SB 2001: "An Act relating to the taxation of certain natural gas project property and related facilities; relating to the determination of the value of taxable real and personal property for purposes of calculating local contributions for public school funding; relating to municipal property taxes; relating to the Alaska Gasline Development Corporation; relating to revenue from a North Slope natural gas project; relating to an alternative volumetric tax on natural gas throughput; relating to agreements and payments related to a natural gas project; relating to community impact grants; relating to the regulation of liquefied natural gas import facilities by the Regulatory Commission of Alaska; relating to an Alaska liquefied natural gas project mitigation fund; and providing for an effective date."
00 SENATE BILL NO. 2001 01 "An Act relating to the taxation of certain natural gas project property and related 02 facilities; relating to the determination of the value of taxable real and personal property 03 for purposes of calculating local contributions for public school funding; relating to 04 municipal property taxes; relating to the Alaska Gasline Development Corporation; 05 relating to revenue from a North Slope natural gas project; relating to an alternative 06 volumetric tax on natural gas throughput; relating to agreements and payments related 07 to a natural gas project; relating to community impact grants; relating to the regulation 08 of liquefied natural gas import facilities by the Regulatory Commission of Alaska; 09 relating to an Alaska liquefied natural gas project mitigation fund; and providing for an 10 effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section
01 to read: 02 LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that the tax 03 treatment in this Act is necessary to advance a major natural gas project and to ensure that 04 (1) the project maximizes the benefit to the state by ensuring direct and 05 affordable access to natural gas to the residents of the state; and 06 (2) communities affected by the natural gas project are protected from the 07 negative effects of the project. 08 (b) Nothing in this Act is intended to establish, modify, impair, waive, or otherwise 09 affect the tax treatment, assessment methodology, valuation, taxing authority, or applicability 10 of taxes imposed under AS 29.45 or AS 43.56 with respect to any other property, project, 11 facility, infrastructure, or taxpayer. It is the intent of the legislature that this Act be narrowly 12 construed and not serve as precedent, guidance, or interpretive authority for the taxation of 13 any other property subject to taxation under AS 29.45 or AS 43.56. 14 * Sec. 2. AS 14.17.510 is amended by adding a new subsection to read: 15 (d) In this section, the full and true value of the taxable real and personal 16 property does not include property subject to the alternative volumetric tax levied 17 under AS 43.59. 18 * Sec. 3. AS 29.45.080(c) is amended to read: 19 (c) A municipality may levy and collect a tax on the full and true value of that 20 portion of taxable property taxable under AS 43.56 as assessed by the Department of 21 Revenue which value, when combined with the value of property otherwise taxable by 22 the municipality, does not exceed the product of the percentage determined in (f) of 23 this section of the average per capita assessed full and true value of property in the 24 state multiplied by the number of residents of the taxing municipality. Property 25 subject to tax abatement under AS 43.59.010 or to the alternative volumetric tax 26 levied under AS 43.59.020 is not included in the value of property for the purpose 27 of making the calculation under this subsection. 28 * Sec. 4. AS 31.25.010 is amended to read: 29 Sec. 31.25.010. Structure. The Alaska Gasline Development Corporation is a 30 public corporation and government instrumentality acting in the best interest and as a 31 fiduciary of the state for the purposes required by AS 31.25.005, located for
01 administrative purposes in the Department of Commerce, Community, and Economic 02 Development, but having a legal existence independent of and separate from the state. 03 The corporation may not be terminated as long as it has bonds, notes, or other 04 obligations outstanding. The corporation may dissolve when no bonds, notes, or other 05 obligations of the corporation or a subsidiary of the corporation are outstanding and 06 the corporation or a subsidiary of the corporation is no longer engaged in the 07 development, financing, construction, or operation of an in-state natural gas pipeline 08 or an Alaska liquefied natural gas project. Upon termination of the corporation, its 09 rights and property pass to the state. 10 * Sec. 5. AS 31.25.040(b) is amended to read: 11 (b) The board shall by regulation adopted under AS 44.62 (Administrative 12 Procedure Act) adopt and publish procedures to govern the procurement by the 13 corporation of supplies, services, professional services, and construction. The 14 procurement procedures must 15 (1) reflect competitive bidding principles and provide vendors 16 reasonable and equitable opportunities to participate in the procurement 17 process; 18 (2) include procurement methods to meet emergency and 19 extraordinary circumstances; 20 (3) comply with the five percent preference under AS 36.30.321(a); 21 and 22 (4) provide for an Alaska veterans' preference that is consistent with 23 the Alaska veterans' preference in AS 36.30.175. 24 * Sec. 6. AS 31.25.080(a) is amended to read: 25 (a) In addition to other powers granted in this chapter, the corporation may 26 (1) determine the form of ownership and the operating structure of an 27 in-state natural gas pipeline developed by the corporation and may, subject to 28 AS 31.25.120(b), enter into agreements with other persons for joint ownership, joint 29 operation, or both of an in-state natural gas pipeline or an Alaska liquefied natural gas 30 project; 31 (2) plan, finance, construct, develop, acquire, maintain, and operate a
01 pipeline system and other transportation mechanism, including pipelines, compressors, 02 storage facilities, and other related facilities, equipment, and works of public 03 improvement, in the state to facilitate production, transportation, and delivery of 04 natural gas or other related natural resources to the point of consumption or to the 05 point of distribution for consumption; 06 (3) lease or rent facilities, structures, and properties; 07 (4) exercise the power of eminent domain and file a declaration of 08 taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 09 necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas project; 10 the exercise of powers by the corporation under this paragraph may not exceed the 11 permissible exercise of the powers by the state; 12 (5) acquire, by purchase, lease, or gift, land, structures, real or personal 13 property, an interest in property, a right-of-way, a franchise, an easement, or other 14 interest in land, or an interest in or right to capacity in a pipeline system determined to 15 be necessary or convenient for the development, financing, construction, or operation 16 of an in-state natural gas pipeline project or an Alaska liquefied natural gas project or 17 part of an in-state natural gas pipeline project or an Alaska liquefied natural gas 18 project; 19 (6) subject to AS 31.25.120(b), transfer or otherwise dispose of all or 20 part of an in-state natural gas pipeline project, an Alaska liquefied natural gas project, 21 or an interest in an asset of the corporation; 22 (7) elect to provide transportation of natural gas as a contract carrier, 23 common carrier, or otherwise; 24 (8) provide light, water, security, and other services for property of the 25 corporation; 26 (9) conduct hearings to gather and develop data consistent with the 27 purpose and powers of the corporation; 28 (10) advocate for new pipeline capacity before the Federal Energy 29 Regulatory Commission; 30 (11) make and execute agreements, contracts, and other instruments 31 necessary or convenient in the exercise of the powers and functions of the corporation
01 under this chapter, including a contract with a person, firm, corporation, governmental 02 agency, or other entity; 03 (12) sue and be sued in its own name; 04 (13) adopt an official seal; 05 (14) adopt bylaws for the regulation of its affairs and the conduct of its 06 business and adopt regulations and policies in connection with the performance of its 07 functions and duties; 08 (15) employ fiscal consultants, engineers, attorneys, appraisers, and 09 other consultants and employees that may, in the judgment of the corporation, be 10 required and fix and pay their compensation from funds available to the corporation; 11 (16) procure insurance against a loss in connection with its operation; 12 (17) borrow money as provided in this chapter to carry out its 13 corporate purposes and issue its obligations as evidence of borrowing; 14 (18) include in a borrowing the amounts necessary to pay financing 15 charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 16 and legal fees, and other expenses that are necessary or incident to the borrowing; 17 (19) receive, administer, and comply with the conditions and 18 requirements of an appropriation, gift, grant, or donation of property or money; 19 (20) do all acts and things necessary, convenient, or desirable to carry 20 out the powers expressly granted or necessarily implied in this chapter; 21 (21) invest or reinvest, subject to its contracts with noteholders and 22 bondholders, money or funds held by the corporation, including funds in the in-state 23 natural gas pipeline fund (AS 31.25.100) and the Alaska liquefied natural gas project 24 fund (AS 31.25.110), in obligations or other securities or investments in which banks 25 or trust companies in the state may legally invest funds held in reserves or sinking 26 funds or funds not required for immediate disbursement, and in certificates of deposit 27 or time deposits secured by obligations of, or guaranteed by, the state or the United 28 States; 29 (22) enter into, as it determines to be necessary or appropriate, any 30 swap or hedge, cap, or other contract providing for payments based on levels of or 31 changes in interest rates or indices or in the cost or price of any commodity, supply, or
01 expense expected to be used or incurred in connection with the acquisition, 02 construction, or operation of any facility or property owned, leased, or operated by the 03 corporation, or an option with respect to any of the foregoing; 04 (23) except as provided in (g) of this section, acquire an ownership or 05 participation interest in an Alaska liquefied natural gas project, natural gas treatment 06 facilities, natural gas pipeline facilities, liquefaction facilities, marine terminal 07 facilities related to the infrastructure of an Alaska liquefied natural gas project, or an 08 entity or joint venture that has an ownership interest in or is engaged in the planning, 09 financing, acquisition, maintenance, construction, and operation of an Alaska liquefied 10 natural gas project; 11 (24) after consultation with the commissioner of revenue and the 12 commissioner of natural resources, enter into contracts relating to an Alaska liquefied 13 natural gas project, including contracts for services related to operation, marketing, 14 transportation, gas treatment, marine terminal operation, or liquefaction. 15 * Sec. 7. AS 31.25.080 is amended by adding new subsections to read: 16 (h) If the corporation or a subsidiary of the corporation negotiates with another 17 entity to acquire an interest in an Alaska liquefied natural gas project, the corporation 18 shall provide an opportunity for municipalities in the state to purchase a portion of the 19 corporation's right to acquire additional equity interest in the natural gas project not 20 exercised by the corporation, through an entity managed by the corporation. A 21 municipality may not acquire a direct interest in a natural gas project under this 22 subsection. 23 (i) The corporation shall, to the maximum extent possible, use contractors and 24 suppliers in the state in order to benefit from the experience of workers and businesses 25 in the state in arctic engineering and construction. 26 * Sec. 8. AS 31.25.090(f) is amended to read: 27 (f) Subject to the restrictions in this section, the [THE] corporation may 28 enter into confidentiality agreements necessary to acquire or provide information to 29 carry out its functions. If a state agency determines that a law or provision of a 30 contract to which the state agency is a party requires the state agency to preserve the 31 confidentiality of the information and that delivering the information to the
01 corporation would violate the confidentiality provision of that law or contract, the state 02 agency shall 03 (1) identify the applicable law or contract provision to the corporation; 04 and 05 (2) obtain the consent of the person who has the right to waive the 06 confidentiality of the information under the applicable law or contract provision before 07 the state agency transfers the information to the corporation. 08 * Sec. 9. AS 31.25.090 is amended by adding new subsections to read: 09 (j) If all parties to a confidentiality agreement entered into under (f) of this 10 section agree to waive the confidentiality required by the agreement, in whole or in 11 part, information subject to that waiver may be released to a legislator or a public 12 agent. Information released under this subsection may include reasonable redactions. 13 Information released under this subsection may include 14 (1) a contract or agreement or a specific term of a contract or 15 agreement; 16 (2) a pending contract or agreement or a specific term of a pending 17 contract or agreement; 18 (3) a record, file, or other information in possession of the corporation, 19 a subsidiary of the corporation, or an entity partnered with the corporation; or 20 (4) the confidentiality agreement or terms of the confidentiality 21 agreement. 22 (k) Notwithstanding (g) or (j) of this section, information subject to a 23 confidentiality agreement entered into by the corporation may be discussed in a 24 legislative committee in regular or executive session if all parties to the confidentiality 25 agreement consent to the session, the consent is lawful, and one or more of the 26 consenting parties is available to testify at the session. 27 (l) A confidentiality agreement entered into under (f) of this section may not 28 (1) prevent compliance with an administrative or court order 29 mandating disclosure; 30 (2) except as provided in (m) of this section, make confidential 31 information that may lead to
01 (A) a significant fiscal liability, obligation, or risk to the state; 02 or 03 (B) appropriations or other state funding or in-kind payments 04 or services from the state; or 05 (3) make confidential the existence of information related to a state 06 interest option under AS 31.25.125. 07 (m) A confidentiality agreement entered into under (f) of this section may 08 make confidential specific known or reasonably anticipated project economics or costs 09 related to the Alaska liquefied natural gas project only if the parties to the contract 10 agree that release of the project economics or costs would cause commercial or 11 competitive harm to an entity involved in the Alaska liquefied natural gas project. 12 (n) In this section, "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) an agent or contractor of a member of the legislature or of a 16 legislative committee. 17 * Sec. 10. AS 31.25.120 is amended by adding a new subsection to read: 18 (b) Unless the legislature approves the action by law under this subsection, the 19 corporation may not transfer, sell, or otherwise dispose of an ownership or 20 management interest in a subsidiary of the corporation. The corporation shall notify 21 the presiding officer of each house if the corporation intends to transfer, sell, or 22 otherwise dispose of an ownership or management interest in a subsidiary of the 23 corporation. The legislature shall have 90 legislative days to consider the transfer, sale, 24 or disposition. If the legislature does not disapprove the transfer, sale, or disposition of 25 an ownership interest within 90 legislative days, the corporation may move forward 26 with the transfer, sale, or disposition. In this subsection, "legislative day" means a day 27 the legislature is in regular or special session. 28 * Sec. 11. AS 31.25 is amended by adding a new section to read: 29 Sec. 31.25.125. Involvement in revenue-generating projects. (a) If the 30 corporation negotiates with another entity for participation by the corporation in a 31 revenue-generating project, the corporation shall negotiate an option for the state to
01 acquire an interest in the project. The corporation shall immediately notify the 02 president of the senate, the speaker of the house of representatives, and the chairs of 03 the finance committee of each house of the legislature on each occasion that an option 04 is available for consideration by the legislature. 05 (b) The corporation shall immediately notify the president of the senate, the 06 speaker of the house of representatives, and the chairs of the finance committee of 07 each house of the legislature on each occasion that the state may exercise an option 08 negotiated under (a) of this section. The corporation shall notify the legislature under 09 this subsection on the earlier of the date that 10 (1) the corporation determines, with reasonable assurance and 11 considering the totality of circumstances, including review of all relevant financial 12 information, that the revenue-generating project will be completed, with or without 13 state investment; or 14 (2) a final investment decision is made for the revenue-generating 15 project. 16 (c) The state may not acquire an interest in a revenue-generating project under 17 this section unless the interest is approved by the legislature by law. When making an 18 investment decision under this section, the legislature shall act as a prudent investor. 19 (d) The Department of Revenue shall cooperate with and assist the legislature 20 in determining whether to acquire an interest in a revenue-generating project under (c) 21 of this section by exercising an option negotiated under (a) of this section, including 22 by identifying potential funding sources for exercising the option and potential fiscal 23 effects on the state. If requested by the legislature, another state agency shall cooperate 24 with and assist the legislature with making a determination under (c) of this section. 25 (e) In this section, 26 (1) "corporation" includes a subsidiary of the corporation; 27 notwithstanding the definition of "subsidiary of the corporation" in AS 31.25.390, a 28 subsidiary of a corporation does not include a partially owned subsidiary for purposes 29 of this section; 30 (2) "revenue-generating project" means a project, entity ownership, 31 legal business arrangement, partnership, joint venture, or other commercial endeavor
01 expected to generate revenue. 02 * Sec. 12. AS 31.25.130(a) is amended to read: 03 (a) Except as otherwise provided in this chapter and except for 04 AS 44.62.310 - 44.62.319 (Open Meetings Act), AS 44.62 (Administrative Procedure 05 Act) does not apply to this chapter. The corporation shall make available to members 06 of the public copies of the regulations adopted under (b) - (e) of this section. 07 * Sec. 13. AS 31.25 is amended by adding a new section to article 1 to read: 08 Sec. 31.25.145. Accounting. (a) The corporation shall deposit into separate 09 accounts in the general fund revenue 10 (1) generated by a subsidiary of the corporation; and 11 (2) resulting from an option negotiated under AS 31.25.125. 12 (b) The legislature may appropriate the annual estimated balance in the 13 accounts for operations of the corporation or for any other purpose. 14 * Sec. 14. AS 31.25 is amended by adding a new section to read: 15 Sec. 31.25.285. Legislative notification of ownership change. (a) Unless 16 prevented by a confidentiality agreement entered into and subject to AS 31.25.090, the 17 corporation shall promptly notify the president of the senate, the speaker of the house 18 of representatives, and the chairs of the finance committee of each house of the 19 legislature if 20 (1) an entity in a legal relationship with the corporation, or a subsidiary 21 of the corporation, has a significant change in ownership structure; or 22 (2) the corporation becomes aware that an entity in a legal relationship 23 with the corporation, or a subsidiary of the corporation, plans to make a significant 24 change in ownership structure. 25 (b) In this section, "legal relationship" means a partnership, joint venture, joint 26 ownership agreement, or other legally binding business arrangement 27 (1) of which the corporation, or a subsidiary of the corporation, has at 28 least a 10 percent interest; or 29 (2) that has an interest in a third entity in which the corporation, or a 30 subsidiary of the corporation, also has at least a 10 percent interest; and 31 (3) that formed for the purpose of shared ownership or shared
01 management of, or pooling of resources for, an entity in which the corporation, or a 02 subsidiary of the corporation, has an ownership or management interest. 03 * Sec. 15. AS 31.25.390 is amended by adding a new paragraph to read: 04 (8) "subsidiary of the corporation" means a subsidiary controlled by 05 the corporation. 06 * Sec. 16. AS 43.56.010(a) is amended to read: 07 (a) Except as provided in AS 43.59.010 and 43.59.020, an [AN] annual tax 08 of 20 mills is levied each tax year beginning January 1, 1974, on the full and true 09 value of taxable property taxable under this chapter. 10 * Sec. 17. AS 43.56.020(d) is amended to read: 11 (d) Taxable property subject to tax abatement under AS 43.59.010 or the 12 volumetric tax imposed under AS 43.59.020 [OF A NATURAL GAS PIPELINE 13 PROJECT OWNED OR FINANCED BY THE ALASKA GASLINE 14 DEVELOPMENT CORPORATION OR A JOINT VENTURE, PARTNERSHIP, OR 15 OTHER ENTITY THAT INCLUDES THE ALASKA GASLINE DEVELOPMENT 16 CORPORATION] is exempt from state taxes levied or authorized under 17 AS 43.56.010(a) and municipal taxes levied or authorized under AS 43.56.010(b) 18 [BEFORE THE COMMENCEMENT OF COMMERCIAL OPERATIONS OF THAT 19 NATURAL GAS PIPELINE PROJECT. IN THIS SUBSECTION, 20 "COMMENCEMENT OF COMMERCIAL OPERATIONS" MEANS THE FIRST 21 FLOW OF NATURAL GAS IN THE PROJECT THAT GENERATES REVENUE 22 TO THE OWNERS OF THE NATURAL GAS PIPELINE PROJECT]. 23 * Sec. 18. AS 43 is amended by adding a new chapter to read: 24 Chapter 59. Natural Gas Project Temporary Tax Abatement and Volumetric Tax. 25 Sec. 43.59.010. Temporary tax abatement. (a) Property of a natural gas 26 project is not subject to the taxes levied under AS 29.45.080, AS 43.56.010, or 27 AS 43.59.020 during the temporary tax abatement period. The abatement period 28 begins on the effective date of this section and ends on the earlier of 29 (1) the day after the natural gas project achieves a throughput of 30 500,000,000 cubic feet of natural gas a day, calculated as a rolling average over a 31 consecutive 30-day period; or
01 (2) five years after the date of commencement of commercial 02 operations of the natural gas project. 03 (b) A natural gas project is eligible for the tax abatement under this section 04 only if the department determines that the project is eligible under AS 43.59.025. 05 Sec. 43.59.020. Imposition of alternative volumetric tax. (a) The owner of 06 property subject to tax under this section shall pay an alternative volumetric tax on the 07 throughput of the property. The alternative volumetric tax applies beginning on the 08 day after the expiration of the abatement period under AS 43.59.010. 09 (b) The volumetric tax is the sum of the amounts calculated under this 10 subsection for each component of a natural gas project. The tax for a component is 11 calculated by multiplying the tax rate for the component, set out under (c) of this 12 section, by the component weight, calculated under (d) of this section, by the total 13 units of component throughput, defined under (e) of this section, for the tax period. 14 (c) The tax rate is 15 (1) $0.06 for a gas pipeline component; 16 (2) $0.12 for a gas treatment plant and carbon capture facility 17 component; 18 (3) $0.12 for a liquefied natural gas plant component. 19 (d) The component weight is the capital expenditures for a completed 20 component divided by the total capital expenditures for all completed components. 21 The department shall calculate the component weights upon commencement of 22 commercial operations of each major phase of the project. The department shall 23 calculate the final and fixed component weight upon commencement of commercial 24 operations of the project. Each time a component weight is calculated under this 25 subsection, the department shall provide the revised component weight to each 26 taxpayer under this section and to a municipality collecting the tax due under this 27 section. 28 (e) A unit of component throughput is 1,000 cubic feet of natural gas. 29 (f) Beginning after the first year the tax applies to throughput of a natural gas 30 project, the tax rate for throughput under (c) of this section shall be adjusted on 31 January 1 of each year for inflation, using 100 percent of the average of the annual
01 change over the preceding five calendar years in the Consumer Price Index for all 02 urban consumers for urban Alaska, as determined by the United States Department of 03 Labor, Bureau of Labor Statistics. However, the annual adjustment under this 04 subsection must increase the rates by at least one percent and not more than two 05 percent. 06 (g) A natural gas project is subject to the alternative volumetric tax levied 07 under this section only if the department determines that the project is eligible under 08 AS 43.59.025. 09 (h) The tax levied under this section is in place of 10 (1) all state taxes levied on taxable property, including property used 11 or committed by contract or other agreement for use in the natural gas project; 12 (2) taxes levied under AS 43.56.010; and 13 (3) taxes levied under AS 29.45.080. 14 (i) An owner of property subject to tax under this section shall, on or before 15 the last day of each month, file a return with the department and with each 16 municipality collecting tax under this section. The return must state the throughput, in 17 cubic feet of natural gas for each day, for each component of property subject to tax 18 for the month preceding the month in which the return is due and include an 19 installment payment for the month of the return. An installment payment is considered 20 delinquent if the payment is not received by the department on or before the last day 21 of each month. 22 (j) The tax levied under this section is due annually, on the calendar year. The 23 owner of the property shall, on or before April 30 each year, pay any remaining tax 24 due under this section for tax accruing from throughput in the previous calendar year. 25 A tax payment under this subsection is considered delinquent if the payment is not 26 received by the department on or before April 30 each year. 27 (k) Notwithstanding AS 43.05.220, if a tax payment or installment payment 28 required under this section is delinquent, the department or a municipality shall assess 29 a penalty of 15 percent of the amount of delinquent taxes and interest on the 30 delinquent taxes, exclusive of penalty, at the rate specified in AS 43.05.225. 31 Sec. 43.59.025. Eligibility. (a) A natural gas project is eligible for the tax
01 abatement under AS 43.59.010 and the alternative volumetric tax under AS 43.59.020 02 only if the department determines that the plans for the project meet the requirements 03 of this section. 04 (b) To be eligible under this section, plans for the project must include a spur 05 line meeting the requirements of this subsection that serves the City of Fairbanks and 06 the Fairbanks North Star Borough. The spur line must 07 (1) have sufficient capacity to serve reasonably projected residential, 08 commercial, and industrial demand in the Interior area of the state; 09 (2) be scheduled to begin operations within two years after the 10 commencement of commercial operations of a major component of the natural gas 11 project; 12 (3) be designed to connect with local distribution infrastructure 13 capable of delivering natural gas to the City of Fairbanks and the surrounding urban 14 area; 15 (4) be designed and operated to deliver gas at the lowest reasonable 16 cost consistent with safe and reliable service; and 17 (5) allocate costs, including capital, financing, construction, 18 operations, and maintenance costs, 19 (A) across all consumers systemwide; costs related to 20 financing, construction, operations, or maintenance of the spur line may not be 21 allocated solely to the Interior area of the state; in this subparagraph, 22 "systemwide" means the area from the North Slope to the Southcentral regions 23 of the state; and 24 (B) justly, reasonably, and not unduly discriminatorily. 25 (c) If the department determines that the requirements of (b) of this section 26 have been met, the department shall issue a written determination that the natural gas 27 project is eligible for the tax abatement under AS 43.59.010 and the alternative 28 volumetric tax under AS 43.59.020. 29 Sec. 43.59.030. Collection and allocation of alternative tax. The department 30 shall levy and collect the alternative volumetric tax imposed by AS 43.59.020 on the 31 portion of the project property located in the unorganized borough. A municipality
01 may levy and collect the alternative volumetric tax imposed by AS 43.59.020 on the 02 portion of the project property located in the municipality. The department shall adopt 03 regulations providing for a methodology to determine the amount that each 04 municipality and the department may levy based on the proportion of capital 05 expenditures located within each municipality and in the unorganized borough. 06 Sec. 43.59.040. Administrative appeals; distraint of property. (a) A 07 decision by the department regarding the imposition or calculation of the tax levied 08 under AS 43.59.020 may be appealed to the department for an informal conference 09 under AS 43.05.240, and a final decision may be appealed to the office of 10 administrative hearings under AS 43.05.405. 11 (b) The remedy of distraint of property set out in AS 43.20.270 applies to the 12 tax levied in this section. However, only the property subject to tax under 13 AS 43.59.020 may be distrained. 14 Sec. 43.59.050. Termination of status; application. (a) The alternative 15 volumetric tax applicable to a natural gas project under AS 43.59.020 terminates on 16 January 1, 2032, if commencement of construction of the first 730 miles of the gas 17 pipeline has not begun by that date. 18 (b) A natural gas project that does not meet the conditions of (a) of this section 19 and for which the alternative volumetric tax under AS 43.59.020 does not apply is 20 subject to all other state and municipal taxes on taxable property, including taxes 21 levied under AS 29.45.080 and AS 43.56.010. 22 Sec. 43.59.060. Reporting; regulations. (a) The owner of property subject to 23 tax under this section shall, at the request of the department, provide to the department 24 the information necessary to calculate the tax under this section, including capital 25 expenditures made by the owner. Notwithstanding AS 40.25.100(a) and AS 43.05.230, 26 the department shall hold confidential proprietary information provided to the 27 department under this subsection at the request of the owner. In this subsection 28 "proprietary information" means information that, if publicly disclosed, would 29 adversely affect the competitive position of the owner or materially diminish the 30 commercial value of the information to the owner. 31 (b) The department shall adopt regulations under AS 44.62 (Administrative
01 Procedure Act) to implement this chapter, including procedures for 02 (1) measuring throughput; 03 (2) throughput reporting; 04 (3) calculating the rolling average of throughput; and 05 (4) reporting and verifying capital expenditures for the purposes of the 06 calculations under AS 43.59.020(d) and adopting regulations under AS 43.59.030. 07 Sec. 43.59.100. Definitions. In this chapter, 08 (1) "capital expenditure" means an actual expenditure incurred to 09 acquire, construct, improve, or maintain a natural gas project or a component of a 10 natural gas project; 11 (2) "commencement of commercial operations" means the first flow of 12 natural gas through a natural gas project or a component of a natural gas project that 13 treats, transports, or processes a commercial amount of natural gas; 14 (3) "gas pipeline" 15 (A) means a main natural gas pipeline from the outlet flange of 16 the gas treatment plant on the North Slope to the inlet flange of the liquefied 17 natural gas plant located in the Kenai Peninsula region of the state; 18 (B) does not include any gas lines downstream of any offtake 19 point between a gas treatment plant and a liquefied natural gas plant; 20 (4) "gas treatment plant" means a facility and the related activities 21 required to receive natural gas from a Prudhoe Bay unit gas transmission line, a Point 22 Thomson unit gas transmission line, or other facilities, to treat the natural gas to 23 pipeline specifications, to dispose of or deliver byproducts, to deliver liquid products 24 for further transportation, and to deliver treated natural gas for transportation through a 25 gas pipeline; 26 (5) "liquefied natural gas plant" means a facility for liquefying natural 27 gas and includes structures, equipment, underlying land rights, and other associated 28 systems, storage, and facilities for off-loading liquefied natural gas; 29 (6) "natural gas project" and "project" means a natural gas project that 30 includes, collectively, a Prudhoe Bay unit gas transmission line, a Point Thomson unit 31 gas transmission line, a gas pipeline, a gas treatment plant, a liquefied natural gas
01 plant, and a marine terminal; in this paragraph, 02 (A) "marine terminal" means a terminal and those facilities 03 required to receive liquefied natural gas from the boundary of the liquefied 04 natural gas plant for marine transportation, including auxiliary vessels used in 05 the operation of the terminal; 06 (B) "Point Thomson unit gas transmission line" means a natural 07 gas transmission line from the outlet flange of the Point Thomson unit 08 production facility to the inlet flange of the gas treatment plant; and 09 (C) "Prudhoe Bay unit gas transmission line" means a natural 10 gas transmission line from the outlet flange of the Prudhoe Bay unit central gas 11 facility to the inlet flange of the gas treatment plant; 12 (7) "spur line" 13 (A) means 14 (i) a natural gas transmission or lateral line that 15 branches from the main gas pipeline for the primary purpose of 16 delivering natural gas to a local community or utility distribution 17 system; and 18 (ii) compressing and metering equipment and 19 interconnection facilities related to the transmission or lateral line 20 described in (A)(i) of this paragraph; 21 (B) does not include infrastructure used for the export of 22 natural gas or lateral lines not necessary for delivering natural gas to a local 23 community or utility distribution system; 24 (8) "throughput" 25 (A) means 26 (i) the volume of natural gas measured by summing all 27 volumes sold or otherwise delivered at each outlet or offtake point 28 along the gas pipeline; and 29 (ii) natural gas consumed as fuel for the operation of a 30 liquefaction facility; 31 (B) does not include natural gas consumed as fuel for pipeline
01 compression. 02 * Sec. 19. AS 44.33 is amended by adding a new section to read: 03 Article 13A. Alaska Liquefied Natural Gas Project Mitigation Fund. 04 Sec. 44.33.850. Alaska liquefied natural gas project mitigation fund. (a) 05 The Alaska liquefied natural gas project mitigation fund is established as a separate 06 fund in the state treasury. The department shall administer the fund for the purposes 07 set out in this section. Money in the fund does not lapse. Nothing in this section 08 creates a dedicated fund. Each fiscal year, the legislature may appropriate to the fund 09 up to $90,000,000 of revenue received by the state from an Alaska liquefied natural 10 gas project. 11 (b) In a fiscal year, if the legislature appropriates less than or equal to 12 $30,000,000 to the fund, the department shall distribute the balance of the fund, in 13 equal amounts, to the North Slope Borough, the Fairbanks North Star Borough, the 14 Denali Borough, the Municipality of Anchorage, the Matanuska-Susitna Borough, and 15 the Kenai Peninsula Borough. 16 (c) In a fiscal year, if the legislature appropriates more than $30,000,000 but 17 less than or equal to $60,000,000 to the fund, the department shall distribute 18 (1) $5,000,000 each to the North Slope Borough, the Fairbanks North 19 Star Borough, the Denali Borough, the Municipality of Anchorage, the Matanuska- 20 Susitna Borough, and the Kenai Peninsula Borough; and 21 (2) the remainder of the balance of the fund equally to the North Slope 22 Borough and the Kenai Peninsula Borough. 23 (d) In a fiscal year, if the legislature appropriates more than $60,000,000 to the 24 fund, the department shall distribute 25 (1) $5,000,000 each to the North Slope Borough, the Fairbanks North 26 Star Borough, the Denali Borough, the Municipality of Anchorage, the Matanuska- 27 Susitna Borough, and the Kenai Peninsula Borough; 28 (2) $15,000,000 each to the North Slope Borough and the Kenai 29 Peninsula Borough; and 30 (3) the remainder of the balance of the fund proportionately to each 31 municipality in the state based on the municipality's population, except that money
01 may not be distributed to a municipality benefiting from a spur line. 02 (e) In this section, 03 (1) "Alaska liquefied natural gas project" has the meaning given in 04 AS 31.25.390; 05 (2) "department" means the Department of Commerce, Community, 06 and Economic Development; 07 (3) "fund" means the Alaska liquefied natural gas project mitigation 08 fund established under (a) of this section; 09 (4) "spur line" means a natural gas transmission or lateral line that 10 branches from the main gas pipeline for the primary purpose of delivering natural gas 11 to a local community or utility distribution system. 12 * Sec. 20. AS 42.05.711(v) is repealed. 13 * Sec. 21. The uncodified law of the State of Alaska is amended by adding a new section to 14 read: 15 REQUIRED REPORT: PHASE TWO OF THE ALASKA LIQUEFIED NATURAL 16 GAS PROJECT. (a) Before a final investment decision is made on phase two of the Alaska 17 liquefied natural gas project, the Alaska Gasline Development Corporation shall deliver a 18 report to the senate secretary and the chief clerk of the house of representatives and shall 19 notify the legislature that the report is available. The report must include 20 (1) a discussion and review of the effects and effectiveness of this Act on the 21 Alaska liquefied natural gas project; 22 (2) if applicable, suggestions for additional changes to law related to the 23 Alaska liquefied natural gas project, before implementation of phase two. 24 (b) In this section, 25 (1) "Alaska liquefied natural gas project" has the meaning given in 26 AS 31.25.390; 27 (2) "phase two" means a phase of the Alaska liquefied natural gas project that 28 includes a liquefied natural gas plant, as defined in AS 31.25.390, and other related 29 infrastructure required for the export of liquefied natural gas. 30 * Sec. 22. The uncodified law of the State of Alaska is amended by adding a new section to 31 read:
01 APPROPRIATION FOR COMMUNITY IMPACT GRANTS. After the state receives 02 the $40,000,000 payment committed to the state under sec. 25(a)(1) of this Act, the legislature 03 may appropriate $40,000,000 to the Department of Commerce, Community, and Economic 04 Development for payment of community impact grants to eligible communities. The 05 department shall use the money appropriated to the department under this section to timely 06 distribute grants to communities for activities, services, or facilities that offset actual or 07 expected effects of construction of a gas pipeline. When administering grants under this 08 section, the department shall prioritize granting awards based on the needs of the community, 09 the severity of the effects caused by construction of the pipeline, and the correlation of the 10 effect to the construction of the pipeline. In this section, "gas pipeline" has the meaning given 11 in AS 31.25.390. 12 * Sec. 23. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 APPLICABILITY: ALASKA GASLINE DEVELOPMENT CORPORATION 15 CONFIDENTIALITY AGREEMENTS, SUBSIDIARIES, NOTIFICATIONS, LEGAL 16 RELATIONSHIPS. (a) AS 31.25.080(a)(1) and (6) as amended by sec. 6 of this Act, apply to 17 a transfer or disposition occurring on or after the effective date of sec. 6 of this Act. 18 (b) AS 31.25.090(l), added by sec. 9 of this Act, applies to a confidentiality 19 agreement entered into on or after the effective date of sec. 9 of this Act. 20 (c) AS 31.25.145, added by sec. 13 of this Act, applies to revenue generated on and 21 after the effective date of sec. 13 of this Act. 22 (d) AS 31.25.285, added by sec. 14 of this Act, applies to a legal relationship entered 23 into on or after the effective date of sec. 14 of this Act. In this subsection, "legal relationship" 24 has the meaning given in AS 31.25.285(b), added by sec. 14 of this Act. 25 * Sec. 24. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 TRANSITION: EXISTING OPTIONS. (a) Within 30 days after the effective date of 28 sec. 11 of this Act, the Alaska Gasline Development Corporation shall notify the president of 29 the senate, the speaker of the house of representatives, and the chairs of the finance committee 30 of each house of the legislature of any existing options to invest in a revenue-generating 31 project, as required under AS 31.25.125, added by sec. 11 of this Act.
01 (b) An option for state participation in a revenue-generating project negotiated by the 02 Alaska Gasline Development Corporation agreed to before the effective date of AS 31.25.125, 03 added by sec. 11 of this Act, must allow the state to exercise the option for at least 180 days 04 after the corporation notifies the legislature under AS 31.25.125, added by sec. 11 of this Act. 05 * Sec. 25. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 CONDITIONAL EFFECT: ALTERNATIVE VOLUMETRIC TAX; 08 NOTIFICATION TO THE REVISOR OF STATUTES. (a) Sections 1 - 3, 16 - 18, 21, and 22 09 of this Act take effect only if, before January 1, 2032, the commissioner of revenue 10 determines that the primary owner of property that could be taxable under AS 43.59.020, 11 added by sec. 18 of this Act, has committed to 12 (1) pay $40,000,000 to the state, which the legislature may appropriate to the 13 Department of Commerce, Community, and Economic Development for payment of 14 community impact grants to eligible communities in accordance with sec. 22 of this Act; 15 (2) negotiate a project labor agreement for the construction of an economically 16 viable gas pipeline project; in this paragraph, "project labor agreement" means a 17 comprehensive collective bargaining agreement between the contractors of the owner of the 18 gas treatment plant, carbon capture facility, liquefied natural gas plant, and gas pipeline and 19 the appropriate labor representatives to ensure expedited construction with labor stability for 20 the project by qualified residents of the state; and 21 (3) construct a spur line; to meet the requirement of this paragraph, the owner 22 responsible for constructing the spur line shall 23 (A) on or before completion of construction of 730 miles of the gas 24 pipeline, timely and in good faith begin all necessary permit applications and take 25 action on any other regulatory requirements necessary for the construction of the spur 26 line, including, if the Regulatory Commission of Alaska has jurisdiction over the 27 tariffs, 28 (i) initiating a tariff proceeding; and 29 (ii) filing with the commission for systemwide tariff treatment 30 for the spur line with an economically viable gas sales contract, and not for 31 tariff treatment that allocates costs for financing, construction, operations, and
01 maintenance of the spur line solely to the Interior region of the state; in this 02 sub-subparagraph, "systemwide" means the area from the North Slope to the 03 Southcentral region of the state; and 04 (B) begin construction on a spur line within one year after receiving all 05 permits and meeting the necessary regulatory requirements described in (A) of this 06 paragraph. 07 (b) If the commissioner of revenue determines that the conditions in (a) of this section 08 have been met, the commissioner of revenue shall notify the revisor of statutes in writing 09 within 30 days after making the determination. 10 (c) In this section, 11 (1) "economically viable gas sales contract" means a contract, precedent 12 agreement, memorandum of understanding, tariff-supported sales arrangement, or other 13 commercially reasonable arrangement for the sale, delivery, transportation, or distribution of 14 natural gas to serve current or reasonably projected residential, commercial, institutional, 15 utility, or industrial demand in the City of Fairbanks, the Fairbanks North Star Borough, or 16 the surrounding Interior area of the state, including demand aggregated by a public utility, gas 17 distribution utility, local government, state agency, or other entity serving customers in the 18 Interior area of the state; the gas sales contract need not demonstrate that the spur line alone 19 will recover all capital, financing, construction, operation, or maintenance costs solely from 20 customers in the Interior area of the state; 21 (2) "gas pipeline" means a gas pipeline, as defined in AS 31.25.390, that is 22 expected to be subject to the alternative volumetric tax under AS 43.59.020, enacted by sec. 23 18 of this Act; 24 (3) "spur line" means a spur line, as defined in AS 43.59.100, enacted by sec. 25 18 of this Act, used for the primary purpose of delivering natural gas to the City of Fairbanks 26 and the Fairbanks North Star Borough. 27 * Sec. 26. If, under sec. 25 of this Act, secs. 1 - 3, 16 - 18, 21, and 22 of this Act take 28 effect, they take effect on the day after the date the commissioner of revenue determines that 29 the conditions in sec. 25(a) of this Act have been met. 30 * Sec. 27. Except as provided in sec. 26 of this Act, this Act takes effect immediately under 31 AS 01.10.070(c).