qualified property described in AS 43.56.020(d); 29 (3) "throughput" means the volume of natural gas measured by 30 summing all volumes sold or otherwise delivered at each outlet or offtake point along 31 the gas pipeline as defined in AS 31.25.390; "throughput" includes natural gas
01 consumed as fuel for the operation of a liquefaction facility but does not include 02 natural gas consumed as fuel for pipeline compression. 03 * Sec. 9. This Act takes effect immediately under AS 01.10.070(c).