SB 275: "An Act relating to natural gas and natural gas projects; relating to the Alaska Gasline Development Corporation; relating to the powers and duties of the Legislative Budget and Audit Committee; relating to the value of certain oil and gas; relating to an income tax on certain natural gas-related entities; relating to the oil and gas production tax; establishing a surcharge on gas processed in the state; and providing for an effective date."
00 SENATE BILL NO. 275 01 "An Act relating to natural gas and natural gas projects; relating to the Alaska Gasline 02 Development Corporation; relating to the powers and duties of the Legislative Budget 03 and Audit Committee; relating to the value of certain oil and gas; relating to an income 04 tax on certain natural gas-related entities; relating to the oil and gas production tax; 05 establishing a surcharge on gas processed in the state; and providing for an effective 06 date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 24.20.201(a) is amended to read: 09 (a) The Legislative Budget and Audit Committee has the power to 10 (1) organize, adopt rules for the conduct of its business, and prescribe 11 procedures for the comprehensive fiscal analysis, budget review, and post-audit 12 functions; 13 (2) hold public hearings, administer oaths, issue subpoenas, compel the
01 attendance of witnesses and production of papers, books, accounts, documents, and 02 testimony, and have the deposition of witnesses taken in a manner prescribed by court 03 rule or law for taking depositions in civil actions; 04 (3) require all state officials and agencies of state government to give 05 full cooperation to the committee or its staff in assembling, generating, and furnishing 06 requested information, including assembling, generating, or furnishing information in 07 the form or format requested by the committee or the committee's staff; 08 (4) review revenue projections, state agency appropriation requests, the 09 expenditure of state funds, including the relationship between state agency program 10 accomplishments and legislative intent, and the fiscal policies and procedures of state 11 government; 12 (5) review and approve proposed changes to agency authorized 13 budgets as provided in AS 37.07 (Executive Budget Act); 14 (6) make recommendations concerning appropriations, their 15 expenditure, and the fiscal policies and procedures of state government to the governor 16 when appropriate, and to the legislature; 17 (7) prepare and distribute reports, memoranda, or other necessary 18 materials; 19 (8) sue in the name of the legislature during the interim between 20 sessions if authorized by majority vote of the full membership of the committee; 21 (9) make recommendations to the legislature and to agencies of the 22 state that perform lending or investment functions concerning the structure and 23 operating practices of the agencies; 24 (10) enter into and enforce all contracts necessary or desirable for the 25 functions of the committee; 26 (11) provide for annual post audits of the Alaska Housing Finance 27 Corporation, the Alaska Aerospace Corporation, [AND] the Alaska Industrial 28 Development and Export Authority, and the Alaska Gasline Development 29 Corporation. 30 * Sec. 2. AS 24.20.206 is amended to read: 31 Sec. 24.20.206. Duties. The Legislative Budget and Audit Committee shall
01 (1) annually review the long-range operating plans of all agencies of 02 the state that perform lending or investment functions; 03 (2) review periodic reports from all agencies of the state that perform 04 lending or investment functions; 05 (3) prepare a complete report of investment programs, plans, 06 performance, and policies of all agencies of the state that perform lending or 07 investment functions and notify the legislature on or before the first day of each 08 regular session that the report is available; 09 (4) in conjunction with the finance committee of each house, 10 recommend annually to the legislature the investment policy for the general fund 11 surplus and for the income from the permanent fund; 12 (5) provide for an annual post audit and annual operational and 13 performance evaluation of the Alaska Permanent Fund Corporation investments and 14 investment programs; 15 (6) provide for an annual operational and performance evaluation of 16 the Alaska Housing Finance Corporation and the Alaska Industrial Development and 17 Export Authority; the performance evaluation must include, but is not limited to, a 18 comparison of the effect on various sectors of the economy by public and private 19 lending, the effect on resident and nonresident employment, the effect on real wages, 20 and the effect on state and local operating and capital budgets of the programs of the 21 Alaska Housing Finance Corporation and the Alaska Industrial Development and 22 Export Authority; 23 (7) provide assistance to the trustees of the trust established in 24 AS 37.14.400 - 37.14.450 in carrying out their duties under AS 37.14.415; 25 (8) provide for an annual post audit and annual operational and 26 performance evaluation of the Alaska Gasline Development Corporation, 27 including evaluation of ownership and management interests, investments, and 28 projects of the corporation. 29 * Sec. 3. AS 31.25.080(a) is amended to read: 30 (a) In addition to other powers granted in this chapter, the corporation may 31 (1) determine the form of ownership and the operating structure of an
01 in-state natural gas pipeline developed by the corporation and may enter into 02 agreements with other persons for joint ownership, joint operation, or both of an in- 03 state natural gas pipeline or an Alaska liquefied natural gas project; 04 (2) plan, finance, construct, develop, acquire, maintain, and operate a 05 pipeline system and other transportation mechanism, including pipelines, compressors, 06 storage facilities, and other related facilities, equipment, and works of public 07 improvement, in the state to facilitate production, transportation, and delivery of 08 natural gas or other related natural resources to the point of consumption or to the 09 point of distribution for consumption; 10 (3) lease or rent facilities, structures, and properties; 11 (4) exercise the power of eminent domain and file a declaration of 12 taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 13 necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas project; 14 the exercise of powers by the corporation under this paragraph may not exceed the 15 permissible exercise of the powers by the state; 16 (5) acquire, by purchase, lease, or gift, land, structures, real or personal 17 property, an interest in property, a right-of-way, a franchise, an easement, or other 18 interest in land, or an interest in or right to capacity in a pipeline system determined to 19 be necessary or convenient for the development, financing, construction, or operation 20 of an in-state natural gas pipeline project or an Alaska liquefied natural gas project or 21 part of an in-state natural gas pipeline project or an Alaska liquefied natural gas 22 project; 23 (6) subject to AS 31.25.120(b), transfer or otherwise dispose of all or 24 part of an in-state natural gas pipeline project, an Alaska liquefied natural gas project, 25 or an interest in an asset of the corporation; 26 (7) elect to provide transportation of natural gas as a contract carrier, 27 common carrier, or otherwise; 28 (8) provide light, water, security, and other services for property of the 29 corporation; 30 (9) conduct hearings to gather and develop data consistent with the 31 purpose and powers of the corporation;
01 (10) advocate for new pipeline capacity before the Federal Energy 02 Regulatory Commission; 03 (11) make and execute agreements, contracts, and other instruments 04 necessary or convenient in the exercise of the powers and functions of the corporation 05 under this chapter, including a contract with a person, firm, corporation, governmental 06 agency, or other entity; 07 (12) sue and be sued in its own name; 08 (13) adopt an official seal; 09 (14) adopt bylaws for the regulation of its affairs and the conduct of its 10 business and adopt regulations and policies in connection with the performance of its 11 functions and duties; 12 (15) employ fiscal consultants, engineers, attorneys, appraisers, and 13 other consultants and employees that may, in the judgment of the corporation, be 14 required and fix and pay their compensation from funds available to the corporation; 15 (16) procure insurance against a loss in connection with its operation; 16 (17) borrow money as provided in this chapter to carry out its 17 corporate purposes and issue its obligations as evidence of borrowing; 18 (18) include in a borrowing the amounts necessary to pay financing 19 charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 20 and legal fees, and other expenses that are necessary or incident to the borrowing; 21 (19) receive, administer, and comply with the conditions and 22 requirements of an appropriation, gift, grant, or donation of property or money; 23 (20) do all acts and things necessary, convenient, or desirable to carry 24 out the powers expressly granted or necessarily implied in this chapter; 25 (21) invest or reinvest, subject to its contracts with noteholders and 26 bondholders, money or funds held by the corporation, including funds in the in-state 27 natural gas pipeline fund (AS 31.25.100) and the Alaska liquefied natural gas project 28 fund (AS 31.25.110), in obligations or other securities or investments in which banks 29 or trust companies in the state may legally invest funds held in reserves or sinking 30 funds or funds not required for immediate disbursement, and in certificates of deposit 31 or time deposits secured by obligations of, or guaranteed by, the state or the United
01 States; 02 (22) enter into, as it determines to be necessary or appropriate, any 03 swap or hedge, cap, or other contract providing for payments based on levels of or 04 changes in interest rates or indices or in the cost or price of any commodity, supply, or 05 expense expected to be used or incurred in connection with the acquisition, 06 construction, or operation of any facility or property owned, leased, or operated by the 07 corporation, or an option with respect to any of the foregoing; 08 (23) except as provided in (g) of this section, acquire an ownership or 09 participation interest in an Alaska liquefied natural gas project, natural gas treatment 10 facilities, natural gas pipeline facilities, liquefaction facilities, marine terminal 11 facilities related to the infrastructure of an Alaska liquefied natural gas project, or an 12 entity or joint venture that has an ownership interest in or is engaged in the planning, 13 financing, acquisition, maintenance, construction, and operation of an Alaska liquefied 14 natural gas project; 15 (24) after complying with AS 31.25.280, if applicable, and after 16 consultation with the commissioner of revenue and the commissioner of natural 17 resources, enter into contracts relating to an Alaska liquefied natural gas project, 18 including contracts for services related to operation, marketing, transportation, gas 19 treatment, marine terminal operation, or liquefaction. 20 * Sec. 4. AS 31.25.090(f) is amended to read: 21 (f) Except as provided in (l) of this section, the [THE] corporation may enter 22 into confidentiality agreements necessary to acquire or provide information to carry 23 out its functions. If a state agency determines that a law or provision of a contract to 24 which the state agency is a party requires the state agency to preserve the 25 confidentiality of the information and that delivering the information to the 26 corporation would violate the confidentiality provision of that law or contract, the state 27 agency shall 28 (1) identify the applicable law or contract provision to the corporation; 29 and 30 (2) obtain the consent of the person who has the right to waive the 31 confidentiality of the information under the applicable law or contract provision before
01 the state agency transfers the information to the corporation. 02 * Sec. 5. AS 31.25.090(g) is amended to read: 03 (g) The portions of records containing information acquired or provided by the 04 corporation under a confidentiality agreement are not subject to AS 40.25.100 - 05 40.25.295. The corporation may enter into confidentiality agreements with a public 06 agent [AGENCY, AS DEFINED IN AS 40.25.220,] to allow release of confidential 07 information. The portions of the records and files of a public agency bound by a 08 confidentiality agreement that reflect, incorporate, or analyze information subject to a 09 confidentiality agreement under this subsection are not public records. Confidentiality 10 agreements entered into under this subsection are valid and binding against all parties 11 in accordance with the terms of the confidentiality agreement. In this subsection, 12 "public agent" means 13 (1) a public agency, as defined in AS 40.25.220, or an agent or 14 contractor of a public agency; 15 (2) a member of the legislature, or an agent or contractor of a 16 member of the legislature or of a legislative committee. 17 * Sec. 6. AS 31.25.090(h) is amended to read: 18 (h) Information and trade secrets of the corporation are confidential and not 19 subject to AS 40.25.100 - 40.25.295 if the corporation determines that disclosure 20 would cause commercial or competitive harm or damage to the corporation. 21 Information that discloses the particulars of a business or the affairs of a private 22 enterprise, investor, advisor, consultant, counsel, or manager that is developed or 23 obtained by the corporation and related to the development, financing, construction, or 24 operation of an in-state natural gas pipeline project by the corporation is confidential 25 and not subject to AS 40.25.100 - 40.25.295. This subsection does not apply to 26 information required to be made public by the corporation under AS 31.25.275. 27 The corporation may waive the confidentiality described in this subsection, except for 28 information that is confidential under another provision of state law or under a federal 29 law or regulation and except for information acquired from another person that is 30 subject to a confidentiality agreement, if the waiver is consistent with the interests of 31 the state and will facilitate the development, financing, or construction of an in-state
01 natural gas pipeline. On the date that the in-state natural gas pipeline project becomes 02 operational, the corporation shall make available, upon request under AS 40.25.100 - 03 40.25.295, records that were exempt from AS 40.25.100 - 40.25.295 under this 04 subsection or (g) of this section, unless the corporation determines that 05 (1) maintaining the confidentiality of the information is necessary to 06 protect the economic interests of the corporation or the state; or 07 (2) disclosure of the information will violate another provision of state 08 law, a federal law or regulation, or the terms of a confidentiality agreement or other 09 agreement to which the corporation is a party or that is binding on the corporation. 10 * Sec. 7. AS 31.25.090 is amended by adding new subsections to read: 11 (j) On and after the effective date of this subsection, at the request of a 12 legislator, the corporation shall enter into a confidentiality agreement with the 13 legislator to allow release of confidential information. Information released under (g) 14 of this section or this subsection may be discussed by a legislative committee in 15 executive session if each legislator attending the executive session has signed a 16 confidentiality agreement relating to the information discussed. 17 (k) A confidentiality agreement entered into under (f) of this section may be 18 waived, in whole or in part, with the agreement of the parties to the confidentiality 19 agreement, to allow publication of information covered by the confidentiality 20 agreement. Information made public under this subsection may include redactions. 21 Information subject to a confidentiality agreement made public under this subsection 22 may include 23 (1) a contract or agreement or a specific term of a contract or 24 agreement; 25 (2) a pending contract or agreement or a specific term of a pending 26 contract or agreement; 27 (3) a record, file, or other information in possession of the corporation, 28 a subsidiary of the corporation, or an entity partnered with the corporation; or 29 (4) the confidentiality agreement or terms of the confidentiality 30 agreement. 31 (l) The corporation may not enter into a confidentiality agreement that
01 (1) prevents the publication of information required to be published 02 under AS 31.25.275; 03 (2) makes confidential contract terms, including contract terms for in- 04 kind payments or services, that bind the corporation, or a subsidiary of the 05 corporation, to assume duties or liabilities under a contract; 06 (3) makes confidential contract terms governing the ownership or 07 management structure of a subsidiary of the corporation; 08 (4) makes confidential information related to a state ownership or 09 management interest option under AS 31.25.125; or 10 (5) prevents compliance with an administrative or court order 11 mandating disclosure. 12 * Sec. 8. AS 31.25.120 is amended by adding a new subsection to read: 13 (b) Unless the legislature approves the action by law, the corporation may not 14 transfer, sell, or otherwise dispose of an ownership or management interest in a 15 subsidiary of the corporation. 16 * Sec. 9. AS 31.25 is amended by adding a new section to read: 17 Sec. 31.25.125. State ownership of projects. (a) If the corporation negotiates 18 with another entity for participation by the corporation in a revenue-generating 19 project, the corporation shall negotiate an option for the state to acquire an ownership 20 or management interest in the project. The corporation shall immediately notify the 21 president of the senate, the speaker of the house of representatives, and the chairs of 22 the finance committee of each house of the legislature on each occasion that an option 23 is available for consideration by the legislature under (b)(1) of this section. 24 (b) An option negotiated under this section must 25 (1) before being agreed to, be approved by the legislature by law; and 26 (2) allow the state to exercise the option for at least 180 days after the 27 date on which the corporation determines, with reasonable assurance and considering 28 the totality of circumstances, including review of all relevant financial information, 29 that the revenue-generating project will be completed, with or without state 30 investment. 31 (c) The state may not acquire an interest in a revenue-generating project under
01 this section unless the interest is approved by the legislature by law. When making an 02 investment decision under this section, the legislature shall act as a prudent investor. 03 (d) The corporation, and any other entity participating in a revenue-generating 04 project, shall 05 (1) cooperate with and assist the legislature in determining whether to 06 acquire an interest or whether to exercise an interest acquired under this section; 07 (2) provide information requested by the legislature related to the 08 project, including 09 (A) information necessary for the legislature to act as a prudent 10 investor; and 11 (B) all financial records of or related to the revenue-generating 12 project; and 13 (3) ensure a representative of the corporation or the other entity is 14 available to testify during public hearings of legislative committees requesting 15 testimony. 16 (e) The corporation shall immediately notify the president of the senate, the 17 speaker of the house of representatives, and the chairs of the finance committee of 18 each house of the legislature on each occasion that the state may exercise an option 19 negotiated under this section. The Department of Revenue shall cooperate with and 20 assist the legislature in determining whether to acquire an interest in a revenue- 21 generating project by exercising an option negotiated under this section, including by 22 identifying potential funding sources for exercising the option and potential fiscal 23 effects on the state. 24 (f) The corporation shall deposit into a separate account in the general fund 25 revenue resulting from an option negotiated under this section. The legislature may 26 appropriate the annual estimated balance in the account for any purpose. 27 (g) In this section, 28 (1) "corporation" includes a subsidiary of the corporation; 29 (2) "revenue-generating project" means a project, entity ownership, 30 legal business arrangement, partnership, joint venture, or other commercial endeavor 31 expected to generate revenue.
01 * Sec. 10. AS 31.25 is amended by adding a new section to article 1 to read: 02 Sec. 31.25.145. Separate accounting. The corporation shall deposit into a 03 separate account in the general fund revenue generated by a subsidiary of the 04 corporation. The legislature may appropriate the annual estimated balance in the 05 account for operations of the corporation or for any other purpose. 06 * Sec. 11. AS 31.25 is amended by adding new sections to read: 07 Sec. 31.25.275. Required public disclosures. (a) For each project developed 08 by the corporation or project in which the corporation has an ownership or 09 management interest, the corporation shall publish on a publicly available Internet 10 website the following information related to the owners of, investors in, lenders to, 11 and creditors of the project: 12 (1) the full legal name of each owner, investor, lender, and creditor; 13 (2) the mailing and physical address of each owner, investor, lender, 14 and creditor; 15 (3) the name of the project; 16 (4) categorization as an owner, investor, lender, or creditor; 17 (5) whether each owner, investor, lender, and creditor is a foreign 18 entity or domestic entity; 19 (6) the name, title or position, and contact information of each natural 20 person legally authorized to bind an owner, investor, lender, or creditor in matters 21 related to the project; 22 (7) the name, title or position, and contact information of each natural 23 person authorized to act as an intermediary for or communicate on behalf of an owner, 24 investor, lender, or creditor in matters related to the project; 25 (8) the physical address of the location of the primary business 26 operations for each owner, investor, lender, and creditor; 27 (9) for each owner, the percentage of ownership in the project, a 28 history of past ownership percentage, and the dates of changes to an ownership 29 percentage; the total ownership percentages published must add up to 100 percent; and 30 (10) for each investor, lender, or creditor, 31 (A) the value of initial investment, loan, or credit; this
01 subparagraph applies only to an initial investment, loan, or credit amount that 02 exceeds $2,000,000; 03 (B) a description of the asset invested, loaned, or credited; and 04 (C) the dates of the initial and any subsequent increases or 05 changes to the amount invested, loaned, or credited. 06 (b) Except as provided in (c) of this section, for each gas purchase agreement 07 for gas transported through or processed by a project developed by the corporation or 08 project in which the corporation has an ownership or management interest, the 09 corporation shall publish on a publicly available Internet website the following 10 information related to each purchase agreement: 11 (1) the full legal name of each purchaser; 12 (2) the mailing and physical address of each purchaser; 13 (3) whether the purchaser is a foreign entity or domestic entity; 14 (4) the name, title or position, and contact information of each natural 15 person authorized to bind the purchaser in matters related to the project; 16 (5) the name, title or position, and contact information of each natural 17 person authorized to act as an intermediary for or communicate on behalf of the 18 purchaser in matters related to the project; 19 (6) the physical address of the location of the primary business 20 operations of the purchaser; and 21 (7) the state or nation expected to use the gas. 22 (c) The corporation shall redact from the Internet website required by this 23 section personally identifying information related to a gas purchase agreement made 24 for the purpose of providing gas for residential use. 25 (d) The corporation shall maintain the Internet website required by this 26 section. To comply with this subsection, the corporation shall 27 (1) update the Internet website as often as reasonably practicable, but 28 at least once each calendar quarter; 29 (2) include an entry on the Internet website for each 30 (A) owner, investor, lender, and creditor for each project 31 developed by the corporation or project in which the corporation has an
01 ownership or management interest; and 02 (B) gas purchase agreement for gas transported through or 03 processed by a project developed by the corporation or project in which the 04 corporation has an ownership or management interest; 05 (3) ensure the Internet website is searchable; at a minimum, the 06 Internet website must be searchable by the following categories: 07 (A) for information published under (a) of this section: 08 (i) legal name; 09 (ii) project name; 10 (iii) categorization as an owner, investor, lender, or 11 creditor; 12 (iv) foreign or domestic entity status; 13 (v) name of natural person authorized to bind an entity; 14 (vi) name of natural person authorized to act as an 15 intermediary; and 16 (vii) country of primary business operations; and 17 (B) for information published under (b) of this section: 18 (i) legal name; 19 (ii) foreign or domestic entity status; 20 (iii) state or nation expected to use the gas; 21 (iv) name of natural person authorized to bind the 22 entity; 23 (v) name of natural person authorized to act as an 24 intermediary; and 25 (vi) country of primary business operations; and 26 (4) list the date of each entry and the date of any change to an entry on 27 the Internet website. 28 (e) Notwithstanding AS 09.50.250, a civil action or claim for damages or costs 29 alleging violation of a confidentiality agreement may not be brought against the 30 corporation, a state agency, an officer or employee of the corporation, or the state for 31 publishing the information required under this section.
01 (f) In this section, "corporation" includes a subsidiary of the corporation. 02 Sec. 31.25.280. Legislative approval of relationships with foreign entities. 03 (a) Unless the legislature approves the action by law, the corporation or a subsidiary of 04 the corporation may not enter into a legal relationship with a foreign entity, either 05 indirectly through another person or entity or directly. Before a legal relationship is 06 approved under this section, the corporation shall 07 (1) notify the president of the senate, the speaker of the house of 08 representatives, and the chairs of the finance committee of each house of the 09 legislature of the corporation's or subsidiary's request to enter into the legal 10 relationship; and 11 (2) provide legislative committees the opportunity to hold public 12 hearings relating to the proposed legal relationship. 13 (b) To facilitate approval under (a) of this section, to the greatest extent 14 possible, the corporation or the subsidiary of the corporation, as applicable, shall 15 cooperate with the legislature, including by 16 (1) providing all allowable information requested by the legislature or 17 a committee of the legislature; and 18 (2) ensuring that a representative of the foreign entity is available, if 19 requested, to testify relating to the proposed legal relationship during public hearings 20 of legislative committees requesting testimony. 21 (c) In this section, "legal relationship" includes a partnership, joint venture, 22 joint ownership agreement, merger, gas purchase agreement, or other legal agreement 23 made for the purpose of investing in, obtaining monetary returns from, or obtaining an 24 ownership interest in 25 (1) a project developed by the corporation or a subsidiary of the 26 corporation; 27 (2) a project in which the corporation or a subsidiary of the corporation 28 has an ownership or management interest; or 29 (3) an entity engaged in a project described in (1) or (2) of this 30 subsection. 31 Sec. 31.25.285. Legislative notification of ownership change. (a) The
01 corporation shall promptly notify the president of the senate, the speaker of the house 02 of representatives, and the chairs of the finance committee of each house of the 03 legislature if 04 (1) an entity in a legal relationship with the corporation or a subsidiary 05 of the corporation has a significant change in ownership structure; or 06 (2) the corporation becomes aware that an entity in a legal relationship 07 with the corporation or a subsidiary of the corporation plans to make a significant 08 change in ownership structure. 09 (b) In this section, "legal relationship" means a partnership, joint venture, joint 10 ownership agreement, or other legally binding business arrangement 11 (1) of which the corporation or a subsidiary of the corporation has at 12 least a 10 percent interest; and 13 (2) formed for the purpose of shared ownership or shared management 14 of, or pooling of resources for, an entity in which the corporation or a subsidiary of the 15 corporation has an ownership or management interest. 16 * Sec. 12. AS 31.25.390 is amended by adding new paragraphs to read: 17 (8) "foreign entity" means 18 (A) an entity whose primary operations are not physically 19 located in the United States and that is not managed primarily by citizens of 20 the United States; or 21 (B) a natural person who is not a citizen of the United States; 22 (9) "subsidiary of the corporation" includes a subsidiary partially 23 owned by the corporation. 24 * Sec. 13. AS 38.05.180 is amended by adding a new subsection to read: 25 (mm) Before taking oil or gas royalties in value, the commissioner shall 26 determine that the value taken is based on the value of oil or gas of the same kind, 27 quality, and character prevailing for that field, unit, or area during the calendar month 28 the oil or gas is produced. The commissioner may take royalties on oil or gas that is 29 produced but not sold and may take royalties on gas that is produced and stored in a 30 gas storage facility. The commissioner may not, when making a value determination 31 under this subsection, base a value for oil or gas on oil or gas sold at no cost or at a
01 cost substantially lower than that of other oil or gas of the same kind, quality, and 02 character. After determining the value of oil or gas under this subsection, the 03 commissioner shall 04 (1) prepare a written report evidencing the determination of value; 05 (2) publish on the department's Internet website 06 (A) the determined value; 07 (B) a summary of the reasoning for the determination; and 08 (C) notice that the written determination required under (1) of 09 this subsection is available as a public record under AS 40.25.100 - 40.25.295 10 (Alaska Public Records Act); and 11 (3) maintain the publication required under (2) of this subsection on 12 the department's Internet website for at least 10 years. 13 * Sec. 14. AS 43.05.230(a) is amended to read: 14 (a) It is unlawful for a current or former officer, employee, or agent of the 15 state to divulge the amount of income or the particulars set out or disclosed in a report 16 or return made under this title, except 17 (1) in connection with official investigations or proceedings of the 18 department, whether judicial or administrative, involving taxes due under this title; 19 (2) in connection with official investigations or proceedings of the 20 child support enforcement agency, whether judicial or administrative, involving child 21 support obligations imposed or imposable under AS 25 or AS 47; 22 (3) as provided in AS 38.05.036 pertaining to audit functions of the 23 Department of Natural Resources; 24 (4) as provided in AS 43.05.405 - 43.05.499; [AND] 25 (5) as otherwise provided in this section or AS 43.55.890; and 26 (6) in connection with publication of a determination as required 27 by AS 43.55.020(o). 28 * Sec. 15. AS 43.05.230(k) is amended to read: 29 (k) The name of each person required to pay taxes in kind [THAT THE 30 DEPARTMENT HAS ALLOWED TO MAKE AN ELECTION] under 31 AS 43.55.014(a) and the amount of gas produced from each lease or property for
01 which taxes are paid in kind [TO WHICH AN EFFECTIVE ELECTION] under 02 AS 43.55.014 [APPLIES] is public information. 03 * Sec. 16. AS 43.20 is amended by adding a new section to read: 04 Sec. 43.20.019. Tax on income of certain natural gas-related pass-through 05 entities. (a) If a qualified entity has taxable income over $5,000,000 in a tax year, the 06 qualified entity shall pay a tax of 9.4 percent on the taxable income over $5,000,000. 07 (b) For the purpose of calculating taxable income under this section, 08 (1) taxable income of a qualified entity is determined under 09 AS 43.20.144 as if the qualified entity were taxable as a C corporation, as defined by 10 26 U.S.C. 1361(a)(2) (Internal Revenue Code), as that section read on January 1, 11 2026; 12 (2) notwithstanding AS 43.20.021 and 43.20.036, the qualified entity 13 may not apply as a credit or deduction against tax liability a credit or deduction 14 allowed as to federal taxes under 26 U.S.C. (Internal Revenue Code), except that the 15 qualified entity may take a credit or deduction allowed for a C corporation under (1) of 16 this subsection. 17 (c) The tax under this section does not apply to a corporation subject to tax 18 under AS 43.20.011 or to an entity that is part of a unitary business with a corporation 19 subject to tax under AS 43.20.011. 20 (d) For the purpose of determining the tax due under this section, the 21 department shall 22 (1) aggregate the taxable income of two or more taxpayers if the 23 department determines that, without the provisions of this section, the taxable income 24 would reasonably be expected to be attributed to a single entity; 25 (2) except as provided in (c) of this section, include in the calculation 26 of taxable income of the qualified entity income that is attributable to an entity that is 27 part of a unitary business with the qualified entity paying tax under this section; and 28 (3) adopt regulations to prevent evasion of taxes imposed under this 29 section. 30 (e) When providing a tax return under AS 43.20.030, a qualified entity shall 31 provide the information necessary, as directed by the department, for the department
01 to determine the income of the qualified entity as if the qualified entity were taxable 02 under AS 43.20.011. 03 (f) For the purpose of calculating income under this section, a qualified entity 04 may deduct from income a payment to the shareholder, owner, member, or partner of 05 the qualified entity if 06 (1) the shareholder, owner, member, or partner is a taxpayer under this 07 chapter; 08 (2) the payment does not include a transfer of property; and 09 (3) the payment is included in the shareholder's, owner's, member's, or 10 partner's income for the purposes of this chapter. 11 (g) In this section, 12 (1) "carbon capture" and "carbon storage" have the meanings given in 13 AS 43.55.165(e)(23); 14 (2) "natural gas pipeline" means a natural gas pipeline that transports 15 natural gas from north of 68 degrees North latitude to a location outside of the lease or 16 property where the natural gas is produced for the direct purpose of sale and delivery 17 of the natural gas to a commercial market; 18 (3) "natural gas pipeline carrier" means an entity that 19 (A) owns, operates, manages, or controls a natural gas pipeline; 20 (B) transports natural gas in a natural gas pipeline as a common 21 carrier or contract carrier; or 22 (C) holds an ownership, investment, or similar interest in a 23 natural gas pipeline, but does not include a natural person; 24 (4) "producer" means an owner of an operating right, operating 25 interest, or working interest in a mineral interest in oil or gas in the state; 26 (5) "qualified entity" means a sole proprietorship, partnership, limited 27 liability company, or entity that has elected to file federal returns under 26 U.S.C. 28 1361 - 1379 (Internal Revenue Code) that is 29 (A) a natural gas pipeline carrier in the state; 30 (B) a producer engaged in the transportation of natural gas by a 31 natural gas pipeline in the state;
01 (C) a producer supplying natural gas to a natural gas pipeline 02 carrier in the state or supplying gas to an intermediary for transportation by a 03 natural gas pipeline in the state; 04 (D) an entity engaged in gas treatment, carbon capture, or 05 carbon storage activities in the state related to natural gas transported by a 06 natural gas pipeline in the state or an owner of or investor in an entity engaged 07 in gas treatment, carbon capture, or carbon storage activities in the state related 08 to natural gas transported by a natural gas pipeline in the state; 09 (E) an entity engaged in liquefied natural gas processing of 10 natural gas transported by a natural gas pipeline in the state or an owner of or 11 investor in an entity engaged in liquefied natural gas processing of natural gas 12 transported by a natural gas pipeline in the state; or 13 (F) an entity engaged in the sale of gas transported by a natural 14 gas pipeline in the state; 15 (6) "taxable income" means income 16 (A) from the transportation, supplying, or sale of gas that is 17 transported by a natural gas pipeline in the state; 18 (B) from gas treatment, carbon capture, or carbon storage 19 activities related to gas that is transported by a natural gas pipeline in the state; 20 (C) from liquefied natural gas processing of gas that is 21 transported by a natural gas pipeline in the state; and 22 (D) as included under (d)(2) of this section, attributable to an 23 entity that is part of a unitary business with a qualified entity paying tax under 24 this section. 25 * Sec. 17. AS 43.20.030(a) is amended to read: 26 (a) If a taxpayer [CORPORATION], or a partnership that has a taxpayer 27 [CORPORATION] as a partner, is required to make a return under the provisions of 28 the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30 29 days after the federal return is required to be filed, a return setting out 30 (1) the amount of tax due under this chapter, less credits claimed 31 against the tax; and
01 (2) other information for the purpose of carrying out the provisions of 02 this chapter that the department requires. 03 * Sec. 18. AS 43.20.031(i) is amended to read: 04 (i) A taxpayer that [CORPORATION WHICH] is a member of a group of 05 unitary corporations or entities that [WHICH] collectively has income from business 06 activity taxable both inside and outside the state, or income from other sources both 07 inside and outside the state, shall determine its income from sources in this state by 08 use of the combined method of accounting. 09 * Sec. 19. AS 43.20.144(d) is amended to read: 10 (d) The sales factor of a taxpayer subject to this section is a fraction, 11 (1) the numerator of which is the sum of the following for the tax 12 period: 13 (A) the tariffs allowed and received by or for the taxpayer for 14 transporting oil or gas by pipeline in this state, regardless of whether the tariffs 15 are paid by third parties or by entities within the taxpayer's consolidated 16 business; and 17 (B) the total sales of the taxpayer in this state, determined in 18 accordance with AS 43.19 (Multistate Tax Compact), but excluding 19 (i) those sales already included in the tariffs described 20 in (A) of this paragraph; 21 (ii) constructive sales or deemed sales of natural gas 22 delivered to the state as payment of tax under [AN ELECTION MADE 23 BY THE TAXPAYER UNDER] AS 43.55.014; 24 (iii) fees, allowed and received, that are paid between 25 entities within the consolidated business of the taxpayer for 26 transporting the taxpayer's natural gas; and 27 (2) the denominator of which is the sum of the following for the tax 28 period: 29 (A) the tariffs allowed and received by or for the taxpayer's 30 consolidated business for transporting oil or gas by pipeline everywhere, 31 regardless of whether the tariffs are paid by third parties or by entities within
01 the taxpayer's consolidated business; and 02 (B) the total sales of the taxpayer's consolidated business 03 everywhere, determined in accordance with AS 43.19 (Multistate Tax 04 Compact), but excluding 05 (i) those sales already included in the tariffs described 06 in (A) of this paragraph; 07 (ii) constructive sales or deemed sales of natural gas 08 delivered to the state as payment of tax under [AN ELECTION MADE 09 BY THE TAXPAYER UNDER] AS 43.55.014 or delivered in another 10 tax jurisdiction under a law comparable to AS 43.55.014; 11 (iii) fees, allowed and received, that are paid between 12 entities within the consolidated business of the taxpayer for 13 transporting the taxpayer's natural gas. 14 * Sec. 20. AS 43.20.144(f) is amended to read: 15 (f) The extraction factor of a taxpayer subject to this section is a fraction, 16 (1) the numerator of which is the sum of the following for the tax 17 period: 18 (A) the number of barrels of the taxpayer's oil (net of royalty to 19 an unrelated party) produced from or allocated to leases or properties of the 20 taxpayer in this state; and 21 (B) one-sixth of the number of Mcf of the taxpayer's gas, 22 excluding reinjected gas but including gas paid as tax in kind [SUBJECT TO 23 AN ELECTION] under AS 43.55.014, (net of royalty to an unrelated party) 24 produced from or allocated to leases or properties of the taxpayer in this state; 25 and 26 (2) the denominator of which is the sum of the following for the tax 27 period: 28 (A) the number of barrels of oil of the taxpayer's consolidated 29 business (net of royalty to an unrelated party) produced from or allocated to 30 leases or properties of the taxpayer's consolidated business everywhere; and 31 (B) one-sixth of the number of Mcf of gas, excluding reinjected
01 gas but including gas paid as tax in kind [SUBJECT TO AN ELECTION] 02 under AS 43.55.014, of the taxpayer's consolidated business (net of royalty to 03 an unrelated party) produced from or allocated to leases or properties of the 04 taxpayer's consolidated business everywhere. 05 * Sec. 21. AS 43.55.014(a) is amended to read: 06 (a) If the commissioner makes a written determination, as described in 07 this subsection, that it is in the best interest of the state, a producer shall, at the 08 times and under the circumstances prescribed by the commissioner, [FOR GAS 09 PRODUCED ON AND AFTER JANUARY 1, 2022, OTHER THAN GAS 10 DESCRIBED IN (e) OF THIS SECTION, THE DEPARTMENT SHALL ALLOW A 11 PRODUCER TO MAKE AN ELECTION, UNDER REGULATIONS ADOPTED BY 12 THE DEPARTMENT, TO] pay in gas the [PRODUCTION] tax levied by this section 13 in lieu of the tax otherwise levied for the gas by AS 43.55.011(e). The determination 14 must include a comparison of the payment of the tax in gas to the payment of the 15 tax in money and must include relevant and specific information regarding the 16 particular producer and the determination. The commissioner shall submit a 17 determination made under this subsection to the legislature at the first 18 opportunity during a current session or, if the legislature is not in session, at the 19 next regular session. The legislature may, within 60 days after receiving the 20 determination or before adjournment of the session, whichever is sooner, revoke 21 the determination by concurrent resolution. Except as provided in this section, 22 the department may not allow a producer to pay a tax under this section or 23 AS 43.55.011(e) in gas. This [AN ELECTION UNDER THIS] subsection applies 24 only to gas produced from 25 (1) oil and gas leases modified under AS 38.05.180(hh) and under 26 which the state takes [FROM WHICH THE COMMISSIONER OF NATURAL 27 RESOURCES HAS DETERMINED TO TAKE] royalty gas in kind under 28 AS 38.05.182; and 29 (2) deposits located in the state north of 68 degrees North latitude 30 or located in leases or properties in the state that include land north of 68 degrees 31 North latitude.
01 * Sec. 22. AS 43.55.014(b) is amended to read: 02 (b) A production tax levied by this section is equal to 13 percent of the gas 03 otherwise taxable under AS 43.55.011(e)(3) produced from each oil and gas lease 04 subject to a requirement to pay the tax in kind under [TO WHICH AN 05 EFFECTIVE ELECTION UNDER] (a) of this section [APPLIES], when and as that 06 gas is produced. The producer shall pay the tax in gas by delivering that 13 percent of 07 the gas to the state at the point of production. 08 * Sec. 23. AS 43.55.014(d) is amended to read: 09 (d) An assessment under AS 43.05.245 against a producer for an 10 underpayment of a tax levied by this section may be made in terms of an amount of 11 gas or an amount of money, as determined under regulations adopted by the 12 department. If the assessment is made in terms of money, the amount for a month of 13 production for an oil and gas lease subject to a requirement to pay the tax in kind 14 [AN EFFECTIVE ELECTION] under (a) of this section is the product of the number 15 of units of gas by which the producer's delivery to the state was less than the amount 16 required by (b) of this section, multiplied by the average gross value at the point of 17 production for each unit of the gas produced by the producer from the lease during the 18 month other than gas that was not subject to tax or gas that was delivered to the state 19 under (b) of this section. The department may allow a credit or refund under 20 AS 43.05.275 for an overpayment of a tax levied by this section that may be issued in 21 the form of gas or money, as determined under regulations adopted by the department. 22 If the credit or refund is allowed in terms of money, the amount of the credit or refund 23 for a month of production for an oil and gas lease subject to a requirement to pay the 24 tax in kind [AN EFFECTIVE ELECTION] under (a) of this section is the product of 25 the number of units of gas by which the producer's delivery to the state was more than 26 the amount required under (b) of this section, multiplied by the average gross value at 27 the point of production for each unit of the gas produced by the producer from the 28 lease during the month other than gas that was not subject to tax or gas that was 29 delivered to the state under (b) of this section. Interest that is determined as a 30 percentage of the amount of a tax underpayment or overpayment and a penalty that is 31 a percentage of the amount of a tax underpayment are calculated as a percentage of the
01 amount of money determined in this subsection. An amount of gas that was less than 02 the amount required to be delivered to the state under (b) of this section or an amount 03 of gas that was more than the amount required to be delivered to the state under (b) of 04 this section that is adjusted as provided by a gas balancing agreement to which the 05 state is a party under AS 38.05.020(b)(11) is not subject to assessment under 06 AS 43.05.245 or a credit or refund under AS 43.05.275. In this subsection, "unit" 07 means a unit of measurement for gas identified by the department under regulations 08 adopted by the department and may be expressed as 1,000 cubic feet, 1,000,000 09 British thermal units, or another appropriate unit of measurement specified by the 10 department under regulations adopted by the department. 11 * Sec. 24. AS 43.55.020(f) is repealed and reenacted to read: 12 (f) The department, based on the value determined under (n) of this section, 13 (1) may require tax to be paid on oil or gas that is produced, but not 14 sold; 15 (2) may require tax to be paid on gas that is produced and stored in a 16 gas storage facility; 17 (3) shall require tax to be paid on oil or gas that is produced and sold at 18 no cost or under circumstances where the sale price does not represent the prevailing 19 value for oil or gas of like kind, quality, or character for the field, unit, or area from 20 which the product is produced; 21 (4) shall publish information related to the value of the oil or gas as 22 required under (o) of this section. 23 * Sec. 25. AS 43.55.020 is amended by adding new subsections to read: 24 (n) When making a value determination for purposes of the payment of tax 25 under (f) of this section, the department 26 (1) shall base the value for oil or gas on the value of oil or gas of the 27 same kind, quality, and character prevailing for that field, unit, or area during the 28 calendar month of production or sale; and 29 (2) may not base a value for oil or gas on oil or gas sold at no cost or at 30 a cost substantially lower than that of other oil or gas of the same kind, quality, and 31 character.
01 (o) After determining the value of oil or gas for purposes of (f) of this section, 02 the department shall 03 (1) prepare a written report evidencing the determination of value; 04 (2) publish on the department's Internet website 05 (A) the determined value; 06 (B) a summary of the reasoning for the determination; and 07 (C) notice that the written determination required under (1) of 08 this subsection is available as a public record under AS 40.25.100 - 40.25.295 09 (Alaska Public Records Act); and 10 (3) maintain the publication required under (2) of this subsection on 11 the department's Internet website for at least 10 years. 12 * Sec. 26. AS 43.55.023(c) is amended to read: 13 (c) A credit or portion of a credit under this section 14 (1) may not be used to reduce a person's tax liability under 15 AS 43.55.011(e) for any calendar year below zero; 16 (2) may, if not used under this subsection, be applied in a later 17 calendar year; 18 (3) may, regardless of when the credit was earned, be used to satisfy a 19 tax, interest, penalty, fee, or other charge that 20 (A) is related to the tax due under this chapter for a prior year, 21 except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 22 43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014; and 23 (B) has not, for the purpose of art. IX, sec. 17(a), Constitution 24 of the State of Alaska, been subject to an administrative proceeding or 25 litigation. 26 * Sec. 27. AS 43.55.023(e) is amended to read: 27 (e) A person to which a transferable tax credit certificate is issued under (d) of 28 this section may transfer the certificate to another person, and a transferee may further 29 transfer the certificate. Subject to the limitations set out in (a) - (d) of this section, and 30 notwithstanding any action the department may take with respect to the applicant 31 under (g) of this section, the owner of a certificate may apply the credit or a portion of
01 the credit shown on the certificate 02 (1) against a tax levied by AS 43.55.011(e); however, a credit shown 03 on a transferable tax credit certificate may not be applied under this paragraph to 04 reduce a transferee's total tax liability under AS 43.55.011(e) for oil and gas produced 05 during a calendar year to less than 80 percent of the tax that would otherwise be due 06 without applying that credit; any portion of a credit not used under this paragraph may 07 be applied in a later period; or 08 (2) regardless of when the credit was earned, to satisfy a tax, interest, 09 penalty, fee, or other charge that 10 (A) is related to the tax due under this chapter, except for a 11 surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 43.55.320 or 12 the tax levied by AS 43.55.011(i) or 43.55.014; 13 (B) is for a calendar year before the year in which the 14 certificate is applied; and 15 (C) has not, for the purpose of art. IX, sec. 17(a), Constitution 16 of the State of Alaska, been subject to an administrative proceeding or 17 litigation. 18 * Sec. 28. AS 43.55.025(h) is amended to read: 19 (h) A producer that purchases a production tax credit certificate may apply the 20 credits against its production tax levied by AS 43.55.011(e). Regardless of the price 21 the producer paid for the certificate, the producer may receive a credit against its 22 production tax liability for the full amount of the credit, but for not more than the 23 amount for which the certificate is issued. A production tax credit or a portion of a 24 production tax credit or a production tax credit certificate or a portion of a production 25 tax credit certificate allowed under this section 26 (1) may not be applied more than once; 27 (2) may be applied in a later calendar year; 28 (3) may, regardless of when the credit was earned, be applied to satisfy 29 a tax, interest, penalty, fee, or other charge that 30 (A) is related to the tax due under this chapter for a prior year, 31 except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or
01 43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014; and 02 (B) has not, for the purpose of art. IX, sec. 17(a), Constitution 03 of the State of Alaska, been subject to an administrative proceeding or 04 litigation. 05 * Sec. 29. AS 43.55.030(a) is amended to read: 06 (a) A producer that produces oil or gas from a lease or property in the state 07 during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) 08 for that oil or gas, shall file with the department on March 31 of the following year a 09 statement, under oath, in a form prescribed by the department, giving, with other 10 information required, the following: 11 (1) a description of each lease or property from which oil or gas was 12 produced, by name, legal description, lease number, or accounting codes assigned by 13 the department; 14 (2) the names of the producer and, if different, the person paying the 15 tax, if any; 16 (3) the gross amount of oil and the gross amount of gas produced from 17 each lease or property, separately identifying the gross amount of gas produced from 18 each oil and gas lease for which tax is paid in kind [TO WHICH AN EFFECTIVE 19 ELECTION] under AS 43.55.014(a) [APPLIES], the amount of gas delivered to the 20 state under AS 43.55.014(b), and the percentage of the gross amount of oil and gas 21 owned by the producer; 22 (4) the gross value at the point of production of the oil and of the gas 23 produced from each lease or property owned by the producer and the costs of 24 transportation of the oil and gas; 25 (5) the name of the first purchaser and the price received for the oil and 26 for the gas, unless relieved from this requirement in whole or in part by the 27 department; 28 (6) the producer's qualified capital expenditures, as defined in 29 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 30 payments or credits under AS 43.55.170; 31 (7) the production tax values of the oil and gas under AS 43.55.160(a)
01 or of the oil under AS 43.55.160(h), as applicable; 02 (8) any claims for tax credits to be applied; and 03 (9) calculations showing the amounts, if any, that were or are due 04 under AS 43.55.020(a) and interest on any underpayment or overpayment. 05 * Sec. 30. AS 43.55.160(h) is amended to read: 06 (h) For oil produced on and after January 1, 2022, except as provided in (b), 07 (f), and (g) of this section, for the purposes of AS 43.55.011(e)(3), the annual 08 production tax value of oil taxable under AS 43.55.011(e) produced by a producer 09 during a calendar year 10 (1) from leases or properties in the state that include land north of 68 11 degrees North latitude is the gross value at the point of production of that oil, less the 12 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 13 explore for, develop, or produce oil and gas deposits located in the state north of 68 14 degrees North latitude or located in leases or properties in the state that include land 15 north of 68 degrees North latitude, as adjusted under AS 43.55.170; for oil produced 16 on and after January 1, 2026, lease expenditures deductible under this paragraph 17 may not include costs incurred to explore for, develop, or produce gas deposits 18 located in the state north of 68 degrees North latitude or located in leases or 19 properties in the state that include land north of 68 degrees North latitude; 20 (2) before or during the last calendar year under AS 43.55.024(b) for 21 which the producer could take a tax credit under AS 43.55.024(a), from leases or 22 properties in the state outside the Cook Inlet sedimentary basin, no part of which is 23 north of 68 degrees North latitude, other than leases or properties subject to 24 AS 43.55.011(p), is the gross value at the point of production of that oil, less the 25 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 26 explore for, develop, or produce oil and gas deposits located in the state outside the 27 Cook Inlet sedimentary basin and south of 68 degrees North latitude, other than oil 28 and gas deposits located in a lease or property that includes land north of 68 degrees 29 North latitude or that is subject to AS 43.55.011(p) or, before January 1, 2027, from 30 which commercial production has not begun, as adjusted under AS 43.55.170; 31 (3) from leases or properties subject to AS 43.55.011(p) is the gross
01 value at the point of production of that oil, less the producer's lease expenditures under 02 AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and 03 gas deposits located in leases or properties subject to AS 43.55.011(p) or, before 04 January 1, 2027, located in leases or properties in the state outside the Cook Inlet 05 sedimentary basin, no part of which is north of 68 degrees North latitude from which 06 commercial production has not begun, as adjusted under AS 43.55.170; 07 (4) from leases or properties in the state no part of which is north of 68 08 degrees North latitude, other than leases or properties subject to (2) or (3) of this 09 subsection, is the gross value at the point of production of that oil less the producer's 10 lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, 11 develop, or produce oil and gas deposits located in the state south of 68 degrees North 12 latitude, other than oil and gas deposits located in a lease or property in the state that 13 includes land north of 68 degrees North latitude, and excluding lease expenditures that 14 are deductible under (2) or (3) of this subsection or would be deductible under (2) or 15 (3) of this subsection if not prohibited by (b) of this section, as adjusted under 16 AS 43.55.170; a separate annual production tax value shall be calculated for 17 (A) oil produced from each lease or property in the Cook Inlet 18 sedimentary basin; 19 (B) oil produced from each lease or property outside the Cook 20 Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, 21 other than leases or properties subject to (3) of this subsection. 22 * Sec. 31. AS 43.55.165(a) is amended to read: 23 (a) For purposes of this chapter, a producer's lease expenditures for a calendar 24 year are 25 (1) costs, other than items listed in (e) of this section, that are 26 (A) except as provided in (t) of this section, incurred by the 27 producer during the calendar year after March 31, 2006, to explore for, 28 develop, or produce oil or gas deposits located within the producer's leases or 29 properties in the state or, in the case of land in which the producer does not 30 own an operating right, operating interest, or working interest, to explore for 31 oil or gas deposits within other land in the state; and
01 (B) allowed by the department by regulation, based on the 02 department's determination that the costs satisfy the following three 03 requirements: 04 (i) the costs must be incurred upstream of the point of 05 production of oil and gas; 06 (ii) the costs must be ordinary and necessary costs of 07 exploring for, developing, or producing, as applicable, oil or gas 08 deposits; and 09 (iii) the costs must be direct costs of exploring for, 10 developing, or producing, as applicable, oil or gas deposits; 11 (2) a reasonable allowance for that calendar year, as determined under 12 regulations adopted by the department, for overhead expenses that are directly related 13 to exploring for, developing, or producing, as applicable, the oil or gas deposits; and 14 (3) lease expenditures incurred in a previous calendar year, subject to 15 (l) - (r) of this section, that 16 (A) met the requirements of AS 43.55.160(e) in the year in 17 which the lease expenditures were incurred; 18 (B) have not been deducted in the determination of the 19 production tax value of oil and gas under AS 43.55.160(a) or (h) in a previous 20 calendar year; 21 (C) were not the basis of a credit under this title; and 22 (D) were incurred to explore for, develop, or produce an oil or 23 gas deposit located in the state outside the Cook Inlet sedimentary basin. 24 * Sec. 32. AS 43.55.165(e) is amended to read: 25 (e) For purposes of this section, lease expenditures do not include 26 (1) depreciation, depletion, or amortization; 27 (2) oil or gas royalty payments, production payments, lease profit 28 shares, or other payments or distributions of a share of oil or gas production, profit, or 29 revenue, except that a producer's lease expenditures applicable to oil and gas produced 30 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 31 profit paid to the state under that lease;
01 (3) taxes based on or measured by net income; 02 (4) interest or other financing charges or costs of raising equity or debt 03 capital; 04 (5) acquisition costs for a lease or property or exploration license; 05 (6) costs arising from fraud, wilful misconduct, gross negligence, 06 violation of law, or failure to comply with an obligation under a lease, permit, or 07 license issued by the state or federal government; 08 (7) fines or penalties imposed by law; 09 (8) costs of arbitration, litigation, or other dispute resolution activities 10 that involve the state or concern the rights or obligations among owners of interests in, 11 or rights to production from, one or more leases or properties or a unit; 12 (9) costs incurred in organizing a partnership, joint venture, or other 13 business entity or arrangement; 14 (10) amounts paid to indemnify the state; the exclusion provided by 15 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 16 a third-party insurer or surety; 17 (11) surcharges levied under AS 43.55.201, [OR] 43.55.300, or 18 43.55.320; 19 (12) an expenditure otherwise deductible under (b) of this section that 20 is a result of an internal transfer, a transaction with an affiliate, or a transaction 21 between related parties, or is otherwise not an arm's length transaction, unless the 22 producer establishes to the satisfaction of the department that the amount of the 23 expenditure does not exceed the fair market value of the expenditure; 24 (13) an expenditure incurred to purchase an interest in any corporation, 25 partnership, limited liability company, business trust, or any other business entity, 26 whether or not the transaction is treated as an asset sale for federal income tax 27 purposes; 28 (14) a tax levied under AS 43.55.011 or 43.55.014; 29 (15) costs incurred for dismantlement, removal, surrender, or 30 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 31 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in
01 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 02 excluded under this paragraph if the dismantlement, removal, surrender, or 03 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 04 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 05 (16) costs incurred for containment, control, cleanup, or removal in 06 connection with any unpermitted release of oil or a hazardous substance and any 07 liability for damages imposed on the producer or explorer for that unpermitted release; 08 this paragraph does not apply to the cost of developing and maintaining an oil 09 discharge prevention and contingency plan under AS 46.04.030; 10 (17) costs incurred to satisfy a work commitment under an exploration 11 license under AS 38.05.132; 12 (18) that portion of expenditures, that would otherwise be qualified 13 capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 14 are less than the product of $0.30 multiplied by the total taxable production from each 15 lease or property, in BTU equivalent barrels, during that calendar year, except that, 16 when a portion of a calendar year is subject to this provision, the expenditures and 17 volumes shall be prorated within that calendar year; 18 (19) costs incurred for repair, replacement, or deferred maintenance of 19 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 20 undertaken in response to a failure, problem, or event that results in an unscheduled 21 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 22 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 23 equipment, other than a well, that is undertaken in response to, or is otherwise 24 associated with, an unpermitted release of a hazardous substance or of gas; however, 25 costs under this paragraph that would otherwise constitute lease expenditures under (a) 26 and (b) of this section may be treated as lease expenditures if the department 27 determines that the repair or replacement is solely necessitated by an act of war, by an 28 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 29 inevitable, and irresistible character, the effects of which could not have been 30 prevented or avoided by the exercise of due care or foresight, or by an intentional or 31 negligent act or omission of a third party, other than a party or its agents in privity of
01 contract with, or employed by, the producer or an operator acting for the producer, but 02 only if the producer or operator, as applicable, exercised due care in operating and 03 maintaining the facility, pipeline, structure, or equipment, and took reasonable 04 precautions against the act or omission of the third party and against the consequences 05 of the act or omission; in this paragraph, 06 (A) "costs incurred for repair, replacement, or deferred 07 maintenance of a facility, a pipeline, a structure, or equipment" includes costs 08 to dismantle and remove the facility, pipeline, structure, or equipment that is 09 being replaced; 10 (B) "hazardous substance" has the meaning given in 11 AS 46.03.826; 12 (C) "replacement" includes renovation or improvement; 13 (20) costs incurred to construct, acquire, or operate a refinery or crude 14 oil topping plant, regardless of whether the products of the refinery or topping plant 15 are used in oil or gas exploration, development, or production operations; however, if 16 a producer owns a refinery or crude oil topping plant that is located on or near the 17 premises of the producer's lease or property in the state and that processes the 18 producer's oil produced from that lease or property into a product that the producer 19 uses in the operation of the lease or property in drilling for or producing oil or gas, the 20 producer's lease expenditures include the amount calculated by subtracting from the 21 fair market value of the product used the prevailing value, as determined under 22 AS 43.55.020(f), of the oil that is processed; 23 (21) costs of lobbying, public relations, public relations advertising, or 24 policy advocacy; 25 (22) costs incurred as part of a capital expenditure or other action taken 26 for a carbon management purpose under AS 38.05.081 or a carbon offset project under 27 AS 38.95.400 - 38.95.499; 28 (23) costs incurred for carbon capture or carbon storage, including fees 29 incurred under AS 41.06.160, surcharges incurred under AS 41.06.175, or costs 30 associated with obtaining, operating, or maintaining a license or lease under 31 AS 38.05.700 - 38.05.795; in this paragraph,
01 (A) "carbon capture" means the process of capturing carbon 02 dioxide from a chemical, mechanical, or industrial process, or directly from the 03 ambient atmosphere, and reducing the carbon dioxide to a concentrated form, 04 including a supercritical fluid; "carbon capture" does not include gas 05 processing or gas treatment; 06 (B) "carbon storage" means the long-term geologic storage of 07 carbon dioxide in a carbon storage facility permitted under AS 41.06.120 or a 08 Class VI injection well, as defined in 40 C.F.R. 146.5(f). 09 * Sec. 33. AS 43.55.165 is amended by adding a new subsection to read: 10 (t) For oil produced on and after January 1, 2026, lease expenditures under 11 this section do not include costs incurred to explore for, develop, or produce gas 12 deposits located in the state north of 68 degrees North latitude or located in leases or 13 properties in the state that include land north of 68 degrees North latitude. 14 * Sec. 34. AS 43.55.201(b) is amended to read: 15 (b) The surcharge imposed by (a) of this section is in addition to the tax 16 imposed by AS 43.55.011 and is due on the last day of the month on oil produced 17 from each lease or property during the preceding month. The surcharge is in addition 18 to the surcharge imposed by AS 43.55.300 - 43.55.310 and 43.55.320. 19 * Sec. 35. AS 43.55 is amended by adding a new section to article 3 to read: 20 Sec. 43.55.320. Surcharge on liquefied natural gas. (a) Every processor of 21 liquefied natural gas shall pay a surcharge of $.15 for each Mcf of natural gas 22 processed in the state. In this subsection, 23 (1) "Mcf" means the quantity of gas contained in 1,000 cubic feet of 24 space, measured at a temperature of 60 degrees Fahrenheit and an absolute pressure of 25 14.65 pounds per square inch; 26 (2) "processor of liquefied natural gas" means a person that processes 27 natural gas by cooling it for the purpose of converting the natural gas to a liquid state 28 for transportation or storage. 29 (b) The surcharge imposed by (a) of this section 30 (1) applies only to a processor with the capacity to process more than 31 50 MMcf of natural gas per day; in this paragraph, "MMcf" means the quantity of gas
01 contained in 1,000,000 cubic feet of space, measured in the same manner as gas 02 described in (a) of this section; 03 (2) is in addition to the tax imposed by AS 43.55.011 and the 04 surcharges imposed by AS 43.55.201 and 43.55.300. 05 (c) A tax credit authorized under this chapter may not be applied to reduce a 06 processor's liability for the surcharge. 07 (d) The surcharge is due on the last day of the month on gas processed during 08 the preceding month. The surcharge shall be paid at the same time and in the same 09 manner as the surcharge imposed under AS 43.55.201. 10 (e) The department may aggregate the quantity of gas processed by two or 11 more processors if the department determines that, without the provisions of this 12 section, the gas processed would reasonably be expected to be attributed to a single 13 entity. 14 * Sec. 36. AS 43.55.900(24) is amended to read: 15 (24) "surcharge" means 16 (A) when used in AS 43.55.201 - 43.55.299, the surcharge 17 levied by AS 43.55.201; 18 (B) when used in AS 43.55.300 and 43.55.310 [AS 43.55.300 - 19 43.55.310], the surcharge levied by AS 43.55.300; 20 (C) when used in AS 43.55.320, the surcharge levied by 21 AS 43.55.320; 22 * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 23 read: 24 APPLICABILITY. (a) AS 31.25.080(a)(6), as amended by sec. 3 of this Act, applies 25 to a transfer or disposition occurring on or after the effective date of sec. 3 of this Act. 26 (b) AS 31.25.080(a)(24), as amended by sec. 3 of this Act, applies to a contract 27 entered into on or after the effective date of sec. 3 of this Act. 28 (c) AS 31.25.090(l), added by sec. 7 of this Act, applies to an agreement entered into 29 on or after the effective date of sec. 7 of this Act. 30 (d) AS 31.25.145, added by sec. 10 of this Act, applies to revenue generated on and 31 after the effective date of sec. 10 of this Act.
01 (e) AS 31.25.280, added by sec. 11 of this Act, applies to a relationship with a foreign 02 entity entered into on or after the effective date of sec. 11 of this Act. In this subsection, "legal 03 relationship" has the meaning given in AS 31.25.280(c). 04 (f) AS 31.25.285, added by sec. 11 of this Act, applies to a legal relationship entered 05 into on an after the effective date of sec. 11 of this Act. In this subsection, "legal relationship" 06 has the meaning given in AS 31.25.285(b). 07 (g) AS 43.20.019, added by sec. 16 of this Act, applies to a qualified entity with 08 taxable income over $5,000,000 for a tax year beginning on or after January 1, 2027. In this 09 subsection, "qualified entity" has the meaning given in AS 43.20.019(g). 10 (h) AS 43.55.014(a), as amended by sec. 21 of this Act, applies to gas produced on 11 and after the effective date of sec. 21 of this Act. An election made under AS 43.55.014(a) 12 before the effective date of sec. 21 of this Act, if part of a contractual agreement, is not made 13 void by sec. 21 of this Act. 14 (i) AS 43.55.020(f), as repealed and reenacted by sec. 24 of this Act, and 15 AS 43.55.020(n), added by sec. 25 of this Act, apply to oil and gas produced on and after the 16 effective date of secs. 24 and 25 of this Act. 17 * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 TRANSITION. (a) The Alaska Gasline Development Corporation shall, by January 1, 20 2027, first publish the information required under AS 31.25.275, added by sec. 11 of this Act. 21 The first publication required under AS 31.25.275 must include information about each 22 (1) owner, investor, lender, and creditor since July 1, 2024, for each project 23 developed by the corporation or project in which the corporation has an ownership or 24 management interest; and 25 (2) gas purchase agreement entered into since July 1, 2024, for gas transported 26 through or processed by a project developed by the corporation or project in which the 27 corporation has an ownership or management interest. 28 (b) Within 30 days after the effective date of sec. 9 of this Act, the corporation shall 29 notify the president of the senate, the speaker of the house of representatives, and the chairs of 30 the finance committee of each house of the legislature of any existing options to invest in a 31 revenue-generating project, as required under AS 31.25.125.
01 * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 RETROACTIVITY. (a) Sections 30, 31, and 33 of this Act are retroactive to 04 January 1, 2026. 05 (b) If secs. 15, 19 - 23, and 29 of this Act take effect after July 1, 2026, secs. 15, 19 - 06 23, and 29 of this Act are retroactive to July 1, 2026. 07 * Sec. 40. Sections 15, 19 - 23, and 29 of this Act take effect July 1, 2026. 08 * Sec. 41. Sections 16 - 18, 26 - 28, 32, and 34 - 36 of this Act take effect January 1, 2027. 09 * Sec. 42. Except as provided in secs. 40 and 41 of this Act, this Act takes effect 10 immediately under AS 01.10.070(c).